TITLE: B-316107, Election Assistance Commission--Availability of Funds for Purchase of Replacement Voting Equipment, March 19, 2008
BNUMBER: B-316107
DATE: March 19, 2008
****************************************************************************************************************************
B-316107, Election Assistance Commission--Availability of Funds for Purchase of Replacement Voting Equipment, March 19, 2008

   Decision

   Matter of: Election Assistance Commission--Availability of Funds for
   Purchase of Replacement Voting Equipment

   File: B-316107

   Date:  March 19, 2008

   DIGEST

   Section 251 of the Help America Vote Act of 2002 (HAVA), 42 U.S.C. sect.
   15401, authorizes the Election Assistance Commission (EAC) to provide
   payments to states for a variety of enumerated purposes, including
   procurement of HAVA-compliant voting systems to improve the administration
   of federal elections. HAVA leaves to the states what type of voting
   equipment the individual states should use, as long as the equipment
   complies with HAVA. At issue in this decision is whether under section 251
   of HAVA a state may fund the replacement of HAVA-compliant voting systems,
   originally purchased with HAVA funds, with a different kind of
   HAVA-compliant voting system. We conclude that EAC's proposed policy to
   permit such expenses is within EAC's discretion in its exercise of
   statutory authority under HAVA.

   DECISION

   The Election Assistance Commission (EAC) has requested a decision
   regarding its Proposed Policy to permit use of Help America Vote Act of
   2002 (HAVA) funds to purchase a HAVA-compliant voting system even though
   the system replaced was originally purchased with HAVA funds.[1] Letter
   from Rosemary E. Rodriguez, Chair, Election Assistance Commission, to
   David M. Walker, Comptroller General of the United States, Feb. 21, 2008
   (Rodriguez Letter). At issue in this decision is whether payments made to
   states under section 251 of HAVA (42 U.S.C. sect. 15401) are available to
   fund the replacement of HAVA-compliant voting systems, originally
   purchased with HAVA funds, with a different kind of HAVA-compliant voting
   system. HAVA does not expressly state whether funds can be used for this
   purpose. We conclude that it is within EAC's legitimate range of
   discretion to determine that section 251 funds may be used to replace
   systems that are already HAVA-compliant and were purchased with HAVA
   funds. Accordingly, we would not object to the Proposed Policy.

   EAC included in its request for an expedited decision in this matter its
   legal views and relevant factual material. To supplement the record, we
   held a telephone conference call with EAC officials on March 6, 2008. GAO,
   Procedures and Practices for Legal Decisions and Opinions, GAO-06-1064SP
   (Washington, D.C.: Sept. 2006), available at
   www.gao.gov/legal/resources.html.

   BACKGROUND

   The Help America Vote Act of 2002 (HAVA) established the EAC to assist in
   the administration of federal elections and charged the EAC with
   distributing payments to states under its authorized funding programs.
   Pub. L. No. 107-252, 116 Stat. 1666 (Oct. 29, 2002); 42 U.S.C. sections
   15301--15545. HAVA established three programs for the EAC[2] to distribute
   money to the states to implement HAVA, including the purchase of
   HAVA-compliant voting systems. These programs are set out in section 101
   (42 U.S.C. sect.15301), section 102 (42 U.S.C. sect.15302), and section
   251 (42 U.S.C. sect.15401) of HAVA. The funding program that is relevant
   to this decision is the section 251 program.

   Section 251 authorizes payments to states, referred to as "requirements
   payments," for certain enumerated purposes, including improving the
   administration of elections for federal office. HAVA provides that states
   may use requirements payments to implement provisional voting; provide
   information to voters in the polling place; procure voting systems that
   comply with the requirements of Title III of HAVA;[3] develop and
   implement a computerized statewide voter registration list; implement
   identification requirements for first-time voters who register to vote by
   mail; and improve the administration of elections for federal office. In
   addition, HAVA section 251(b)(2) allows a state to use section 251
   payments to improve the administration of elections for federal office if
   the state has certified to EAC that it has met the requirements of Title
   III.[4] EAC received appropriations in fiscal years 2003, 2004, and 2008
   for requirements payments.[5] EAC distributed requirements payments to
   states between June 2004 and December 2005,[6] and they are maintained in
   the election fund of the individual state. Requirements payments are
   allocated among the states based on the relative size of the state's
   voting age population.[7]

   In addition to distributing payments to states under the HAVA funding
   programs, EAC oversees and administers states' use of funds. HAVA also
   authorizes EAC to audit or examine the recipient of a grant or other
   payment made under HAVA. As part of its audits, EAC may examine records
   relating to the amount and disposition of HAVA payments. 42 U.S.C. sect.
   15542. EAC is required to provide information and training on the
   management of the payments and grants. 42 U.S.C. sect. 15322. In addition,
   a condition of receipt of requirements payments is the states' submission
   to EAC of a state plan that accounts for the use of the payments.
   42 U.S.C. sections 15403--15404. States must submit a report to the EAC
   about the activities conducted with the funds including a list of
   expenditures, the number and type of voting equipment obtained with the
   funds, and an analysis and description of the activities funded under
   section 251. 42 U.S.C. sect. 15408.

