TITLE:   Rescission of District of Columbia Courts Appropriations, B-284566.2, August 9, 2000
BNUMBER:  B-284566.2
DATE:  August 9, 2000
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Rescission of District of Columbia Courts Appropriations, B-284566.2, August
9, 2000

B-284566.2

August 9, 2000

Ms. Anne Wicks
Acting Executive Officer
District of Columbia Courts
500 Indiana Avenue
Washington, D.C. 20001

Subject: Rescission of District of Columbia Courts Appropriations

Dear Ms. Wicks:

This completes our response to a January 20, 2000 letter from the former
Executive Officer, District of Columbia Courts (D.C. Courts). The former
Executive Officer asked a number of questions concerning the proper
accounting for certain payments, which we addressed in B-284566, April 3,
2000. The former Executive Officer also asked about the applicability to the
D.C. Courts of the .38 percent rescission of discretionary budget authority
made by the Consolidated Appropriations Act for Fiscal Year 1999, Pub. L.
No. 106-113, Division B sect. 1005(a)(5), 113 Stat. 1501, 1535 (November 29,
1999).

Specifically, the rescission applies to "discretionary budget authority
provided . . . for fiscal year 2000 in this or any other Act for each
department, agency, instrumentality, or entity of the Federal Government."
The Office of Management and Budget (OMB) applied the rescission to two D.C.
Courts appropriation accounts. The former Executive Officer questioned
whether the rescission applies to D.C. Courts, stating that the federal
government and the District of Columbia are separate legal entities. For the
reasons explained below, we conclude that OMB's application of the
rescission to the D.C. Courts discretionary accounts is reasonable.

Background

During Congress's consideration of the fiscal year 2000 federal budget, OMB
warned that discretionary spending limits might be exceeded and a
sequestration of discretionary spending might be required. See OMB
Sequestration Update Report to the President and Congress for Fiscal Year
2000, April 25, 1999. Rather than relying on a possible sequestration order,
Senator Nickles offered the following amendment to S. 1650, the Labor,
Health and Human Services, Education Appropriations Act for FY 2000:

"(b) Sense of the Senate-It is the sense of the Senate that Congress should
ensure that the fiscal year 2000 appropriations measures do not result in an
on-budget deficit (excluding the surpluses generated by Social Security
trust funds) by adopting an across-the-board reduction of all discretionary
appropriations sufficient to eliminate such deficit if necessary." [1]

Senator Nickles indicated that approximately a 1- percent across-the-board
reduction to all discretionary appropriations would eliminate the overage.
[2] Unlike a reduction issued under the President's sequestration order,
which would only apply to the discretionary spending category causing a
breach, [3] the Senator proposed a reduction that would apply to all
discretionary appropriations. However, the Senate did not include the
proposal in S. 1650.

Thereafter, the Conference Committee Report on H.R. 3064 (the second
District of Columbia and Labor, HHS, Education Appropriation Act) included
an across-the-board .97 percent rescission of budget authority provided in
any discretionary account (or obligation limitation) in any fiscal year 2000
appropriation. [4] However, the President vetoed H.R. 3064 on November 3,
1999. The President's veto message to Congress cited the across-the-board
cut as one of the reasons for vetoing the bill. The President objected to
the "indiscriminate cuts" to areas such as national defense and security,
education, environmental programs and law enforcement. [5] The President's
message, however, makes no specific reference to the effect of such cuts on
the District's appropriations, but does commend the Congress for providing
"essential funding for the District Courts and Corrections" and other
federal funds he requested for the District.

Shortly thereafter, on November 17, 1999, the chairman of the House
Appropriations Committee, Mr. Young of Florida, introduced H.R. 3425, a bill
making miscellaneous appropriations for fiscal year 1999. Section 301(a) of
H. R. 3425 provided for a .38 percent rescission. Section 301(b) precluded
the reduction of any program, project or activity by more than 15 percent,
specifically included an exemption for military personnel accounts from the
.38 percent rescission, and provided that the reduction for Defense and
Energy accounts shall be applied proportionately to all defense activities.

In this same time frame, Congress took up H.R. 3194, the House's third
version of the District of Columbia appropriation act for fiscal year 2000.
In conference, the conferees added four additional regular appropriations
acts and a number of other legislative initiatives to H.R. 3194, and
retitled it the Consolidated Appropriations Act for fiscal year 2000. On
November 18, 1999, the House adopted the conference report on H.R. 3194 and
the Senate did the same the next day. On November 29, 1999, President
Clinton signed the measure into law. Pub. L. No. 106-113, 113 Stat.
1501-1537 (1999).

