Proposed Rescission by Department of Commerce of Unobligated Emergency Steel Guarantee Loan Program Appropriation, B-302335, January 15, 2004

TITLE: Proposed Rescission by Department of Commerce of Unobligated Emergency Steel Guarantee Loan Program Appropriation, B-302335, January 15, 2004
BNUMBER: B-302335
DATE: January 15, 2004
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Proposed Rescission by Department of Commerce of Unobligated Emergency Steel
Guarantee Loan Program Appropriation, B-302335, January 15, 2004

B-302335

January 15, 2004

The Honorable Robert C. Byrd>
Ranking Minority Member
Committee on Appropriations
United States Senate

Subject: Proposed Rescission by Department of Commerce of Unobligated
Emergency Steel Guarantee Loan Program Appropriation

Dear Senator Byrd:

This responds to your request of December 22, 2003, for our opinion on the
Department of Commerce*s (Department) plan to rescind $17.711 million of
the unobligated balance of amounts appropriated for the Emergency Steel
Guarantee Loan Program (Program).[1] The Department has indicated that it
would draw on the unobligated balance of the Program*s appropriation to
help satisfy a $100 million rescission that would be required by H.R.
2673, the bill making omnibus appropriations for fiscal year 2004, if
enacted. You asked whether the unobligated balance of the Program*s
appropriation is available to the Department for that purpose. For the
reasons provided below, we conclude that the Program*s appropriation is
not available to the Department for purposes of the $100 million
rescission.

BACKGROUND

In the findings section of the Emergency Steel Loan Guarantee Act of 1999
(Steel Act), Congress noted the loss of jobs and company bankruptcies in
the steel industry as a consequence of increases in steel imports.
Emergency Steel Loan Guarantee Act of 1999, Pub. L. No. 106-51, S:101(b),
113 Stat. 252 (1999). Congress found that "a strong steel industry is
necessary to the adequate defense preparedness of the United States" and
that industry problems were causing a decline in the willingness of
private institutions to loan money to U.S. steel companies. Id. Congress
passed the Steel Act, which established the Emergency Steel Loan Guarantee
Program, in order "to provide loan guarantees to qualified steel
companies." Id. S: 101(d). [2]

To administer the program, the Steel Act created a three-member Loan
Guarantee Board comprised of the Secretary of Commerce, the Chairman of
the Securities and Exchange Commission, and the Chairman of the Board of
Governors of the Federal Reserve System. Pub. L. No. 106-51, S: 101(d),
(e). To fund the costs of the loan guarantees, the Steel Act appropriated
$140 million. Id. S: 101(f)(5) ("For the additional cost of the loans
guaranteed under this subsection, including the costs of modifying the
loans . . . , there is appropriated $140,000,000 to remain available until
expended."). Also, the Steel Act provided the Department of Commerce with
an administrative support role and appropriated $5 million to the
Department for that purpose. Id. S: 101(j) ("For necessary expenses to
administer the Program, $5,000,000 is appropriated to the Department of
Commerce, to remain available until expended . . . .").[3]

The Commerce Department*s fiscal year 2004 appropriation, currently before
the Senate, would include a rescission of $100 million.[4] Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies
Appropriations Act, 2004, H.R. 2673, 108th Cong., Div. B, S: 215 (2003)
(hereinafter Omnibus Bill) ("Of the unobligated balances available to the
Department of Commerce from prior year appropriations with the exception
of funds provided for coral reef activities, fisheries enforcement, the
Ocean Health Initiative, land acquisition, and lab construction,
$100,000,000 are rescinded."). Subject to the limitation that the
rescission come from "unobligated balances available to the Department of
Commerce from prior year appropriations," the law would give the Secretary
discretion to identify the sources of the rescission. Id. ("Provided,
That within 30 days after the date of enactment of this section the
Secretary of Commerce shall submit to the Committees on Appropriations of
the House of Representatives and the Senate a report specifying the amount
of each rescission made pursuant to this section.").[5]

