Presidential Authority to Impound Funds Appropriated for Assistance to Federally Impacted Schools ( 1969 )

Presidential Authority to Impound Funds Appropriated
for Assistance to Federally Impacted Schools
Public Law 81-874 does not provide statutory authority for the Commissioner of Education in the
exercise of his discretion to avoid applying the full sum appropriated to the entitlements of local
educational agencies for financial assistance to federally impacted schools.
The President does not have the constitutional authority to direct the Commissioner of Education or the
Bureau of the Budget to impound or otherwise prevent the expenditure of funds appropriated by
Congress to carry out the legislation for financial assistance to federally impacted schools, Public
Law 81-874.
December 1, 1969
MEMORANDUM OPINION FOR THE GENERAL COUNSEL
BUREAU OF THE BUDGET
You have asked us to consider whether the President may, by direction to the
Commissioner of Education or to the Bureau of the Budget, impound or otherwise
prevent the expenditure of funds appropriated by Congress to carry out the
legislation for financial assistance to federally impacted schools, Public Law 81-
874, 64 Stat. 1100 (1950) (codified as amended at 20 U.S.C. §§ 236 et seq. (1964
& Supp. IV 1965–1968), and Public Law 81-815, 64 Stat. 967 (Sept. 23, 1950)
(codified as amended at 20 U.S.C. §§ 631 et seq. (1964 & Supp. IV 1965–1968)).
I.
In July, the House of Representatives, in adopting the Joelson Amendment to
the appropriations bill for the Departments of Labor and Health, Education, and
Welfare (“HEW”) (H.R. 13111, 91st Cong. (1969)), added approximately one
billion dollars to the sum to be appropriated for various programs administered by
the Office of Education. 115 Cong. Rec. 21,688–89 (1969). One of the largest
increases was in the appropriation to carry out Public Law 81-874, which was
raised to $585 million, nearly $400 million over the figure requested by the
Administration and reported by the House Appropriations Committee. The
appropriation for Public Law 81-815, on the other hand, is only $15,167,000, the
same as that requested by the Administration.
The question arises whether, assuming that the appropriations carried in the
Joelson Amendment are not significantly reduced by the Senate, the Administra-
tion is bound to spend the money appropriated. This memorandum considers the
situation with respect to Public Law 81-874 and Public Law 81-815, particularly
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the former. In a subsequent memorandum we shall consider the situation with
respect to certain of the other items in the Joelson Amendment.1
Public Law 81-874 authorizes financial assistance for the maintenance and
operation of local school districts in areas where school enrollments are affected
by federal activities. Payments are made to eligible school districts which provide
free public education to children who live on federal property with a parent
employed on federal property (section 3(a) (codified as amended at 20 U.S.C.
§ 238)) and to children who either live on federal property or live with a parent
employed on federal property (section 3(b)); to those school districts having a
substantial increase in school enrollment resulting from federal contract activities
with private companies (section 4 (codified as amended at 20 U.S.C. § 239)); and
to school districts when there has been a loss of tax base as a result of the acquisi-
tion of real property by the federal government (section 2 (codified as amended at
20 U.S.C. § 237)). Where the state or local educational agency is unable to provide
suitable free public education to children who live on federal property, the
Commissioner of Education is required to make arrangements for such education
(section 6 (codified as amended at 20 U.S.C. § 241)). Major disaster assistance is
authorized for local educational agencies under section 7 of Public Law 81-874
(codified as amended at 20 U.S.C. § 241-1). It should be noted that the $585
million provided by the Joelson Amendment is for assistance “as authorized by
sections 3, 6, and 7” of Public Law 81-874. 115 Cong. Rec. 21,689 (1969).
Consequently, no funding is provided for sections 2 and 4, and these sections need
not concern us further.
Section 3 of Public Law 81-874 (as amended and codified) requires the Com-
missioner to compute the “entitlement” of a local educational agency under a
formula, whereby, simply stated, the number of Category A children and one-half
the Category B children2 is multiplied by the local contribution rate for the school
district as determined under section 3(d). The determination of entitlement is not
entirely mechanical, for within fairly narrow limits the Commissioner has
discretion in selecting the basis for his determination of the local contribution rate,
and other provisions permit him to make favorable adjustments in entitlements
under narrowly defined circumstances (section 3(c)(2), (c)(4), (e); section 5(d)(1)
(codified as amended at 20 U.S.C. § 240)).
