Obligating Carryover Funds in Violation of OMB Zero-Dollar Apportionment Rule ( 2016 )

Obligating Carryover Funds in Violation
of OMB Zero-Dollar Apportionment Rule
At least in circumstances where an agency fails to submit an apportionment request for
carryover funds to the Office of Management and Budget before the start of a fiscal
year, the automatic zero-dollar apportionment effected by section 120.57 of OMB Cir-
cular A-11 is a valid apportionment for purposes of the Anti-Deficiency Act. As a re-
sult, in such circumstances, 31 U.S.C. § 1517 would prohibit an agency from expend-
ing or obligating funds exceeding that apportionment of zero.
September 29, 2016
MEMORANDUM OPINION FOR THE
ASSISTANT GENERAL COUNSEL
ADMINISTRATION AND TRANSACTIONS
DEPARTMENT OF COMMERCE
For purposes of federal fiscal law, an “apportionment” specifies the
amount of money in an appropriation account an agency can obligate or
expend during a particular period of time, or on a particular project or
function. See 31 U.S.C. § 1512. The Anti-Deficiency Act (“ADA” or
“Act”) gives the President the authority to apportion the appropriations
available to federal agencies. Id. § 1513(b)(1). The President has delegat-
ed this authority to the Office of Management and Budget (“OMB”).
Exec. Order No. 6166, § 16 (June 10, 1933), as amended by Exec. Order
No. 12608, § 2 (Sept. 9, 1987), 3 C.F.R. 245 (1987 comp.). The ADA also
provides that United States Government officers and employees may not
make or authorize expenditures or obligations of funds “exceeding . . . an
apportionment.” 31 U.S.C. § 1517(a)(1). You have asked whether an
official would violate this provision of the Act if she obligated appropri-
ated funds in violation of an OMB rule that automatically apportions
certain kinds of funds in the amount of zero dollars. 1
1 See Letter for Karl Remón Thompson, Principal Deputy Assistant Attorney General,
Office of Legal Counsel, from Rafael A. Madan, Acting Assistant General Counsel for
Administration, Department of Commerce (Sept. 18, 2015) (“Commerce Letter”). In
preparing this opinion, we also received the views of OMB. See Letter for Karl Remón
Thompson, Principal Deputy Assistant Attorney General, Office of Legal Counsel, from
Ilona Cohen, General Counsel, Office of Management and Budget (Jan. 8, 2016) (“OMB
Letter”). At our request, both the Department and OMB supplemented their initial views
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Obligating Carryover Funds in Violation of OMB Zero-Apportionment Rule
The OMB rule at issue, which appears in section 120.57 of OMB Cir-
cular A-11, 2 imposes an automatic zero-dollar apportionment for carry-
over funds—i.e., unobligated balances that remain available from a prior
fiscal year—until and unless OMB issues an account-specific apportion-
ment for the same funds. You have explained that, in your view, while
OMB’s rule is formally structured as an apportionment, it is in effect a
prohibition on agencies’ obligating carryover funds in advance of later,
account-specific apportionments. As you point out, the text of the ADA
suggests, and at least one federal court of appeals has held, that while the
ADA expressly forbids obligations in advance of appropriations, it does
not similarly bar obligations in advance of apportionments. Relying on
that reading of the ADA, you contend that section 120.57 improperly
eliminates this distinction between appropriations and apportionments
under the Act; converts a violation of an administrative rule that tempo-
rarily precludes the use of funds pending an account-specific apportion-
ment into a full-blown ADA violation; and wrongly imposes ADA penal-
ties on agencies for using carryover funds even after they have made clear
that there is a programmatic need to use them. OMB disagrees, explaining
that in its view, section 120.57 constitutes a fully valid apportionment that
“achieve[s] the most effective and economical use” of carryover funds, as
the ADA itself requires. See 31 U.S.C. § 1512(a). As a result, OMB
asserts, any obligation or expenditure made in excess of the zero-dollar
apportionment set forth in section 120.57 would violate the ADA.
