Inspector General Authority to Conduct Regulatory Investigations ( 1989 )

Inspector General Authority
to Conduct Regulatory Investigations
The Inspector General Act of 1978, as amended, does not generally vest in the Inspector
General of the Department of Labor the authority to conduct investigations pursuant to
regulatory statutes administered by the Department of Labor. The Inspector General has
an oversight rather than a direct role in investigations conducted pursuant to regulatory
statutes: he may investigate the Department’s conduct of regulatory investigations, but
may not conduct such investigations himself.
The responsibility to conduct regulatory investigations cannot be delegated by the Secretary
to the Inspector General pursuant to section 9(a)(2) of the Inspector General Act.
The significant investigative authority granted to Inspectors General under the Inspector
General Act includes the authority to investigate recipients of federal funds, such as con­
tractors and grantees, to determine if they are complying with federal laws and regula­
tions and the authority to investigate the policies and actions of the Departments and
their employees. This latter authority includes the authority to exercise “oversight” over
the investigations that are integral to the programs of the Department.
March 9, 1989
M emorandum O pinion fo r the S olicitor
D epartm ent o f L abor
This memorandum responds to the request of September 23, 1988, as
supplemented by a letter of December 5, 1988, for the opinion of this
Office as to the scope of the investigative authority of the Inspector
General of the Department of Labor under the Inspector General Act of
1978, Pub. L. No. 95-452, 92 Stat. 1101 (1978), as thereafter amended (cod­
ified as amended at 5 U.S.C. app. §§ 1-9) (“the Act”). Specifically, we were
asked to determine whether the authority granted the Inspector General
includes the authority to conduct investigations pursuant to statutes that
provide the Department with regulatory jurisdiction over private individ­
uals and entities that do not receive federal funds.
As set forth below, we conclude that the Act does not generally vest in
the Inspector General authority to conduct investigations pursuant to
regulatory statutes administered by the Department of Labor.1 Rather,
1 We shall henceforth refer to such investigations as “regulatory investigations " Such investigations
generally have as their objective regulatory compliance by private parties On the other hand, investiga­
tions properly within the ambit of the Inspector General generally have as their objective the elimination
Continued
54
Congress intended the Inspector General to be an objective official free
from general regulatory responsibilities who investigated the employees
and operations of the Department, as well as its contractors, grantees and
other recipients of federal funds, so as to root out waste and fraud. Thus,
the Inspector General has an oversight rather than a direct role in inves­
tigations conducted pursuant to regulatory statutes: he may investigate
the Department’s conduct of regulatory investigations but may not con­
duct such investigations himself.2
I. Background
A dispute has arisen between the Solicitor and Inspector General of the
Department of Labor as to the types of investigations the Inspector
General is authorized to conduct. It is undisputed that the Inspector
General is authorized to conduct investigations of the Department’s oper­
ations, employees, contractors, grantees and other recipients of federal
funds. What is disputed is whether the Inspector General is also autho­
rized to conduct investigations pursuant to statutes that grant the
Department regulatory authority over individuals and entities outside the
Department who do not receive federal funds.
The dispute has precipitated interest beyond the Department of Labor.3
At issue is the authority of the Inspector General under regulatory
1 ( .continued)
of waste and fraud in governmental departments, including waste and fraud among its employees, con­
tractors, grantees and other recipients of federal funds As we note below, however, see infra note 20, the
Inspector General may investigate private parties who do not receive federal funds when they act in collu­
sion with the Department’s employees or other recipients of federal funds to avoid regulatory compliance.
2 When our opinion was first requested in this matter, we attempted to limit our opinion to the specif­
ic situation that prompted the dispute between the Solicitor of Labor and the Inspector General See
Letter for George R Salem, Solicitor of Labor, from Douglas W. Kmiec, Assistant Attorney General, Office
of Legal Counsel (Oct. 28,1988); Letter for J. Brian Hyland, Inspector General, Department of Labor, from
Douglas W. Kmiec, Assistant Attorney General, Office of Legal Counsel (Oct. 28,1988). Your predecessor
replied that the dispute had not arisen from a specific statutory or factual context, but rather from the
Inspector General’s claim of “general authority to investigate any violation of any statute administered
or enforced by the Department." Letter for Douglas W Kmiec, from George R Salem at 1 (Dec 5, 1988)
In his response, the Inspector General agreed that the dispute concerned the existence of such general
authority Letter for Douglas W. Kmiec, from J. Brian Hyland (Dec 22, 1988) (“Hyland Letter").
Accordingly, while we have made reference to certain specific regulatory schemes (such as the Fair
Labor Standards Act) which Mr. Salem offered as paradigmatic examples of statutes giving rise to the
general dispute, we have responded to the request with an opinion establishing general principles We
would be pleased to give more specific guidance with respect to the scope of the Inspector General’s
authority in the context of a particular statutory scheme should you or the Inspector General so request.