1
This memorandum does not consider title I of the Elementary and Secondary Education Act of
1965, Pub. L. No. 89-10, 79 Stat. 27 (codified as amended at 20 U.S.C. §§ 241a–241m (Supp. IV
1965–1968)), which, although enacted as title II of Public Law 81-874, is usually cited as a separate
statute and is listed as a separate appropriation item in the Joelson Amendment. 115 Cong. Rec. 21,689
(1969).
2
The terms “Category A” and “Category B” refer to the standards for eligibility under sections 3(a)
and 3(b), respectively.
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Once a district’s section 3 entitlement has been determined, however, the pro-
cess of making payments becomes mechanical. Section 5(b) of Public Law 81-874
(as amended and codified) provides:
The Commissioner shall . . . from time to time pay to each local edu-
cational agency, in advance or otherwise, the amount which he esti-
mates such agency is entitled to receive under this subchapter. . . .
Sums appropriated pursuant to this subchapter for any fiscal year
shall remain available, for obligation and payments with respect to
amounts due local educational agencies under this subchapter for
such year, until the close of the following fiscal year.
20 U.S.C. § 240(b).3
However, Public Law 81-874 does not constitute a promise by the United
States to pay the full entitlement, for the statute contemplates that Congress may
choose not to appropriate sufficient money to fund the program at 100% of
entitlement. In such a circumstance section 5(c) provides that the Commissioner
after deducting the amount necessary to fund section 6, shall, subject to any
limitation in the appropriation act, apply the amount appropriated pro rata to the
entitlements.4 (Since the Joelson Amendment provides no funding for sections 2
and 4, this would mean that after deducting the amount necessary to fund section 6
and, perhaps, constituting a reserve for possible application to section 7,5 the
appropriation would be applied to the payment of section 3 entitlements.)
In sum, whatever limited discretionary authority the Commissioner may have
with respect to determining entitlements, section 5 does not appear to permit any
exercise of discretion in the application of appropriated funds to the payment of
entitlements. Since the $585 million carried in the Joelson Amendment is only
90% of the total estimated entitlements, Departments of Labor and Health,
Education, and Welfare Appropriations for 1970: Hearings Before the Subcomm.
3
This provision for continued availability beyond the close of the fiscal year conflicts with section
405 of the appropriation bill, H.R. 13111, 91st Cong. (as reported by H. Comm. on Appropriations,
July 24, 1969). However, we understand that HEW regards the obligation of the funds as occurring
within the fiscal year, even though the precise amount due may not be ascertained until after the close
of the fiscal year.
4
Thus, he would have no authority to vary this formula in order to provide fuller funding for
Category A entitlements at the expense of Category B entitlements unless Congress were so to provide
in the appropriation act.
5
It is arguable that since the Joelson Amendment appropriates funds to carry out sections 3, 6,
and 7, the Commissioner could set up a reserve for contingencies under section 7, disaster assistance.
On the other hand, section 7(c) of Public Law 81-874 permits the Commissioner, notwithstanding the
Anti-Deficiency Act, to grant assistance under section 7 out of moneys appropriated for the other
sections, such funds to be reimbursed out of subsequent appropriations for carrying out section 7. Since
the statute permits such application of funds allocated to carrying out section 3, it would be hard for the
Commissioner to justify withholding funds from allocation on the basis of the possibility that they
might be needed for disaster assistance.
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on Departments of Labor and Health, Education, and Welfare and Related
Agencies of the H. Comm. on Appropriations, 91st Cong., pt. 5, at 229 (1969),
discretionary cutbacks on entitlements would have to exceed 10% of the total
before there would be any impact on the total funding of the program.
