Special Counsel and Permanent Indefinite Appropriation, B-302582, September 30, 2004

TITLE: Special Counsel and Permanent Indefinite Appropriation, B-302582, September 30, 2004
BNUMBER: B-302582
DATE: September 30, 2004
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B-302582

September 30, 2004

The Honorable Ted Stevens

Chairman

Committee on Appropriations

The Honorable Robert C. Byrd

Ranking Minority Member

Committee on Appropriations

United States Senate

The Honorable C.W. Bill Young

Chairman

Committee on Appropriations

The Honorable David Obey

Ranking Minority Member

Committee on Appropriations

House of Representatives

Subject: Special Counsel and Permanent Indefinite Appropriation

The Government Accountability Office (GAO) is required to audit twice a
year the expenditures by independent counsels and certain special counsels
paid from the permanent indefinite appropriation.[1] In the course of
auditing independent counsel expenditures for the period ending March 31,
2004, we learned that the Department of Justice was using the permanent
indefinite appropriation to pay the expenses of the investigation by
Special Counsel Patrick J. Fitzgerald. Mr. Fitzgerald continued to
perform his duties as a U.S. Attorney after his appointment as Special
Counsel. This is the first time that the expenses of an investigation by
a United States Attorney appointed to serve as Special Counsel who
continues to serve as a United States Attorney have been paid from the
permanent indefinite appropriation. In addition, Department of Justice
regulations at 28 C.F.R. Part 600 (2003) provide that Special Counsels
shall be selected from outside the government.

Given our responsibility to audit the fund, the use of the account to
finance Special Counsel Fitzgerald's activities, and the provisions of 28
C.F.R. Part 600 (2003), we initiated inquiries with the Department of
Justice to assure ourselves of the availability of this account to defray
his expenses.[2] In considering this matter, we requested and received
the written views of the Department of Justice. We also met with
officials of the Department to discuss their views and obtained additional
comments and information. Finally, we reviewed the laws and their
legislative histories, regulations, court decisions, and past practices of
the Department of Justice, as they relate to this matter.

For the reasons discussed below, we do not object to the use of the
permanent indefinite appropriation to fund Special Counsel Fitzgerald's
expenses. Unlike the expired independent counsel law, the permanent
indefinite appropriation does not require that a Special Counsel be
appointed from outside the government. The Department, in appointing
Special Counsel Fitzgerald under "other law", has afforded him
independence by delegating all of the Attorney General's authority with
respect to the investigation and instructing him to exercise that
authority independent of the control of any officer of the Department.
Finally, the Part 600 regulations are not substantive and may be waived by
the Department.

Background

On December 30, 2003, Deputy Attorney General James B. Comey, acting in
his capacity as Acting Attorney General, appointed Patrick J. Fitzgerald,
United States Attorney for the Northern District of Illinois, as Special
Counsel to investigate the alleged unauthorized disclosure of a CIA
employee's identity. Special Counsel Fitzgerald's delegation reads as
follows:

"By the authority vested in the Attorney General by law, including 28
U.S.C. SSA 509, 510, and 515, and in my capacity as Acting Attorney
General pursuant to 28 U.S.C. S 508, I hereby delegate to you all the
authority of the Attorney General with respect to the Department's
investigation into the alleged unauthorized disclosure of a CIA employee's
identity, and I direct you to exercise that authority as Special Counsel
independent of the supervision or control of any officer of the
Department."[3]

In February 2004, Acting Attorney General Comey clarified Special Counsel
Fitzgerald's delegation of authority to state that the authority
previously delegated to him is plenary. It also states, "Further, my
conferral on you of the title of *Special Counsel' in this matter should
not be misunderstood to suggest that your position and authorities are
defined and limited by 28 CFR Part 600."[4]

Following his appointment as Special Counsel, Mr. Fitzgerald continued to
perform his duties as United States Attorney. As a result of our
activities in connection with the audit of the Independent Counsel
expenditures for the six-month period ending March 31, 2004, we learned
that the Department of Justice was charging the expenses of Special
Counsel Fitzgerald to the permanent indefinite appropriation established

" . . . to pay all necessary expenses of investigations and prosecutions
by independent counsels appointed pursuant to the provisions of 28 U.S.C.
591 et seq. or other law . . ."[5] In the following section we discuss
two issues: whether the permanent indefinite appropriation is available to
fund Special Counsel Fitzgerald's expenses and whether the Part 600
regulations, which among other things require the appointment of Special
Counsel from outside the government, can be waived.

