Contribution of Telecommunications Services to the D.C. Courts, B-286182, January 11, 2001

TITLE:  Contribution of Telecommunications Services to the D.C. Courts, B-286182, January 11, 2001
BNUMBER:  B-286182
DATE:  January 11, 2001
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Contribution of Telecommunications Services to the D.C. Courts, B-286182,
January 11, 2001

Decision

Matter of: Contribution of Telecommunications Services to the D.C. Courts

File: B-286182

Date: January 11, 2001

DIGEST

Verizon Communications has agreed to provide the District of Columbia Court
System telecommunications services and equipment valued at $1.53 million
pursuant to a rate case settlement agreement between the Office of the
People's Counsel of the District of Columbia and Verizon. The Public Service
Commission of the District of Columbia has approved the settlement
agreement. We conclude that the District of Columbia Courts may accept this
contribution of services and equipment.

DECISION

The District of Columbia Courts requested an advance decision on whether
they can lawfully accept and use a contribution of telecommunications
services and equipment made available to them as part of a settlement
agreement in a rate case between the Office of the People's Counsel of the
District of Columbia (OPC) and Bell Atlantic, Washington, D.C., Inc. (BA-DC)
(now Verizon Communications). [1] Pursuant to the settlement agreement,
Verizon has agreed to provide services and equipment equivalent to $1.53
million to the District of Columbia Courts for the purpose of developing
advanced telecommunications services that promote and facilitate access to
the legal system within the District of Columbia Court System. We conclude
that the District of Columbia Courts may accept and use the services and
equipment directed to them by Verizon pursuant to its settlement agreement
with OPC.

BACKGROUND

On November 12, 1996, the Public Service Commission of the District of
Columbia (Commission) approved a settlement agreement between OPC [2] and
Verizon regarding Verizon's application for a price cap plan to replace
rate-of- return based incentive regulations. A price cap plan is an
alternative form of regulation that uses market-based incentives together
with price caps. It reflects a move away from rate-of-return based
regulations traditionally used to regulate monopolies. The Commission is a
quasi-judicial body that has the authority to approve rates and settlement
agreements that are reasonable, just, and nondiscriminatory. D.C. Code sect.
43-501. The Commission may approve a plan for alternative regulation, such
as the plan that Verizon had proposed, if the Commission determines that the
plan meets criteria specified in section 3(j) of the Telecommunications
Competition Act of 1996. D.C. Code sect. 43-1452(j). Before approving such a
plan, the Commission must consider, for example, whether the plan is in the
public interest, will maintain the quality and availability of
telecommunications services, and accounts for changes in technology and the
structure of the telecommunications industry that are occurring.

The Commission found generally that the price cap plan represents a less
burdensome form of regulation and that "market-based incentives, together
with the limits on rate increases and Commission oversight, will ensure that
the rates charged by [Verizon] will be just, reasonable and
nondiscriminatory. . . ." [3] The Commission also determined that price cap
regulation creates stronger, market-based incentives for Verizon to deploy
technology quickly and efficiently, and that "Ratepayers will thus benefit
from access to new technology sooner and at a lower cost than under
rate-of-return regulation." [4] The Commission further found that "the plan
will encourage [Verizon] to invest in new facilities, offer innovative
services and increase usage of the telephone networks." [5] "The plan will
thus promote universal service in the District and help ensure that all
District residents have access to the information superhighway as we move
into the 21st Century." [6]

As part of the 1996 settlement agreement, OPC and Verizon agreed to
establish an "infrastructure fund," consisting primarily of contributions
from Verizon, to finance advanced telecommunications projects in District of
Columbia schools, libraries, and community centers. [7] This element of the
agreement was important in the Commission's finding that the proposed price
cap plan satisfied the section 3(j) criteria. The Commission found,
particularly, that the expected improved access of District of Columbia
ratepayers to advanced telecommunications services financed by Verizon's
contribution to the infrastructure fund was pivotal in satisfying at least
two section 3(j) criteria-that the proposed regulatory plan account for
changes in technology (section 3(j)(4)), and that the plan maintain the
quality and availability of telecommunications services (section 3(j)(6)).
[8]

