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II. APPORTIONMENT OF RESERVES Legislation requiring the apportionment of reserves traces its origin to the Antideficiency Act of March 3, 1905, which, as amended February 27, 1906, 34 Stat. 27, 49, reads as follows:
“Sec. 3679. No Executive Department or other Government establishment of the United States shall expend, in any one fiscal year, any sum in excess of appropriations made by Congress for that fiscal year or involve the Government in any contract or other obligation for the future payment of money in excess of such appropriations unless such contract or obligation is authorized by law. Nor shall any Department or any officer of the Government accept voluntary service for the Government or employ personal service in excess of that authorized by law, except in cases of sudden emergency involving the loss of human life or the destruction of property. All appropriations made in fulfillment of contract obligations expressly authorized by law, or for objects required or authorized by law without reference to the amounts annually appropriated therefor, shall, on or before the beginning of each fiscal year, be so apportioned by monthly or other allotments as to prevent expenditures in one portion of the year which may necessitate deficiency or additional appropriations to complete the service of the fiscal year for which said appropriations are made: and all such apportionments shall be adhered to and shall not be waived or modified except upon the happening of some extraordinary emergency or unusual circumstance which could not be anticipated at the time of making such apportionment, but this provision shall not apply to the contingent appropriations of the Senate or House of Representatives; and in case said apportionments are waived or modified as herein provided, the same shall be waived or modified in writing by the head of such Executive Department or other Government establishment having control of the expenditure, and the reason therefor shall be fully set forth in each particular case and communicated to Congress in connection with estimates for any additional appropriations required on account thereof. Any person violating any provision of this section shall be summarily removed from office and may also be punished by a fine of not less than one hundred dollars or by imprisonment for not less than one month."
Although this language contemplated apportionment by the Heads of Departments and Agencies to which appropriations were made, the Bureau of the Budget injected itself into this process immediately after its organization in 1921. By Budget Circular No. 4, issued July 1, 1921, the day the Budget and Accounting Act of 1921 became effective, each department and establishment was requested to estimate (1) the expenditures that were regarded as indis. pensable during the ensuing fiscal year in carrying on the activities of the several branches and bureaus, and (2) the resulting balance which might be saved under each appropriation. These estimates were to be communicated to the Budget Director and submitted by him to the President for approval Upon such approval, the estimated savings were to be designated as a "general reserve" to be so carried under their respective appropriation titles on the records of the Director of the Budget, and the amount approved by the President for expenditure under an appropriation title was thereafter to be considered as the maximum available for obligation during the fiscal year.
The circular further provided that the estimate of expenditures, one approved, was subject to further study and revision during the course of the fiscal year, and that all possible additional savings should be effected. To this end, heads of bureaus and branches were directed to maintain upon their financial records additional sums reserved from obligation so that if develop ments of the fiscal year permitted, these funds might be added to the general reserve. Hearings before a Subcommittee of the Committee on Appropriations. United States Senate, First Supplemental National Defense Appropriation Bill for 1941, 78th Congress, first session, 738 (1943).
Subsequent circulars, beginning with Budget Circular 51, issued December 21, 1921, and continuing until the year 1933, prescribed details for making apportionments and stated the purpose of this procedure as follows:
"General reserves should be provided (1) to meet emergencies that could not be foreseen at the time the apportionment is made, and (2) to effect war. ings in the appropriation where such savings can be made without detriment to the service in question."
By Executive Order No. 6166, issued June 10, 1933, the President transferred to the Director of the Bureau of the Budget “the functions of making, waiving and modifying apportionments of appropriations."
Sometime thereafter, the Budget Bureau instituted the practice of impounding funds appropriated for specific purposes. In 1943, in the cited hearings of a Senate Appropriations Subcommittee, references were made to several instances of such withholding. Senator Richard Russell of Georgia recalled. id. at 311 that:
"... Several years before the war broke out in Europe members of the subcommittee handling the War Department bill were tremendously interested in the R.O.T.C. in the colleges of the country. I was personally a member of that committee, and I worked harder on it than any other item I have ever known.
"We appropriated funds here to enable the War Department, and directed them to do so, to establish a unit in every college or high school of the United States of America, as requested. We had a long list of requests on file in the War Department at the time.
“Those funds were impounded, and I think it is before your time as Director, but it shows it is not a new policy, because they were impounded and those funds were never expended."