   In May 2007, the EAC responded to an inquiry from the state of Florida
   concerning the expenditure of section 251 funds to improve the
   administration of elections for federal office. Letter from Juliet T.
   Hodgkins, General Counsel, Election Assistance Commission, to Kurt
   Browning, Secretary of State of the State of Florida, May 2, 2007 (May
   2007 Policy).[8] Florida had approximately $91 million of section 251
   funds available in its election fund and asked whether it was permissible
   to use HAVA funds to purchase HAVA-compliant voting systems to replace
   existing HAVA-compliant voting systems acquired with HAVA funds.
   Specifically, Florida wanted to replace touch screen voting systems,
   previously funded in part with HAVA funds, with optical scan voting
   systems. EAC's May 2007 Policy denied the request and stated that under
   Office of Management and Budget (OMB) Circular No. A-87 cost principles,
   while it was reasonable to fund the purchase of HAVA-compliant voting
   equipment one time, it was not reasonable to fund that expense twice.[9]

   In its submission to us, EAC referenced the House Appropriations Committee
   report accompanying the Financial Services and General Government
   Appropriations bill for Fiscal Year 2008, directing EAC to reconsider its
   ruling in the May 2007 Policy. H.R. Rep. No. 110-207, at 56 (2007). In a
   letter dated January 23, 2008, the Subcommittee on Financial Services and
   General Government asked the EAC to reverse the May 2007 Policy. Proposed
   Policy, at 3. EAC's Proposed Policy would reverse the May 2007 Policy,
   concluding that OMB Circular No. A-87 does not prohibit a state's use of
   HAVA funds to replace voting systems purchased with HAVA funds, as long as
   such purchases comply with HAVA.

   DISCUSSION

   HAVA neither expressly authorizes nor prohibits the use of section 251
   funds to purchase replacement voting systems. Where a given expenditure is
   neither specifically provided for nor prohibited, an agency's
   appropriation is available so long as the proposed expenditure bears a
   reasonable relationship to fulfilling an authorized purpose or function of
   the agency. B-286457, Jan. 29, 2001. The question for the agency is
   whether the proposed use falls within the agency's legitimate range of
   discretion, or whether its relationship to an authorized purpose or
   function is so attenuated as to take it beyond that range. B-304718, Nov.
   9, 2005. This determination, in the first instance, is a matter of agency
   discretion, B-223608, Dec. 19, 1998, which we will accept so long as
   reasonable, see B-285066.2, Aug. 9, 2000.

   Here, the question is whether EAC's proposed policy decision to permit a
   state's use of HAVA funds, appropriated for the purpose of improving the
   administration of federal elections, is a reasonable exercise of EAC's
   discretion in administering these funds. There is no provision in HAVA, in
   section 251 or otherwise, that addresses the issue of whether states can
   use section 251 funds to purchase HAVA-compliant voting systems to replace
   HAVA-compliant voting systems originally purchased with HAVA funds. HAVA
   only requires that voting systems comply with the requirements of Title
   III. EAC's Proposed Policy is consistent with HAVA's statutory scheme.
   Section 251 clearly authorizes a state to use a requirements payment to
   carry out activities to improve the administration of elections for
   federal office if the state has met the certification condition.
   Importantly, HAVA does not require or recommend a specific type of voting
   system, and states are free to choose the type and model of voting
   equipment that they wish to use, as long as that system meets or exceeds
   the requirements of HAVA. 42 U.S.C. sect.15481(c)(1).[10] Consistent with
   HAVA, EAC's Proposed Policy does not direct or otherwise imply that states
   select one type of voting system over another. EAC's Proposed Policy only
   requires that the systems selected be HAVA-compliant.

