TITLE: B-308476, Federal Motor Carrier Safety Administration--Retention of Court-Ordered Restitution, December 20, 2006
BNUMBER: B-308476
DATE: December 20, 2006
****************************************************************************************************************
B-308476, Federal Motor Carrier Safety Administration--Retention of Court-Ordered Restitution, December 20, 2006

   Decision

   Matter of: Federal Motor Carrier Safety Administration--Retention of
   Court-Ordered Restitution

   File: B-308476

   Date:  December 20, 2006

   DIGEST

   The Federal Motor Carrier Safety Administration (FMCSA) has no authority
   to retain the amounts of an award of criminal restitution that a federal
   district court ordered to be paid to FMCSA. The miscellaneous receipts
   statute, 31 U.S.C. sect. 3302(b), requires that absent specific authority,
   federal agencies must deposit money received for the government into the
   Treasury as miscellaneous receipts. Although GAO recognizes a limited
   exception for certain amounts that constitute repayments, the restitution
   awarded here may not be characterized as such. Therefore, FMCSA must
   deposit money constituting the restitution award into the general fund of
   the Treasury.

   DECISION

   The Chief Counsel of the Federal Motor Carrier Safety Administration
   (FMCSA) requests an advance decision,[1] asking whether FMCSA may retain a
   restitution award ordered by a federal court. Letter from Suzanne M. Te
   Beau, Chief Counsel, Federal Motor Carrier Safety Administration, to Gary
   L. Kepplinger, General Counsel, GAO, Sept. 28, 2006 (FMCSA Request). The
   miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), requires federal
   agencies to deposit into the federal Treasury any moneys received for the
   government. Although there are statutory and nonstatutory exceptions to
   the general rule, those exceptions do not apply to the restitution awarded
   to FMCSA. The agency lacks statutory authority to retain the restitution,
   and the award does not qualify as a repayment. Bound by the provisions of
   section 3302(b), FMCSA must deposit the restitution award in the general
   fund of the Treasury as soon as practicable.

   BACKGROUND

   FMCSA, an administration within the Department of Transportation, is
   responsible for improving the safety of commercial vehicle operations. See
   49 U.S.C. sect. 113(b). As such, FMCSA's "primary mission is to reduce
   crashes, injuries, and fatalities involving large trucks and buses."
   Federal Motor Carrier Safety Administration, About FMCSA, available at
   www.fmcsa.dot.gov/about/aboutus.htm (last visited Dec. 12, 2006). In
   carrying out its function, FMCSA issues and enforces motor carrier safety
   regulations concerning specified commercial trucking and bus operations.
   See 49 U.S.C. sect. 113(f).

   A trucking company's officers recently pleaded guilty to violating
   Department of Transportation regulations regarding maintenance of false
   logs, as well as a criminal statute concerning conspiracy to commit false
   statement offenses. FMCSA Request. Accepting the plea, the United States
   District Court for the District of Nebraska ordered, among other
   penalties, the defendants to pay restitution to FMCSA in the amount of
   $20,000. United States v. Vyhnalek, No. 19168-047 (D. Neb. Jan. 4, 2006);
   United States v. Vyhnalek, No. 19167-047 (D. Neb. Jan. 4, 2006); United
   States v. Crawford, No. 19166-047 (D. Neb. Jan. 5, 2006). FMCSA explains
   that the restitution was ordered to "compensate the agency for the costs
   of investigation [, including] time spent by FMCSA investigators and
   attorneys developing the case for submission to the U.S. Attorney, and
   support for the prosecution as needed." Te Beau Letter. FMCSA received and
   deposited an initial payment of $4,000 from the defendants into a budget
   clearing account. FMCSA Request.

