B-238615, Feb 4, 1991, 70 Comp.Gen. 225

B-238615, Feb 4, 1991, 70 Comp.Gen. 225

APPROPRIATIONS/FINANCIAL MANAGEMENT - Judgment Payments - Permanent/indefinite appropriation - Availability 1. The Judgment Fund, 31 U.S.C. Sec. 1304 (1988), is not legally available to cover the costs of compliance by the Department of Veterans Affairs with either judgments or proposed compromise settlements that are "injunctive" in nature (i.e., they direct the government to perform or not perform some act). APPROPRIATIONS/FINANCIAL MANAGEMENT - Appropriation Availability - Time availability - Fiscal-year appropriation - Unobligated balances 2. The unobligated balance of an expired appropriation to implement extended educational assistance benefits mandated by 38 U.S.C. Sec. 1662(a)(3) (1988) and 29 U.S.C. Sec. 1721 note (1988) may be used by the Department of Veterans Affairs (VA) to satisfy a court order (or a proposed settlement agreement) which requires VA to entertain new applications and reconsider the eligibility of veterans improperly denied benefits under those acts. The unobligated balance of VA's appropriations may be used to provide the mandated benefits pursuant to 31 U.S.C. Secs. 1502(b) and 1553(a), as amended by section 1405 of the National Defense Authorization Act for Fiscal Year 1991, Pub.L. No. 101 510, 104 Stat. 1485, 1675-80 (Nov. 5, 1990).

Availability of Expired Funds for Non-monetary Judicial Awards:

The district court decision in Pacheco v. VA, No. C-83-3098 (N.D. Ohio, Dec. 22, 1988), requires the Department of Veterans Affairs (VA) to reconsider the eligibility of certain Vietnam-era veterans for "GI Bill" educational benefits which VA withheld. VA is presently appealing that decision to the United States Court of Appeals for the Sixth Circuit. Nevertheless, VA's General Counsel has requested our opinion concerning what, if any, funds would be legally available to pay VA's obligations under the decision (if VA's appeal proves unsuccessful), or under a proposed compromise agreement (in the form of a Consent Order) which VA is currently considering in lieu of further appellate efforts. VA doubts that its own appropriations could be used for this purpose and suggests use of the so-called Judgment Fund, which is the permanent, indefinite appropriation created by 31 U.S.C. Sec. 1304 (1988), as amended.

As explained below, it is our view that neither the district court's order (should it become final) nor the proposed settlement agreement would constitute "monetary" awards payable from the Judgment Fund. We also find that Congress has previously appropriated funds to VA to carry out the responsibilities which are the subject of the order and draft settlement agreement. Although the period of availability of those funds has expired, they remain available for use to cover obligations properly changeable to this account under 31 U.S.C. Secs. 1502(b), 1553(a), as amended by section 1405 of the National Defense Authorization Act for Fiscal Year 1991, Pub.L. No. 101-510, 104 Stat. 1485, 1675-80 (Nov. 5, 1990). Congress has also provided that part of VA's current appropriations may be used until expended to fund veterans' benefits restored under the court's order which exceed the amount of the expired funds. VA may need to seek a supplemental appropriation from the Congress, however, if it finds that these combined funds are insufficient to finance benefits for all veterans whose eligibility is restored as a result of the court order.

BACKGROUND

On July 29, 1983, a class action suit, Pacheco v. VA, No. C-83-3098, was brought against the VA on the ground that it had unduly restricted eligibility for the benefits contemplated by 38 U.S.C. Sec. 1662(a)(3) (as added by Pub.L. No. 97-72, tit. II, Sec. 201(a), 95 Stat. 1054 (1981)), a part of the veterans' educational assistance program known as the "GI Bill." That law gave certain unemployed and underemployed Vietnam-era veterans an extension of time (until December 31, 1983-- later extended by Public Law 97-306, tit. II, 96 Stat. 1435 (1982), to December 31, 1984) in which to apply for educational assistance benefits in order to pursue "a program of apprenticeship or other on job training; ... a course with an approved vocational objective; ... or a program of secondary education." 38 U.S.C. Sec. 1662(a)(3)(A). The law required VA to grant those benefits to otherwise eligible veterans, except where VA determined that they were not needed by particular applicants. 38 U.S.C. Sec. 1662(a)(3)(C)(i). believed that pursuit of an associate or other college degree could never qualify under the statute as "a course with an approved vocational objective." Consequently, VA's regulations excluded all courses "leading to a standard college degree," 38 C.F.R. Sec. 21.1044(d)(2)(ii) (1984), and VA denied benefits for such purpose to otherwise eligible veterans. The class action asked the court to require VA to change its regulations and to grant monetary benefits to those otherwise eligible veterans from whom VA had improperly withheld benefits.

While that court action was pending, Congress enacted the Emergency Veterans' Job Training Act (EVJTA), Pub.L. No. 98-77, 97 Stat. 443 (1983). Section 18 of that act provided:

"(a) An associate degree program which is predominantly vocational in content may be considered by VA, for the purposes of 38 U.S.C. Sec. 1662(a)(3) to be a course with an approved vocational objective. ..."

