A-69783, JANUARY 14, 1936, 15 COMP. GEN. 605

A-69783, JANUARY 14, 1936, 15 COMP. GEN. 605

AGRICULTURAL ADJUSTMENT ACT - UNCONSTITUTIONALITY - AVAILABILITY OF APPROPRIATIONS THE SUPREME COURT OF THE UNITED STATES HAVING DETERMINED THE EXACTION OF PROCESSING TAXES UNDER THE AGRICULTURAL ADJUSTMENT ACT, 48 STAT. 31, AS AMENDED, TO BE IN CONTRAVENTION OF THE CONSTITUTION, IN CONSEQUENCE OF WHICH THERE WILL BE NO FURTHER COLLECTIONS, THE UNEXPENDED BALANCES OF ADVANCES MADE TO THE SECRETARY OF AGRICULTURE PURSUANT TO AUTHORIZATION CONTAINED IN SECTION 12 (B) OF SAID ACT, APPROPRIATING FOR THAT PURPOSE ONLY A SUM EQUAL TO THE PROCEEDS DERIVED FROM SUCH TAXES, IN EXCESS OF THE AMOUNT ACTUALLY SO DERIVED, ARE NOT APPROPRIATED MONEYS AND ARE NOT NOW AVAILABLE FOR ANY USE WHATSOEVER, AND ANY UNEXPENDED BALANCES OF FUNDS TRANSFERRED TO THE TREASURY DEPARTMENT UNDER SECTION 12 (C) OF SAID ACT ARE FOR RETURNING TO THE GENERAL FUND OF THE TREASURY.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, JANUARY 14, 1936:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JANUARY 9, 1936, AS FOLLOWS:

THE SUPREME COURT HAS RECENTLY HELD IN THE CASE OF UNITED STATES V. BUTLER, THAT CERTAIN PROVISIONS OF THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933, CONFLICT WITH THE CONSTITUTION. THIS DEPARTMENT IS CONSEQUENTLY BOUND TO MAKE ITS ACTION CONFORM TO THAT OPINION. PENDING YOUR DECISION IN THE MATTER, THE DEPARTMENT HAS DISCONTINUED MAKING PAYMENTS OF SALARIES AND ADMINISTRATIVE EXPENSES INCURRED IN CARRYING OUT THE AGRICULTURAL ADJUSTMENT ACT. THE QUESTION HAS ARISEN WHETHER THE APPROPRIATION 3X107 "SALARIES AND EXPENSES, AGRICULTURAL ADJUSTMENT ADMINISTRATION," AND OTHER FUNDS HERETOFORE AVAILABLE, MAY NOW BE USED FOR SUCH PURPOSES, AND YOUR OPINION UPON THIS QUESTION IS RESPECTFULLY REQUESTED.

THE DEPARTMENT IS AWARE OF YOUR DECISION (A-61873, 14 COMP. GEN. 846), WITH RESPECT TO THE PAYMENT OF SALARIES OF MEMBERS AND EMPLOYEES OF THE RAILROAD RETIREMENT BOARD, AND ADMINISTRATION EXPENSES IN LIQUIDATING THE AFFAIRS OF THE BOARD, AFTER THE DECISION OF THE SUPREME COURT, IN THE CASE OF THE ALTON RAILROAD V. THE RAILROAD RETIREMENT BOARD, DECIDED MAY 6, 1935. IT IS BELIEVED, HOWEVER, THAT YOUR DECISION ON THAT SITUATION MAY BE READILY DISTINGUISHED FROM THE SITUATION GROWING OUT OF THE SUPREME COURT CASE OF UNITED STATES V. BUTLER. IN YOUR DECISION IT WAS POINTED OUT THAT THE SUPREME COURT IN THE RAILROAD RETIREMENT ACT CASE HAD AFFIRMED THE DECREE OF THE SUPREME COURT OF THE DISTRICT OF COLUMBIA, WHICH HAD HELD THE RAILROAD RETIREMENT ACT UNCONSTITUTIONAL IN ITS ENTIRETY. THE FOLLOWING LANGUAGE WAS QUOTED FROM THE DECREE SO AFFIRMED:

"IT IS FURTHER CONSIDERED, ADJUDGED, AND DECREED THAT THE RAILROAD RETIREMENT ACT AND EACH AND EVERY PROVISION THEREOF, IS VOID AND OF NO EFFECT.'