3 The Inspector General Act is a generic one in the sense that its core provisions apply to most of the
departments and agencies of the federal government. See 5 U.S C app. §§ 2(1), 11(2) & 8E Our opinion,
therefore, will necessarily have applicability beyond the Department of Labor For this reason, this opin­
ion has been of interest to various Inspectors General in other departments, and in addition to the mate­
rials submitted by the Inspector General of the Department of Labor, we have reviewed carefully the let­
ters and memoranda other Inspectors General have submitted to us. Memorandum for Dennis C
Whitfield, Deputy Secretary of Labor, from Richard Kusserow, Inspector General, Department of I lealth
and Human Services (“HHS”) (Oct. 6, 1988); Letter for Douglas W. Kmiec, Assistant Attorney General,
Continued
55
statutes such as the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-
219, and the Occupational Safety and Health Act (“OSHA”), 29 U.S.C. §§
651-678, which impose restrictions on individuals and entities who are
not employees of a Department and who are not contractors, grantees or
other recipients of federal funds distributed by the Department.4 FLSA,
for instance, requires that a fixed minimum wage be paid to any covered
employee, id. § 206, as well as imposing other regulatory requirements
such as restricting the work week to 40 hours unless the employee is
compensated at not less than one and one half times the regular rate. Id.
§ 207. Similarly, OSHA imposes on employers the duty to furnish a safe
workplace and to comply with the safety standards promulgated by the
Secretary of Labor under its authority. Id. § 654(a).
The Secretary of Labor is the official charged with administering these
statutes. That authority includes specific grants of enforcement and
investigative authority. See, e.g., id. §§ 212(b), 657. The Inspector
General, however, believes that the provisions of the Act granting him
authority to conduct investigations “relating to the programs” of the
Department vest in him general investigative authority under these regu­
latory statutes. Memorandum for the Deputy Secretary, Department of
Labor, from J. Brian Hyland, Inspector General, Department of Labor, Re:
Authority of Inspector General at 2 (Oct. 17, 1988) (“Hyland Memo”).5
Indeed, he argues that since the Act gives him authority to “supervise” all
investigations “relating to programs” of the Department of Labor, he has
supervisory authority over the Secretary of Labor with respect to her
exercise of her statutory authority to conduct investigations pursuant to
the regulatory statutes the Department administers. Id. at 7.
The Solicitor disagrees. He views the Inspector General as an auditor
and internal investigator for the Department — authorized to investigate
the operations of the Department, the conduct of its employees and the
Department’s contractors, grantees and other recipients of federal funds.6
3 ( . continued)
Office of Legal Counsel, from Charles R. Gillum, Inspector General, Small Business Administration (Nov.
4, 1988), Letter for Douglas W Kmiec, from John W Melchner, Inspector General, Department of
Transportation (Dec 1, 1988), Letter for Douglas W Krruec, from Paul A Adams, Inspector General,
Department of Housing and Urban Development (Nov. 30, 1988), Letter for Douglas W Kmiec, from
Francis D. DeGeorge, Inspector General, Department of Commerce (Dec 1, 1988)
4At our request, the Solicitor provided a detailed description of three investigations undertaken by the
Inspector General. This was to clarify for our benefit the nature of the dispute between the Solicitor and
the Inspector General We have addressed here the general legal question asked by the Solicitor. We
express no opinion as to whether any o f these particular investigations was authorized.
6 The Inspector General does not claim that he has the same enforcement and litigative authority as the
Secretary of Labor. For instance, he neither claims authority under the FLSA to impose civil monetary
penalties, nor the authority to initiate civil litigation Rather, he claims the authority to conduct regulato­
ry investigations and refer the results to the Department of Justice for civil action or criminal prosecution.
GThe Solicitor does not question the authority of the Inspector General to conduct investigations relat­
ing to organized crime and racketeering to the extent that authority derives from the jurisdiction of the
Continued
56
II. Discussion
The Act established the Office of Inspector General in the Department
of Labor and in the other covered departments. The purpose of the Act,
as stated in section 2, is “to create independent and objective units” to
“conduct and supervise audits and investigations relating to the programs
and operations” of the covered departments, 5 U.S.C. app. § 2(1), and “to
provide leadership and coordination and recommend policies for activi­
ties designed (A) to promote economy, efficiency, and effectiveness in
the administration of, and (B) to prevent and detect fraud and abuse in,
such programs and operations.” Id. § 2(2).
Section 4 of the Act provides authority that is correlative to these
responsibilities:
(a) It shall be the duty and responsibility of each Inspector
General, with respect to the establishment within which his
Office is established—
(1) to provide policy direction for and to conduct, super­
vise, and coordinate audits and investigations relating to
the programs and operations of such establishment;
(3) to recommend policies for, and to conduct, super­
vise, or coordinate other activities carried out or
financed by such establishment for the purpose of pro­
moting economy and efficiency in the administration of,
or preventing and detecting fraud and abuse in, its pro­
grams and operations; ....
Id. § 4(a). Furthermore, section 6(a)(2) authorizes the Inspector General
“to make such investigations and reports relating to the administration of
the programs and operations of the applicable establishment as are [in
his judgment] necessary or desirable.” Id. § 6(a)(2).