We do not, in short, find within Public Law 81-874 any statutory authority for
the Commissioner in the exercise of his discretion to avoid applying to the
entitlements the full sum appropriated, and we conclude that the provisions of
section 5 are mandatory in this respect. 6 We understand that this conclusion is
consistent with the position taken over the years by the General Counsel of the
Department of Health, Education, and Welfare.7
Public Law 81-815 authorizes payments to assist local school districts in the
construction of school facilities in areas where enrollments are increased by
federal activities. The entitlement for assistance is computed under a statutory
formula, and in addition there is provision for judicial review of a commissioner’s
determination refusing to approve part or all of any application for assistance
under the Act. Id. § 11(b) (codified as amended at 20 U.S.C. § 641(b)). On the
other hand, the mechanics of administration of Public Law 81-815 differ signifi-
cantly from those of Public Law 81-874. First, the commissioner is not required to
apply appropriations pro rata among the eligible districts, but in accordance with
priorities which he establishes by regulation (section 3 (codified as amended at 20
U.S.C. § 633)). Second, entitlement for assistance is not computed on an annual
basis, but as a share of the cost of a particular project. Thus, if funds are held up in
one fiscal year, the project may be funded the next year. Finally, the commissioner
is apparently free to allot, in his discretion, an indefinite share of the appropriation
to section 14 purposes, school construction on Indian reservations.
While we hesitate to conclude, on this fairly summary consideration, that the
Commissioner has discretionary authority under Public Law 81-815 to delay
indefinitely the obligation and expenditure of funds appropriated to carry out the
statute, it does appear to us that there are enough discretionary powers throughout
the statute to permit him to postpone the obligation of funds during fiscal 1970.
Indeed, the Joelson Amendment provides that the appropriation for Public Law
81-815 shall remain available until expended, 115 Cong. Rec. 21,689, which
would seem to confirm the conclusion that there is no legal requirement that the
6
Mandatory, that is, provided that the school district is in compliance with applicable federal
statutes and regulations. Where a district is not in compliance, the Commissioner may have authority to
withhold or terminate assistance, see, e.g., Civil Rights Act of 1964, Pub. L. No. 88-352, tit. VI, 78
Stat. 241, 252 (codified at 42 U.S.C. §§ 2000d et seq. (1964 & Supp. IV 1965–1968)); 45 C.F.R. pt. 80
(1968). Whether in the event of such a withholding or termination the Commissioner would be required
to apply the funds to the unfunded entitlements of other districts is a point we need not decide at this
time.
7
Memorandum for Assistant Secretary Huitt from General Counsel Willcox (Mar. 29, 1966);
Memorandum for the Secretary from General Counsel Banta (Aug. 6, 1958) (HEW files do not indicate
whether this memo was actually sent).
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funds be obligated in the year for which the appropriation is made. However,
inasmuch as the appropriation in question is relatively small and is consistent with
the Administration’s budget request, we see no need to discuss in greater detail the
legal arguments which could be used to support a deferral of action to obligate the
funds.
II.
Notwithstanding the apparently mandatory provisions of Public Law 81-874, it
has been suggested that the President has a constitutional right to refuse to spend
funds which Congress has appropriated. In particular, there have been a number of
statements by congressmen with respect to the very programs of the Office of
Education presently under consideration that Congress could not force the
President to spend money which he did not want to spend.
Section 406 of the Elementary and Secondary Education Amendments of 1967,
Pub. L. No. 90-247, 81 Stat. 783 (1968) (as added by the Vocational Education
Amendments of 1968, Pub. L. No. 90-576, § 301, 82 Stat. 1064, 1094), provides
that notwithstanding any other provision of law, unless expressly in limitation of
this provision, funds appropriated to carry out any Office of Education program
shall remain available for obligation until the end of the fiscal year. The purpose
of this provision was to deny to the President authority which he would otherwise
have had under the Revenue and Expenditure Control Act of 1968, Pub. L. No. 90-
364, §§ 202–203, 82 Stat. 251, 271–72, to reduce obligations and expenditures on
Office of Education programs, and, in particular, the impacted area programs and
title III of the National Defense Education Act of 1958, Pub. L. No. 85-864, 72
Stat. 1580, 1588 (codified at 20 U.S.C. §§ 441 et seq. (1964 & Supp. IV 1965–
1968)). See 114 Cong. Rec. 29,155 (1968). During the debate in both Houses on
this provision several members stated that section 406 would not interfere with the
President’s constitutional authority to reduce expenditures in the area of education.
