found in section 108 (b) of the Federal-Aid Highway Act of 1956, June 29, 1956, c. 462, 70 Stat. 378, as amended, 23 U.S.C. 101 note. The funds expected to be available with respect to each fiscal year included in these authorizations are apportioned among the States on or before the first day of January preceding the fiscal year for which they are authorized to be appropriated. 23 U.S.C. 104 (a), (b). Funds so apportioned remain available for obligation at any time prior to the close of the second fiscal year after the fiscal year for which they are authorized. (23 U.S.C. 118 (a), (b))

After apportionment, the States submit general programs of proposed highway projects for approval (23 U.S.C. 105). Following the approval of a program by the Secretary, the State submits "such surveys, plans, specifications, and estimates for each proposed project included in an approved program as the Secretary may require." Approval of a specific project by the Secretary "shall be deemed a contractual obligation of the Federal Government for the payment of its proportional contribution thereto." (23 U.S.C. 106(a))

Payments to the States are made pursuant to appropriation acts based on estimates of the requests to be made by the States in each fiscal year for reimbursement for work performed. We understand that there is a variable, often considerable, time lag between the approval of a project and the requests of the State for partial or full reimbursement of the Federal proportional contribution to the cost of the work performed on that project. Thus actual appropriations in any given year will include reimbursement of costs resulting from projects approved in preceding years.

The amount which may be appropriated in any given year for Federal-aid highway purposes is subject to two limitations: First, it cannot exceed the amounts provided for in the authorization act and, second, it cannot exceed the funds available in the Highway Trust Fund. See, e.g., Departments of State, Justice and Commerce, the Judiciary and Related Agencies Appropriation Act, 1967, November 8, 1966, P.L. 89-797, 80 Stat. 1479, 1495 (Bureau of Public Roads, Federal-Aid Highways (Trust Fund)).

It is my conclusion that the Secretary has the power to defer the availability to the States of those funds authorized and apportioned for highway construction which have not, by the approval of a project, become the subject of a contractual obligation on the part of the Federal Government in favor of a State.

I

Although your inquiry is not directly concerned with an appropriation act, but rather with the effect of legislation authorizing actions ultimately leading to appropriations, it will be useful to consider first the effect of a congressional appropriation of money. The basic function of such legislation is to furnish the formal permission required by Article I, section 9, clause 7 of the Constitution for the withdrawal of funds from the Treasury. Cincinnati Soap Co. v. United States, 301 U.S. 308, 321 (1937). 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); Campagna v. United States, 26 C. Cl 316, 317 (1891); Lovett v. United States, 104 C. Cl. 557, 583 (1945), affirmed on other grounds, 328 U.S. 303 (1946); McKay v. Central Electric Power Cooperative, 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, "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.

2 While 23 U.S.C. 118(b) uses the term "expenditure," the second sentence of the subsection indicates that the term "expenditure" is there used in the sense of "obligation." 3 Section 209 of the Highway Revenue Act of 1956. June 29, 1956, c. 462, 70 Stat. 387, 397, 23 U.S.C. 120 note, established the Highway Trust Fund and appropriated into that Fund amounts equivalent to specified percentages of certain taxes received in the Treasury. Under section 209 (f), the amounts in the Highway Trust Fund are available for appropriations out of the Fund, to be made annually, for expenditures to meet the obligations of the United States under 23 U.S.C. 106(a). .

"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.

An appropriation act thus places an upper and not a lower limit on expenditures. The duty of the President to see that the laws are faithfully executed, under Article II, section 3 of the Constitution, does not require that funds made available must be fully expended. This principle has received statutory recognition in the Anti-Deficiency Act, February 27, 1906, c. 510, sec. 3, 34 Stat. 49 (31 U.S.C. 665(c)), which authorizes the executive branch to effectuate savings of appropriated funds, and in 31 U.S.C. 701, which provides that unexpended appropriated funds shall revert to the Treasury.

Many factors must be weighed by the Executive in determining the extent to which funds should be expended. Consideration must be given not only to legislative authorizations and appropriations but also to such factors as the effect of the authorized expenditures on the national economy and their relation to other programs important to the national welfare.

A situation analogous to the present one arose in the early 1940's when the economy of the United States shifted first to defense and later to war production. At that time President Franklin Delano Roosevelt directed that projects having a lower priority would have to be postponed or even cancelled in spite of the availability of appropriated funds. In response to complaints about the curtailment by the Bureau of the Budget of certain programs of the Agricultural Marketing Administration, President Roosevelt set forth the powers and responsibilities of the executive branch in this area:

"It should, of course, be clearly understood that what you refer to as "the practice of the Bureau [of the Budget] of impounding funds duly appropriated by the Congress' is in fact action by the Chief Executive, and has two purposes. The first purpose is compliance with the Anti-Deficiency Act, which requires that appropriated funds be so apportioned over the fiscal year as to insure against deficiency spending. *** Secondly, the apportionment procedure is used as a positive means of reducing expenditures and saving money wherever and whenever such savings appear possible.

