[Congressional Record Volume 170, Number 139 (Monday, September 9, 2024)]
[Senate]
[Pages S5872-S5875]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             GOVERNMENT ACCOUNTABILITY OFFICE LEGAL OPINION

  Mr. CRUZ. Mr. President, I ask unanimous consent that the attached 
legal opinion of the Government Accountability Office, no. B-336512, 
titled ``Office of Management and Budget--Applicability of the 
Congressional Review Act to Controller Alert CA-23-6, Enhancing 
Transparency Through Use of the Investing in America Emblem on Signs,'' 
issued on August 29, 2024, be printed in the Congressional Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                Decision

     Matter of: Office of Management and Budget--Applicability of 
         the Congressional Review Act to Controller Alert CA-23-6, 
         Enhancing Transparency Through Use of the Investing in 
         America Emblem on Signs
     File: B-336512
     Date: August 29, 2024


                                 digest

       The Office of Management and Budget (OMB) issued an updated 
     Controller Alert entitled CA-23-6, Enhancing Transparency 
     Through Use of the Investing in America Emblem on Signs 
     (UPDATED) (Controller Alert). The Controller Alert was 
     directed to Chief Financial Officers across the federal 
     government and recommended actions for agencies to take, such 
     as adopting signage and public acknowledgement requirements 
     in the terms and conditions of financial assistance awards, 
     to promote openness and transparency of projects funded in 
     whole or in part by specified pieces of legislation.
       The Congressional Review Act (CRA) requires that before a 
     rule can take effect, an agency must submit the rule to both 
     the House of Representatives and the Senate, as well as the 
     Comptroller General. CRA incorporates the Administrative 
     Procedure Act's (APA's) definition of a rule for this 
     purpose, with three exceptions. We conclude that the 
     Controller Alert is a rule for purposes of CRA because it 
     meets the APA definition of a rule, and no CRA exception 
     applies. Therefore, the Controller Alert is subject to CRA's 
     submission requirements.


                                decision

       On February 24, 2023, the Office of Management and Budget 
     (OMB) published an updated Controller Alert entitled CA-23-6, 
     Enhancing Transparency Through Use of the Investing in 
     America Emblem on Signs (UPDATED) (Controller Alert).\1\ We 
     received a request for a decision as to whether the 
     Controller Alert is a rule for purposes of the Congressional 
     Review Act (CRA). Letter from Senator Ted Cruz to the 
     Comptroller General (June 20, 2024). We also received a 
     follow-up communication from Senator Cruz further explaining 
     his views. Letter from Senator Ted Cruz to the Comptroller 
     General (Aug. 1, 2024). As discussed below, we conclude that 
     the Controller Alert is a rule subject to CRA's submission 
     requirements.
       Our practice when rendering decisions is to contact the 
     relevant agencies to obtain their legal views on the subject 
     of the request. GAO, GAO's Protocols for Legal Decisions and 
     Opinions, GAO-24-107329 (Washington, D.C.: Feb. 2024), 
     available at https://www.gao.gov/products/gao-24-107329. 
     Accordingly, we reached out to OMB to obtain the agency's 
     legal views. Letter from Assistant General Counsel, GAO, to 
     General Counsel, OMB (July 9, 2024). We received a response 
     from OMB on August 6, 2024. Letter from General Counsel, OMB 
     to Assistant General Counsel, GAO (Response Letter).