IT WAS CONCLUDED THEN THAT THE RAILROAD RETIREMENT BOARD AND ITS EMPLOYEES HAD NO LAWFUL EXISTENCE AS SUCH, AND THAT THERE WAS NO AUTHORITY FOR PAYMENT FROM THE FUND THERE IN QUESTION OF ANY SALARIES OF THE MEMBERS AND EMPLOYEES OF THE BOARD, OR ANY ADMINISTRATIVE EXPENSES IN TERMINATING THE AFFAIRS OF THE BOARD.

THE SUPREME COURT IN THE CASE OF UNITED STATES V. BUTLER, HOWEVER, LIMITED ITS CONSIDERATION TO THE QUESTION OF RENTAL OR BENEFIT PAYMENTS AND THE PROCESSING TAXES RAISED TO MAKE SUCH PAYMENTS. THE COURT DID NOT CONSIDER SUCH PROVISIONS AS THOSE RELATING TO MARKETING AGREEMENTS, LICENSES, ORDERS, THE REMOVAL OF SURPLUS AGRICULTURAL COMMODITIES, THE ENCOURAGING OF THE EXPORTATION OF AGRICULTURAL COMMODITIES AND PRODUCTS, OR THE PROVISIONS RELATING TO THE PHILIPPINE ISLANDS AND PUERTO RICO. THE AGRICULTURAL ADJUSTMENT ACT CONTAINS THE USUAL SEPARABILITY CLAUSE AND IT IS OUR OPINION THAT THE APPLICATION OF THIS CLAUSE REQUIRES A CONCLUSION THAT THESE PROVISIONS ARE SEPARABLE FROM THOSE HELD INVALID BY THE SUPREME COURT. THAT CONGRESS WAS AWARE OF THE POSSIBILITY OF THE INVALIDITY OF THE TAXES IMPOSED BY THE ACT AND ASSUMED THAT OTHER PROVISIONS WOULD STILL BE APPLICABLE IS EVIDENT FROM THE PROVISIONS OF SECTION 21 (D) WHICH MAKE EXPRESS PROVISION IN THAT EVENT.

THERE IS, THEREFORE, A SOUND BASIS FOR HOLDING THAT THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, ESTABLISHED BY THE AGRICULTURAL ADJUSTMENT ACT, AND ITS EMPLOYEES, HAVE A LAWFUL EXISTENCE AS SUCH, UNLIKE THE RAILROAD RETIREMENT BOARD AND ITS MEMBERS AND EMPLOYEES, AND THAT THE AGRICULTURAL ADJUSTMENT ADMINISTRATION HAS AUTHORITY TO CARRY ON FUNCTIONS WHICH ARE NOT AFFECTED BY THE ABOVE-MENTIONED DECISION OF THE SUPREME COURT. THE SAME REASONING IS EQUALLY APPLICABLE IN THE CASE OF EMPLOYEES OF OTHER DEPARTMENTS ENGAGED IN ADMINISTERING PROVISIONS OF THE ACT. FOR EXAMPLE, THERE ARE NOW PENDING IN THE BUREAU OF INTERNAL REVENUE OF THIS DEPARTMENT MANY CLAIMS FOR REFUNDS UNDER SECTION 21 (D) OF THE ACT, AS AMENDED.