   In 2007, EAC applied the cost principle of reasonableness of OMB Circular
   No. A-87. In the Proposed Policy, EAC reconsidered that application. EAC's
   reconsideration is a reasonable exercise of its discretion concerning the
   use of its appropriations under section 251. Here, OMB Circular No. A-87
   cost principles must be understood within the statutory scheme of section
   251, and a determination of reasonableness under those cost principles,
   once made, should not be viewed as an insurmountable obstacle to EAC's
   review and exercise of its discretion under section 251 to improve the
   administration of elections for federal office.

   CONCLUSION

   Section 251 of HAVA provides payments to states for a variety of
   enumerated purposes, including procurement of voting systems that are
   HAVA-compliant for the purpose of improving the administration of federal
   elections. HAVA leaves to each state the decision on what type of voting
   equipment the state wishes to use, as long as the equipment complies with
   HAVA. EAC's proposed policy to permit states to use section 251 funds to
   replace HAVA-compliant voting systems even if the systems were originally
   purchased with HAVA funds is within EAC's legitimate range of discretion
   in its exercise of statutory authority under HAVA.

   Gary L. Kepplinger
   General Counsel

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

   [1] Election Assistance Commission, Proposed Policy Clarification On the
   Allowable Uses of Help America Vote Act Funds Authorized Under Titles I
   and II (Mar. 20, 2008), available at
   www.eac.gov/News/meetings/march-20-2008-public-meeting (last visited Mar.
   17, 2008)  (Proposed Policy).

   [2] Before the formation of EAC, the General Services Administration (GSA)
   distributed payments under Title I of HAVA. 42 U.S.C. sections
   15301-15306.

   [3] Title III of HAVA requires voting systems to permit the voter to
   verify the vote selected before the voter casts the ballot and to change
   the vote before the ballot is cast and counted; notify the voter if the
   voter has selected more than a single candidate and the impact of
   selecting more than one candidate, and allow the voter to correct the
   ballot; provide a voter education system for jurisdictions that use a
   paper ballot, punch card, or central count voting systems; produce an
   auditable record; be accessible for individuals with disabilities; provide
   alternative language accessibility; and meet minimum error rates for
   counting ballots. 42 U.S.C. sect. 15481.

   [4] Sections 251 and 252 also permit states to use section 251 funds to
   improve the administration of elections for federal office if they certify
   that they will not spend more than the amount of the minimum payment
   available to the state under section 252(c). 42 U.S.C. sections
   15401-15402.

   [5] In fiscal year 2003, EAC received $830 million for requirements
   payments. Consolidated Appropriations Resolution, 2003, Pub. L. No. 108-7,
   div. N, 117 Stat. 11, 537 (Feb. 20, 2003). In fiscal year 2004, Congress
   appropriated $1.5 billion for requirements payments. Consolidated
   Appropriations Act, 2004, Pub. L. No. 108-199, div. F, div. H, 118 Stat.
   3, 327, 451 (Jan. 23, 2004). According to EAC officials, after a
   rescission, EAC received $1,498,200,000. In fiscal year 2008, EAC received
   $115 million for requirements payments. Consolidated Appropriations Act,
   2008, Pub. L. No. 110-161, 121 Stat. 1844, 1996 (Dec. 26, 2007).

   [6] Election Assistance Commission, Report to Congress on State
   Governments' Expenditures of Help America Vote Act Funds, July 2007.

   [7] Section 252 provides the formula for allocation of the money to the
   states. 42 U.S.C. sect. 15402.

   [8] May 2007 Policy, available at http://www.eac.gov/News (search "Florida
   Use of HAVA Funds"; then follow "05/02/07 - EAC Reply to Florida"
   hyperlink) (last visited Mar. 17, 2008).

   [9] OMB Circular No. A-87 addresses the use of federal funds to purchase
   goods for state and local governments. OMB Cir. No. A-87, Cost Principles
   for State, Local and Indian Tribal Governments (May 10, 2004). When EAC
   distributed section 251 payments to states, EAC subjected states' use of
   the payments to OMB Circular No. A-87. Under OMB Circular No. A-87, costs
   paid with HAVA funds must be allowable, allocable, and reasonable.
   Proposed Policy, at 2.

   [10] See also 42 U.S.C. sect. 15485 (stating that methods of
   implementation are left to the discretion of the state) and 42 U.S.C.
   sect. 15329 (EAC shall not have authority to issue any rule, promulgate
   any regulation, or take any other action which imposes any requirement on
   any state, except to the extent permitted under section 9(a) of the
   National Voter Registration Act of 1993, 42 U.S.C. sect. 1973gg-7(a),
   which requires the EAC to promulgate regulations for the development of a
   mail voter registration form).