DISCUSSION

At issue here is whether unobligated Program funds are "unobligated
balances available to the Department of Commerce" for rescission. The
language of the $140 million appropriation itself does not identify to
whom the appropriation was made, only the purpose of the appropriation.
The Steel Act states, "there is appropriated $140 million" for the costs
of the loan guarantees that the Board approves. The issue for us is one
of statutory construction: Is the Program*s $140 million appropriation
available to the Board or to the Department? In interpreting statutes,
the federal courts have developed a number of well-recognized conventions,
which are also known as canons of statutory construction. One important
canon is that words should be considered in the context of the entire
statute. See United States v. Cleveland Indians Baseball Co., 532 U.S.
200, 217 (2001); United Savings Ass*n of Texas v. Timbers of Inwood Forest
Assocs., 484 U.S. 365, 371 (1988). We apply that canon of statutory
construction in this case.

The provisions in a statute should not be viewed in isolation but in the
context of the entire statute. In 2001 in United States v. Cleveland
Indians Baseball Co., the Supreme Court stated that "it is, of course,
true that statutory construction *is a holistic endeavor* and that the
meaning of a provision is *clarified by the remainder of the statutory
scheme.*" 532 U.S. 200, 217. See also 2A Sutherland, Statutes and
Statutory Construction S: 46:05, at 154 (6th ed. 2000) ("A statute is
passed as a whole and not in parts or sections and is animated by one
general purpose and intent. Consequently, each part or section should be
construed in connection with every other part or section so as to produce
a harmonious whole."). In our case law, we apply this canon of
construction with equal vigor. See, e.g., Matter of Jacobs COGEMA, LLC,
B-290125.2, B-290125.3, at 8, Dec. 18, 2002 ("In ascertaining the plain
meaning of the statute, we necessarily look to the particular statutory
language at issue, as well as the language and design of the statute as a
whole."). See also
B-286661, Jan. 19, 2001.

When the 1999 Steel Act created the Program, it specified that the Program
was "to be administered by the Board." Pub. L. No. 106-51, S: 101(d).
The Steel Act gave the Board decision-making powers to "approve or deny
each application for a guarantee." Id. S: 101(e). At the same time, the
Steel Act provided an appropriation to finance the costs of these
guarantees; it said that "there is appropriated $140,000,000 to remain
available until expended." Id. S: 101(f)(5).

Congress finances federal programs and activities by providing "budget
authority." Budget authority is a general term referring to various forms
of authority provided by law to enter into financial obligations that will
result in immediate or future outlays of government funds. See S: 3(2)
of the Congressional Budget and Impoundment Control Act of 1974, 2 U.S.C.
S: 622(2) and note, as amended by the Omnibus Budget Reconciliation Act of
1990, Pub. L. No. 101-508, S:S: 13201(b) and 13211(a), 104 Stat. 1388,
1388-614, and 1388-620 (Nov. 5, 1990). An appropriation, such as the $140
million one enacted for the Program, is one form of budget authority.
Within the context of the 1999 Steel Act, only the Board has authority to
incur an obligation against the $140 million appropriation by committing
the federal government to a loan guarantee. It is the Board who can
approve applications for loan guarantees, and it is the Board*s approval
of an application that financially obligates the United States. For this
reason, we view the $140 million appropriation as available to the Board,
not to the Department. While the Secretary of Commerce, as a Board
member, has a vote in whether to approve an application for a loan
guarantee whose costs are charged to the $140 million appropriation, the
Secretary, by himself, cannot approve an application and cannot incur an
obligation against the appropriation.[6]

The Department asserts that the $140 million is a Commerce Department
appropriation because the Steel Act appropriated $5 million to the
Department to cover the costs of administrative support to the Program.
Specifically, the Steel Act appropriated $5 million to the Department "for
necessary expenses to administer the Program." Id. S: 101(j). The
Department notes that historically Commerce, Treasury, and OMB have always
treated the $140 million as a Commerce appropriation. The Department
performs all of the Board*s bookkeeping and provides other administrative
support. The Department carries the Board*s staff on the Department*s
payroll. Treasury, the Department says, has assigned the Program*s
appropriation a Commerce Department account symbol, and OMB reports the
Program*s activity as part of the Department*s budget.