Finally, section 9(a)(2) authorizes the transfer of “such other offices or
agencies, or functions, powers, or duties thereof, as the head of the estab­
lishment involved may determine are properly related to the functions of
6 (...continued)
Office of Special Investigations whose functions were specifically transferred to the Inspector General
in the Act. 5 U S C. app § 9(a)(1)(G). Various issues relating to the scope of that authority are addressed
m an earlier opinion of this Office Memorandum for Stephen S. Trott, Assistant Attorney General,
Criminal Division, from Larry L. Simms, Deputy Assistant Attorney General, Office of Legal Counsel, Re
On-Site Inspection o f Books and Records in Crim inal Investigations o f Labor Unions and Employee
Benefit Plans (Dec. 23, 1983)
57
the [Inspector General] and would, if so transferred, further the pur­
poses of this Act,” but adds the caveat: “except that there shall not be
transferred to an Inspector General ... program operating responsibili­
ties.” Id. § 9(a)(2).
The question presented is the meaning of the phrase “relating to the
programs and operations” in section 4 and “relating to the administration
of the programs and operations” in section 6, as well as similar language
elsewhere in the Act.7 The Act does not define terms such as “investiga­
tions” and “programs,” nor does the Act expressly address whether the
Inspector General is authorized to conduct investigations pursuant to
regulatory statutes administered by the Department. But we think the
meaning of the statutory language is clear when examined in the context
of the structure and legislative history of the Act.
The impetus for the Inspector General Act of 1978 was revelations of
significant corruption and waste in the operations of the federal govern­
ment, and among contractors, grantees and other recipients of federal
funds. S. Rep. No. 1071, 95th Cong., 2d Sess. 4 (1978). Furthermore,
Congress concluded that the existing audit and investigative units were
inadequate to deal with this problem because they reported to, and were
supervised by, the officials whose programs they were to audit and inves­
tigate. Id. at 5-6; H.R. Rep. No. 584, 95th Cong., 1st Sess. 5 (1977).
The Act addressed both the underlying problem and this organization­
al defect. The Inspector General was to deal with “fraud, abuse and waste
in the operations of Federal departments and agencies and in federally-
funded programs.” S. Rep. No. 1071 at 4. The Inspector General was to be
an objective official reporting directly to the head of the department and
not to the program head whose operations were to be audited and inves­
tigated. H.R. Rep. No. 584 at 11. This objectivity was to be fostered by a
7 In a supplemental letter to us, the Inspector General argues that it is necessary to accept his broad
view of his authority lest a situation be created whereby there was no entity investigating a wide-range
of criminal offenses under the regulatory jurisdiction of the Department of Labor Letter for Douglas W
Kmiec, Assistant Attorney General, Office of Legal Counsel, from J. Brian Hyland, Inspector General,
Department of Labor (Dec 22, 1988). Specifically, he argues that while the Department of Labor may gen­
erally have criminal investigative authority over the offenses listed in the labor provisions (title 29 of the
U S. Code), it does not, with one specific exception, have criminal investigative authority over the gen­
eral criminal provision of title 18 Id. at 1-2. By contrast, the Inspector General argues that he does pos­
sess criminal investigative authority under title 18 Id at 2.
The Inspector General’s argument is misconceived. We have no doubt that the Inspector General has
criminal investigative authority, see 5 U S C. app. § 4(d), United States v Aero Mayflower Transit Co.,
831 F.2d 1142, 1145 & n 3 (D C. Cir. 1987), but he only has that authority w ithin the scope of his statuton-
ly-granted investigative authonty It is the scope of that authority that is at issue here
Moreover, we note that it would by no means be anomalous if neither the Secretary of Labor nor the
Inspector General had criminal investigative authonty over some statutory violation that affected the
Department of Labor. The Federal Bureau of Investigation (“FBI”) has general criminal investigative
authonty over all violations of federal law. 28 U.S C § 533(1); 28 C F.R. § 0.85(a) (1989). See also 28 U S C
§ 535. Other departm ents or agencies have authonty to conduct cnminal investigations only “when inves­
tigative junsdiction has been assigned by law to such departments and agencies." 28 U S.C. § 533. Thus,
it is not unusual for the FBI to have exclusive cnminal investigative authority with regard to certain
statutory violations.
58
lack of conflicting policy responsibility: “[T]he legislation gives the
[Inspector General] no conflicting policy responsibilities which could
divert his attention or divide his time; his sole responsibility is to coordi­
nate auditing and investigating efforts and other policy initiatives
designed to promote the economy; efficiency and effectiveness of the
programs of the establishment.” S. Rep. No. 1071 at 7.