As explained in more detail below, we conclude that, at least in circum-
stances where an agency fails to request a non-zero apportionment of
carryover funds before the start of a fiscal year, section 120.57 effects a
valid apportionment for purposes of the ADA. Nothing in the ADA for-
by e-mail. See E-mail for Daniel L. Koffsky, Deputy Assistant Attorney General, Office
of Legal Counsel, from Angelia Talbert-Duarte, Department of Commerce, Re: DOC
Opinion Request (Feb. 12, 2016, 9:36 AM) (“Talbert-Duarte E-mail”); E-mail for Daniel
L. Koffsky, Deputy Assistant Attorney General, Office of Legal Counsel, from Heather V.
Walsh, Office of Management and Budget, Re: DOC Opinion Request (May 12, 2016,
9:37 AM) (“Walsh E-mail”); E-mail for Daniel L. Koffsky, Deputy Assistant Attorney
General, Office of Legal Counsel, from Andrea Torczon, Department of Commerce, Re:
DOC Opinion Request (June 2, 2016, 9:57 AM) (“Torczon E-mail”).
2 OMB Circular No. A-11, Preparation, Submission, and Execution of the Budget (July
2016) (“Circular A-11”), https://www.whitehouse.gov/sites/default/files/omb/assets/a11_
current_year/a11_2016.pdf.
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40 Op. O.L.C. 90 (2016)
bids automatic zero-dollar apportionments, or requires OMB to issue
account-specific apportionments in non-zero amounts. And even if the
requirement that OMB apportion carryover funds to achieve “the most
effective and economical use” of those appropriations imposes a substan-
tive standard whose violation could render an apportionment ineffective
under the ADA, we believe OMB’s application of section 120.57 in the
circumstances described above would meet that “effective and economical
use” standard. Further, under such circumstances, we do not think auto-
matically imposing a zero-dollar apportionment on carryover funds im-
permissibly eliminates any feature of the ADA, improperly punishes
violations of an administrative rule, or improperly imposes ADA penalties
on agencies obligating or expending funds at a time when the ADA sug-
gests that they should be able to use them. As a result, in the circumstanc-
es described, an agency’s obligation of carryover funds in excess of the
rule’s zero-dollar apportionment would be an expenditure “exceeding . . .
an apportionment” in violation of the ADA.
This opinion has two parts. In Part I, we discuss the relevant statutory
and factual background. In Part II, we explain our reasons for concluding
that section 120.57 effects a valid apportionment under the ADA.
I.
A.
The Constitution provides that “[n]o Money shall be drawn from the
Treasury, but in Consequence of Appropriations made by Law.” U.S.
Const. art. I, § 9, cl. 7. The Anti-Deficiency Act “reinforces and elabo-
rates on this constitutional limitation.” Memorandum for Judith R. Starr,
General Counsel, Pension Benefit Guaranty Corporation, from Troy A.
McKenzie, Deputy Assistant Attorney General, Office of Legal Counsel,
Re: Whether the Pension Benefit Guaranty Corporation May Enter Into
and Incrementally Fund Multiyear Leases Exceeding Five Years at 3
(Sept. 30, 2015). A key provision of the Act, 31 U.S.C. § 1341, states
that officers and employees of the United States Government may not
“make or authorize an expenditure or obligation exceeding an amount
available in an appropriation or fund for the expenditure or obligation,”
or “involve [the] government in a contract or obligation for the payment
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Obligating Carryover Funds in Violation of OMB Zero-Apportionment Rule
of money before an appropriation is made unless authorized by law.” Id.§ 1341(a)(1)(A), (B).
The ADA also requires appropriated funds to be “apportioned.” Id.
§ 1512(a). As suggested above, apportionment is “an administrative
process by which . . . appropriated funds are distributed to agencies in
portions over the period of their availability.” 2 Government Accountabil-
ity Office (“GAO”), Principles of Federal Appropriations Law 6-116 (3d
ed. 2006) (“Federal Appropriations Law”). 3 The purpose of apportion-
ment is “to minimize the potential for engaging in expenditures that
exceed congressional appropriations.” United States Marshals Service
Obligation to Take Steps to Avoid Anticipated Appropriations Deficiency,
23 Op. O.L.C. 105, 106 (1999). Consistent with that goal, the ADA re-
quires “appropriation[s] available for obligation for a definite period” to
be apportioned “to prevent obligation or expenditure at a rate that would
indicate a necessity for a deficiency or supplemental appropriation for the
period,” and “appropriation[s] for an indefinite period”—the kind of
appropriation at issue here—to be apportioned “to achieve the most effec-
tive and economical use” of those appropriations. 31 U.S.C. § 1512(a).