Discussion

As you are aware, the authority to appoint independent counsels pursuant
to the provisions of 28 U.S.C. SS 591 et seq. expired on June 30, 1999.
However, the permanent indefinite appropriation remains available to pay
the expenses of an independent counsel (1) who was appointed by the
Special Division of the United States Court of Appeals for the District of
Columbia pursuant to the provisions of 28A U.S.C. SS 591 et seq. whose
investigation was underway when the law expired [6] or

(2) who was appointed under "other law."[7] Under the expired law, a
person appointed as an independent counsel could not hold "any office of
profit or trust under the United States, 28 U.S.C. S 593(b)(2) (2000)."
[8] The purpose of the qualification was to avoid the public perception
of an actual or apparent conflict of interest existing between the
investigator and those being investigated for alleged violations of
law.[9]

The permanent indefinite appropriation is available to pay all necessary
expenses of investigations of independent counsels appointed under other
law. However, the term "independent counsel" is not defined in the
permanent indefinite appropriation. About the time the independent
counsel law was being considered for reauthorization in 1987, legal
challenges were underway regarding the constitutionality of the procedure
followed to appoint independent counsels. Consequently, to avoid
interruption of ongoing investigations should the law be ruled
unconstitutional by a court, the Attorney General appointed the same
persons to serve as independent counsels under the statutory authority
that was relied upon to appoint Special Counsel Fitzgerald.[10] Thus, the
independent counsels appointed under "other law" around the time that the
Congress was considering the Department of Justice appropriation act for
fiscal year 1988 (which enacted the permanent indefinite appropriation
into law) were the independent counsels that also had been appointed in
conformity with the requirements of the independent counsel law. [11]

In a meeting with Department of Justice officials,[12] the Department
explained its view that use of the permanent indefinite appropriation to
pay expenses of a U.S. Attorney appointed to serve as Special Counsel who
continues to perform his duty as a U.S. Attorney is appropriate. The
alleged violation that Special Counsel Fitzgerald is investigating
involves the rank and level of government official that clearly would have
been within the scope of the expired independent counsel law and the
investigation of which could have been funded by the permanent indefinite
appropriation. Additionally, the Department views the use of the
permanent indefinite appropriation as important to facilitate Special
Counsel Fitzgerald's investigation by freeing him from possible budget
constraints that potentially might serve to limit his activities.

Since the permanent indefinite appropriation is available for independent
counsels, we looked for indicia of independence of Special Counsel
Fitzgerald. The parameters of his authority and independence are defined
in the appointment letters which delegate to Special Counsel Fitzgerald
all (plenary) the authority of the Attorney General with respect to the
Department's investigation into the alleged unauthorized disclosure of a
CIA employee's identity with the direction that he exercise such authority
independent of the supervision or control of any officer of the
Department.[13] In addition, Department officials informed us that the
express exclusion of Special Counsel Fitzgerald from the application of 28
C.F.R. Part 600, which contains provisions that might conflict with the
notion that the Special Counsel in this investigation possesses all the
power of the Attorney General, contributes to the Special Counsel's
independence.[14] Thus, Special Counsel Fitzgerald need not follow the
Department's practices and procedures if they would subject him to the
approval of an officer or employee of the Department. For example, 28
C.F.R. S 600.7 requires that a Special Counsel consult with the Attorney
General before taking particular actions. The consulting requirement
would seem to be inconsistent with the notion that Special Counsel
Fitzgerald possesses the plenary authority of the Attorney General. The
Department also stated it would continue to provide the financial
information for Special Counsel Fitzgerald as it has done with respect to
other independent counsels appointed under "other law" whose expenses were
paid from the permanent indefinite appropriation.[15]

Acting Attorney General Comey appointed Special Counsel Fitzgerald under
28 U.S.C. SS 509, 510 and 515.[16] The Department has relied upon such
authority in the past to appoint regulatory independent counsel from
outside the government.. In 1994, the Department first determined that
it was authorized to finance the activity of a regulatory independent
counsel who was appointed from outside the government pursuant to such
authority from the permanent indefinite appropriation. We agree with the
Department that the same statutory authorities that authorize the Attorney
General (or Acting Attorney General) to delegate authority to a U.S.
Attorney to investigate and prosecute high ranking government officials
are "other law" for the purposes of authorizing the Department to finance
the investigation and prosecution from the permanent indefinite
appropriation. It should be noted that we have not objected to the use of
the permanent indefinite appropriation to fund the expenses of regulatory
independent counsels appointed from outside the government pursuant to
such authority. [17]