97 Stat. at 452, codified at 29 U.S.C. Sec. 1721 note (1988). The legislative history of this provision does not explicitly reference VA's regulation or the class action. /1/

In December 1988, the district court issued its decision. The court invalidated that portion of VA's regulations which excluded from the extended benefit program all courses leading to associate degrees. The court agreed with VA that the extended benefits program should be limited to courses which had occupational or vocational objectives. Nevertheless, the court held that many associate degree programs can and do have those objectives, and that VA was wrong to assume the contrary in its regulations. Indeed, the court cited section 18 of EVJTA as evidence that Congress agreed that VA was "distorting the plain language" of 38 U.S.C. Sec. 1662(a)(3). Pacheco, slip mem. op. at 10. The court instructed VA to reconsider the eligibility of all applicants from whom benefits were withheld solely because the courses involved were part of an associate degree program. The court also directed VA to extend this program until December 31, 1989, to afford an additional opportunity to any otherwise eligible veterans who may have been deterred from applying by VA's regulation. /2/ Pacheco, slip mem. op. at 10-12.

At the same time, however, the court refused the plaintiffs' request for an order directing the VA to actually grant the withheld benefits. The court concluded that it lacked the authority to grant the improperly withheld benefits. This was because, while VA's implementation was improper, the statute was not and it requires VA to make a discretionary determination of each applicant's "need" for the benefits. Pacheco, slip mem. op. at 12. In other words, the court did not order VA to pay any money to the plaintiff. Instead, it required VA to reconsider whether to make any awards to them. Although it has appealed the court's decision to the federal Court of Appeals for the Sixth Circuit, VA has also reached a tentative settlement agreement with the plaintiff. Like the court's order, the proposed compromise agreement requires VA to reconsider whether to grant the withheld benefits to eligible applicants.

DISCUSSION

The Judgment Fund

VA argues that both the district court judgment and the proposed compromise settlement (whichever becomes final) should be payable from the Judgment Fund-- the permanent indefinite appropriation established by 31 U.S.C. Sec. 1304. As noted in VA's submission, the Judgment Fund is legally available to pay those judgments against the United States which are "not otherwise provided for." 31 U.S.C. Sec. 1304(a)(1). VA believes that the payment of this judgment is not otherwise provided for because, among other reasons, it can find no express statutory language permitting its payment from VA's appropriations. We think VA's arguments in this regard over-look a critical element of the law: Neither the court's order nor the proposed settlement agreement fall within the scope of the Judgment Fund appropriation.

With certain exceptions not relevant here, in order to qualify for payment from the Judgment Fund, there must be a monetary award against the United States under a judgment or settlement agreement (that is, the judgment or agreement must direct the government to pay money), as opposed to judgments and settlements which are injunctive in nature (i.e., which either direct the government to perform, or not to perform, some particular action). Clearly, compliance with virtually any adverse judgment has a measurable cost to the government. However, as a general rule, unless the government is directly ordered to pay a sum of money, the costs of compliance with the judgment are not considered payable from the Judgment Fund. E.g., 69 Comp.Gen. 114, 116 (1990). Compromise settlements are treated similarly. 28 U.S.C. Sec. 2414 (1988).

As noted above, the order in this case explicitly disavows both the authority and the intention to award monetary judgments. Rather, it requires VA to perform a discretionary act-- to reconsider whether to award benefits to those otherwise eligible Vietnam-era veterans whose benefits were withheld based on VA's improper interpretation of the statute. The same is true of the proposed settlement agreement. Thus, neither the order nor the proposed settlement agreement constitutes a monetary award payable from the Judgment Fund.

Expired VA Appropriations

Having established that payment from the Judgment Fund is not appropriate, the question remains: Are there any funds legally available for this purpose? The Congress has appropriated funds for the benefits at issue here. The EVJTA, in addition to clarifying the availability of benefits for vocationally oriented associate degree programs, authorized the appropriation of funds to pay such benefits, and specified that those benefits may be paid only through the use of funds authorized for appropriation by that act:

"(b) Funds for the purpose of carrying out subsection (a) the subsection including associate degree programs shall be derived only from amounts appropriated pursuant to the authorizations of appropriations in this act. Not more than a total of $25,000,000 of amounts so appropriated for fiscal years 1984 and 1985 shall be available for that purpose."

97 Stat. at 452. The funds authorized by EVJTA were appropriated by section 126 of Pub.L. No. 98-151, 97 Stat. 964, 979 (1983), which authorized VA to transfer as much as $25 million from the Veterans' Job Training appropriation to VA's Readjustment Benefits appropriation for implementation of section 18 during fiscal years 1984 and 1985. informed us that $25 million was, indeed, transferred to the Readjustment Benefits account and that, of those funds, only $1.4 million remained unobligated at the end of fiscal year 1985. /3/ The availability of those funds from fiscal years 1984 and 1985 was temporarily extended by VA's 1990 fiscal year appropriation which provided:

"any funds transferred to VA's Readjustment Benefits account ... under the authority of section 126 of Public Law 98-151 ... shall be available until expended for all expenses of this account, which until March 31, 1990, shall be deemed to include such expenses as may be incurred in carrying out the purposes of section 18 of EVJTA, as amended." /4/

The problem is that, although the propriety of their expenditure for this purpose has now been judicially established, the period of availability of those funds expired.