On November 17, 1999, the Commission approved an extension of the price cap
plan and a new settlement agreement between OPC and Verizon. [9] The parties
agreed as part of the new settlement agreement that Verizon would make a
contribution of $1.53 million to a new "infrastructure trust fund" to
provide and otherwise facilitate advanced telecommunications services in
District of Columbia institutions. [10] On February 28, 2000, the Commission
approved articles of incorporation and by-laws for a non-profit corporation
[11] to administer the infrastructure trust fund. The articles included
among the purposes of the corporation to finance advanced telecommunications
projects for the District of Columbia Court of Appeals and Superior Court,
help to ensure affordable access for District of Columbia residents to
advanced telecommunications and computer technologies that promote and
facilitate access to the District of Columbia legal system, and establish
network connectivity and Internet access between the Courts and their
support agencies. [12]

To accomplish these purposes, the Courts and Verizon developed a proposed
scope of work calling for the following upgrades:

   + Replace all existing inter-building wiring and related local area
     network electronics,

   + Interconnect the Main judicial building with two adjacent buildings and
     two remote facilities; and

   + Install, configure, and provide training on the networking equipment.
     [13]

According to OPC and the Commission, Verizon has agreed to establish a
ledger entry system rather than paying monies over to an infrastructure
trust fund bank account. Verizon will periodically provide invoices for work
performed to the Board of Directors of the infrastructure trust fund for
review and approval. Once approved, Verizon will debit and credit the
appropriate Verizon accounts. [14]

DISCUSSION

The District of Columbia Courts have asked whether the Courts have authority
to accept and use telecommunications services and equipment made available
to them pursuant to a settlement agreement between Verizon and OPC.

Generally, to prevent a government agency from exceeding the amount that
Congress has appropriated to it, a government agency may not augment its
appropriation from outside sources without specific statutory authority. In
this regard, the "miscellaneous receipts" statute, 31 U.S.C. sect. 3302(b),
requires an official or agent of the government receiving money for the
government from any source, absent statutory authority to the contrary, to
deposit the money into the general fund of the Treasury. Similar statutes
apply specifically to the District of Columbia. Section 446 of the District
of Columbia Home Rule Act, as amended, provides that "no amount may be
obligated or expended by any officer or employee of the District of Columbia
government unless such amount has been approved by Act of Congress, and then
only according to such Act." Pub. L. No. 93-198, 87 Stat. 774 (1973), as
amended by Pub. L. No. 105-33, 111 Stat. 251 (1997). Similarly, section 450
of the District of Columbia Home Rule Act, as amended, provides that all
money received by the Courts must be deposited in the U.S. Treasury or the
Crime Victims Fund. Pub. L. No. 93-198, 87 Stat. 774 (1973) as amended by
Pub. L. No. 105-33, 111 Stat. 251 (1997). The objective of the
"miscellaneous receipts" statute and other related statutes is to ensure
that a government agency does not circuitously augment the amount Congress
has appropriated for an activity.

Whether an agency may accept goods and services often depends on whether the
agency has statutory authority to accept gifts. Because of the longstanding
rule against augmenting appropriations, a government agency may not accept
for its own use gifts of money or other property in the absence of specific
statutory authority. 16 Comp. Gen. 911 (1937). The Congress provided
statutory authority to the District of Columbia to accept and use gifts or
donations in annual appropriations acts for fiscal years 1992 through 2000.
The annual appropriations acts provided in relevant part that "An entity of
the District of Columbia government may accept and use a gift or donation
during fiscal year . . . if -- (1) the Mayor approves the acceptance and use
of the gift or donation . . . ; and (2) the entity uses the gift or donation
to carry out its authorized functions or duties . . . ." See, e.g., the
District of Columbia Appropriations Act, fiscal year 2000, Pub. L. No.
106-113, Sec. 125, 113 Stat. 1501, (1999), and the District of Columbia
Appropriations Act, fiscal year 1992, Pub. L. No. 102-111, Secs. 134 (a)(1)
and 202(a)(1), 105 Stat. 559 (1991). The District of Columbia Appropriations
Act for fiscal year 1994, Pub. L. No. 103-127, Secs. 131 (a)(1) and 202, 107
Stat. 1336, added language that allows the Council of the District of
Columbia to accept gifts and donations without first obtaining consent of
the Mayor.

