TITLE: B-307317, State Justice Institute--Newsletter Advertising Charges, September 13, 2006
BNUMBER: B-307317
DATE: September 13, 2006
*************************************************************************************
B-307317, State Justice Institute--Newsletter Advertising Charges, September 13, 2006

   Decision

   Matter of: State Justice Institute--Newsletter Advertising Charges

   File: B-307317

   Date:  September 13, 2006

   DIGEST

   The State Justice Institute (Institute) may retain a fee for the use of
   advertising space in its semiannual newsletter. Congress established the
   Institute as a private, nonprofit corporation. 42 U.S.C. sect. 10702(a).
   Although the Institute has many aspects of a federal agency, its
   authorizing statute states that "[e]xcept as otherwise specifically
   provided . . . the Institute shall not be considered a department, agency,
   or instrumentality of the Federal Government." 42 U.S.C. sect.
   10704(c)(1). Nothing in the Institute's authorizing legislation explicitly
   or implicitly requires application of the miscellaneous receipts statute,
   which states that all money received "for the government" must be
   deposited in the Treasury. 31 U.S.C. sect. 3302(b). Thus, the Institute is
   not subject to the miscellaneous receipts statute. Certain legal and
   policy considerations may inform the Institute's choices regarding
   advertising it carries in its newsletter.

   DECISION

   The Executive Director of the State Justice Institute (Institute) has
   requested an advance decision under 31 U.S.C. sect. 3529 regarding whether
   the Institute may retain a fee for the use of advertising space in its
   semiannual newsletter. Letter from Kevin Linskey, Executive Director,
   Institute, to David M. Walker, Comptroller General, Dec. 30, 2005. The
   Director's concern is rooted in the miscellaneous receipts statute, 31
   U.S.C. sect. 3302(b), which dictates that in the absence of authority to
   the contrary, an agency receiving funds on behalf of the government may
   not retain those funds but must deposit them in the general fund of the
   Treasury. We conclude that the Institute is not subject to the
   miscellaneous receipts statute and under its authorizing statute the
   Institute may retain a fee for advertising space in its newsletter.

   BACKGROUND

   Congress provided for the establishment of the Institute in 1984. State
   Justice Institute Act of 1984, Pub. L. No. 98-620, title II, 98 Stat.
   3335, 3336 (Nov. 8, 1984), codified at 42 U.S.C. sections 10701--10713.
   The Institute's purpose is to further "the development and adoption of
   improved judicial administration in State courts in the United States." 42
   U.S.C. sect. 10702(a). This statute establishes a private, nonprofit
   corporation. Id. It is incorporated in Virginia as a nonstock corporation
   under title 13.1, chapter 10 of the Code of Virginia Annotated. Articles
   of Incorporation of State Justice Institute, Sept. 24, 1986. The Board of
   Directors consists of 11 members appointed by the President and confirmed
   by the Senate. 42 U.S.C. sect. 10703(a)(1). The Institute carries out its
   mission primarily by providing funds to state court systems and affiliated
   organizations through grants, cooperative agreements, and contracts. 42
   U.S.C. sect. 10705(a).

   The Institute receives an annual appropriation from Congress. E.g.,
   Science, State, Justice, Commerce, and Related Agencies Appropriations
   Act, 2006, Pub. L. No. 109-108, title V, 119 Stat. 2290, 2333 (Nov. 22,
   2005) (appropriating a lump sum for Salaries and Expenses). The Institute
   is authorized to make purchases from the General Services Administration,
   and its employees are eligible to receive certain federal employment
   benefits. 42 U.S.C.  sect. 10704. Except for limited purposes specified in
   its authorizing statute, the Institute is not a government agency or
   instrumentality, and its employees are not to be considered employees of
   the United States. Id.

   ANALYSIS

   Whether the Institute may retain a fee for the use of advertising space in
   its newsletter depends upon whether it is subject to the miscellaneous
   receipts statute, 31 U.S.C. sect. 3302(b).[1] This statute provides that
   in the absence of contrary authority "an official or agent of the
   Government receiving money for the Government from any source shall
   deposit the money in the Treasury . . . without deduction for any charge
   or claim." Thus, without statutory authority to retain for its own use
   funds it receives, an agency must deposit such funds in the Treasury. See
   B-300826, Mar. 3, 2005. Failure to do so would result in augmentation of
   its appropriation. Id.