See 114 Cong. Rec. 29,159 (1968) (remarks of Sens. Dominick and Yarborough);
114 Cong. Rec. 29,481 (1968) (remarks of Congressmen Perkins and Quie).
Similar views were expressed almost contemporaneously in connection with
the House of Representatives’ consideration of a Senate amendment to the Labor-
HEW appropriations bill, 1969 (H.R. 18037, 91st Cong.), which would exempt
from both the Antideficiency Act and the Revenue and Expenditure Control Act
an appropriation of $91 million for impacted area school assistance for fiscal
1968. In advising the House to accept the Senate amendment, Congressman Flood
stated:
Section 406 of the Vocational Education Act amendments seems to
many and, I must say, not to others, to cover what the language in
disagreement seeks to do; but in any event there are many instances
in which it has been made clear that the President has the constitu-
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tional powers to refuse to spend money which the Congress appro-
priates.
114 Cong. Rec. 30,588 (Oct. 10, 1968). Congressman Laird agreed:
The language will not be interpreted as a requirement to spend be-
cause of the constitutional question which is involved. The Congress
cannot compel the President of the United States to spend money
that he does not want to spend.
Id. at 30,588–89. More recently, in the hearing on HEW’s appropriation bill for
fiscal 1970 (H.R. 13111, 91st Cong.), Congressman Smith stated his belief that
HEW was not compelled to spend the funds appropriated for the impact aid
program. Hearings Before a Subcommittee of the House Appropriations Commit-
tee, 91st Cong., pt. 3, at 263 (1969). Subcommittee Chairman Flood appeared to
agree. Id. at 264.
Taken together these statements evidence broad congressional support for the
proposition that the President has some residual constitutional authority to refuse
to expend those funds to which section 406 applies. What is not clear is the nature
or the precise source of the authority the speakers had in mind.
For the reasons discussed below we conclude that the President does not have a
constitutional right to impound Public Law 81-874 funds notwithstanding a
congressional direction that they be spent. However, before proceeding with
discussion of the constitutional question we might note that the congressional
statements cited above might be used in support of another argument for presiden-
tial authority, based on statutory interpretation. It might be argued that although
these statements cannot affect the interpretation of Public Law 81-874, since they
were not made in the course of enacting or amending that statute, nevertheless
Public Law 81-874 is not self-executing, and its operation is expressly conditioned
on the enactment of subsequent appropriations legislation. Therefore, in determin-
ing the duties of the Commissioner of Education one must construe the intent of
both the substantive legislation, Public Law 81-874, and the appropriations
legislation, and the present understanding of Congress, as evidenced by the
statements above, is that the enactment of the appropriation does not create a duty
to spend.
Up to a point this argument has a certain amount of validity. We do not doubt,
for example, that notwithstanding the terms of Public Law 81-874, Congress could
provide in its appropriation that the money need not be spent. Or it could enact an
appropriation, and then provide in contemporaneous or subsequent legislation that
the money need not be spent, as was done in title II of the Revenue and Expendi-
ture Control Act of 1968, Pub. L. No. 90-364. However, the congressional
statements cited above refer to the President’s constitutional powers and not to
congressional intent. It seems doubtful that one can infer from those statements,
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most of them made in 1968, that Congress, in enacting the appropriations legisla-
tion in 1968, intended to exert less than its full authority to require the expenditure
of funds appropriated to Public Law 81-874. Still, since at this writing the
appropriations legislation has not yet been passed, it may be that legislative history
may still be made which would support the argument that Congress does not
intend to require the expenditure of the entire sum appropriated.
With respect to the suggestion that the President has a constitutional power to
decline to spend appropriated funds, we must conclude that existence of such a
broad power is supported by neither reason nor precedent. There is, of course, no
question that an appropriation act permits but does not require the Executive
Branch to spend funds. See Federal-Aid Highway Act of 1956—Power of Presi-
dent to Impound Funds, 42 Op. Att’y Gen. 347, 350 (1967). But this is basically a
rule of construction, and does not meet the question whether the President has
authority to refuse to spend where the appropriation act or the substantive
legislation, fairly construed, requires such action.