                               background

     Controller Alert
       According to OMB, Controller Alerts are designed to inform 
     Chief Financial Officers (CFOs) at agencies across the 
     federal government of financial issues that may require 
     attention, ``but do not constitute official guidance or 
     prescribe specific tasks for agencies beyond consideration of 
     appropriate steps to address the issue.'' Controller Alert, 
     at 1. The Controller Alert at issue here was intended to 
     ``suggest strategies, including the use of public signage, to 
     increase the transparency of projects funded in whole or in 
     part'' by the American Rescue Plan Act of 2021 (ARPA), Pub. 
     L. No. 117-2, 135 Stat. 4 (Mar. 11, 2021); the Infrastructure 
     Investment and Jobs Act (IIJA), Pub. L. No. 117-58, 135 Stat. 
     429 (Nov. 15, 2021); the Creating Helpful Incentives to 
     Produce Semiconductors and Science Act of 2022 (CHIPS and 
     Science Act), Pub. L. No. 117-167, 136 Stat. 1366 (Aug. 9, 
     2022); the Inflation Reduction Act of 2022 (IRA), Pub. L. No. 
     117-169, 136 Stat. 1818 (Aug. 16, 2022); and ``other 
     appropriations as appropriate.'' Controller Alert, at 1.
       Among the strategies recommended, the Controller Alert 
     encouraged agencies to develop signage and public 
     acknowledgement requirements to be included in the terms and 
     conditions of financial assistance awards provided through 
     the specified legislation, to develop public outreach 
     campaigns to communicate progress on projects funded through 
     the legislation, and to incorporate statements of 
     acknowledgement in published materials that cover activities 
     funded through the legislation. Id. at 2. For example, the 
     Controller Alert states that ``award terms and conditions 
     requirements should specify guidelines for use of the 
     official Investing in America emblem,'' ``should specify 
     guidelines for signage and communications materials to 
     identify the project as a

[[Page S5873]]

     `project funded by [Insert name of the law],' '' and ``should 
     stipulate that costs associated with signage must be 
     reasonable and limited, and that recipients are encouraged to 
     use recycled or recovered materials when procuring signs.'' 
     Id. at 2 (brackets in original). Further, the Controller 
     Alert notes that ``[s]igns should not be produced or 
     displayed if doing so results in unreasonable cost, 
     expense, or recipient burden.'' Id.
       Additionally, the Controller Alert states that ``[w]hile 
     specific requirements regarding usage of signage must be 
     applied on an agency-by-agency and program-by-program basis, 
     Federal awarding agencies are strongly encouraged to seek 
     opportunities to employ'' the strategies explained in the 
     Controller Alert ``to the extent possible. . . .'' Id. 
     (footnote omitted).
       The Controller Alert updated a previous Controller Alert 
     issued by OMB on August 22, 2022.\2\ According to OMB, the 
     2022 Controller Alert contained ``materially identical'' 
     recommendations for agencies, but was only directed at 
     projects funded under IIJA. Response Letter, at 2.
     The Congressional Review Act
       CRA, enacted in 1996 to strengthen congressional oversight 
     of agency rulemaking, requires federal agencies to submit a 
     report on each new rule to both houses of Congress and to the 
     Comptroller General for review before a rule can take effect. 
     5 U.S.C. Sec. 801(a)(1)(A). The report must contain a copy of 
     the rule, ``a concise general statement relating to the 
     rule,'' and the rule's proposed effective date. Id. CRA 
     allows Congress to review and disapprove of federal agency 
     rules for a period of 60 days using special procedures. See 5 
     U.S.C. Sec. 802. If a resolution of disapproval is enacted, 
     then the new rule has no force or effect. 5 U.S.C. 
     Sec. 801(b)(1).
       CRA adopts the definition of rule under the Administrative 
     Procedure Act (APA), 5 U.S.C. Sec. 551(4), which states that 
     a rule is ``the whole or a part of an agency statement of 
     general or particular applicability and future effect 
     designed to implement, interpret, or prescribe law or policy 
     or describing the organization, procedure, or practice 
     requirements of an agency.'' 5 U.S.C. Sec. 804(3). However, 
     CRA excludes three categories of rules from coverage: (1) 
     rules of particular applicability; (2) rules relating to 
     agency management or personnel; and (3) rules of agency 
     organization, procedure, or practice that do not 
     substantially affect the rights or obligations of non-agency 
     parties. Id.
       OMB did not submit a CRA report to Congress or the 
     Comptroller General on the Controller Alert. In its response 
     to us, OMB stated that the Controller Alert was not a rule 
     for several reasons. First, OMB stated that the Controller 
     Alert does not satisfy the APA definition of rule. Response 
     Letter, at 3-6. Further, OMB stated that even if the 
     Controller Alert were a rule, it falls within two CRA 
     exceptions and is not subject to its submission requirements. 
     Id., at 6-9.