A SOMEWHAT COMPARABLE SITUATION WAS PRESENTED BY THAT CONSIDERED IN YOUR DECISION RENDERED JUNE 8, 1935 (A-62441, 14 COMP. GEN. 878) IN CONNECTION WITH THE AVAILABILITY OF FUNDS APPROPRIATED BY THE EMERGENCY APPROPRIATION ACT, FISCAL YEAR 1935, APPROVED JUNE 19, 1934, FOR ADMINISTERING AND ENFORCING THE PROVISIONS OF SECTION 9 (C) OF THE NATIONAL INDUSTRIAL RECOVERY ACT. THIS APPROPRIATION WAS AVAILABLE FOR THE ADMINISTRATIVE EXPENSES OF THE PETROLEUM ADMINISTRATIVE BOARD, THE PETROLEUM LABOR POLICY BOARD, AND THE OIL ENFORCEMENT SECTION, DIVISION OF INVESTIGATIONS, WHICH WERE ESTABLISHED UNDER SECTION 2 (A) OF TITLE I OF THE NATIONAL INDUSTRIAL RECOVERY ACT, TO ADMINISTER AND ENFORCE SECTION 9 (C) OF SAID TITLE AND ACT, AND THE CODE OF FAIR COMPETITION FOR THE PETROLEUM INDUSTRY, AND SUBSEQUENTLY AIDED IN CARRYING OUT THE PROVISIONS OF THE CONNALLY OIL ACT OF FEBRUARY 22, 1935. WHILE THE SUPREME COURT, BY ITS DECISION OF JANUARY 7, 1935, AND ITS DECISION OF MAY 27, 1935, HELD UNCONSTITUTIONAL SECTION 9 (C), AND THE CODE OF FAIR COMPETITION FOR THE PETROLEUM INDUSTRY, NEVERTHELESS YOUR DECISION INDICATES THAT THE APPROPRIATION FOR ADMINISTRATIVE EXPENSES OF THE ABOVE-MENTIONED AGENCIES WAS STILL AVAILABLE FOR THAT PURPOSE", EVEN AFTER THE DECISIONS OF THE SUPREME COURT HAD BEEN RENDERED. IT MUST BE ASSUMED THAT THE REASONS FOR THIS RESULT WERE THAT THESE AGENCIES CONTINUED IN EXISTENCE, DESPITE THE FACT THAT THE SUPREME COURT HAD DECLARED INVALID SOME OF THE PROVISIONS WHICH THESE UNITS WERE ESTABLISHED TO ENFORCE. THE SAME SITUATION EXISTS WITH RESPECT TO THE AGRICULTURAL ADJUSTMENT ADMINISTRATION. ALTHOUGH SOME OF THE FUNCTIONS PERFORMED BY THAT ADMINISTRATION HAVE BEEN DECLARED UNCONSTITUTIONAL, NEVERTHELESS OTHER FUNCTIONS REMAIN TO BE CARRIED ON BY THAT AGENCY WHICH ARE UNAFFECTED BY THE DECISION IN THE BUTLER CASE, AND IT MUST LIKEWISE BE DEEMED THAT APPROPRIATIONS AVAILABLE FOR ADMINISTRATIVE EXPENSES UNDER THE AGRICULTURAL ADJUSTMENT ACT REMAIN AVAILABLE AFTER THE DECISION IN THAT CASE.

PAYMENTS HAVE LIKEWISE BEEN TEMPORARILY DISCONTINUED FROM THE FUND 3T030.198 "MISCELLANEOUS CONTRIBUTED FUNDS, DEPARTMENT OF AGRICULTURE (SPECIAL TAX-EXEMPTION CERTIFICATE POOL).' THIS FUND RESULTED FROM THE SALE OF SURPLUS COTTON TAX-EXEMPTION CERTIFICATES SURRENDERED TO A SPECIAL POOL ORGANIZED UNDER SECTION 58 OF THE 1935 REGULATIONS PRESCRIBED UNDER THE COTTON CONTROL ACT OF APRIL 21, 1934. THIS SPECIAL POOL IS BASED ON TRUST AGREEMENTS ENTERED INTO BETWEEN THE PRODUCER SURRENDERING THE CERTIFICATES AND THE MANAGER OF THE POOL, AND THEY PROVIDE THAT THE MANAGER SHALL ENDEAVOR TO SELL TO OTHER PRODUCERS THE POUNDAGE REPRESENTED BY THE CERTIFICATES SURRENDERED, SHALL COLLECT THE PROCEEDS DERIVED FROM THE SALE OF SUCH CERTIFICATES, AND SHALL DEPOSIT SUCH PROCEEDS IN THE TREASURY TO THE CREDIT OF THOSE PRODUCERS PARTICIPATING IN THE SURRENDER OF THE CERTIFICATES. IT IS FURTHER AGREED IN THE TRUST AGREEMENT THAT FOLLOWING THE DEDUCTION OF ADMINISTRATIVE EXPENSES, PRODUCERS PARTICIPATING IN THE SPECIAL POOL WILL SHARE PROPORTIONATELY IN THE TOTAL NET PROCEEDS DERIVED FROM THE SALE OF SUCH SURPLUS CERTIFICATES. IT IS THUS APPARENT THAT THE AMOUNTS IN THE FUND UNDER CONSIDERATION CONSTITUTE A TRUST FUND AND ARE NOT TO BE CONSIDERED IN THE SAME MANNER AS RENTAL AND BENEFIT PAYMENTS UNDER THE AGRICULTURAL ADJUSTMENT ACT. YOUR OPINION IS RESPECTFULLY REQUESTED WHETHER CHECKS MAY PROPERLY BE ISSUED AGAINST THE FUND IN QUESTION IN SATISFACTION OF ALL TRUST AGREEMENTS.