As noted above, the President has the responsibility to make written
apportionments for the Executive Branch, id. § 1513(b)(1), and has dele-
gated this responsibility to OMB, Exec. Order No. 6166, § 16. In exercis-
ing this delegated authority, OMB has the discretion to apportion funds by
time periods, activities, functions, projects, objects, or some combination
thereof. 31 U.S.C. § 1512(b)(1)–(2). In the case of carryover funds—i.e.,
“unobligated balances that are available from the prior fiscal year(s) in
multi-year and no-year accounts,” Circular A-11, supra note 2, § 120.2—
the ADA requires agency heads to submit apportionment requests to OMB
no later than forty days before the beginning of the next fiscal year. 31
U.S.C. § 1513(b)(1)(A). OMB, in turn, must apportion the funds not later
than twenty days before the start of the fiscal year. Id. § 1513(b)(2)(A).
3 Although the legal interpretations and opinions of the GAO and the Comptroller
General are not binding on Executive Branch agencies, they “‘often provide helpful
guidance on appropriations matters and related issues.’” State and Local Deputation of
Federal Law Enforcement Officers During Stafford Act Deployments, 36 Op. O.L.C. 77,
89 n.8 (2012) (quoting Applicability of Government Corporation Control Act to “Gain
Sharing Benefit” Agreement, 24 Op. O.L.C. 212, 216 n.3 (2000)).
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40 Op. O.L.C. 90 (2016)
In a provision that resembles, but does not fully parallel, section 1341’s
prohibition on expenditures and obligations in excess or advance of ap-
propriations, section 1517 of title 31 states that government officers and
employees “may not make or authorize an expenditure or obligation
exceeding . . . an apportionment.” Id. § 1517(a)(1) (emphasis added).
Unlike section 1341, section 1517 does not also expressly bar entering
into a contract or making an obligation before an apportionment is made.
In light of the textual difference between these provisions, at least one
federal court of appeals has held that while the ADA prohibits expendi-
tures that “exceed” an existing apportionment, it does not prohibit ex-
penditures made in advance of a later apportionment. See Cessna Aircraft
Co. v. Dalton, 126 F.3d 1442, 1451 (Fed. Cir. 1997). Agency heads must
report violations of section 1517 immediately to the President and Con-
gress, and transmit a copy of those reports to the Comptroller General. 31
U.S.C. § 1517(b). Officials who violate the section are subject to adminis-
trative and criminal penalties, including suspension without pay, removal
from office, and, in the case of knowing and willful violations, a fine and
possible imprisonment. Id. §§ 1518, 1519.
Circular A-11 implements the ADA’s apportionment provisions by giv-
ing instructions to agencies about the apportionment process. Section
120.57 of the Circular addresses the apportionment of carryover funds.
That provision, in question-and-answer form, states:
Must I request that funds apportioned in one fiscal year be appor-
tioned in the next fiscal year if the funds were not obligated and re-
main available?
Yes. When budgetary resources remain available (unexpired) be-
yond the end of a fiscal year, you must submit a new apportionment
request for the upcoming fiscal year. You cannot incur obligations in
any year absent an approved apportionment for that year. For in-
stance, if OMB apportioned $1 million for a no-year [account] in
[Fiscal Year (“FY”)] 2012 and you obligated no funds, you must still
submit an FY 2013 request and receive OMB approval of that re-
quest before incurring obligations in FY 2013. Until you receive a
written apportionment from OMB, the amount of carryover appor-
tioned is zero dollars. In addition, apportioned anticipated or esti-
mated resources are not available for obligation until the resources
are realized.
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Obligating Carryover Funds in Violation of OMB Zero-Apportionment Rule
Circular A-11, § 120.57. Circular A-11 contrasts the apportionment ef-
fected by section 120.57, as well as other kinds of “automatic apportion-
ments,” with “written apportionments” in which OMB approves an agen-
cy’s request for an apportionment in a specific amount. Id. § 120.2. 4 OMB
also sometimes refers to these “written apportionments” as “account-
specific apportionments.” See OMB Letter at 2.
B.
