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B-200457 L/M, NOV 26, 1980

B-200457 L/M Nov 26, 1980
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YOU ASKED WHETHER THERE WAS AN IMPOUNDMENT OF FUNDS BECAUSE OF DELAYS IN CONSTRUCTION THAT MIGHT RESULT FROM THE TERMINATIONS. YOU INFORMED US THAT LEGAL COUNSEL FOR SOME OF THE TERMINATED WORKERS TAKES THE POSITION THAT "TVA'S ACTION IS A DELIBERATE EFFORT TO SLOW CONSTRUCTION OF THE NUCLEAR FACILITY AND CONSTITUTES IMPOUNDMENT.". THERE ARE TWO TYPES OF IMPOUNDMENTS COVERED BY THE IMPOUNDMENT CONTROL ACT. THE TERM "RESCISSION" IS NOT SPECIFICALLY DEFINED IN THE ACT. SECTION 1012 REQUIRES THE PRESIDENT TO REPORT A PROPOSED RESCISSION - "WHENEVER THE PRESIDENT DETERMINES THAT ALL OR PART OF ANY BUDGET AUTHORITY WILL NOT BE REQUIRED TO CARRY OUT THE FULL OBJECTIVES OR SCOPE OF PROGRAMS FOR WHICH IT IS PROVIDED OR *** SHOULD BE RESCINDED FOR FISCAL POLICY OR OTHER REASONS *** OR *** PROVIDED FOR ONLY ONE FISCAL YEAR IS TO BE RESERVED FROM OBLIGATION FOR SUCH FISCAL YEAR ***.".

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B-200457 L/M, NOV 26, 1980

PRECIS-UNAVAILABLE

JIM SASSER, UNITED STATES SENATE:

THIS RESPONDS TO YOUR LETTER OF SEPTEMBER 9, 1980, CONCERNING THE TERMINATION OF WORKERS AT THE PHIPPS BEND NUCLEAR PLANT IN TENNESSEE BY OFFICIALS OF THE TENNESSEE VALLEY AUTHORITY (TVA). YOU ASKED WHETHER THERE WAS AN IMPOUNDMENT OF FUNDS BECAUSE OF DELAYS IN CONSTRUCTION THAT MIGHT RESULT FROM THE TERMINATIONS. IN THIS REGARD, YOU INFORMED US THAT LEGAL COUNSEL FOR SOME OF THE TERMINATED WORKERS TAKES THE POSITION THAT "TVA'S ACTION IS A DELIBERATE EFFORT TO SLOW CONSTRUCTION OF THE NUCLEAR FACILITY AND CONSTITUTES IMPOUNDMENT."

THERE ARE TWO TYPES OF IMPOUNDMENTS COVERED BY THE IMPOUNDMENT CONTROL ACT, "RESCISSIONS" AND "DEFERRALS." THE TERM "RESCISSION" IS NOT SPECIFICALLY DEFINED IN THE ACT. HOWEVER, SECTION 1012 (31 U.S.C. 1402) PROVIDES GUIDANCE AS TO WHEN A RESCISSION EXISTS. SECTION 1012 REQUIRES THE PRESIDENT TO REPORT A PROPOSED RESCISSION -

"WHENEVER THE PRESIDENT DETERMINES THAT ALL OR PART OF ANY BUDGET AUTHORITY WILL NOT BE REQUIRED TO CARRY OUT THE FULL OBJECTIVES OR SCOPE OF PROGRAMS FOR WHICH IT IS PROVIDED OR *** SHOULD BE RESCINDED FOR FISCAL POLICY OR OTHER REASONS *** OR *** PROVIDED FOR ONLY ONE FISCAL YEAR IS TO BE RESERVED FROM OBLIGATION FOR SUCH FISCAL YEAR ***."

A "DEFERRAL" IS DEFINED IN SECTION 1011(1), 31 U.S.C. 1401(1), AS A WITHHOLDING OR DELAYING OF THE OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY (WHETHER BY ESTABLISHING RESERVES OR OTHERWISE) PROVIDED FOR PROJECTS OR ACTIVITIES, OR ANY OTHER TYPE OF EXECUTIVE ACTION OR INACTION WHICH EFFECTIVELY PRECLUDES THE OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY.

THEREFORE, WHETHER THE SUBJECT IS A RESCISSION OR A DEFERRAL, CERTAIN COMMON ELEMENTS MUST EXIST IN ORDER FOR THERE TO BE AN IMPOUNDMENT UNDER THE IMPOUNDMENT CONTROL ACT. FIRST, "BUDGET AUTHORITY" MUST BE INVOLVED. SECOND, THE BUDGET AUTHORITY MUST BE WITHHELD OR DELAYED FROM OBLIGATION OR EXPENDITURE BY EXECUTIVE ACTION OR INACTION.