IT IS RESPECTFULLY REQUESTED THAT PROMPT CONSIDERATION BE GIVEN TO THE INQUIRIES REFERRED TO YOU AND YOUR PROMPT DECISION IN THE MATTER WILL BE GREATLY APPRECIATED.

THE ONLY PROVISIONS OF THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933, 48 STAT. 31, AS AMENDED, THAT WERE FOR ADMINISTERING BY THE TREASURY DEPARTMENT ARE THOSE--- SUCH AS FOUND IN SECTIONS 15 TO 21, INCLUSIVE--- RELATING TO THE COLLECTION OF THE TAXES IMPOSED UNDER THE ACT AND TO THE MAKING OF CERTAIN REFUNDS SPECIFICALLY PROVIDED FOR THEREIN. THEREFORE, QUESTIONS AS TO THE EFFECT OF THE DECISION OF THE SUPREME COURT OF THE UNITED STATES ON THE ACTIVITIES OF THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, DEPARTMENT OF AGRICULTURE, OR ON THE STATUS OF ITS EMPLOYEES, ARE NOT PROPER FOR CONSIDERATION BY THIS OFFICE ON THE BASIS OF YOUR SUBMISSION, BUT ARE BEING CONSIDERED ON A SUBMISSION RECEIVED FROM THE SECRETARY OF AGRICULTURE. LIKEWISE, QUESTIONS AS TO THE AVAILABILITY OF THE UNEXPENDED BALANCE OF THE APPROPRIATION REFERRED TO IN THE FIRST PARAGRAPH OF YOUR LETTER, SUPRA -- WHICH IS THE APPROPRIATION OF $100,000,000 MADE BY SECTION 12 (A) OF THE AGRICULTURAL ADJUSTMENT ACT, AS AMENDED--- MAY NOT PROPERLY BE ANSWERED AT YOUR REQUEST AS IT APPEARS THE FUNDS TRANSFERRED TO YOUR DEPARTMENT PURSUANT TO SECTION 12 (C) OF THE ACT, AND IN WHICH THERE WERE UNEXPENDED BALANCES ON THE DATE OF THE COURT'S DECISION, WERE TRANSFERRED, NOT FROM THE APPROPRIATION MADE UNDER SECTION 12 (A), BUT PURSUANT TO SECTION 12 (C) FROM FUNDS PROVIDED UNDER SECTION 12 (B), AS AMENDED. SECTION 12 (B) READS AS FOLLOWS:

(B) IN ADDITION TO THE FOREGOING, FOR THE PURPOSE OF EFFECTUATING THE DECLARED POLICY OF THIS TITLE, A SUM EQUAL TO THE PROCEEDS DERIVED FROM ALL TAXES IMPOSED UNDER THIS TITLE IS HEREBY APPROPRIATED TO BE AVAILABLE TO THE SECRETARY OF AGRICULTURE FOR (1) THE ACQUISITION OF ANY AGRICULTURAL COMMODITY PLEDGED AS SECURITY FOR ANY LOAN MADE BY ANY FEDERAL AGENCY, WHICH LOAN WAS CONDITIONED UPON THE BORROWER AGREEING OR HAVING AGREED TO COOPERATE WITH A PROGRAM OF PRODUCTION ADJUSTMENT OR MARKETING ADJUSTMENT ADOPTED UNDER THE AUTHORITY OF THIS TITLE, AND (2) THE FOLLOWING PURPOSES UNDER PART 2 OF THIS TITLE: ADMINISTRATIVE EXPENSES, PAYMENTS AUTHORIZED TO BE MADE UNDER SECTION 8, AND REFUNDS ON TAXES. THE SECRETARY OF AGRICULTURE AND THE SECRETARY OF THE TREASURY SHALL JOINTLY ESTIMATE FROM TIME TO TIME THE AMOUNTS, IN ADDITION TO ANY MONEY AVAILABLE UNDER SUBSECTION (A), CURRENTLY REQUIRED FOR SUCH PURPOSES; AND THE SECRETARY OF THE TREASURY SHALL, OUT OF ANY MONEY IN THE TREASURY NOT OTHERWISE APPROPRIATED, ADVANCE TO THE SECRETARY OF AGRICULTURE THE AMOUNTS SO ESTIMATED. THE AMOUNT OF ANY SUCH ADVANCE SHALL BE DEDUCTED FROM SUCH TAX PROCEEDS AS SHALL SUBSEQUENTLY BECOME AVAILABLE UNDER THIS SUBSECTION.