A colloquy between Senator Russell and Senator John H. Overton of Louisiana brought out the facts that appropriations for this purpose were made in three successive years; that all of the funds appropriated for one year and part of those appropriated for another were impounded; that the last time Congress
had a list of just where the funds were to go, and they were expended.” Id, at 312.
Senator Gerald Nye, of North Dakota, mentioned that "long before Pearl Harbor" an appropriation referred to as the “Turtle Mountain appropriation" was made to enable the Indian Bureau to complete the purchase of certain land in North Dakota, but that the funds were impounded. Id. at 339.
Senator Carl Hayden, of Arizona, said the first instance he had any recollection about was an appropriation made by Congress for building a bridge across the Gila River in Arizona, under conditions set by Congress. The conditions were not satisfactory to the Bureau of Indian Affairs. “They didn't want it built that way,” according to Senator Hayden, "and they just wouldn't built the bridge.”
What probably was the first major controversy between Congress and the President over the impoundment of various funds erupted in 1941, shortly before Pearl Harbor. In his budget message for the fiscal year 1942, dated January 3, 1941, President Roosevelt expressed his intention to cut certain types of spending to offset increased military expenditures. He informed Congress that "I have requested that further contracts for the construction of public builings outside the District of Columbia be held in abeyance for the present. ... Projects under construction, or on which bids have been solicited, will go forward until completion. Throughout the Federal service other projects are being deferred until a more appropriate time.” 87 Congressional Record 67, 68 (1941).
The following year, the budget message for fiscal year ending June 30, 1943, declared, 88 Congressional Record 38 (1942), that
"... Federal aid for highways will be expended only for construction essential for strategic purposes. Other highway projects will be deferred until the post-war period. For all other Federal construction I am restricting expenditures to those active projects which cannot be discontinued without endangering the structural work now in progress."
Apparently there was no immediate outcry against these proposed cuts in, or deferral of, expenditures for public works. Late in 1941, the Administration took steps to impound substantial portions of the moneys appropriated for various agencies, including the National Youth Administration, the Civilian Conservation Corps, and the Surplus Marketing Agency. Hea rings before the Joint Committee on Reduction of Nonessential Federal Expenditures on Reduction of Nonessential Federal Expenditures, 77th Congress, first session, 2, 22, 133, 160 (1941).
This action evoked expressions of approval and of disapproval from Congress. In a Preliminary Report on Reduction of Nonessential Federal Erpenditures, Senate Document No. 152, 77th Congress, first session (1941), the Joint Committee recommended that all portions of previously appropriated funds for these agencies now held in reserve by the Bureau of the Budget be covered into the Treasury. It further recommended that during the emergency one-halt
of the Federal Highway appropriations and authorizations be deferred, and that all appropriations and authorizations for public works not directly essential to national defense should be deferred until after the emergency.
Senator Robert M. La Follette, Jr., of Wisconsin, filed a statement of minority views criticizing the cutback in funds for the CCC, the NYA, the Surplus Marketing Agency, etc., as a matter of policy, but did not challenge the authority of the Bureau of the Budget with respect to them. A few individual members expressed their objections to these and later impoundments on the floor of the House, 87 Congressional Record, 8734, 9144 (1941), 88 Congressional Record 3296.
Representative Voorhis of California explicitly challenged the authority of the Bureau of the Budget to freeze funds appropriated to the Department of Agriculture for the purposes of carrying out 7 U.S.C. 612(c), including school lunches. Referring to the Antideficiency Act, he declared, id. at 3298, that:
"... The purpose of that act, as I understand it, was to give the Budget the power to prevent a department from expanding its money so rapidly at the beginning of the fiscal year that they would not have anything at the end of it. It seems to me it is an unwarranted extension of that authority to say that they have a right to determine in effect how much Congress has the right to appropriate for a certain purpose. Executive Order No. 6166, section 16, which was issued by the President under the first reorganization bill, I believe, in March 1933, had these words in it:
"The functions of making, waiving, and modifying apportionments of appropriations are transferred to the Director of the Bureau of the Budget.
"It does not seem to me that you can read into this Executive order the authority to go beyond the apportionment as between the quarters of the fiscal year and actually curtail the total amount of appropriations made for a specific purpose. Indeed, I claim that that is to interpret these powers in a seemingly illegal manner.”