Section 1005 (a)(5) of the Consolidated Appropriations Act for fiscal year
2000, Pub. L. No. 106-113, Division B, sect. 1005(a)(5), 113 Stat. 1501, 1535
(November 29, 1999), incorporated by reference and enacted into law H.R.
3425, as introduced on November 17, 1999. Section 301 (a) of H.R. 3425, as
introduced on November 17, 1999, provides that:

"There is hereby rescinded an amount equal to 0.38 percent of the
discretionary budget authority provided (or obligation limit imposed) for
fiscal year 2000 in this or any other Act for each department, agency,
instrumentality, or entity of the Federal Government." Pub. L. No. 106-113,
Appendix E, 113 Stat. 1501A-303.

Subsection 301(c) requires the Director of OMB to include a report
specifying the reductions made to each account pursuant to section 301 in
the President's fiscal year 2001 budget. The OMB report on the rescissions
lists only the "Federal Payment to the District of Columbia Courts" account
(349-10-20-1712) among the accounts subjected to the .38 percent reduction.
[6] In addition, the OMB apportionment schedule dated December 30, 1999, for
"Federal Funds," "Defender Services in the District of Columbia Courts"
account (349-10-20-1736), identified amounts rescinded for this account
pursuant to Public Law 106-113.

Discussion

As we read section 301, two conditions must be met for it to apply. First,
the funds rescinded must be discretionary budget authority provided for
fiscal year 2000. Second, the discretionary budget authority provided must
be for a "department, agency, instrumentality, or entity of the Federal
Government."

The D.C. Courts do not dispute that they received, and OMB rescinded,
discretionary budget authority provided for fiscal year 2000. In its request
to us, the D.C. Courts point out that the District of Columbia government
has been treated as possessing a separate legal identity from the federal
government for certain purposes, citing 60 Comp. Gen. 710 (1981). [7]
Accordingly, the question is whether, for purposes of section 301(a), OMB
may reasonably consider the D.C. Courts a "department, agency,
instrumentality, or entity of the Federal Government."

There are any numbers of examples of where Congress has treated the District
government as part of the federal government for some purposes but not for
others. [8] Although Congress often explicitly addresses a statute's
application to the District, the failure of Congress to do so does not mean
that the District is not covered where the statute's language and purpose
warrants coverage. Here we think that OMB's application of section 301(a) to
the D.C. Court's fiscal year 2000 discretionary budget authority finds
support in both the language and purpose of section 301(a).

As noted in the background, Congress adopted the across-the-board cut in
response to OMB's warning of a potential breach of the discretionary
spending caps. Senator Nickles's proposal was designed to remedy this
situation by a reduction applicable to all discretionary spending. Congress'
subsequent legislative actions were broadly written to achieve this purpose.
Until the incorporation by reference of section 301 of H.R. 3425, the
rescission language under consideration by the Congress was intended to
reduce across-the-board all discretionary appropriations, which would have
included those received by D.C. Courts.

Moreover, a sequester in the general category for discretionary spending
would reach federal funds appropriated for the D.C. Courts. Given the
legislative purpose behind section 301(a), we see no reason to infer that
Congress intended it to apply more narrowly than would a sequester of
discretionary spending. [9] We found nothing in the legislative history of
section 301(a) suggesting that the phrase "department, agency,
instrumentality or entity of the Federal Government" reflects a change from
reducing spending from all discretionary appropriations to something less.
Further, section 301(b), which imposes express limitations on the rescission
(that responded in part to the President's veto message), supports the
inference that Congress intended to make the reductions less extensive than
had previously been considered only in the areas expressly addressed in
section 301(b). If the drafters also intended to exclude the District of
Columbia from the proposed rescission, they presumably would have provided
equally clear guidance to that effect either in the law or its legislative
history. [10]

While the phrase "of the Federal Government" in section 301(a) raises a
legitimate issue concerning its application to the D.C. Courts, we think
there is a reasonable basis to view the D.C. Courts as either an
"instrumentality" or "entity" of the federal government. Arguably, the terms
"federal department" and "federal agency" have taken on a settled meaning.
In everyday conversation these terms are typically used to describe
governmental organizations headed by federal officers, staffed with federal
employees, funded with federal dollars, and subject to the panoply of
federal laws and regulations governing the day-to-day activities of its
departments and agencies. Admittedly, this does not precisely capture the
District of Columbia Courts.

Clearly, however, Congress intended the terms "entity" and "instrumentality"
to have a broader reach than the terms "department" or "agency." This is
obvious from the way Congress used the terms in the statute. Moreover,
viewing the phrase "for each department, agency, instrumentality, or entity
of the Federal Government" as a whole, we think Congress used it expansively
to capture as much of the federal establishment funded with discretionary
appropriations as possible.