WE HAVE DISCUSSED THE PHIPPS BEND MATTER WITH REPRESENTATIVES OF THE TVA AND THE OFFICE OF MANAGEMENT AND BUDGET (OMB). THERE IS A CONTINUING DISAGREEMENT BETWEEN TVA AND OMB CONCERNING WHETHER TVA FUNDS SUCH AS THOSE INVOLVED IN THE PHIPPS BEND NUCLEAR PLANT PROJECT REPRESENT "BUDGET AUTHORITY." THE PROGRAM IS INTENDED TO BE SELF SUPPORTING AND IS NOT FINANCED THROUGH GENERAL REVENUE APPROPRIATIONS, BUT THROUGH REVENUES FROM POWER OPERATIONS, BONDS, AND BORROWINGS AGAINST FUTURE POWER REVENUES. TVA BELIEVES THAT THESE FUNDS ARE NOT BUDGET AUTHORITY. UNDER 16 U.S.C. 831N-4(B), BONDS ISSUED BY TVA ARE NOT OBLIGATIONS OF THE UNITED STATES. TVA TAKES THE POSITION THAT THE OBLIGATIONS INCURRED BY TVA ARE OBLIGATIONS OF THE RATEPAYERS USING ENERGY GENERATED BY TVA, WHICH TVA PAYS OFF THROUGH THE FEES PAID TO IT BY ITS RATEPAYERS, WITHOUT THE USE OF ANY APPROPRIATED FUNDS. SECTION 831N-4(B) ALSO PROVIDES THAT TVA'S PROCEEDS FROM BONDS AND FROM POWER OPERATIONS AND THE EXPENDITURE OF SUCH PROCEEDS ARE NOT SUBJECT TO APPORTIONMENT. THEREFORE, TVA CONCLUDES THAT BUDGET AUTHORITY IS NOT INVOLVED. OMB BELIEVES THAT THESE FUNDS DO REPRESENT BUDGET AUTHORITY. OMB INCLUDES IN THE FEDERAL BUDGET THE POWER PROCEEDS AND BORROWINGS USED TO FINANCE POWER GENERATING FACILITIES. HOWEVER, IT IS NOT NECESSARY TO RESOLVE THE ISSUE OF WHETHER BUDGET AUTHORITY IS INVOLVED IN THE PHIPPS BEND NUCLEAR PLANT PROJECT BECAUSE WE BELIEVE THAT OTHER CONDITIONS WHICH MUST EXIST IN ORDER FOR THERE TO BE AN IMPOUNDMENT ARE NOT PRESENT.

UNDER THE GENERAL AGREEMENT BETWEEN TVA AND LABOR UNIONS REPRESENTING TVA'S WORKERS, A JOINT COMMITTEE REPRESENTING MANAGEMENT AND LABOR WAS CHARGED TO INVESTIGATE THE WORK STOPPAGE AT PHIPPS BEND. THE JOINT COMMITTEE RECOMMENDED THAT SOME WORKERS BE TERMINATED BECAUSE THE WORK STOPPAGE VIOLATED THE GENERAL AGREEMENT. THE DETERMINATION OF THE JOINT COMMITTEE AND THE SUBSEQUENT TERMINATIONS ARE NOW THE SUBJECT OF LITIGATION PENDING IN AT LEAST TWO FEDERAL DISTRICT COURTS. ONE OF THE ISSUES BEFORE THE COURT CONCERNS TVA'S MOTIVATION FOR THE TERMINATIONS.

WE HAVE FOUND NO EVIDENCE THAT THE TERMINATIONS WERE BASED ON FISCAL POLICY OR PROGRAMMATIC REASONS, RATHER THAN ON THE ALLEGED VIOLATION OF A LABOR MANAGEMENT AGREEMENT AS TVA STATES. FURTHERMORE, EVEN IF THE TERMINATIONS WERE BASED ON REASONS OTHER THAN THOSE ASSERTED BY TVA, THERE WOULD BE NO IMPOUNDMENT SO LONG AS THE TERMINATIONS DID NOT PRECLUDE THE OBLIGATION OR EXPENDITURE OF FUNDS AND THE FUNDS CONTINUED TO BE AVAILABLE. IN THIS REGARD, WE HAVE FOUND NO EVIDENCE THAT FUNDS AFFECTED BY THE TERMINATIONS HAVE BEEN PLACED IN A RESERVE. NOR HAVE WE ESTABLISHED THAT THESE FUNDS WILL BE WITHHELD FROM OBLIGATION OR EXPENDITURE BECAUSE THE PRESIDENT, OR ANY TVA OFFICIAL, DETERMINED THAT THESE FUNDS SHOULD NOT BE SPENT FOR THE PROGRAM. TVA HAS INFORMED US THAT THEY ARE PROCEEDING WITH HIRING PEOPLE TO REPLACE THE TERMINATED WORKERS. SUCH EFFORTS WOULD BE INCONSISTENT WITH THE NOTION THAT AN IMPOUNDMENT HAS OCCURRED.

FOR THE REASONS DISCUSSED, WE CONCLUDE THAT THE TERMINATION OF WORKERS AT PHIPPS BEND DID NOT CONSTITUTE AN IMPOUNDMENT EVEN IF BUDGET AUTHORITY WAS INVOLVED. IF WE CAN BE OF FURTHER ASSISTANCE, PLEASE CONTACT MR. JEFFREY JACOBSON OF OUR OFFICE OF GENERAL COUNSEL.

DIGEST

IMPOUNDMENT EXISTS UNDER IMPOUNDMENT CONTROL ACT WHEN BUDGET AUTHORITY IS WITHHELD OR DELAYED FROM OBLIGATION OR EXPENDITURE BY EXECUTIVE ACTION OR INACTION. NO IMPOUNDMENT RESULTED FROM TERMINATION OF WORKERS BY TVA SINCE TERMINATIONS DID NOT PRECLUDE OBLIGATION OR EXPENDITURE OF FUNDS, AND FUNDS CONTINUED TO BE AVAILABLE.

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