   To be subject to the miscellaneous receipts statute, the Institute must
   have "an official or agent of the Government receiving money for the
   Government." The Institute has some aspects of a federal agency. It
   receives an annual appropriation, its Board of Directors is appointed by
   the President and confirmed by the Senate, its employees are eligible to
   receive certain federal employment benefits, and it may purchase items
   from the General Services Administration. However, the Institute's
   authorizing statute makes it clear that except as otherwise explicitly
   provided, the Institute "shall not be considered a department, agency, or
   instrumentality of the federal government." 42 U.S.C. sect. 10704(c)(1).
   We find nothing explicitly or implicitly in the Institute's authorizing
   statute that would otherwise suggest or require application of the
   miscellaneous receipts statute to the Institute. Congress also made clear
   that, except for specific exceptions not applicable here, the officers and
   employees of the Institute "shall not be considered officers or employees
   of the United States." 42 U.S.C. sect. 10704(d)(1). The Institute is not a
   government agency nor does it act on behalf of the government. Although
   Congress imposed on the Institute certain requirements typically
   applicable to a federal agency, it did so selectively, against the general
   backdrop of a private corporate entity. 42 U.S.C. sect. 10702(a). The
   Institute is therefore not "receiving money for the Government."

   As a private corporation, the Institute is generally not subject to the
   same restrictions and controls on its expenditures as are government
   agencies and establishments even though it receives appropriations
   directly from the Congress. B-131935, July 16, 1975. For the most part, it
   may conduct its business in the same manner as any other private,
   nonprofit corporation. Id. This includes retaining for its own use fees
   collected from the sale of advertising space in its newsletter. The
   Institute must, of course, adhere to its authorizing legislation, any
   restrictions contained in its appropriation acts, or other applicable law.
   [2]

   While the Institute may retain a fee for the use of advertising space in
   its newsletter, its authorizing statute constrains the content of
   advertising the Institute chooses to carry. First, the Institute may not
   attempt to influence either the passage or the defeat of legislation
   pending in Congress or any state or local legislative body. 42 U.S.C.
   sect. 10707(a)(3). The Institute also may not identify itself with any
   political party or association, or any candidate for public or party
   office. 42 U.S.C. sect. 10707(c).

   Federal policy considerations may also influence the content of
   advertising the Institute carries. Although there is no governmentwide
   legal restriction, federal policy is generally opposed to commercial
   advertising in federal publications. Joint Committee on Printing, United
   States Congress, Government Printing and Binding Regulations, sect. 13
   (reprinted 1990). This policy is based on concerns that such advertising
   might create an unfair advantage for particular private entities by
   creating the impression of government endorsement. Id.

   Although the Institute is not a government agency, this policy may still
   inform the Institute's choice of advertising. In addition to possessing
   some of the traditional indicia of a federal agency as discussed above,
   the Institute's public role also appears in many ways to be governmental.
   For example, the Institute awards grants and contracts primarily to state
   and local courts and nonprofits operating in conjunction with state
   judicial branches. 42 U.S.C. sect. 10705(b). These grants and contracts
   are intended to enhance the performance of state and local court systems.
   42 U.S.C. sect. 10705(c). In addition, the Institute must follow notice
   and comment procedures before it issues rules and regulations and must
   publish new rules and regulations in the Federal Register. 42 U.S.C. sect.
   10702(f). Thus, while the Institute is a private, nonprofit corporation,
   the principles supporting the federal policy against commercial
   advertising should inform the Institute's judgment in its choice of the
   nature and scope of advertising it will publish in its newsletter. We
   recommend that the Institute consult with the appropriate committees of
   Congress before adopting a policy concerning advertising.

   CONCLUSION

   Congress established the Institute as a private, nonprofit corporation.
   Under its authorizing statute, it is not considered a department, agency,
   or instrumentality of the federal government, nor are its officers and
   employees considered officers and employees of the United States. Thus,
   the Institute, by collecting fees for advertising in its newsletter, is
   not "receiving money for the Government." As such, it is not subject to
   the miscellaneous receipts statute. Accordingly, the Institute may retain
   a fee for the use of advertising space in its newsletter. In doing so, the
   Institute should be cognizant of the legal constraints and policy
   considerations regarding advertising it chooses to carry.

   Gary L. Kepplinger
   General Counsel

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

   [1] We accept, for purposes of our analysis, that the Institute may charge
   a fee for advertising space, since the Institute may exercise all the
   powers conferred upon it by the Virginia Nonstock Corporation Act, under
   which it is incorporated, 42 U.S.C. sect. 10702, and that Act authorizes
   the Institute to "exercise all powers necessary or convenient to effect
   any or all of the purposes for which [it] is organized." Va. Code Ann.
   sect. 13.1-826. However, whether the Institute may retain these fees for
   its own use rather than remitting them to the Treasury is a separate
   issue.

   [2] While the Institute is not constrained by the miscellaneous receipts
   statute by virtue of its status as a private, nonprofit corporation, the
   Institute should also consider the application of other law to its
   proposed fund-raising activity. For example, where "the government creates
   a corporation by special law, for the furtherance of governmental
   objectives, and retains for itself permanent authority to appoint a
   majority of the directors of that corporation, the corporation is part of
   the Government for purposes of the First Amendment." Lebron v. National
   Railroad Passenger Corp., 513 U.S. 374, 400 (1995) (holding Amtrak is a
   government entity for purposes of individual rights guaranteed by the
   Constitution).