We agree that the Department has an administrative role with regard to the
Program*s appropriation; however, the Department*s argument is not
persuasive when considered in the context of the Steel Act. The
Department fails to recognize that while the Steel Act appropriated funds
to the Department "for necessary expenses to administer the Program," the
word "administer," when viewed in the context of the entire Steel Act, has
a particular and very different meaning than its use earlier in the Steel
Act when the Steel Act specifies that the Program "is to be administered
by the Board." In this regard, the Steel Act captioned the $5 million
appropriation, "Salaries and Administrative Expenses." When contrasted
with the very clear decision-making authority provided the Board to
approve loan guarantee applications, it seems equally clear that the Steel
Act intended the Department to perform ministerial administrative tasks,
such as recording obligations as a bookkeeper, and provided a specific
appropriation to cover these expenses, whereas it intended the Board to
perform decision-making "administrative" tasks, such as incurring
obligations. The Department*s, Treasury*s, and OMB*s historical treatment
of the Program*s appropriation that the Department finds relevant is
consistent with the Department*s administrative support role.

Furthermore, the words Congress selected in sections 101(f) and 101(j),
especially when viewed in the context of the Steel Act, support the
conclusion that Congress made the $140 million appropriation available to
the Board and not to the Department of Commerce. In appropriating money
for administrative support, Congress expressly appropriated the money to
the Department: "$5,000,000 is appropriated to the Department of Commerce,
to remain available until expended." Id. at 101(j) (emphasis added). Had
the Congress intended the Program*s $140 million appropriation, enacted in
the same Steel Act, to be available to the Department as well, we would
have expected the Congress to use the same phrasing as it did in enacting
the $5 million appropriation. The fact that the Congress chose not to use
that phrasing for the $140 million appropriation, especially when the
Congress clearly said that the Program funded by that appropriation was to
be administered by the Board, belies the Department*s assertion.

The Department makes three other arguments. First, the Department points
out that in Division B, Title II of the omnibus bill, section 211 would
provide extra funding for administrative support. Omnibus Bill, Div. B,
S: 211. Section 211 would authorize the Secretary of Commerce to use $2
million of the unobligated balance of the $140 million appropriation to
supplement the $5 million previously appropriated for administrative
support. The Department argues that Congress would not have made that
money available to the Department had Congress not viewed the $140 million
as a Commerce Department appropriation. The Department offered no support
for its argument, and we found no support for its argument in our review.
As we explain in this letter, all indications are that the $140 million is
not available to the Department. In fact, regardless of whether the
appropriation is available to the Department, Congress still would need to
act to make any amounts available for administrative support. The $140
million appropriation, as enacted, is available only for the costs of the
loan guarantees and not for administrative support. There is another
appropriation, the $5 million appropriation, that was enacted specifically
for administrative support.

Second, the Department notes that last year, Congress enacted a rescission
in the fiscal year 2003 omnibus appropriations act of the unobligated
balance of the appropriation for the Emergency Oil and Gas Guaranteed Loan
Program. This program was created at the same time, in the same public
law, for similar purposes, and in a similar manner as the Steel Program.
When the Oil and Gas Guaranteed Loan Program expired last year, Congress
rescinded the remaining $920,000 unobligated balance in that program.
Departments of Commerce, Justice, and State, the Judiciary, and Related
Agencies Appropriations Act, 2003, Pub. L. No. 108-7, Div. B, 117
Stat. 11, 106 (2003) ("Of the unobligated balances available [in the
Emergency Oil and Gas Guaranteed Loan Program account] from prior year
appropriations, $920,000 are rescinded."). The Department interpreted the
2003 rescission language as a direction to Commerce to rescind the money.
The Department argues that the section 215 rescission in the Omnibus Bill
is like the oil and gas rescission. In our view, the fact that in both
instances it is the Department*s responsibility to take appropriate action
to accomplish the rescissions does not mean that the appropriations are
available to the Department. Rather, the Department*s responsibility is
based on its statutory role to provide administrative support, such as
bookkeeping. Also, we note that Congress explicitly rescinded the oil and
gas unobligated balance. That is not the case before us here.