In the hearings of a Senate subcommittee on appropriations on the First Supplemental National Defense Appropriation Bill for 1944, supra, other instances of impounding of funds were cited and their legality challenged. Senator McKellar called attention to a report in the press on the day of the hearing, November 19, 1943, that the Army had determined to reduce the number of men in its service from the 8,200,000 for which it had asked and received appropriations to 7,700,000 with the result that the Army had $13,163,519,000 to return to the Treasury. Addressing his remarks to the Director of the Bureau of the Budget, he said, at page 339 of the hearings:
"... The story is that they have returned it to you, to put it in a reserve fund of some kind ; and that whether or not they will expend any part of it will depend, not upon the Congress, whose duty under the Constitution is to appropriate money, but that it will depend upon your will, as to whether you will let them have any part of it in the future.
"I think when you receive any such authority, you are receiving authority not authorized by the Constitution or the law of the United States. I would like to have the law specifically pointed out where you have a right to set up for the War Department now-a fund of some 13 billion dollars as a reserve fund. I don't think the War Department has a right to return that money, or any part of it, to you or to put it under your supervision or to give you authority to handle it in the slightest degree, because the money was appropriated for the War Department and not for the Budget Bureau."
With respect to an instance of impoundment of money appropriated for roads, Senator McKellar observed, at page 341:
“Of course if the President wanted to do it, why, he has got a right to veto any bill, and that is the time for him to veto it. This is the authority the Constitution gives him to stop appropriations, but after the appropriation is made and signed by the President and becomes a law, why, to my mind any executive officer that attempted to interfere with it in the slightest degree renders himself liable for illegal action."
In the Preliminary Report of the Joint Committee on Reduction of Nonessential Federal Expenditures, supra, the Committee had recommended that "legislation be enacted which would authorize the Director of the Budget to set up reserves out of any future appropriation, at such times and in such amounts as the Director may determine." This implied that the Director did not possess such authority under the Antideficiency Act.
Nevertheless the Bureau of the Budget continued to impound funds. Among the more important of these actions taken during the period 1941-1950 were those designed to curtail spending by the Armed Forces in the years immediately following World War II. Tables showing such impoundments were included in Hearings before a Subcommittee on Department of Defense Appropriations of the House Appropriations Committee on The Supplemental Appropriation Bill for 1951, 81st Congress, second session, 47, 120, 233 (1950).
The Omnibus Appropriation Act for 1951 amended the Antideficiency Act to enlarge the power to apportion reserves and to vest the power to make apportionments in the Director of the Bureau of the Budget in stated circumstances. It now reads in pertinent part as follows: "31 U.S.C. 665(c)(d)
"(c) Apportionment of appropriations; reserves; distribution; review.
“(1) Except as otherwise provided in this section, all appropriations or funds available for obligation for a definite period of time shall be so apportioned as to prevent obligation or expenditure thereof in a manner which would indicate a necessity for deficiency or supplemental appropriations for such period; and all appropriations or funds not limited to a definite period of time, and all authorizations to create obligations by contract in advance of appropriations, shall be so apportioned as to achieve the most effective and economical use thereof. As used hereafter in this section the term "appropriation" means appropriations, funds, and authorizations to create obligations by contract in advance of appropriations.
“(2) In apportioning any appropriation, reserves may be established to provide for contingencies, or to effect savings whenever savings are made possible by or through changes in requirements, greater efficiency of operations, or other developments subsequent to the date on which such appropriation was made available. Whenever it is determined by an officer designated in subsection (d) of this section to make apportionments and reapportionments that any amount so reserved will not be required to carry out the purposes of the appropriation concerned, he shall recommend the rescission of such amount in the manner provided in the Budget and Accounting Act, 1921, for estimates of appropriations.
“(d) Officers controlling apportionment or reapportionment.
“(1) Any appropriation available to the legislative branch, the judiciary, or the District of Columbia, which is required to be apportioned under subsection (c) of this section, shall be apportioned or reapportioned in writing by the officer having administrative control of such appropriation. Each such appropriation shall be apportioned not later than thirty days before the beginning of the fiscal year for which the appropriation is available, or not more than thirty days after approval of the Act by which the appropriation is made available, whichever is later.
“(2) Any appropriation available to an agency which is required to be apportioned under subsection (c) of this section, shall be apportioned or reapportioned in writing by the Director of the Bureau of the Budget."
The purpose of this amendment was explained in House Report No. 1797, 81st Congress, second session, page 9, as follows:
"Economy neither begins nor ends in the Halls of Congress. Under the Budget and Accounting Act, it is the responsibility of the executive branch of the Government to submit annually to the Congress the estimates of the amounts which officials in the executive branch feel are required to support the necessary activities of the Government. The Congress reviews these estimates and decides the maximum amounts which must be appropriated for these various activities, and the annual appropriation bill provides the sums so determined by the Congress.