"While our statutory system of fund apportionment is not a substitute for item or blanket veto power, and should not be used to set aside or nullify the expressed will of Congress, I cannot believe that you or Congress as a whole would take exception to either of these purposes which are common to sound business management everywhere. In other words, the mere fact that Congress, by the appropriation process, has made available specified sums for the various programs and functions of the Government is not a mandate that such funds must be fully expended. Such a premise would take from the Chief Executive every incentive for good management and the practice of commonsense economy. This is particularly true in times of rapid change in general economic conditions and with respect to programs and activities in which exact standards or levels of operation are not and cannot well be prescribed by statute."

One incident which occurred during that period seems particularly relevant for the problem at hand. Section 9 of the Rural Post Roads Act of July 13. 1943. c. 236, 57 Stat. 560, 563, provided:

"No part of any appropriation authorized in this Act shall be impounded or withheld from obligation or expenditure by any agency or official, unless the War Production Board shall certify that the use of critical materials for additional highway construction would impede the conduct of the war." This section was based on an even broader proposed rider which had been added to the bill in the Senate for the avowed purpose of eliminating the authority of the Bureau of the Budget to impound highway funds, 89 Cong. Rec. 63136316. and which was narrowed in conference because the Senate provision

This letter is reproduced in part in First Supplemental National Defense Appropriation, 1944, Hearings before a Subcommittee of the Senate Committee on Appropriations. 78th Cong., 1st sess. on H.R. 3598, p. 739.

"was found wholly objectionable by all the managers on the part of the House." See H. (Conf.) Rept. 677, 78th Cong., 1st sess., p. 4 and 89 Cong. Rec. 73857386. In adopting section 9, Congress seems to have recognized that authorizing legislation does not compel the executive branch to obligate or to expend highway funds.

II

There is nothing in Title 23 of the United States Code which imposes upon the executive branch the duty to approve all qualifying projects for which appropriated funds are available.

A. 23 U.S.C. 118, which provides that apportioned funds "shall be available for expenditure under the provisions of this title," does not give the States any inchoate right to the apportioned funds. The gist of this section is that apportioned funds are available for obligation (see note 2, supra) for a period of two years after the end of the fiscal year for which the sums are authorized. It does not mean that the Secretary must approve all projects which comply with the technical requirements of 23 U.S.C. 109 as soon as funds are apportioned. Such interpretation of the statute would be inconsistent with the pay-as-you-go principle underlying the Federal-aid highway program. Thus, when it appears that the balance in the Highway Trust Fund is or will be less than the sums apportioned among the States on the basis of the authorizations contained in section 108 (b) of the Federal-Aid Highway Act of 1956, as amended, the Secretary must limit the approvals of projects under 23 U.S.C. 106(a) to a figure within the sums estimated to be actually "available for expenditure."

It is not consistent with this approach to contend that the States have vested rights in the funds apportioned prior to the actual approval of projects under 23 U.S.C. 106(a). It is approval of a project under that section which constitutes the contractual obligation of the United States. No provision of the act gives any State a vested right to the apportioned funds prior to such approval. B. I am aware of 23 U.S.C. 101(b), in which Congress declared that it is in the national interest to accelerate the construction of the Federal-aid highway systems; that the prompt and early completion of the National System of Interstate and Defense Highways is essential to the national interest; and that it is the intent of Congress that the Interstate system be completed as nearly as practicable over the period of availability of the fifteen years' appropriations (through the fiscal year ending June 30, 1972) to which the section refers. I do not consider that these policy declarations contain any mandate which is inconsistent with the deferral on the approval of Federalaid highway projects involved here.

23 U.S.C. 101 (b) does not use any mandatory language. It is well-established that such statements of policy do not add to or alter specific operative provisions of a statute. Sinclair Refining Co. v. Atkinson, 370 U.S. 195, 202 (1962); Lauf v. E. G. Shinner & Co., 303 U.S. 323. 330 (1938); Price v. Forrest, 173 U.S. 410, 427 (1899); Sutherland, Statutory Construction (3d Ed., 1943), section 4820. Language of this type is a form of congressional guidance and not a directive. It reflects congressional understanding that during the course of a long-range program, situations may arise in which the stated considerations of policy might not be decisive. See 37 Op. A.G. 546, 548; 42 Op. A.G. No. 15, pp. 8-9 (October 9, 1963); id. No. 20, p. 3 (April 26, 1965). The choice by Congress of hortatory language in 23 U.S.C. 101 (b) also seems to be indicative of its awareness of the point stressed by President Roosevelt to the effect that there are many programs and activities, especially in times of rapid changes in general economic conditions, in which it is impossible to prescribe exact statutory standards and levels of operation.