                               DISCUSSION

       An agency action is subject to CRA if it meets the APA 
     definition of rule and no CRA exception applies. For the 
     reasons discussed below, we find that the Controller Alert as 
     a whole meets the APA definition of a rule and that no 
     exception applies. Therefore, it is subject to CRA's 
     submission requirements.
     The Controller Alert Is a Rule as Defined by APA
       The Controller Alert meets the APA definition of a rule. 
     First, the Controller Alert is an agency statement because it 
     is an announcement by OMB to agency CFOs across the 
     government. Controller Alert, at 1. We note that we have 
     previously found that OMB does not act as an agency where it 
     steps into the President's shoes in exercise of delegated 
     authority. B-333725, Mar. 17, 2022. However, when issuing the 
     Controller Alert, OMB was acting under its own authority, not 
     an authority delegated to it by the President. See also B-
     335142, May 1, 2024 (finding that a joint memorandum issued 
     by the Department of Labor (DOL) and OMB was issued in their 
     respective capacities as agencies as defined by APA). 
     Therefore, OMB was acting as an agency subject to CRA when it 
     issued the Controller Alert.
       Second, the Controller Alert is of future effect, as it 
     suggests prospective changes for agencies to make with 
     respect to federal funding agreements under the specified 
     legislation. Controller Alert, at 1. While the Controller 
     Alert does not have a stated effective date, it seeks to 
     ``inform the [CFO] community of key issues where [OMB] 
     believes further action may be warranted . . .'' Id. 
     (emphasis added). Additionally, the Controller Alert suggests 
     actions for agencies to take with respect to future funding 
     agreements through forward-looking recommendations to 
     ``develop'' and ``incorporate'' certain terms into those 
     agreements. Id. at 2.
       Finally, the Controller Alert implements, interprets, or 
     prescribes policy and describes the organization, procedure, 
     or practice requirements of an agency. OMB argues that the 
     Controller Alert does not reflect a change in agency 
     discretion, and does not change official policy because it 
     replaced a similar alert issued in August 2022. Response 
     Letter, at 4. We have recognized that `` `a statement by an 
     agency that simply restates an established interpretation 
     `tread[s] no new ground' and `le[aves] the world just as it 
     found it, and thus cannot be fairly described as 
     implementing, interpreting, or prescribing law or policy.' '' 
     B-336217, Aug. 6, 2024 (quoting Golden & Zimmerman, LLC v. 
     Domenech, 599 F.3d 426, 432 (4th Cir. 2010) (alterations in 
     original)). In that decision, we determined that part of 
     Supervision and Regulation Letter 23-8 (SR 23-8) issued by 
     the Board of Governors of the Federal Reserve System (FRB) 
     restated established FRB policy regarding FRB's supervisory 
     nonobjection process. Id. However, SR 23-8 also 
     contained statements that went beyond what was in FRB's 
     earlier policy statements, including expanding the scope 
     of which entities were subject to its supervisory 
     nonobjection process and clarification of the process 
     through more detailed description of existing policy. Id. 
     While we determined that the portions of SR 23-8 that 
     largely restated existing policy would not satisfy this 
     element of the APA definition because they did not 
     prescribe new policy, the letter taken as a whole did 
     implement, interpret, or prescribe law or policy given 
     that there were additional provisions of SR 23-8 that went 
     beyond restating existing policy decisions. Id.
       Similarly in this case, both the Controller Alert at issue 
     here and the 2022 Controller Alert apply to funding 
     agreements under IIJA. 2022 Controller Alert, at 1; 
     Controller Alert, at 1. With respect to IIJA, both Controller 
     Alerts contain many of the same recommendations relating to 
     signage, public acknowledgement, and communications 
     initiatives. For example, both ``strongly encourage[ ]'' 
     agencies to develop ``signage and public acknowledgement 
     requirements'' ``for inclusion in the terms and conditions of 
     award agreements between agencies and recipients of'' awards 