The remaining issue is whether Part 600 can be waived by the Attorney
General or acting Attorney General. We examined Part 600 and found it was
issued in 1999 to replace the procedures of the expired Independent
Counsel Reauthorization Act of 1994. In our view, Part 600 is not a
substantive (legal) limitation on the authority of the Acting Attorney
General to delegate departmental functions to Special Counsel Fitzgerald.
First, 28 C.F.R. S 600.10 states that the regulations are "not intended
to, do not, and may not be relied upon to create any rights, substantive
or procedural, enforceable at law or equity, by any person or entity, in
any matter, civil, criminal, or administrative." Further, in the
supplemental information accompanying the issuance of Part 600, the
Department explained that the effective date of the rule did not have to
be delayed 30 days after publication because it was not a substantive
rule, citing 5 U.S.C. SS 553(d), 552(a)(1)(D). 64 Fed. Reg. 37038, at
37041 (July 9, 1999).

Finally, the only statute cited as authority for 28 C.F.R. Part 600 that
expressly authorizes the Department to issue regulations is 5 U.S.C. S 301
(2000). It provides that the head of executive agencies may "prescribe
regulations for the government of his department, the conduct of its
employees, the distribution and performance of its business, and the
custody, use and preservation of its records, papers and property*" The
power conferred by 5 U.S.C. S 301 is administrative and not

legislative. Chrysler Corp. v. Brown, 441 U.S. 281, 309 (1979); United
States v. George, 228 U.S. 14, 21-22 (1914). It follows that such
regulations governing internal procedures issued under this statute do not
have the force and effect of law. See Einhorn v. DeWitt, 618 F. 2d 347
(5th Cir. 1980) (IRS procedural rules issued under 5 U.S.C. S 301
governing the internal affairs of the IRS do not have force and effect of
law). Thus, 28 C.F.R Part 600 does not act as a substantive limitation on
the Attorney General's (or Acting Attorney General's) authority to
delegate authority to a U.S. Attorney to serve as a Special Counsel to
investigate high ranking government officials and it may be waived. See
60 Comp. Gen. 208, 210 (1981) (an agency could waive its internal
guidelines prescribing the specific evidence required to demonstrate a
grantee's financial responsibility when the agency was otherwise satisfied
that the government's interests were adequately protected). The
Department was not limited by 28 C.F.R. Part 600 when it exercised its
authority under 28 U.S.C. SS 508, 509, 510 and 515 and appointed Special
Counsel Fitzgerald from within the Department to investigate the alleged
unauthorized leak of a CIA employee' identity.

We also note that the Part 600 regulations contemplate an outside Special
Counsel when "it would be in the public interest to appoint an outside
Special Counsel to assume responsibility" for an investigation and that an
investigation by the Department would present a conflict of interest or
other extraordinary circumstance. 28 C.F.R. S600.1(b). We defer to the
Department's judgment in this regard.

Conclusion

Upon review and consideration, we do not object to the Department's
determination that the permanent indefinite appropriation is available to
pay the expenses of Special Counsel Fitzgerald's investigation.
Admittedly one might infer from events occurring around the time that the
Congress was considering establishing the permanent indefinite
appropriation that it was within the Congress' contemplation that the
appropriation would be used to pay the expenses of an independent counsel
possessing the degree of independence similar to that possessed by an
independent counsel appointed under 28 U.S.C. SS 591 et seq. However,
such an inference is insufficient to support our reading into the law a
limitation on the use of the permanent indefinite appropriation to pay for
investigations solely by Special Counsels appointed from outside the
government. The independence conferred by the delegation of authority to
Special Counsel Fitzgerald from the Department of Justice is consistent
with a fair reading of the independence required of an "independent
counsel" appointed under "other law." Finally, Part 600 regulations do
not have the force and effect of law and may be waived by the Department.
Thus we do not view the payment of the expenses associated with Special
Counsel Fitzgerald's investigation from the permanent indefinite
appropriation to be improper or unauthorized simply because he was not
appointed from outside the government and continues to serve as a United
States Attorney.

Should you have any questions regarding this matter, you may contact Susan
A. Poling, Associate General Counsel, on 202-512-2667 or Richard T.
Cambosos, Senior Attorney, on 202-512-8263.

/SIGNED/

Anthony H. Gamboa

General Counsel

cc: Chairman and Ranking Minority Member

Committee on Governmental Affairs

United States Senate