The legislative history of the Act reflects a consistent understanding
that the role of the Inspector General was to be that of an investigator
who would audit and investigate the operations of the departments and
their federally-funded programs. See, e.g., S. Rep. No. 1071 at 27 (“The
[Inspector General’s] focus is the way in which Federal tax dollars are
spent by the agency, both in its internal operations and its federally-fund­
ed programs.”).8 The legislative history also rejects the idea that
Inspectors General would have the authority to conduct regulatory inves­
tigations of the type at issue here. The most comprehensive statement is
in the House Report:
While Inspectors General would have direct responsibility
for conducting audits and investigations relating to the effi­
8 The Inspector General has quoted to us various statements made by Members of Congress during
hearings or debates that he asserts support his view that Congress intended that Inspectors General have
authonty to investigate violations of regulatory statutes administered by their departments. These quo­
tations include general statements to the effect that Inspectors General were to have broad authority to
investigate the programs and employees of the departments, see, e g , Hyland Memo at 3 (quoting Rep
Fountain), as well as general statements that Inspectors General would restore public confidence in gov­
ernment, see, e g ,id at 4 n.8 (quoting Rep. Levitas) None of these quotations provides support for the
view that Congress intended to vest the Inspectors General with authority over regulatory investigations
The Inspector General also argues that the hearings made Congress aware that the then-existing
Inspectors General were undertaking regulatory investigations under the departments’ regulatory
statutes, but the evidence he cites does not support Iiis argument For instance, he quotes a report sub­
mitted to a Senate Committee at the same time as the Senate was considering the Act in which the
Inspector General of the Department of Health, Education and Welfare defined “abuse" as covering “a
wide variety of excessive services or program violations, and improper practices,” id at 4, but there is
nothing in the quotation to indicate that the reference to “program violations" meant general regulatory
enforcement rather than violations of law committed by department employees or its contractors or
employees. Similarly, the Inspector General cites references in the testimony of the non-statutory
Inspector General of the Department of Agnculture at the House committee hearings regarding investi­
gations of meat and grain inspections which had been conducted by his office. We have examined the
portions of the testimony of the Inspector General and other officials of the Department of Agriculture
at these heanngs which dealt with these investigations The only relevant colloquy we can find occurred
when Representative Jenrette asked the Audit Director of the Department of Agnculture whether the
“majonty” of ihese investigations had to do with employees of that Department. The response was: “Yes,
I would say most of the time it had to do with some sort of inspection function and inspection employ­
ees Also, the plants that had been afforded meat inspection service or meat grading service.”
Establishment o f Offices of Inspector General- Hearings on H.R. 2819 Before the Subcomm o f the
House Comm, on Government Opei'ations, 95th Cong, 1st Sess. at 47 (1977) Representative Jenrette
then responded that this was appropnate because “employees of the Department should certainly
have oversight . before the citizen on the street,” and that the people the taxpayers are paying should
be subject to “control” and “investigation].” Id We believe, m fact, that the grain inspectors who had
been the subjects of these investigations were licensees of the Department of Agnculture not employees.
In any event, this testimony hardly provides support for the view that Congress generally understood that
conducting regulatory investigations was part of the role of Inspectors General
59
ciency and economy of program operations and the prevention
and detention of fraud and abuse in such programs, they would,
not have such responsibility for audits and investigations
constituting an integral part of the programs involved.
Examples of this would be audits conducted by USDA’s
Packers and Stockyards Administration in the course of its reg­
ulation of livestock marketing and investigations conducted
by the Department ofLabor as a means of enforcing the Fair
Labor Standards Act. In such cases, the Inspector General
would have oversight rather than direct responsibility.
H.R. Rep. No. 584 at 12-13 (emphasis added). See also S. Rep. No. 1071 at
27-28.9
The statement in the House Report that Inspectors General were to
have “oversight” but not “responsibility for audits and investigations con­
stituting an integral part of the program involved” is not surprising
because to vest such authority in the Inspectors General would have con­
stituted a fundamental alteration in the departments’ regulatory authori­
ty. It would have taken away the power to control the investigatory por­
tion of a department’s regulatory policy from the official designated by
statute or by the Secretary10 and placed it in an official separate from the
regulatory division of the department.11 As the legislative history makes
9 Similarly, Representative Levitas stated
The Inspectors General to be appointed by the President with the advice and consent of the
Senate will first of all be independent and have no program responsibilities to divide alle­
giances. The Inspectors General will be responsible for audits and investigations only
Moreover, the Offices of Inspector General would not be a new “layer of bureaucracy” to
plague the public. They would deal exclusively with the internal operations of the depart­
m ents and agencies Their public contact would only be for the beneficial and needed pur­
pose of receiving complaints about problems with agency administration and in the investi­
gation of fraud and abuse by those persons who are misusing or stealing taxpayer dollars.
124 Cong. Rec. 10,405 (1978).
10For instance, as we have noted before, the Secretary of Labor is expressly provided with authority
to engage in investigations to assure compliance with the health and safety regulations of OSHA. See 29
US.C §657
11The Inspector General argues, however, that no “policy" considerations would be implicated by his
having supervisory authority over the regulatory investigations of the Department. While conceding that
“[djecisions regarding the emphasis, focus, and type [civil, criminal, administrative] of program enforce­
ment, and the best use of available program resources, can have substantive ‘policy’ ramifications,” he
states that “these considerations have little or no bearing when potential criminal violations are
involved,” and that it is toward uncovering such cnminal violations that he intends to direct his efforts.
Hyland Memo at 8. The Inspector General’s argument fails to recognize that whether to choose cnminal
over civil remedies is one of the classic “policy" choices that a regulator must make.