We understand that your request for advice was prompted by a situa-
tion that arose during Fiscal Year 2014 involving the National Oceanic
and Atmospheric Administration (“NOAA”), an operating unit within the
Department of Commerce (“Department”). NOAA has a no-year fund
called the “Fisheries Enforcement Asset Forfeiture Fund” (“Fisheries
Enforcement AFF” or “Fund”), which consists generally of sums re-
ceived by NOAA as fines, penalties, and forfeitures of property for
violations of marine resource laws, along with transferred amounts that
are “available until expended.” See Department of Commerce Appropria-
tions Act, 2012, Pub. L. No. 112-55, div. B, § 110, 125 Stat. 552, 591,
602 (2011) (establishing the Fund). 5 Because Fiscal Year 2014 began on
October 1, 2013, OMB’s statutory deadline to apportion the unobligated
carryover amounts in the Fund fell on September 11, 2013. See 31 U.S.C.
§ 1513(b)(2)(A). In anticipation of that deadline, the ADA required the
Department to submit an apportionment request to OMB by August 22,
2013. See id. § 1513(b)(1)(A). NOAA submitted an initial request to the
Department’s internal Office of Budget (“OB”) in August. Commerce
Letter at 2. However, due to subsequent back-and-forth between OB and
NOAA, the Department did not submit its apportionment request to OMB
until December 2013. Id. OMB approved a final version of the appor-
tionment request several months later, on April 11, 2014. Id. This final
4 As Circular A-11 explains, “[a]n automatic apportionment is approved by the OMB
Director in the form of a Bulletin or provision in Circular A-11, and typically describes a
formula that agencies will use to calculate apportioned amounts. An automatic appor-
tionment is in contrast to the written apportionments, which typically include specific
amounts, and which are approved by an OMB Deputy Associate Director (or designee).”
Id. § 120.2.
5 A no-year appropriation is an appropriation “that is available for obligation for an
indefinite period.” 1 Federal Appropriations Law at 2-14 (3d ed. 2004).
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40 Op. O.L.C. 90 (2016)
version apportioned the unobligated carryover funds in the Fisheries
Enforcement AFF by project. Id. The apportionment therefore nominally
covered the full fiscal year, even though two quarters of that year had
already passed when the apportionment was approved. Until OMB issued
this account-specific apportionment in April, however, section 120.57 of
Circular A-11 was in effect with respect to the relevant funds. As a
result, between October 1, 2013, and April 11, 2014, NOAA was operat-
ing under an automatic zero-dollar apportionment for the Fisheries En-
forcement AFF. NOAA nonetheless “obligated” funds from the Fisheries
Enforcement AFF during Fiscal Year 2014 “before the [account-specific]
apportionment was issued.” Id. “The total Fisheries Enforcement AFF
obligations during that time,” however, “did not exceed the final appor-
tionment amount for FY 2014” that OMB approved in April. Id.Your opinion request asks us to address whether an agency official vio-
lates section 1517 when she obligates funds in violation of OMB’s auto-
matic zero-dollar apportionment under the circumstances just described.
Id. at 1, 4 (“I am charged with determining whether NOAA’s violation of
OMB’s rule, [section] 120.57 of OMB Circular A-11, of itself constitutes
a violation of the ADA.”). As in prior situations involving ADA questions
prompted by past conduct, we decline to address whether particular past
actions violated the ADA. See Online Terms of Service Agreements with
Open-Ended Indemnification Clauses Under the Anti-Deficiency Act, 36
Op. O.L.C. 112, 114 (2012). We will, however, use the features of the
scenario you have described to provide general guidance in response to
your question. See id.II.
As noted above, section 120.57 states in relevant part that “[u]ntil [an
agency] receive[s] a written apportionment from OMB, the amount of
carryover apportioned [for a given fiscal year] is zero dollars.” Circular
A-11, § 120.57 (emphasis added). By its terms, this provision purports to
make a default, automatic apportionment of zero dollars in carryover
funds until and unless an agency receives a different written apportion-
ment from OMB. Section 120.57 is thus, as OMB explains, an exercise of
its delegated statutory authority to apportion appropriations. See OMB
Letter at 2 (“[Section] 120.57[] is . . . an application of 31 U.S.C. § 1513,
which requires that the President (and, by delegation, OMB) apportion
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Obligating Carryover Funds in Violation of OMB Zero-Apportionment Rule
appropriations.”). Assuming section 120.57 is a valid exercise of that
authority, it would appear straightforward to conclude that obligations or
expenditures made in excess of this zero-dollar apportionment would
violate the ADA. See 31 U.S.C. § 1517(a)(1).