   DISCUSSION

   The question before us is whether FMCSA's retention of court-imposed
   restitution would violate the miscellaneous receipts statute, 31 U.S.C.
   sect. 3302(b), which requires federal agencies that receive any money in
   addition to appropriated funds to deposit those amounts into the general
   fund of the United States Treasury. See 47 Comp. Gen. 70, 72 (1967).
   Specifically, the statute requires those receiving "money for the
   Government from any source [to] deposit the money in the Treasury as soon
   as practicable without deduction for any charge or claim." 31 U.S.C. sect.
   3302(b). Retention of such funds without authority would constitute an
   improper augmentation of the agency's appropriation. Agencies are
   generally prohibited from augmenting their appropriations with other funds
   without statutory authority to do so. Congressional appropriations
   "establish[] a maximum authorized program level, meaning that an agency
   cannot, absent statutory authorization, operate beyond the level that can
   be paid for by its appropriations." B-300248, Jan. 15, 2004. Supplementing
   an appropriation with funds obtained in addition to those provided by
   Congress would usurp Congress's fiscal control over agency programs.[2]

   In circumstances similar to those here, we held that the miscellaneous
   receipts statute prohibits the National Labor Relations Board (NLRB) from
   retaining court costs awarded in civil litigation. 47 Comp. Gen. 70. In
   that case, the United States Court of Appeals for the First Circuit
   ordered a company to pay the costs NLRB incurred in printing material
   related to the agency's appeal. Id. Finding no authority "which makes
   available for expenditure . . . moneys derived from a judgment for costs
   awarded in favor of the United States," we held that the agency must
   comply with the miscellaneous receipts statute and deposit the awarded
   costs into the general fund of the Treasury.[3] Id. at 72.

   FMCSA has not identified any relevant statutory provision permitting the
   agency to retain the court-imposed restitution at issue to supplement its
   appropriation, nor are we aware of any such authority.

   FMCSA explains that the district court awarded restitution in order to
   compensate the agency for investigative costs. Te Beau Letter. GAO
   recognizes an exception to the general rule when receipts are properly
   classified as repayments. B-305402, Jan. 3, 2006; 69 Comp. Gen. 260,
   261--62 (1990). The restitution amounts awarded FMCSA, however, do not
   constitute a repayment.

   Repayments are classified as either a reimbursement or a refund.
   "Reimbursements are amounts collected from outside sources for commodities
   or services furnished, which by law may be credited directly to the
   appropriations." B-305402, Jan. 3, 2006. The restitution award at issue
   here does not constitute an amount collected for "commodities or services
   furnished." The investigation and subsequent prosecution of the defendants
   cannot be considered a service provided to the defendants.

   Refunds are directly related to previous agency expenditures.
   Specifically, they constitute "amounts collected from outside sources for
   payments made in error, overpayments, or adjustments for previous amounts
   disbursed." 65 Comp. Gen. 600, 602 (1986), citing Treasury Department-GAO
   Joint Regulation No. 1, reprinted as appendix II to title 7 of GAO's
   Policy and Procedures Manual for Guidance of Federal Agencies.[4] The
   refund exception "simply restores to the appropriation amounts that should
   not have been paid from the appropriation." B-302366, July 12, 2004. See
   also B-257905, Dec. 26, 1995.

   We have applied the refund exception to permit federal agencies to retain
   portions of damage awards or settlements obtained pursuant to actions
   brought under the False Claims Act. B-281064, Feb. 14, 2000; 69 Comp. Gen.
   260 (1990). The False Claims Act permits government recovery of treble
   damages. 31 U.S.C. sect. 3729. Agencies may retain recoveries representing
   actual losses (single damages), interest on those actual losses, and
   administrative expenses incurred in connection with the payment and
   recovery of the claims. 69 Comp. Gen. 260. Any funds representing amounts
   in excess of that must be deposited into the Treasury as miscellaneous
   receipts. B-281064, Feb. 14, 2000; 69 Comp. Gen. at 264. The False Claims
   Act cases highlight an important component of the refund exception: the
   necessity of an improper payment. In each of those cases, the agency would
   not have made a payment but for the false claim.

   The restitution award at issue is not properly classified as a refund. The
   restitution ordered was meant to "compensate the agency for the costs of
   the investigation [, including] time spent by FMCSA investigators and
   attorneys developing the case . . . and support for the prosecution as
   needed." Te Beau Letter. FMCSA makes no claim that the restitution
   compensates the agency for a payment made in error or an overpayment. Nor
   does FMCSA claim that the restitution constitutes an adjustment for a
   previous amount disbursed. Importantly, crediting the agency's
   appropriation with the restitution award would not "restore[] to the
   appropriation amounts that should not have been paid." B-302366, July 12,
   2004.