On November 5, 1990, however, the National Defense Authorization Act for Fiscal Year 1991 provided that with regard to obligations attributable to an appropriation before it expired, the expired appropriation remains available for a period of 5 years from the date of its expiration. Pub.L. No. 101-510, sec. 1405(a), 104 Stat. 1485 1675-80 (1990), to be codified at 31 U.S.C. Sec. 1553. A transition provision of this act applies this new rule to those appropriations, such as VA's $1.4 million, that expired during the past 2 years. Section 1405(b)(2), 104 Stat. at 1679. In the present case, then, VA's unobligated $1.4 million balance which expired on March 31, 1990, pursuant to Pub.L. No. 101-144 (VA's 1990 fiscal year appropriation), continues to be available to cover obligations properly attributable to that appropriation.

We conclude that the implementation of the court order or settlement agreement at issue here constitutes such an obligation. In circumstances similar to those before us here, we held, consistent with 31 U.S.C. Sec. 1502(b), that the United States Information Agency (USIA) could use expired appropriations in order to pay "performance pay" which USIA was determined, in an unfair labor proceeding, to have improperly withheld from some of its employees. 62 Comp.Gen. 527 (1983). In that case, USIA had resisted making the payments until after the end of the fiscal year in which the payments should have been made. We held that, although the agency's duty to make those payments did not constitute a recordable "obligation" under 31 U.S.C. Sec. 1501(a) (1988) (because the agency had yet to exercise some statutory discretion concerning the exact individuals and amounts to be paid), the unobligated balance remaining from the preceding fiscal year appropriation was still available to make those payments. Section 1502(b) provides that the expiration of an appropriation due to the passage of time does not "affect the status of lawsuits or rights of actions involving an amount payable from the balance of the appropriation." Under section 1502(b), the unfair labor proceeding was a "right of action" which could not be affected by the expiration of the applicable appropriation, or its reversion to the Treasury. /5/

VA's fiscal year 1991 appropriation for Readjustment Benefits is also available for this purpose. The 1991 appropriation provides that the Readjustment Benefits account "shall be available until expended to pay any court order, court award or compromise settlement arising from ... section 18." /6/ The legislative history of this provision states that the balance of VA's current year Readjustment Benefits appropriation will be available to cover any amount in excess of the $1.4 million which may be necessary to resolve this particular lawsuit. S. Rep. No. 474, 101st Cong., 2d Sess. 11 (1990). CONCLUSION

For the foregoing reasons VA may use the unobligated $1.4 million remaining from the $25 million appropriated by section 126 of Pub.L. No. 98-151 to implement section 18 of EVJTA pursuant to the court's order or, in the alternative, the proposed settlement agreement. Should this amount be insufficient to this task, VA may use for this same purpose any otherwise unobligated amounts appropriated in fiscal year 1991 to VA's Readjustment Benefits account.

/1/ See H.R. Rep. No. 116, 98th Cong., 1st Sess. (1983); Explanatory Statement of House Bill, Senate Amendment, and Conference Agreement, 129 Cong. Rec. H6226 (daily ed. Aug. 2, 1983), reprinted in 1983 U.S. Code Cong. Ad. News 846 and 872, respectively.

/2/ Although that deadline has passed, we understand that VA has not yet implemented the court's order.

/3/ Section 126 allowed the "return" of any unused portion of the $25 million to the Job Training appropriation. VA says that "a substantial portion" of the transferred amount was returned and that only $1.4 million remained unobligated in VA's Readjustment Benefits account before the close of fiscal year 1985. VA has told us that, but for this $1.4 million, none of the original $25 million appropriated by section 126 went unspent.

/4/ Pub.L. No. 101-144, 103 Stat. 839 (1989).

/5/ Our decision in 62 Comp.Gen. 527 accomplished its restoration of funds by resort to 31 U.S.C. Sec. 1552(a)(2) (1988). 62 Comp.Gen. at 529- 531. See also International Union, UAW v. Donovan, 570 F.Supp. 210, 220 (D.D.C. 1983); 63 Comp.Gen. 525 (1984). Section 1552(a)(2) was repealed by the National Defense Authorization Act, which enacted section 1553 as the new provision addressing the availability of expired appropriations.

Even had we declined to apply section 1552(a) in 62 Comp.Gen. 527, the courts might have exercised their equitable power to order restoration of the expired funds. Jacksonville Port Authority v. Adams, 556 F.2d 52, 55- 57 (D.C. Cir. 1977); Connecticut v. Schweiker, 684 F.2d 979, 996-99 (D.C. Cir. 1982), cert. denied, 459 U.S. 1207 (1983). See also National Ass'n of Regional Councils v. Costle, 564 F.2d 583, 588-89 (D.C. Cir. 1977); B-232010, Mar. 23, 1989.

/6/ Pub.L. No. 101-507. See 136 Cong. Rec. H10747, H10748 (Oct. 20, 1990) (House of Representatives agrees to conference report and concurs in Senate Amendment No. 1).