BY DECISION OF JANUARY 6, 1936, IN UNITED STATES V. BUTLER, THE SUPREME COURT OF THE UNITED STATES DETERMINED THE EXACTION OF SAID PROCESSING TAX TO BE IN CONTRAVENTION OF THE CONSTITUTION, AND IN CONSEQUENCE THEREOF THERE WILL BE NO FURTHER COLLECTIONS.

INASMUCH AS UNDER THE PROVISION OF SECTION 12 (B), SUPRA, AUTHORIZING ADVANCES TO THE SECRETARY OF AGRICULTURE FROM THE GENERAL FUND IN ANTICIPATION OF PROCESSING TAX COLLECTIONS AND ON THE BASIS OF ESTIMATES BY JOINT ACTION OF THE SECRETARY OF AGRICULTURE AND THE SECRETARY OF THE TREASURY, FROM TIME TO TIME, OF CURRENT REQUIREMENTS, THERE APPEARS TO HAVE BEEN SO ADVANCED TO THE SECRETARY OF AGRICULTURE FROM THE GENERAL FUND, ON THE BASIS OF ESTIMATES AS PROVIDED FOR, SEVERAL HUNDRED MILLION DOLLARS IN EXCESS OF THE TOTAL PROCESSING TAX COLLECTIONS, IT APPEARS YOUR QUESTION INVOLVES WHETHER THE MONEYS SO ADVANCED TO THE SECRETARY OF AGRICULTURE, OR THAT PORTION THEREOF HERETOFORE TRANSFERRED BY THE SECRETARY OF AGRICULTURE TO THE TREASURY DEPARTMENT UNDER THE AUTHORITY OF SECTION 12 (C), SUPRA, MAY NOW LEGALLY BE USED FOR ANY OR ALL OF THE PURPOSES FOR WHICH AVAILABLE PRIOR TO THE DECISION OF THE SUPREME COURT OF THE UNITED STATES OF JANUARY 6, 1936, SUPRA.

IT WILL BE NOTED THAT SAID SECTION 12 (B) APPROPRIATED ONLY "A SUM EQUAL TO THE PROCEEDS DERIVED FROM ALL TAXES IMPOSED UNDER THIS TITLE.' HENCE, TO THE EXTENT THE AGGREGATE AMOUNT ACTUALLY DERIVED FROM SUCH TAXES IS LESS THAN THE AGGREGATE OF ALL EXPENDITURES, INCLUDING TRANSFERS, FROM THE FUND SET UP UNDER SAID SECTION, PLUS THE AMOUNT OF THE UNEXPENDED BALANCE NOW IN SAID FUND, INCLUDING THE UNEXPENDED BALANCES OF AMOUNTS TRANSFERRED FROM SAID FUND UNDER SECTION 12 (C), THE MONEYS SO ADVANCED PURSUANT TO SECTION 12 (B) WERE NOT APPROPRIATED AND ARE NOT NOW AVAILABLE FOR ANY USE WHATSOEVER, AND ANY UNEXPENDED BALANCES OF FUNDS TRANSFERRED TO YOUR DEPARTMENT UNDER SECTION 12 (C) ARE FOR RETURNING TO THE GENERAL FUND OF THE TREASURY.

YOUR SUBMISSION IN THIS REGARD MUST BE AND IS ANSWERED ACCORDINGLY.

YOUR QUESTION RELATIVE TO THE FUND DERIVED FROM THE SALE OF SURPLUS COTTON TAX-EXEMPTION CERTIFICATES ISSUED UNDER THE PROVISIONS OF THE ACT OF APRIL 21, 1934, 48 STAT. 598, WILL BE MADE THE SUBJECT OF A SEPARATE REPLY.