Lastly, the Department finds support in the fact that section 215 in the
Omnibus Bill specifically exempts from the $100 million rescission "funds
provided for coral reef activities, fisheries enforcement, the Ocean
Health Initiative, land acquisition, and lab construction," but does not
exempt the Program*s appropriation. Omnibus Bill, Div. B, S: 215.
Commerce asserts that this implies that the Program*s noninclusion in this
list means that the Program*s funds are not exempt from, and thus subject
to, the rescission. We are not persuaded. The $140 million is not listed
in the bill because it is not a Commerce appropriation, as are funds
provided for coral reef activities, fisheries enforcement, the Ocean
Health Initiative, land acquisition, and lab construction.

CONCLUSION

Accordingly, we conclude that the unobligated balance of the $140 million
appropriation from the 1999 Steel Act is not "available to the Department
of Commerce" and thus would not be subject to the section 215 rescission.
Thus, the Secretary of Commerce may not legally rescind $17.711 million as
planned from the unobligated balance of appropriated funds in the
Emergency Steel Guarantee Loan Program to satisfy the rescission mandate
in the fiscal year 2004 omnibus appropriations bill.

If you have any questions, please contact Susan A. Poling, Associate
General Counsel, at 202-512-5644.

Sincerely yours,

Anthony H. Gamboa
General Counsel

------------------------

[1] Section 101(d) of the Emergency Steel Loan Guarantee Act of 1999,
which established the Program, refers to the "Emergency Steel Guarantee
Loan Program." Pub. L. No. 106-51, S:101(d), 113 Stat. 252 (1999).
However, in other places in the same act, such as the caption in Section
101, the Program is referred to as the "Emergency Steel Loan Guarantee
Program."
[2] The Board*s authority to guarantee loans expired on December 31,
2003. Emergency Steel Loan Guarantee Act of 1999, Pub. L. No. 106-51, S:
101(k), 113 Stat. 252, amended by Act of Nov. 5, 2001, Pub. L. No. 107-63,
S: 101(k), 115 Stat. 414. H.R. 2673 would extend the Board*s authority to
December 31, 2005. Omnibus Bill, Div. B, S: 211(a).
[3] The pending omnibus appropriations bill would make an additional $2
million from the Program*s $140 million appropriation available to the
Department of Commerce to pay the Program*s administrative support costs.
Omnibus Bill, Div. B, S: 211(b) ("In addition to funds made available
under section 101(j) of Emergency Steel Loan Guarantee Act of 1999 (15
U.S.C. S: 1841 note), up to $2,000,000 in funds made available under
section 101(f) of such Act may be used for salaries and administrative
expenses to administer the Emergency Steel Loan Guarantee Program.").
[4] Until January 31, 2004, the Department is funded by a continuing
resolution. Further Continuing Appropriations for the Fiscal Year 2004,
and for Other Purposes, Pub. L. No. 108-135, 117 Stat. 1391 (2003).
[5] We solicited the views of the Department of Commerce in a telephone
conversation with Department attorneys. We also engaged in conversations
with the General Counsel of the Loan Guarantee Board. However, because of
the short timeframe involved, we did not formally solicit the views of the
Department or of the Board.

[6] We informally understand that the Board*s practice has been to have
its General Counsel sign the commitment letters to the loan guarantee
applicants.