In 1967, Attorney General Clark issued an opinion upholding the power of the
President to impound funds which had been apportioned among the States
pursuant to the Federal-Aid Highway Act of 1956, 23 U.S.C. §§ 101 et seq. (1964
& Supp. IV 1965–1968), but had not been obligated through the approval by the
Secretary of Transportation of particular projects. Federal-Aid Highway Act, 42
Op. Att’y Gen. 347. This opinion appears to us to have been based on the con-
struction of the particular statute, rather than on the assertion of a broad constitu-
tional principle of executive authority. While the reasoning of the opinion might
lend support to executive action deferring the obligation of funds under Public
Law 81-815, we think the case of Public Law 81-874 is clearly distinguishable,
because, among other reasons, impounding the Public Law 81-874 funds would
result not in a deferral of expenditures but in permanent loss to the recipient school
districts of the funds in question and defeat the congressional intent that the
operations of these districts be funded at a particular level for the fiscal year.
While there have been instances in the past in which the President has refused
to spend funds appropriated by Congress for a particular purpose, we know of no
such instance involving a statute which by its terms sought to require such
expenditure.
Although there is no judicial precedent squarely in point, Kendall v. United
States, 37 U.S. (12 Pet.) 524 (1838), appears to us to be authority against the
asserted presidential power. In that case it was held that mandamus lay to compel
the Postmaster General to pay to a contractor an award which had been arrived at
in accordance with a procedure directed by Congress for settling the case. The
Court said:
There are certain political duties imposed upon many officers in
the executive department, the discharge of which is under the direc-
tion of the President. But it would be an alarming doctrine, that Con-
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gress cannot impose upon any executive officer any duty they may
think proper, which is not repugnant to any rights secured and pro-
tected by the constitution; and in such cases, the duty and responsi-
bility grow out of and are subject to the control of the law, and not to
the direction of the President. And this is emphatically the case,
where the duty enjoined is of a mere ministerial character.
Id. at 610.
It might be argued that Kendall is not applicable to the instant situation because
the Commissioner of Education’s duties are not merely ministerial. Cf. Decatur v.
Paulding, 39 U.S. (14 Pet.) 497, 515 (1840). On the other hand, while discretion is
involved in the computation of the entitlement of the recipient districts, as we have
pointed out, the application of the appropriation to the payment of entitlements
pursuant to section 5(c) of Public Law 81-874 might reasonably be regarded as a
ministerial duty. In any event, the former distinction between discretionary and
ministerial duties has lost much of its significance in view of the broad availability
of judicial review of agency actions and of a remedy in the Court of Claims for
financial claims against the government. 28 U.S.C. § 1491 (1964). Thus, the mere
fact that a duty may be described as discretionary does not, in our view, make the
principle of the Kendall case inapplicable, if the action of the federal officer is
beyond the bounds of discretion permitted him by the law.
In an opinion letter of May 27, 1937 to the President, * Attorney General Cum-
mings answered in the negative the question whether the President could legally
require the heads of departments and agencies to withhold expenditures from
appropriations made. Insofar as the opinion concludes that a presidential directive
may not bind a department head in the exercise of discretionary power vested in
him by statute, this opinion appears inconsistent with the views expressed in the
opinion of Attorney General Clark previously cited and with constitutional
practice in recent years.8 However, the Cummings opinion also rejects any idea
that the President has any power to refuse to spend appropriations other than such
power as may be found or implied in the legislation itself.
It is in our view extremely difficult to formulate a constitutional theory to
justify a refusal by the President to comply with a congressional directive to
spend. It may be argued that the spending of money is inherently an executive
function, but the execution of any law is, by definition, an executive function, and
it seems an anomalous proposition that because the Executive Branch is bound to
execute the laws, it is free to decline to execute them. Of course, if a congressional
directive to spend were to interfere with the President’s authority in an area
*
Editor’s Note: That opinion letter is also included in this volume (Presidential Authority to Direct
Departments and Agencies to Withhold Expenditures From Appropriations Made, 1 Op. O.L.C. Supp.
12 (May 27, 1937)).
8
See also The Jewels of the Princess of Orange, 2 Op. Att’y Gen. 482 (1831) (Taney, A.G.).
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confided by the Constitution to his substantive direction and control, such as his
authority as Commander in Chief of the Armed Forces and his authority over
foreign affairs, United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304, 319–22
(1936), a situation would be presented very different from the one before us. But
the President has no mandate under the Constitution to determine national policy
on assistance to education independent from his duty to execute such laws on the
subject as Congress chooses to pass.