The Inspector General also argues that his investigative activity implicates no “policy” concerns
because he will refer cases to the Department of Justice, which will make the final decision as to whether
to file criminal charges. Hyland Letter at 2-3 It is true that the Department of Justice has the final say
over whether criminal charges will be filed. 28 U.S.C. §§ 516, 519 But it is equally true that the
Department of Justice is responsive to the policy judgments of the refem ng agencies, and will, within the
limits of available resources, generally follow the wishes of the referring agency as to questions such as
the appropnate balance between criminal and civil enforcement.
60
clear, however, it was not the intention of Congress to make such a fun­
damental change in the regulatory structure of the departments and agen­
cies of the federal government. Rather, Congress was concerned with
waste of federal funds and the need for an independent official who could
review the employees and operations of federal agencies.
The statement in the House Report that Inspectors General were not to
conduct investigations “constituting an integral part of the programs
involved” is also dictated by the nature of the Inspector General’s role. The
purpose of creating an Inspector General was to have an official in the
department who would not have responsibility for the operations of the
department and would thus be free to investigate and criticize. If the
Inspector General undertakes investigations under the department’s regula­
tory statutes, he could not perform this role. One of the Inspector General’s
functions is to criticize regulatory investigative policy, a function he cannot
perform if it is his responsibility to set and implement that policy.
The Inspector General, for instance, indicates that he disagrees with
the current regulatory investigative policy of OSHA which he views as
illustrating “an ingrained philosophy of enforcement that subordinates
and trivializes the investigation and prosecution of significant criminal
felony violations in favor of civil and administrative remedies and petty
criminal offenses (e.g., misdemeanors).” Hyland letter at 4. We would
expect therefore that the Inspector General might discharge his statutory
“oversight” duty by preparing a report for the Secretary and Congress
detailing this criticism of OSHA’s regulatory investigative policies. See 5
U.S.C. app. § 5. However, once the Inspector General assumes authority
over OSHA’s regulatory investigative activity — as under his interpreta­
tion of the statutory language he is bound to do12— he would become an
official responsible for implementing policy. Thus, with regard to the reg­
ulatory investigations the Inspector General would be undertaking, there
would be no truly objective person to investigate claims of misbehavior
and abuse. The purpose of the Act is not only to protect the taxpayers’
money, but also to serve as a check on mistreatment or abuse of the gen­
eral public by government employees. If the Inspector General, however,
is conducting and supervising regulatory investigations of the depart­
ment, the very evil that Congress wanted to avoid by establishing an
objective Inspector General would be created: namely, the responsible
official would be charged with auditing and investigating his own office.
In sum, we think that the legislative history and structure of the Act
provides compelling evidence that in granting the Inspector General
authority to “conduct and supervise audits and investigations relating to
12 Specifically, the Inspector General argues that the statutory mandate in section 4(a)(1) that the
Inspector General is “to provide policy direction for and to conduct, supervise, and coordinate audits and
investigations relating to the programs arid operations of’ the department vests supervisoiy power in him
over all investigations conducted by the Department of Labor, including investigations such as those con­
ducted under OSHA that are integral to the regulatory enforcement of the program. Hyland Memo at 7.
61
the programs and operations” of the department, 5 U.S.C. app. § 2(1),
Congress did not intend to grant the Inspector General authority to con­
duct, in the words of the House Report, “investigations constituting an
integral part of the programs involved.” Rather, the Inspector General’s
authority with respect to investigations pursuant to the Department’s reg­
ulatory statutes is, again in the words of the House Report, one of “over­
sight.” We therefore conclude that investigations undertaken pursuant to
the Department of Labor’s regulatory statutes, such as FLSA and the
OSHA, are not the type authorized by the Act.
We also conclude that this type of regulatory investigative authority
cannot be delegated by the Secretary to the Inspector General under sec­
tion 9(a)(2) of the Act.13 Section 9(a)(2) authorizes the Secretary to trans­
fer additional functions to the Inspector General but only if they are
“properly related” to the functions of the Inspector General and would
“further the purposes of this Act.” It specifically forbids the transfer of
“program operating responsibilities” to the Inspector General. Whether
or not the conduct of investigations pursuant to regulatory statutes con­
stitutes “program operating responsibilities” within the meaning of the
Act, such investigative authority, as outlined above, is inconsistent with
structure and purpose of the Act and cannot be said to be “properly relat­
ed” to the Inspector General’s functions, nor could the transfer of these
functions to the Inspector General be said to “further the purpose of the
Act.”14 Thus, if the Secretary and the Inspector General believe that there
is a need for the Inspector General to undertake particular types of regu­
latory investigations, they should seek from Congress specific amend­
ments of the Act.15
13We do not address whether any other statute provides the Secretary with authonty to delegate such func­
tions to the Inspector General Nor do we address how any such provision should be reconciled with the
Act’s express prohibition on the transfer of “program operating responsibilities” to an Inspector General.