     funded under the applicable legislation. Compare 2022 
     Controller Alert, at 1, with, Controller Alert, at 1-2. 
     Additionally, both state that ``[t]erms and conditions should 
     stipulate that costs associated with signage must be 
     reasonable and limited, and that recipients are encouraged to 
     use recycled or recovered materials when procuring signs.'' 
     Compare 2022 Controller Alert, at 2, with, Controller Alert, 
     at 2. While the Controller Alert includes some additional 
     suggestions, with respect to the recommended actions for 
     funding agreements under IIJA, it largely restates 
     established OMB policy. For these recommendations under IIJA, 
     the Controller Alert does not satisfy the APA definition of 
     rule.
       However, the updated Controller Alert is broader in its 
     coverage than the 2022 Controller Alert. While the 2022 
     Controller Alert applied only to IIJA, the Controller Alert 
     at issue here applies to several additional pieces of 
     legislation, including ARPA, the CHIPS and Science Act, and 
     IRA. Controller Alert, at 1. Though many of the provisions 
     contained within the Controller Alert mirror those in the 
     2022 Controller Alert, it expands the coverage to projects 
     funded under other significant pieces of legislation and 
     announces recommendations for a larger number of funding 
     agreements. As a result, these new recommendations do more 
     than merely restate existing policy.
       As such, we must evaluate whether the recommendations for 
     agreements under statutes other than IIJA prescribe or 
     implement policy or describe agency procedure and practice 
     requirements. OMB stated in its response to us that the 
     Controller Alert does not satisfy this element of the APA 
     definition because in addition to merely restating existing 
     policy, it is also informational rather than prescriptive, 
     giving agencies ``complete discretion'' as to whether they 
     choose to adopt the recommendations. Response Letter, at 4-5. 
     We disagree.
       While the Controller Alert states that it ``do[es] not 
     constitute official guidance or prescribe specific tasks for 
     agencies beyond consideration of appropriate steps to address 
     the issue,'' the Controller Alert urges agencies to change 
     their existing practices, both with respect to signage and 
     public acknowledgement requirements as well as for public 
     affairs and communications strategies, beyond what is 
     required by the underlying program laws. Controller Alert, at 
     1. The Controller Alert notes that ``[federal awarding 
     agencies are strongly encouraged to seek opportunities to 
     employ the following strategies, to the extent possible . . 
     .'' Id. (emphasis added). With respect to the signage and 
     public acknowledgement recommendations, the Controller Alert 
     provides new recommendations in terms that are more 
     prescriptive than informative. For example, the Controller 
     Alert makes the following recommendations: ``Federal award 
     terms and conditions requirements should specify guidelines 
     for use of the official Investing in America emblem,'' 
     ``[t]erms and conditions should stipulate that costs 
     associated with signage must be reasonable and limited, and 
     that recipients are encouraged to use recycled or recovered 
     materials when procuring signs,'' and ``a project award 
     funded by the Bipartisan Infrastructure Law should  include 
     an acknowledgement that it is `funded by President Biden's 
     Bipartisan Infrastructure Law.' '' Id. at 2 (emphasis added). 
     With respect to the public affairs and communications 
     recommendations, the Controller Alert strongly encourages 
     agencies to ``[e]ngage agency public affairs and 
     communications offices to . . . develop public outreach 
     campaigns'' and ``incorporate statements of acknowledgement 
     in all published materials covering activities funded by 
     these laws.'' Controller Alert, at 2. These new agency 
     procedure and practice recommendations are similarly 
     prescriptive.
       Taken together, we conclude that the Controller Alert's 
     recommendations for agreements under statutes other than IIJA 
     prescribe or implement policy and describe agency procedure 
     and practice requirements. These recommendations encourage 
     agencies