Moreover, since the purpose of action here is not to reduce the total amount of the funds to be devoted to the Federal-aid highway program but merely to slow the program for a limited period, hopefully it will have no adverse effect on the completion of the program "as nearly as practicable" by the end of the period envisaged in 23 U.S.C. 101(b).

C. It has been suggested that the highway taxes imposed by the Highway Revenue Act of 1956 are paid into the Highway Trust Fund established by section 209 of that act, and that the executive branch therefore has the fiduciary

5 Congress is well aware of this "reimbursement planning" or "contract control"_procedure. See e... S. Rept. 903. 86th Cong., 1st sess., p. 25 (Minority views); 113 Cong. Rec. H1023 (Daily Ed.. February 6. 1967).

• Under 23 U.S.C. 118(b) apportioned funds remain available for two years after the close of the fiscal year for which authorized.

duty to proceed with the construction of highways to the full extent permitted by the assets in that Fund.

As noted above, the proceeds of the highway taxes are not paid directly into the Fund; Congress merely has appropriated into the Fund amounts equivalent to specified percentages of certain taxes received in the Treasury. The assets in the Fund are neither directly nor automatically available for the payment of the Federal contributions to the States. The disbursements out of the Fund require appropriations under section 209 (f), and such appropriations cannot exceed the authorizations provided for the Federal-aid highway program.

The Highway Trust Fund thus is, in effect, a device designed to identify an amount equivalent to certain designated taxes as a ceiling on the sums available for highway construction. As indicated above, appropriations for Federal-aid highways are subject to a double limitation: they may not exceed the Federal-aid highway authorizations, nor the amount available in the Fund. As a limitation on the sums which may be spent under the Federal-aid highway legislation, the Fund is functionally akin to the conventional appropriation and, as such, it constitutes an authority rather than a mandate. While the executive branch has normally expended substantially all the monies made available by appropriations, there is no duty to spend the entire amount that is available. In the instant situation, the Executive has determined that project approvals should be limited during the current fiscal year so as to reduce the prospective level of expenditures from the Highway Trust Fund. This is a determination which the Executive is fully empowered to make.

III

I conclude that the recent limitation on the Federal-aid highway funds which may be obligated during the current fiscal year was a valid exercise of Executive authority.

Sincerely,

RAMSEY CLARK, Acting Attorney General.

Exhibit 4

U.S. DEPARTMENT OF COMMERCE,

BUREAU OF PUBLIC ROADS, Washington, D.C., November 23, 1966.

INSTRUCTIONAL MEMORANDUM 30–7–66, 34-01

Subject: Limitation on Federal-aid highway obligations during fiscal year 1967.

In recognition of the need for reducing non-military Federal expenditures as a contribution to the Vietnam effort and the resultant program to reduce inflationary pressures, the Federal-aid highway program is to be limited to $3300 million in total project obligations which can be incurred during fiscal year 1967. It is also anticipated at this date that this rate of obligations will continue into at least the first quarter of fiscal year 1968.

Actual obligations have totaled $1,056,725,000 from July 1 through October 31, 1966 thus leaving a balance available for the 8-month period November 1. 1966 through June 30, 1967, of $2,243,275,000. Funds are obligated when the States are authorized to proceed with HPR projects and with preliminary engineering, acquisition of rights-of-way, and advertising for bids on construction projects.

It is therefore planned that reimbursable obligation releases totaling $3300 million will be issued to cover the fiscal year 1967. The schedule of releases is to be as follows:

1 $1.0 billion total release less 10 percent holdback which remains in effect.

The enclosed table shows the amount of Federal-aid highway funds which may be obligated by each of the States during fiscal year 1967. The amounts shown in this table are controlling with respect to total obligations during fiscal year 1967, notwithstanding carryover balances of previously released funds available for reimbursable obligations at the beginning of the fiscal year or as of November 1, 1966. This means in effect that balances from previous quarterly release schedules are available only for incurring obligations in amounts not to exceed each State's share of $3300 million as shown in the enclosed table. They cannot be added to the amounts shown in the enclosed table, which amounts represent the total obligations which can be created during fiscal year 1967 regardless of what other releases may have been made and the balances remaining therefrom.

R. M. WHITTON, Federal Highway Administrator.

U.S. DEPARTMENT OF COMMERCE-BUREAU OF PUBLIC ROADS, LIMITATION ON FEDERAL-AID HIGHWAY OBLIGATIONS, FISCAL YEAR 1967