Moreover, while we do not agree that section 9(a)(2) provides authonty to delegate the conduct of reg­
ulatory investigations to the Inspector General of Health and Human Services, see Memorandum for
Dennis C Whitfield, Deputy Secretary of Labor, from Richard R Kusserow, Inspector General,
Department of Health and Human Services at 6-7 (Oct. 6, 1988), we believe that the Inspector General
may possess authonty to conduct certain investigations into the programs he references (such as
Medicare) as part of his responsibility under the Act to investigate regulatory compliance by recipients
of federal funds We have not been asked, however, to review any specific statutes under the junsdiction
of the Secretary of HHS and thus do not address this question.
14 We also disagree with the Inspector General that he can assume cnminal investigative authonty by
means of a Memorandum of Understanding (“MOU") with the FBI. As this Office has previously stated,
the Attorney General does not have the authonty to delegate his cnrrunal investigative authonty under
28 U S C § 533 to other departments or agencies of the government See, e.g., Department o f Labor
Jurisdiction to Investigate Certain C rim ina l Mattel's, 10 Op. O.L.C. 130, 132-33 (1986). An MOU with
the FBI is only appropnate where the departm ent or agency already has cnminal investigative authonty
concurrent with that of the FBI. Id. at 133
Accordingly, insofar as any MOU purports to provide the Inspector General with cnminal investigative
authority not specifically granted by statute, it should be revised. On the other hand, the Department of
Justice may deputize officials in other agencies, including investigators assigned to an Inspector
General’s office, to enforce the cnminal law Of course, cnminal investigations by deputized officials in
other agencies remain under the supervision of the Department of Justice.
62
Our conclusions here are consistent with the decision of the district
court in United States v. Montgomery County Crisis Center, 676 F. Supp.
98 (D. Md. 1987).16 In this case, the Inspector General of the Department
of Defense had issued a subpoena to a community counseling center
seeking production of documents relating to telephone calls made by a
member of the United States Navy who was allegedly suicidal and who
had allegedly disclosed classified information during the telephone calls.
In holding the subpoena to be outside the scope of the Inspector
General’s authority, the court pointed to a number of factors including
privacy concerns, no one of which was necessarily dispositive. Id. at 99.
Three of the factors the court pointed to, however, are relevant here. The
court stated:
First the “investigation” to which the subpoena relates
concerns a security matter, not one involving alleged fraud,
inefficiency or waste — the prevention of which is the
Inspector General’s clearest statutory charge.
Second, the “investigation” is not even ostensibly related
to a general programmatic review but is limited to tracking
down the source of one alleged security breach.
[In addition,] although the Inspector General is autho­
rized to issue subpoenas to carry out all of his “functions
assigned by ... [law],” the language of the Senate Com­
mittee Report on the 1978 Inspector General Act makes
clear that in granting him subpoena power Congress was
focusing upon obtaining records necessary to audit and
investigate the expenditure of federal funds.
15 The Act itself contains what appears to be at least one specific exception m the authorization of the
transfer of the Office of Special Investigations in the Department of Labor to the Inspector General. See
supra note 6 In 1988, there was also an attempt to transfer the Office of Investigations at the Nuclear
Regulatory Commission (“NRC") to the new office of the Inspector General of NRC, but that attempt did
not succeed See infra note 19.
16The conclusion we reach here is also consistent with an earlier opinion of this Office Authonty o f
the State Department Office o f Security to Investigate Passport and Visa Fraud, 8 Op. O L C 175
(1984). In this opinion we considered among other questions whether the Inspector General of the
Department of State had authority only to investigate “passport and visa malfeasance” under 18 U S C.
§§ 1542-1546 (malfeasance or cnminal activity on the part of Department of State employees in obtain­
ing passports or visas for themselves or others) or whether he also could investigate “passport and visa
fraud” under 18 U SC § 1541 (cnminal deceit in passport or visa acquisition by persons other than
Department of State employees) At that time, the authonty of the Inspector General of the Department
of State denved from the Foreign Service Act of 1980, 22 U S.C § 3929 (The Department of State was
first brought within the ambit of the Act by Pub L No 99-399, 100 Stat. 867 (1986) ) The Foreign Service
Act, however, had been “patterned” after the Inspector General Act of 1978 and explicitly incorporated
Continued
63
Id. While Montgomery Crisis Center involved a different type of investi­
gation than those at issue here, the court’s analysis of the Inspector
General’s statutory investigative authority supports the conclusions we
have reached.