[[Page S5874]]

     to change their existing practices by prescribing 
     requirements for the terms and conditions of federal awards 
     funded by legislation, such as ARPA, the CHIPS and Science 
     Act, and IRA, as well as for public relations and 
     communications strategies with regard to projects funded by 
     such legislation. See B-335115, Sept. 26, 2023 (finding that 
     memoranda satisfied this element of the definition by 
     establishing new policies and procedures that did not exist 
     prior to the memoranda).\3\ Accordingly, we conclude that the 
     Controller Alert meets the APA definition of a rule.
     CRA Exceptions
       After determining that the Controller Alert satisfies the 
     APA definition of a rule, we must next determine whether any 
     of CRA's three exceptions apply. For the reasons described 
     below, we determine that part of the Controller Alert 
     satisfies the exception for rules relating to agency 
     management or personnel, but other parts do not satisfy any 
     of the exceptions. As a result, the Controller Alert as a 
     whole is subject to CRA's submission requirements.
     Rule of Particular Applicability
       The Controller Alert is not a rule of particular 
     applicability. Rules of particular applicability are ``those 
     rules that are addressed to an identified entity and also 
     address actions that entity may or may not take, taking into 
     account facts and circumstances specific to the entity.'' B-
     334995, July 6, 2023. See also B-335781, Feb. 27, 2024; B-
     330843, Oct. 22, 2019. Here, the Controller Alert applies 
     generally to agencies across the federal government \4\ 
     without individualized requirements accounting for 
     differences in the facts or circumstances of agencies or 
     program applicants. Therefore, the Controller Alert is not a 
     rule of particular applicability.
     Rule of Agency Management or Personnel
       Second, the Controller Alert's recommendations for public 
     affairs and communications initiatives satisfy the exception 
     for rules relating to agency management or personnel, but the 
     recommendations for signage and public acknowledgement do 
     not.
       We have previously held that CRA's exception for rules of 
     agency management or personnel applies to rules relating to 
     ``purely internal agency matters.'' B-335142, May 1, 2024. In 
     reaching that conclusion, we have relied on cases 
     interpreting a similar APA exception that exempts matters 
     relating to agency management or personnel from notice and 
     comment rulemaking. See 5 U.S.C. Sec. 553(a)(2). In addition, 
     we've relied on the description of rules of personnel in 
     Attorney General's Manual on the Administrative Procedure Act 
     as those that describe matters relating to agency personnel 
     as including ``rules as to leaves of absence, vacation, 
     travel, etc.'' U.S. Department of Justice, Attorney General's 
     Manual on the Administrative Procedure Act (Manual), at 18 
     (1947).
       We relied on the Manual in B-335115, Sept. 26, 2023, to 
     find that three Department of Defense (DOD) memoranda dealing 
     with notification requirements for pregnant service members, 
     leave to access reproductive care, and travel and 
     transportation allowances to access reproductive care fell 
     into the exception for rules relating to management or 
     personnel. We determined that the memoranda clearly and 
     directly implicated agency personnel matters such as 
     communications between employees and managers, leave, and 
     benefits. Id. We also noted that courts have held this 
     exemption applies even if the agency action has an effect on 
     the outside public when agency management or personnel issues 
     are clearly and directly implicated Id. (citing Stewart v. 
     Smith, 673 F.2d 485, 496-97 (D.C. Cir. 1982)).
       Neither APA nor CRA define ``management'' within the 
     context of the exception, nor have courts interpreted such 
     term. However, we note that ``management'' is defined as 
     ``the conducting or supervising of something.'' Merriam-
     Webster, Management, available at https://www.merriam-
     webster.com/dictionary/management (last visited Aug. 26, 
     2024). See also Dictionary.com, Management, available at 
     https://www.dictionary.com/browse/management (last visited 
     Aug. 26, 2024) (defining management as ``the act or manner of 
     managing; handling, direction, or control''). Therefore, 
     rules relating to management include those related to 
     controlling, directing, or supervising internal management 
     issues.
       Many of the functions OMB carries out for the government 
     fall into the category of agency management. See B-334221, 
     Feb. 9, 2023 (noting that APA's analogous exception relating 
     to internal management of an agency'' `should not be 
     construed as intra-agency only; it includes functions of 
     internal Federal management, such as most of the functions of 
     the Bureau of the Budget [now OMB] '' (citing Manual, at 
     18)). Here, the Controller Alert's suggestions relate 
     primarily to two categories of actions: (1) public affairs 
     and communications initiatives, and (2) public signage and 
     acknowledgement requirements.
       With respect to the first category, the public affairs and 
     communications initiatives fall under the exception. The 
     suggestions for these initiatives recommend that agencies 
     ``engage agency public affairs and communications offices to 
     . . . develop public outreach campaigns'' and ``incorporate 
     statements of acknowledgement in all published materials 
     covering activities funded by these laws.'' Controller Alert, 
     at 2. The Controller Alert notes that examples of these 
     materials include press releases, project fact sheets, 
     reports, agency-developed project websites, flyers, 