“Appropriation of a given amount for a particular activity constitutes only a ceiling upon the amount which should be expended for that activity. The administrative officials responsible for administration of an activity for which appropriation is made bear the final burden for rendering all necessary service with the smallest amount possible within the ceiling figure fired by the congress. Every official of the Government who has responsibility for administration of a program must assume a portion of the burden for the deficit in the Federal Treasury. In the first place, he must take into account the condition of the Federal finances when he recommends to the Bureau of the Budget the amount
which, in his judgment, is necessary for supporting his activity. In the second place, it is his responsibility to so control and administer the activities under his jurisdiction as to expend as little as possible out of the funds appropriated.
"The so-called Antideficiency Act has been a part of the law for many years but the present statute is antiquated and was written at a time when the fiscal operations of the Government were far more simple. Current laws are so complex as to render the current law inoperative in many cases. On that account the committee has included as section 1111 in chapter XI a redraft of the Antideficiency Act. The purpose is to require careful apportionment of all types of funds expended by Federal agencies and efficient administration of the Government's business. (Emphasis supplied.)"
Even as amended it is hard to see how the language of this section can be interpreted to give the Bureau of the Budget unlimited discretion to apportion reserves. The establishment of reserves is authorized "to provide for contingencies, or to effect savings whenever savings are made possible by or through changes in requirements, greater efficiency of operations, or other developments subsequent to the date on which such appropriation was made available." This seems to preclude the establishment of reserves simply because of a disagree ment of policy between the Executive and Legislative Departments on the basis of the facts existing at the time the appropriation was made. It leaves open to debate, however, the nature of the subsequent developments which would justify the reserving of funds appropriated by Congress for a specific purpose.
III. INTREPRETATION OF APPROPRIATIONS AS PERMISSIVE OR MANDATORY The impoundment of funds by the Executive Department is frequently de fended on the ground that appropriations are simply authorizations for the expenditure of funds, but not mandates to do so. In analyzing this argument, it is necessary to distinguish between savings effected by more efficient performance of a function, and savings made by curtailment of a service or omission of a project for which Congress has made specific appropriation.
Recently, in a letter dated February 25, 1967, addressed to the Secretary of Transportation, affirming the legality of the reduction in the amount of Federal-aid highway funds which might be obligated during the fiscal year ending June 30, 1967, the acting Attorney General had this to say
“... The courts have recognized that appropriation acts are of a fiscal and permissive nature and do not in themselves impose upon the Executive Branch an affirmative duty to expend the funds. Hukill v. United States, 16 C.Cl. 562 565 (1880): Compagna v. United States, 26 C.Ci. 316, 317 (1891); Lovett v. United States, 104 C.CI. 557, 583 (1915), affirmed on other grounds, 328 U.S. 303 (1946); McKay v. Central Electric Power Corporation, 223 F.2d 623, 625 (C.A. D.C. 1955).
"Congress, of course, is fully aware of the rule that an appropriation act in itself does not constitute a mandate to spend. The classic exposition of this characteristic of appropriations legislation may be found in the House Appropriations Committee report on the General Appropriation Bill, 1951, submitted by the late Chairman Clarence Cannon:
“Responsibility of the Executive Branch. Economy neither begins nor ends in the Halls of Congress. The Congress * * * decides the maximum amounts which must be appropriated for * * * various activities, and the annual appropriation bill provides the sums so determined by the Congress.
"Appropriation of a given amount for a particular activity constitutes only a ceiling upon the amount which should be expended for that activity. ... (It is the) responsibility [of every Government official] to so control and administer the activities under his jurisdiction as to expend as little as possible out of the funds appropriated. H. Rept. 1797, 81st Cong., 2d Sess., p. 9.
"Or as the then Senator Harry S. Truman observed in 1943:
"Mr. Truman. * * * When the Congress appropriates funds it gives the executive branch an authority to incur obligations. Certainly none of us hold that we give a mandate to expend the funds appropriated. We expect the funds to be used only where needed, and not in excess of the amount appropriated, to carry out some phase of law. 89 Cong. Rec. 10362.”
The full text of the comment in House Report No. 1797, 81st Congress, second session (1950) from which the acting Attorney General quoted excerpts, was set forth in the preceding section. When read as a whole, it appears to support