We also note that the legislative history of the recent amendments to
the Act, Pub. L. No. 100-504, 102 Stat. 2515 (1988) (to be codified at 5
U.S.C. app.), which extended its coverage to a number of other
Departments, including the Treasury Department and the Department of
Justice, as well as extending the Inspector General concept to 33 other
“designated federal entities,” displays an understanding of the authority
of the Inspector General that is fully consistent with the conclusions we
have reached in this opinion. For instance, the House Report responded
to concerns that extending the Act to the Department of Justice would
interfere with the Department’s investigative and law enforcement func­
tions in the following language:
10 ( . continued)
the portions of the Act granting investigative authority. Thus, we looked to the structure and legislative
history of the Act for guidance in determining the scope of the investigative authonty possessed by the
Inspector General under the Foreign Service Act. 8 Op. O.L.C at 177-78 Our conclusion was that leg­
islative history of the Act “strongly suggests that Congress intended that the focus of the Inspector
General’s authority be on the conduct of Department employees or contractors as opposed to the con­
duct of outside persons who may have occasion to deal with the Department ” Id. at 178. Ultimately we
concluded that Inspector Generals did not have authonty to investigate “passport and visa fraud," i.e.,
fraud not involving employees of the Department of State. Id at 179
Our opinion is also consistent with various judicial decisions upholding the subpoena power of
Inspectors General in cases involving investigations of contractor or grantee fraud. See, eg., Uniled
States v. Westinghouse Elec Corp., 788 F2d 164 (3d Cir. 1986) (Inspector General of Department of
Defense investigation of defense contractor), United States Dep’t o f Hous and Urban Dev v. Sutton, 68
B R. 89 (E.D. Mo. 1986) (Inspector General of HUD investigation of properties insured by HUD) The only
judicial opinion that we are aware of that is possibly inconsistent with our opinion is an unreported dis-
tn ct court opinion that was supplied to us by the Inspector General, United States v H P. Connor (Civ.
No. 85-4638, D N J , Dec. 9, 1985). This decision involved the enforcement of a subpoena issued by the
Inspector General in the course of an investigation of alleged Davis-Bacon Act violations. In an opinion
enforcing the subpoena, the court stated “No argument can be made that this investigation is beyond the
Inspector General’s statutory grant." Slip Op. at 6. There is no citation or reasoning to support this state­
ment, and it is unclear from the opinion whether this issue was even argued We think the issue of
whether the Inspector General of the Labor Department has general authority to investigate all federal
contractors under the Davis-Bacon Act is more complex than the distnct court’s opinion reveals.
The Davis-Bacon Act requires federal contractors to pay a minimum wage (established by reference to
prevailing wages in the community) 40 U.S.C. § 276(a). The Secretary of Labor is expressly given author­
ity to conduct investigations to assure compliance with these requirements See Reorg. Plan No. 14 of
1950, 5 U S.C. app at 1261. In order to assure compliance with the Davis-Bacon Act, we understand the
Secretary of Labor may investigate not only contractors of the Department of Labor but any federal con­
tractor To the extent this is true, investigations of contractors outside the Department of Labor seem
akin to regulatory investigations because they are unrelated to waste and fraud in the operations of the
Department of Labor itself or among its employees, contractors or grantees Thus, there is a substantial
question whether it is appropriate for the Inspector General of the Department of Labor to conduct gen­
eral investigations of Davis-Bacon Act compliance by federal contractors outside the Department of
Labor. Before rendering an opinion on the scope of the authonty of the Inspector General of the
Department of Labor to conduct investigations pursuant to the Davis-Bacon Act, however, we would
want your views and those of the Inspector General on how this issue should be resolved in light of the
general principles set out in this opinion and the specific provisions of the Davis-Bacon Act
64
A simple extension of the 1978 act to include the Depart­
ment of Justice would not result in a direct and significant
distortion and diffusion of the Attorney General’s responsi­
bilities to investigate, prosecute, or to institute suit when
necessary to uphold Federal law. The investigation and
prosecution of suspected violations of Federal law and the
conduct of litigation are parts of the basic mission or pro­
gram functions of the Department of Justice. The 1978 act
does not authorize inspectors general to engage in program
functions and, in fact specifically prohibits the assignment
of such responsibilities to an inspector general.
H.R. Rep. No. 771, 100th Cong., 2d Sess. 9 (1988).
Similarly, the House Report described the provisions of the proposed
bill (to be codified as section 8E of the Act) which extended the Inspector
General concept17 to 33 other federal entities as requiring “that multiple
audit and investigative units in an agency (except for units carrying out
audits or investigations as an integral part of the program of the
agency) be consolidated into a single Office of Inspector General ... who
would report directly to the agency head and to the Congress.” Id. at 14
(emphasis added).18 This statement is followed almost immediately by
the statement that these newly-created “inspectors general would have
the same authorities and responsibilities as those provided in the 1978
act.” Id. at 15. It is also significant that a provision in the Senate bill that
would have transferred to the newly-created Office of the Inspector
General at the Nuclear Regulatory Commission the office that conducted
the Commission’s regulatory investigations was dropped after objections
were raised by several Senators.19
17 The principal difference between the Inspectors General at these 33 entities and the Inspectors
General in the other departments and agencies is that the former are appointed, and removable, by the
head of the agency or entities rather than by the President See 5 U.S C. app. § 8E(c).
18This quotation is from the Committee report descnbing the bill that was passed by the House, and
the relevant provisions of which were adopted by the House-Senate conference and enacted into law. An
earlier version of the bill introduced in the House, see 134 Cong. Rec. 3013 (1988), but never voted on, as
well as the bill passed by the Senate, see 134 Cong Rec. 612 (1988), included a definition of the “audit
units” that were to be established in the other federal establishments that tracks the quoted language in
the Committee report A comparison of the two versions of the House bill indicates that the definition
was dropped as part of a simplification of the structure of the bill whereby the concept of the Inspector
General was incorporated by reference rather than being defined There is nothing in the House debates
to suggest that the deletion of this definition from the earlier version of the bill was intended to have sub­
stantive effect. This is confirmed by the Conference Report, which in describing the reconciliation of the
relevant portions of the House and Senate bills does not indicate that the deletion of the definition of
“audit unit" from the Senate bill was understood to have any substantive consequences. See 134 Cong.