     brochures, blogs, and editorials. Id.
       Like our decision in B-334221, Feb. 9, 2023, the Controller 
     Alert contemplates the direction of internal communications 
     staff by recommending particular job tasks and allocation of 
     resources. While it is possible that a third-party may 
     eventually receive agency communications adopting these 
     suggestions, an agency's communications strategy regarding 
     the programs it implements is a purely internal matter. 
     Similarly, as the definition of management suggests, the 
     direction of agency communications personnel squarely falls 
     within the conducting or supervising of interagency business. 
     As a result, the portions of the Controller Alert 
     recommending public affairs and communications strategies 
     under the applicable laws satisfy this exception.
       With respect to the second category of recommendations, the 
     Controller Alert's suggestions relating to signage and public 
     acknowledgment requirements do not satisfy the requirements 
     of this exception. Unlike the recommendations relating to 
     public affairs and communications, the Controller Alert's 
     recommendations regarding signage and public acknowledgement 
     do not primarily relate to agency management or personnel; 
     instead, they implicate requirements that would be imposed on 
     program grantees or recipients beyond what is required by 
     law. As a result, the Controller Alert as a whole does not 
     fall into this exception.
     Rule of Agency Organization, Procedure, or Practice With No 
         Substitutional Non-Agency Parties
       Finally, the Controller Alert does not satisfy the 
     exception for rules of agency organization, procedure, or 
     practice with no substantial effect on the rights or 
     obligations of non-agency parties. This exception was modeled 
     off the APA exception to notice-and-comment requirements for 
     rules of agency organization, procedure, or practice. 5 
     U.S.C. Sec. 553(b)(A). Some courts have limited this 
     exception only to rules that do not have a substantial impact 
     on non-agency parties. See e.g., B-336217, Aug. 6, 2024; B-
     330190, Dec. 19, 2018 (citing Brown Express, Inc., v. United 
     States, 607 F.2d 695, 702 (5th Cir. 1979)). The text of the 
     CRA exception adopts this limitation. 5 U.S.C. 
     Sec. 804(3)(C).
       First, we must determine whether the Controller Alert is a 
     rule of agency organization, procedure, or practice. Rules 
     that satisfy this requirement are ``limited to an agency's 
     methods of operation or how the agency organizes its internal 
     operations.'' B-336217, Aug. 6, 2024. Like with rules 
     relating to agency management or personnel, this exception 
     also applies to interagency rules. B-334221, Feb. 9, 2023 
     (concluding, in part, that nothing in the text of CRA 
     suggests that CRA's exception for rules of agency management 
     or personnel applies only to intra-agency rules and that the 
     exception is couched to include any rule relating to agency 
     management or personnel). Here, the Controller Alert provides 
     recommendations for agencies on the implementation of funding 
     agreements under the specified statutes. Controller Alert, at 
     1-2. These determinations regarding the contents of funding 
     agreements describe the agency's procedures and practices for 
     carrying out their programs.
       Next, we look at whether the Controller Alert substantially 
     affects the rights or obligations of non-agency parties. We 
     have previously said that with respect to this prong of the 
     exception, ``the critical question is whether the agency 
     action alters the rights or interests of the regulated 
     entities.'' B-329926, Sept. 10, 2018. Similarly, courts have 
     determined that ``[a]n agency rule that modifies substantive 
     rights and interests can only be nominally procedural, and 
     the exemption for such rules of agency procedure cannot 
     apply.'' United States Department of Labor v. Kast Metals 
     Corp., 744 F.2d 1145, 1153 (5th Cir. 1984).
       OMB stated in its response to us that the Controller Alert 
     does not substantially affect the rights or obligations of 
     non-agency parties because it is directed only at agencies 
     and their internal decisions, rather than funding recipients 
     or third parties. Response Letter, at 8. OMB noted that any 
     potential downstream effects on non-agency parties did not 
     change the underlying legal rights or obligations of those 
     parties. Id., at 9.
       We agree that the Controller Alert differs from other 
     federal funding requirements we have analyzed under this 
     exception because it directs these recommendations to other 
     agencies, rather than directly imposing new conditions of 
     federal funding on recipients or applicants. See, e.g. B-
     334032, Dec. 15, 2022 (finding that a non-binding Federal 
     Highway Administration memorandum setting out preferred 
     projects for federal funding had the substantial effect of 
     directing non-agency parties' behavior). Nonetheless, the 
     legislative history of CRA instructs us to consider both the 
     direct and indirect effects of a given action when assessing 
     its impacts. 142 Cong. Rec. H3005 (daily ed. Mar. 28, 1996) 
     (statement of Rep. McIntosh) (``A statement of agency 
     procedure or practice with a truly minor, incidental effect 
     on non-agency parties is excluded from the definition of a 
     rule. Any other effect, whether direct or indirect, on the 
     rights or obligations of non-agency parties is a substantial 
     effect within the meaning of the exception. Thus, this 
     exception should be read narrowly and resolved in favor of 
     non-agency parties who can demonstrate that the rule will 
     have a nontrivial effect on their rights or obligations``); 
     see also Batterton v. Marshall, 648 F.2d 694, n.58