And on its face, the automatic apportionment in section 120.57 does not
exceed the limits of OMB’s authority to apportion funds under the ADA.
Nothing in the ADA, and no other authority of which we are aware,
prevents OMB from using categorical rules that operate automatically to
apportion funds in preset amounts, or requires it to issue apportionments
on an account-specific basis. Indeed, OMB often relies on automatic, cat-
egorical apportionments: another provision of the Circular automatically
apportions newly enacted full-year appropriations on a pro rata basis, see
Circular A-11, § 120.41, and OMB frequently issues automatic appor-
tionments of amounts provided in continuing resolutions, see, e.g., OMB
Bulletin No. 15-03, Apportionment of the Continuing Resolution(s) for
Fiscal Year 2016 (Sept. 30, 2015), https://www.whitehouse.gov/sites/
default/files/omb/bulletins/2015/15-03.pdf (last visited ca. Sept. 2016);
see also 2 Federal Appropriations Law at 6-141 (3d ed. 2006) (noting
OMB’s practice of issuing automatic apportionments in the context of
continuing resolutions). We are likewise aware of nothing in the ADA
that would preclude OMB from apportioning carryover funds in the
amount of zero dollars in the circumstances at issue here. 6 And while the
ADA does require apportionments to be “in writing,” 31 U.S.C.
§ 1513(b)(1), OMB’s automatic-apportionment rules—including the one
that appears in section 120.57—satisfy this requirement, because they are
set forth in writing in Circular A-11 or in OMB Bulletins.
6 The ADA does provide that “[i]n apportioning or reapportioning an appropriation, a
reserve may be established only—(A) to provide for contingencies; (B) to achieve savings
made possible by or through changes in requirements or greater efficiency of operations;
or (C) as specifically provided by law.” 31 U.S.C. § 1512(c)(1). However, we understand
that OMB has never considered the zero-dollar apportionments of carryover funds effect-
ed by section 120.57 to create “reserves.” As discussed below, see infra p. 98, the purpose
of the zero-dollar apportionment in section 120.57 is not to “set aside” budgetary re-
sources that might otherwise be used, or be required to be used, in order to “provide for
contingencies,” “effect savings,” or for some other purpose. GAO, A Glossary of Terms
Used in the Federal Budget Process 25 (Sept. 2005) (defining “reserve”). Rather, the
purpose of section 120.57 is simply to ensure that carryover funds will not be used during
those portions of their period of availability when they are not needed.
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40 Op. O.L.C. 90 (2016)
Automatic apportionments further the purposes of the ADA by (among
other things) helping OMB meet the deadlines set forth in that statute. As
we explained above, the ADA requires OMB to apportion appropriated
funds by a set date—in the case of carryover funds, no later than twenty
days before the beginning of the fiscal year for which those funds are
available. By requiring apportionments to be in place before the fiscal
year starts, these deadlines help ensure that the underlying purposes of
the apportionment process are served—“prevent[ing] obligation or ex-
penditure at a rate that would indicate a necessity for a deficiency or
supplemental appropriation for the period” in the case of time-limited
appropriations, and ensuring that appropriations are used “effective[ly]
and economical[ly]” in the case of appropriations available for an indefi-
nite period. 31 U.S.C. § 1512(a). Automatic apportionments make it
possible for OMB to meet these statutory deadlines even when doing so
would otherwise be difficult, such as when Congress provides temporary
funding for agency operations through short-term continuing resolutions,
or when an agency fails to submit a specific apportionment request prior
to the statutory deadline. See Walsh E-mail.
As was just noted, 31 U.S.C. § 1512(a) requires OMB to apportion ap-
propriations for an indefinite period to achieve “the most effective and
economical use” of those appropriations. See also 2 Federal Appropria-
tions Law at 6-121 (3d ed. 2006) (identifying this provision as the appli-
cable requirement for no-year funds). OMB agrees that “[a]ll apportion-
ments, including the one in section 120.57, are subject to the requirements
of section 1512(a).” Walsh E-mail. It is less clear that if an OMB appor-
tionment failed to meet these requirements, it would then be invalid, such
that agencies could make obligations or expenditures in excess of the
purported apportionment without violating the ADA. We need not resolve
this question, however, because we believe that application of the auto-
matic zero-dollar apportionment in section 120.57 in the circumstances at
issue here satisfies the “effective and economical use” standard.