Rec 27,283 (1988)
19 The bill as introduced in the Senate provided for the transfer to the newly-created Office of the
Inspector General at the Nuclear Regulatory Commission not only the personnel and functions of the
Office of Internal Audit which performed “the typical IG functions — that is, internal audit and investi­
gations,” 134 Cong Rec 616 (1988) (statement of Sen. Glenn), but also the functions of the Office of
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65
Finally, in light of the genuine concern expressed to us by some
Inspectors General, we think it worthwhile to set out briefly the signifi­
cant investigatory authority that is granted to Inspectors General under
the Act. Without purporting to provide a complete description of the
nature and scope of these authorities, we simply note that the Inspector
General: (1) has authority to investigate recipients of federal funds, such
as contractors and grantees, to determine if they are complying with fed­
eral laws and regulations,20 and (2) can investigate the policies and
actions of the Departments and their employees.21 Of significance here,
this latter authority includes the authority to exercise “oversight” over
the investigations that are integral to the programs of the Department.
Thus, the Inspector General has the authority to review regulatory inves­
19 ( continued)
Investigations (“OI”), which conducted program investigations of NRC licensees The Senate Report
described the transfer of OI to the Inspector General as “consistent” with the Act S Rep. No. 150,100th
Cong., 1st Sess. 18 (1987). When the bill w as reported from the Committee to the full Senate, however,
there was objection to the transfer of OI to the Office of the Inspector General on the ground that it
would interfere with the authonty of the Commission to perform its regulatory functions resulting from
its loss of control of the investigative unit which conducted investigations integral to the Commission’s
regulatory mission. 134 Cong Rec. 616 (1988) As a result, the Committee Chairman, Senator Glenn,
agreed to drop the transfer of 01 to the Office of the Inspector General from the bill Id
20Thus, our opinion should not be understood as suggesting that the Inspector General does not have
authonty to conduct investigations that are external to the Department He clearly has that authority in
the case of federal contractors, grantees and other recipients of federal funds, as well as authonty to
investigate individuals or entities that are alleged to be involved with employees of the Department in
cases involving employee misconduct or other activities involving fraud, waste and abuse. For instance,
the Inspector General would clearly be able to undertake investigations into the conduct of a corpora­
tion that paid bribes to an employee of the Department of Labor to overlook violations of OSHA
regulations.
21 The Solicitor of Labor does not challenge the exercise of such authonty by the Inspector General:
(T]he Inspector General of DOL and I are in full agreement that if the IG’s office has reason
to believe that some sort of misfeasance or malfeasance by DOL personnel has occurred, the
IG’s Office is fully authorized to investigate such possible misconduct, whether or not the
investigation of a program violation is also involved. Secondly, the investigations to which
this question is directed do not include any which might be directed against a recipient of
funds from the Department, whether those funds have been obtained by means of lawful or
unlawful activity, so long as the investigation is directed at activities which occurred in con­
nection with the receipt or use of the DOL funds.
Letter for Douglas W. Kmiec, Assistant Attorney General, Office of Legal Counsel, from George Salem,
Solicitor of Labor, at 2 (Dec. 5, 1988). The Inspector General brought to our attention a 1981 letter from
the Cnminal Division of the Department of Justice The letter was in response to an inquiry from the
General Counsel of the Department of Health and Human Services as to the authority of the Inspector
General to investigate violations of the Food and Drug Act The relevant portion of the letter states-
We are of the opinion that the legislation establishing the Inspectors General was generally
not intended to replace the regulatory function of an agency such as FDA to investigate pos­
sible violations of the Act However, we also feel that as part of the IG’s general oversight
responsibilities, he is authonzed to investigate allegations of improprieties within the pro­
grams of his department or agency. Therefore, we can envision situations where FDA and/or
the IG will be investigating alleged violations of the Act
Letter for Juan A. del Real, General Counsel, HHS, from D Lowell Jensen, Assistant Attorney General,
Criminal Division (Dec. 10, 1981) The Inspector General suggests that this letter supports his view that
Continued
66
tigative activities of the Department of Labor, and to report his criticism
and findings to the head of the department and Congress. All we con­
clude here is that the Act does not give the Inspector General the author­
ity to assume these regulatory investigative responsibilities himself.
D ouglas W. K miec
Assistant Attorney General
Office of Legal Counsel
21 (•••continued)
he has authonty to conduct regulatory investigations. We find nothing in this letter inconsistent with our
conclusion here Lake the Criminal Division in 1981, we believe that the Inspector General is authorized
to investigate “allegations of improprieties within the programs of his department” and thus we too can
envision situations where the Inspector General of HHS would investigate alleged violations of the Food
and Drug Act. An obvious example of such a situation would be when there were allegations that employ­
ees of the Food and Drug Administration had been bribed to approve a drug for sale to the public.
67