It has been suggested that the President’s duty to “take Care that the Laws be
faithfully executed,” U.S. Const. art. II, § 3, might justify his refusal to spend, in
the interest of preserving the fiscal integrity of the government or the stability of
the economy. This argument carries weight in a situation in which the President is
faced with conflicting statutory demands, as, for example, where to comply with a
direction to spend might result in exceeding the debt limit or a limit imposed on
total obligations or expenditures. See, e.g., Pub. L. No. 91-47, tit. IV, 83 Stat. 49,
82 (1969). But it appears to us that the conflict must be real and imminent for this
argument to have validity; it would not be enough that the President disagreed
with spending priorities established by Congress. Thus, if the President may
comply with the statutory budget limitation by controlling expenditures which
Congress has permitted but not required, he would, in our view, probably be
bound to do so, even though he regarded such expenditures as more necessary to
the national interest than those he was compelled to make.9
If Congress should direct the expenditure of funds in the carrying out of a
particular program or undertaking, say, construction of a public building, but
without limiting the Executive’s discretion in such a way as to designate the
recipient of the appropriated funds, a better argument might perhaps be made for a
constitutional power to refuse to spend than is available in the formula grant
9
We understand that the operation of the expenditure limitation imposed by title IV of Public Law
91-47 may require curtailment of certain controllable expenditures. Paradoxically, title IV would not
conflict with the increase over budgeted amounts in appropriations provided by the Joelson Amend-
ment, because the expenditure limitation would automatically be adjusted upward. Nevertheless, we are
informed that it might prove difficult to comply with title IV without cutting back on expenditure of
budgeted funds for Public Law 81-874 and other Office of Education programs. Whether in such a
situation title IV could be viewed as conflicting with and thus superseding the requirements of Public
Law 81-874 depends to a large extent on the Executive’s spending options at that time. Two
considerations cause us to hesitate to infer from title IV a grant of authority to the President to impound
appropriations for formula grants for education. First, title IV, as passed by the Senate, contained
specific language permitting the impounding of funds appropriated for formula grants and other
mandatory programs, but exempting from this authority education programs. The conference report
contained neither the grant of authority nor the exception. H.R. Rep. No. 91-356 (1969) (Conf. Rep.).
Second, section 406 of the Elementary and Secondary Education Amendments (as added by the
Vocational Education Amendments of 1968) would conflict with such a grant of authority, and there is
legislative history to the effect that title IV of Public Law 91-47 was not intended to alter the effect of
section 406 of the Elementary and Secondary Education Amendments. See 115 Cong. Rec. 18,928–29
(1969). Nevertheless, we do not rule out at this time the possibility that in appropriate circumstances
title IV might permit the impounding of such funds.
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situation presented by Public Law 81-874. Or this might be viewed simply as a
situation in which the duty to spend exists but there is no constitutional means to
compel its performance.
III.
As to the availability of a remedy, if our conclusion that section 5 of Public
Law 81-874 requires expenditure of the appropriation is correct, we believe that
the recipient school districts will probably have a judicial remedy. It is true that
unlike Public Law 81-815, Public Law 81-874 has no specific provision for
judicial review of a refusal to make a grant. However, absence of such a provision
does not imply that no judicial review was intended. See Abbott Labs. v. Gardner,
387 U.S. 136, 139–46 (1967). It may be that a suit to compel the Commissioner to
apply the appropriation would be inappropriate, see Land v. Dollar, 330 U.S. 731,
738 (1947), but if the school districts are legally entitled to payment under the
statute, they can sue the government in the Court of Claims. 28 U.S.C. § 1491.
Such a suit would raise interesting legal problems, for it is clear that “entitlement”
under Public Law 81-874 is not itself equivalent to a legal obligation to pay, and it
is doubtful that even entitlement plus appropriation creates a vested right which
may not be destroyed by subsequent congressional action. Accordingly, technical
defenses might prevent recovery by a school district even if the court concluded
that the Executive Branch had a statutory duty to spend the appropriation.
WILLIAM H. REHNQUIST
Assistant Attorney General
Office of Legal Counsel
312