If the phrase is so understood, there is a credible basis in law to consider
the D.C. Courts a federal "instrumentality" or "entity" for purposes of
section 301(a). Even though the District of Columbia Home Rule Act increased
local participation in a number of ways, the federal government retains a
significant role over the appointment of judges to the local courts and the
spending of locally generated revenues. Specifically, the President
appoints, with confirmation by the Senate, the judges to the Superior Court
of the District of Columbia and the District of Columbia Court of Appeals.
D.C. Code Ann. sect. 11-1501 (1981, 1995 Replacement Volume). Further, no
officer or employee of the District government may obligate or spend an
amount unless the amount is authorized by enactment of a federal law. D.C.
Code Ann. sect.sect. 47-304. 47-313(a) (1981, 1997 Replacement Volume, 2000 Supp.).
The federal government authorizes most of the District of Columbia
government spending (including D.C. Courts) through the enactment of a
regular annual appropriation act considered (along with the 12 other regular
annual appropriations acts) as part of the annual federal budget process.
Finally, unlike the other branches of the District government, beginning
with fiscal year 1998, federal revenues, not District revenues, have funded
the D.C. Courts. Thus, when viewed from an appointment, funding, and
spending authorization standpoint, there is support for the proposition that
the D.C. Courts may be considered a federal instrumentality or entity.

Accordingly, for the reasons discussed above, the decision by OMB, the
implementing agency, to apply the rescission provision to the D.C. Courts
was a reasonable application of section 301(a).

Sincerely yours,

/s/Robert P. Murphy
General Counsel

Notes

1. Amendment No. 1889 to Amendment No. 1851. 145 Cong. Rec. S11774-75 (daily
ed. October 1, 1999)(italics added).

2. 145 Cong. Rec. S11775 (daily ed. October 1, 1999).

3. Congress established the sequestration process in 1985 to enforce
compliance with spending targets set to eliminate the budget deficit over a
period of time. Pub. L. No. 99-177, title II, 99 Stat. 1037, 1038 (1985).
Currently, sequestration is used to enforce statutory limits set for four
categories of discretionary spending (discretionary, violent crime
reduction, highway, and mass transit). 2 U.S.C. 900(c)(4), 901(c)(4) (Supp.
IV 1998).

4. H.R. Conf. Rep. No., 106-419, 93-94, 254 (1999).

5. H. Doc. No. 106-154, at 1-6, (1999).

6. Analytical Perspectives, Budget of the United States Government, Fiscal
Year 2001, "Report on the Government-Wide Rescissions in the Consolidated
Appropriations Act, 2000 (P.L. 106-113)," pp. 381, 394.

7. As discussed in 60 Comp. Gen. 710 (1981), Congress established the
District of Columbia government as a municipal corporation authorized to
exercise limited autonomy over purely local matters. Among its powers is the
authority to tax, collect debts, and settle claims. See, e.g., D.C. Code
Ann. sect.sect. 1-105, 1-109, 1-201 (1981, 1999 Replacement Vol.). Even though there
was no explicit statutory guidance, we determined that the D.C. government
had the necessary separate legal existence from the federal government for
Government Printing Office to charge interest on overdue District accounts.
See also, 65 Comp. Gen. 594 (1986)(administrative procedures to enforce
civil rights protections for federal employees found in section 717 of the
Civil Rights Act of 1964 do not apply to D.C. Courts).

8. Congress has expressly included the District of Columbia as an "agency"
for purposes of our audit authority, 31 U.S.C. sect.sect. 701(1), 717 (1994). For
purposes of chapter 11, title 31, United States Code, relating to the annual
budget, the District of Columbia is included within the definition of
"agency". 31 U.S.C. 1101(1) (1994). In contrast, Congress has expressly
excluded the District of Columbia from the definition of "agency" for
purposes of the Administrative Procedures Act, 5 U.S.C. sect. 551(1)(D).

9. Only appropriations of locally raised funds of the District are exempt
from sequester. 2 U.S.C. sect. 905(g)(1)(A). In addition to the exemption in 2
U.S.C. sect. 905(g)(1)(A), Congress routinely includes language in the annual
District appropriations act specifying that any sequesters shall apply to
each account appropriating federal funds for the District rather than the
aggregate of the accounts. See, e.g., Pub. L. No. 106-113, Division A, title
I, sect. 123, 113 Stat. 1501, 1515 (1999). Previous sequesters have included the
federal payment and other federal funds appropriated to the District of
Columbia.

10. During floor debates on the Conference Report on H.R. 3194, members of
the House referred to the cuts as across-the-board. No one stated that the
language excluded the District or that it was anyone's understanding that
the language excluded the District. See statements of the Honorable David
Obey, Majority Leader Richard Armey, Majority Whip Tom Delay, and Speaker
Dennis Hastert, 145 Cong. Rec. H12742, H12766, H12767, and H12800,
respectively (daily ed. November 18, 1999).