   FMCSA receives an appropriation each year to pay for costs of
   investigations such as the one conducted here. See, e.g., Transportation,
   Treasury, Housing and Urban Development, the Judiciary, the District of
   Columbia, and Independent Agencies Appropriations Act, 2006, Pub. L. No.
   109-115, 119 Stat. 2396, 2409 (Nov. 30, 2005). FMCSA's authorizing
   statute, 49 U.S.C. sect. 31104(i), permits expenditures for "personnel
   costs; administrative infrastructure; rent; information technology;
   programs for research and technology, information management, regulatory
   development, the administration of the performance and registration
   information system management, and outreach and education; other operating
   expenses; and such other expenses as may from time to time become
   necessary." 49 U.S.C. sect. 31104(i)(2). FMCSA's costs of investigation
   are necessary expenses of enforcing the agency's safety regulations. The
   time spent by investigators and attorneys to prepare the case is a
   personnel cost contemplated by the authorizing statute. FMCSA's support in
   the prosecution of the case constitutes "other operating expenses." As
   such, crediting a restitution award to FMCSA's appropriation would
   improperly contribute financial resources that supplement those already
   provided for the agency by Congress. If FMCSA were to retain the $20,000
   in restitution, the agency would improperly augment its appropriation.
   FMCSA must therefore remit all amounts it receives in connection with the
   restitution award to the United States Treasury as miscellaneous receipts.

   FMCSA asks whether our recent decision involving a settlement agreement
   between the Office of Federal Housing Enterprise Oversight (OFHEO) and
   Freddie Mac, B-306860, Feb. 28, 2006, would permit FMCSA to retain the
   restitution award at issue. FMCSA Request. That decision is not apposite.
   OFHEO brought administrative charges against Freddie Mac and former
   executive officers for the undue compensation of those officers. B-306860,
   Feb. 28, 2006. As part of an agreement to settle charges brought against
   Freddie Mac, including a dispute regarding adequacy of discovery
   production, Freddie Mac agreed to pay the costs associated with formatting
   certain documents sought in discovery in a manner agreeable to both
   parties. Id. We found no improper augmentation of appropriations. Id. The
   settlement agreement satisfied a prosecutorial objective and "Freddie Mac
   [was] not defraying an obligation of OFHEO." Id. The same rationale does
   not apply here. If FMCSA is permitted to credit the restitution award to
   its appropriation, the award would work to defray FMCSA's obligations.
   Costs that would otherwise be borne by FMCSA's appropriation would then be
   borne by the restitution award.

   CONCLUSION

   FMCSA lacks authority to credit to its appropriation an award of criminal
   restitution ordered by a federal court. The miscellaneous receipts
   statute, 31 U.S.C. sect. 3302(b), requires federal agencies, absent
   specific authority, to deposit money received for the government into the
   Treasury as miscellaneous receipts. Although GAO recognizes a limited
   exception for certain amounts that constitute repayments, the restitution
   awarded here may not be characterized as such. Consequently, amounts
   associated with the restitution award must be deposited into the general
   fund of the Treasury as soon as practicable.

   Gary L. Kepplinger

   General Counsel

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

   [1] Our practice when rendering decisions is to obtain the views of the
   relevant federal agency to establish a factual record and to elicit the
   agency's legal position on the subject matter of the request. GAO,
   Procedures and Practices for Legal Decisions and Opinions, GAO-06-1064SP
   (Washington, D.C.: Sept. 2006). In this instance, FMCSA responded to
   questions from our office regarding the nature of the restitution award,
   instances of similar awards to FMCSA or other agencies, and the specific
   regulations violated by the defendants in the case. Letter from Suzanne M.
   Te Beau, Chief Counsel, Federal Motor Carrier Safety Administration, to
   Thomas H. Armstrong, Assistant General Counsel, GAO, Re: Disposition of
   Criminal Restitution Payable to the Agency, Nov. 9, 2006 (Te Beau Letter).

   [2] See generally B-300248, Jan. 15, 2004; 72 Comp. Gen. 164, 165 (1993);
   61 Comp. Gen. 419, 421 (1982).

   [3] Cf. 65 Comp. Gen. 666 (1986) (statutory authority permitted the
   Department of the Interior's Job Corps Civilian Conservation Centers to
   retain for program purposes proceeds from the sales of meals, tool kits,
   and clothing, etc.).

   [4] Available at www.gao.gov/special.pubs/ppm.html (last visited Dec. 12,
   2006).