[[Page S5875]]

     (D.C. Cir. 1980) (``Where necessary, the court will look 
     behind the particular label applied by the agency to 
     challenge action in order to discern its real intent and 
     effect''). Therefore, we must look at the effects of the 
     Controller Alert.
       When an agency's actions ``directly determine whether and 
     in what amount an entity may receive funding under the 
     program,'' that action has a substantial effect on the rights 
     or obligations of those non-agency parties. B-334146, June 5, 
     2023. In that decision, we examined documents from the United 
     States Department of Agriculture (USDA) implementing four new 
     financial assistance programs. Id. The documents, which 
     included notices of funding opportunities, a request for 
     applications, and a policy memorandum, established 
     eligibility and application requirements for the new 
     programs, defined selection criteria, imposed reporting 
     requirements, and set funding ranges, among other things. Id. 
     There, we determined that the documents failed to satisfy 
     this exception because they each had a substantial effect on 
     non-agency parties. Id. We had previously concluded that 
     agency rules amending or clarifying the requirements of 
     financial assistance programs had a substantial effect on 
     non-agency parties. See B-333732, July 28, 2022. Because the 
     USDA documents went even further than amending or clarifying 
     existing requirements in establishing new programs, the 
     documents clearly had a substantial effect on the rights or 
     obligations of non-agency parties. B-334146, June 5, 2023.
       Here, the Controller Alert does not establish federal 
     funding programs under any of the statutes it covers. 
     However, by ``strongly'' encouraging agencies to adopt 
     the recommendations in the Controller Alert, it is 
     intended to and has led agencies to incorporate new 
     signage and public acknowledgement requirements into the 
     terms and conditions of federal funding agreements beyond 
     what is required by law. Controller Alert, at 1. Following 
     issuance of the Controller Alert, several agencies 
     implemented terms and conditions of their funding 
     agreements that directly adopted its language.\5\ For 
     example, a notice of funding opportunity issued by the 
     Federal Railroad Administration contains the following 
     language recommended by the Controller Alert: ``In 
     addition, recipients employing project signage are 
     required to use the official Investing in America emblem 
     in accordance with the Official Investing in America 
     Emblem Style Guide. Costs associated with signage and 
     public acknowledgements must be reasonable and limited. 
     Signs or public acknowledgements should not be produced, 
     displayed, or published if doing so results in 
     unreasonable cost, expense, or recipient burden. 
     Recipients are encouraged to use recycled or recovered 
     materials when procuring signs.'' Compare 89 Fed. Reg. 
     42594 (May 15, 2024), with, Controller Alert, at 2.\6\
       The adoption of the recommendations in the Controller 
     Alert, in turn, results in the imposition of additional 
     requirements on recipients of federal funding under the 
     specified legislation. The Controller Alert has a substantial 
     effect on the rights or interests of non-agency parties by 
     providing new criteria for the receipt of federal funding. 
     See B-334146, June 5, 2023; B-333732, July 28, 2022. Where 
     agencies adopt the Controller Alert's recommendations, such 
     recommendations have a substantial effect on non-agency 
     parties. See B-275178, July 3, 1997 (finding that the Forest 
     Service's Tongass National Forest Land and Resource 
     Management Plan had a substantial impact on non-agency 
     parties even though there were two layers of implementation 
     involved before the Plan affected any given area of the 
     forest).
       Because this exception requires us to consider both the 
     direct and indirect effects of an agency action, and because 
     the imposition of new conditions on the receipt of federal 
     funding has a substantial effect on the rights or obligations 
     of non-agency parties, the Controller Alert fails to satisfy 
     the exception.
       Based on the foregoing, we conclude that the Controller 
     Alert is a rule of agency organization, procedure, or 
     practice, but that it does not satisfy the exception because 
     it has a substantial effect on the rights or obligation of 
     non-agency parties. Therefore, no CRA exception applies.