Apparently because of the recent change in financing the operation of the
District of Columbia Courts, Congress felt the need to specifically extend
gift authority to the District of Columbia Courts. The District of Columbia
Appropriations Act for fiscal year 2001 now has provided specific authority
to the Courts to accept and use gifts and donations. Section 118 of the
District of Columbia Appropriations Act for fiscal year 2001, Pub. L. No.
106-522, 114 Stat. 2440 (2000) provides that:

(1) IN GENERAL. An entity of the District of Columbia government may accept
and use a gift or donation during fiscal year 2001 if--

(A) the Mayor approves the acceptance and use of the gift or donation

(except as provided in paragraph (2)); and

(B) the entity uses the gift or donation to carry out its authorized

functions or duties.

(2) EXCEPTION FOR COUNCIL AND COURTS. The Council of the District of
Columbia and the District of Columbia courts may accept and use gifts
without prior approval by the Mayor.

Accordingly, the Courts currently have specific statutory authority to
accept gifts.

Arguably, the goods and services that Verizon has agreed to provide are not
a gift but a conveyance. We have defined gifts as "gratuitous conveyances or
transfers of ownership in property without any consideration." 25 Comp. Gen.
637 (1946). In 63 Comp. Gen. 459 (1984) we held that the offer of free
exhibit space to a government agency did not constitute a gift because the
donor received valuable consideration in the form of increased admission
revenues for donating the space. Similarly, Verizon, it could be argued,
received consideration from the District of Columbia through the approval of
its rate plan and a release from further concessions or requirements; in
return, the District of Columbia will receive valuable goods and services.
Because Verizon is providing the services as part of an authorized
regulatory proceeding made by and for the District of Columbia government
and its citizenry, we would find that the Courts have the necessary
authority to accept the services if determined to be a conveyance.

Accordingly, we need not address here whether the transaction is more
appropriately viewed as a cash gift, a gift of services, or a non-gratuitous

conveyance. We find that, regardless, the Courts have the authority to
accept the telecommunications services.

/s/Anthony H. Gamboa

Acting General Counsel

Notes

1. For the remainder of the decision, we will refer to both Bell Atlantic-DC
(BA-DC) and Verizon Communications as Verizon.

2. The Office of the People's Counsel is an independent agency of the
District of Columbia government. By law, OPC is the advocate for consumers
of natural gas, electric and telephone services in the District of Columbia.
OPC's mission includes advocating the provision of quality utility service
and equitable treatment at rates that are just, reasonable, and
nondiscriminatory to District ratepayers. D.C. Code sect. 43-406.

3. Formal Case No. 814, Phase IV, In The Matter Of The Investigation Into
The Impact of the AT&T Divestiture And Decision of the Federal
Communications Commission on Bell Atlantic – Washington, D.C. Inc.'s
Jurisdictional Rates, Order No. 10877 (Nov. 12, 1996).

4. Id.

5. Id.

6. Id.

7. Id.

8. Id.

9. Formal Case No. 814, Phase IV, In The Matter Of The Investigation Into
The Impact of the AT&T Divestiture And Decision of the Federal
Communications Commission on Bell Atlantic – Washington, D.C. Inc.'s
Jurisdictional Rates, Order No. 11545 (Nov. 17, 1999).

10. Id.

11. The Board of Directors of the corporation is composed of a nominee from
each of the following organizations: the Mayor's Office, the Public Service
Commission, the Office of the People's Counsel, the Chief Judge of the
District of Columbia Court of Appeals, and Verizon Communications.

12. Formal Case No. 814, Phase IV, In The Matter Of The Investigation Into
The Impact of the AT&T Divestiture And Decision of the Federal
Communications Commission on Bell Atlantic – Washington, D.C. Inc.'s
Jurisdictional Rates, Order No. 11620 (Feb. 28, 2000).

13. "Infrastructure Upgrade Requirements Scope of Work Benefits for the
District of Columbia Superior Court," Oct. 26, 2000 (prepared by the
District of Columbia Courts and Verizon Communications).

14. For purposes of this decision, we need not analyze or decide whether we
should view this ledger entry system as equivalent to a cash contribution to
the infrastructure trust fund. Whether the contribution Verizon has agreed
to make is viewed as a contribution of cash or services is not relevant to
this decision because, in either case, as explained herein, the Courts may
accept the contribution.