                               conclusion

       The Controller Alert meets the APA definition of a rule and 
     no exception applies. Therefore, the Controller Alert is 
     subject to CRA's requirement that it be submitted to Congress 
     before it can take effect.

                                            Edda Emmanuelli Perez,
                                                  General Counsel.

                                endnotes

       1. The Controller Alert is available at https://
www.cfo.gov/assets/files/CA-23-06__ 
     Enhancing%20Transparency %20Through %20Use%20of 
     %20the%20Investing %20in%20 America%20Emblem 
     %20on%20Signs.pdf (last visited Aug. 26, 2024).
       2. The original Controller Alert, OMB, Enhancing 
     Transparency Through Use of the Building a Better America 
     Emblem on Construction Signs (Aug. 22, 2022)(2022 Controller 
     Alert), is available at https://www.cfo.gov/assets/files/
Controller%20Alert%20 EnhancingTransparency Bipartisan 
     InfrastructureLaw.pdf (last visited Aug. 26, 2024).
       3. The legislative history of CRA is also instructive when 
     evaluating what actions are intended to be covered by the 
     Act. It states: ``The committees intend this chapter to be 
     interpreted broadly with regard to the type and scope of 
     rules that are subject to conressional review.'' 142 Cong. 
     Rec. E571, E578 (daily ed. Apr. 19, 1996) (statement of Rep. 
     Hyde). The legislative history also notes that the committees 
     were concerned, in particular, with ``general statements of 
     policy, `guidelines,' and agency policy and procedure 
     manuals'' being given legal effect without review. Id.
       4. The Controller Alert is directed to agency CFOs. 
     Controller Alert, at 1. Twenty-four federal agencies across 
     the government currently have CFOs designated under the Chief 
     Financial Officers Act. 31 U.S.C. Sec. 901(b).
       5. Although here we cite the impact of the Controller Alert 
     on non-agency behavior, such evidence is not necessary to 
     determine that an agency action has a substantial effect on 
     non-agency parties for purposes of the third exception. For 
     example, we have previously held that ``[w]hen an agency rule 
     actively attempts to induce the regulated community to take 
     preferred steps, the rule has a substantial impact on the 
     regulated community and does not qualify for the third CRA 
     exception.'' B-334032, Dec. 15, 2022. Moreover, in many 
     instances, the type of direct evidence that we have here will 
     not be readily available at the time of our review.
       6. Other agencies have also adopted provisions of the 
     Controller Alert. For example, the Environmental Protection 
     Agency (EPA) requires that ``[f]or construction projects 
     funded in whole or in part by the Bipartisan Infrastructure 
     Law or Inflation Reduction Act through [EPA], recipients must 
     place a sign at construction sites that display the Investing 
     in America emblem and identify the project as a `project 
     funded by President Biden's Bipartisan Infrastructure Law' or 
     `project funded by President Biden's Inflation Reduction 
     Act.' '' Compare EPA, Investing in America Signage, available 
     at https://www.epa.gov/invest/investing-america-
 signage (last visited Aug. 26, 2024), with, Controller Alert, 
     at 2.


     

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