To begin with, in requiring every appropriation to be apportioned by
certain time periods, projects, or a combination thereof, 31 U.S.C.
§ 1512(b)(1), the ADA makes clear that the official designated to make
an apportionment subject to those requirements must do so “as the offi-
cial considers appropriate,” id. § 1512(b)(2). The ADA thus gives OMB
substantial discretion in making each apportionment, consistent with the
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Obligating Carryover Funds in Violation of OMB Zero-Apportionment Rule
requirement that the apportionment achieve the most effective and eco-
nomical use of the funds. And we think that OMB’s exercise of this
discretion in section 120.57 was sound. OMB has explained that when an
agency “has not requested the use of carryover funds at the beginning of
the fiscal year”—as was the case with respect to the Fisheries Enforce-
ment AFF—OMB presumes that the agency “has no present programmat-
ic need for [those] funds.” Walsh E-mail. In our view, it is reasonable for
OMB to assume both that agencies are best positioned to evaluate their
own fiscal needs, and that they have an incentive to seek any necessary
funds for their own operations. It is also reasonable for OMB to assume
that agencies understand that the ADA itself requires them to submit
apportionment requests for carryover funds forty days prior to the start of
a fiscal year, and requires OMB to complete the apportionments twenty
days later. See 31 U.S.C. § 1513(b)(1)(A), (b)(2)(A). In light of these
considerations, we think it is similarly reasonable to presume that if an
agency fails to request funds before the start of a fiscal year, it has no
present need for those funds. And in that situation, it makes further sense
that imposing a default zero-dollar apportionment would not only allow
OMB to comply with its statutory apportionment deadline, but also
achieve the most “effective and economical use” of the relevant carry-
over funds, by ensuring that they are not used during a period when they
are not needed. 7
As we understand its position, the Department does not dispute that
section 120.57 is, by its terms, an “apportion[ment].” Circular A-11,
§ 120.57; see, e.g., Talbert-Duarte E-mail (“[W]e recognize that OMB
structured § 120.57 as an apportionment of zero.”). Rather, we take the
Department’s argument to be that, whatever its formal structure, the
substantive effect of section 120.57 is to prevent agencies from obligat-
ing or expending funds in advance of an account-specific apportionment.
7 Because we consider only the application of section 120.57 in circumstances where
an agency has failed to submit an apportionment request for carryover funds before the
start of a fiscal year, we express no view on whether OMB could justify an automatic
apportionment of zero dollars by operation of section 120.57 under any other circum-
stances, including where an agency submits an apportionment request by the agency’s
forty-day deadline, where the agency submits a request after the forty-day deadline but
before OMB’s twenty-day deadline, or where the agency submits its request after OMB’s
twenty-day deadline but before the start of the fiscal year.
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40 Op. O.L.C. 90 (2016)
See Commerce Letter at 1 (Although “[the] OMB prohibition is struc-
tured as an automatic apportionment of carryover amounts at zero,”
“[a]s a consequence of this structure, an agency official who obligates
funds in advance of an apportionment violates the OMB rule by exceed-
ing the automatic apportionment amount of zero.”); Talbert-Duarte
E-mail (“From the perspective of an agency official to whom the [appor-
tionment rule in section 120.57] applies, the purpose and effect of the
rule is the same—there can be no obligation before there is an appor-
tionment of an actual dollar amount.”). According to the Department,
this is problematic for three reasons, which we consider in turn.
First, the Department contends that, by creating a situation in which
agencies can never obligate carryover funds before they are apportioned,
“the statutory distinction between [section] 1341”—which prohibits
obligations and expenditures both in advance and in excess of appropria-
tions—“and [section] 1517”—which prohibits obligations and expendi-
tures only in excess of apportionments—“is entirely erased.” Talbert-
Duarte E-mail; see id. (noting that OMB itself states that “[b]y operation
of § 120.57, an agency will never be in ‘advance of ’ an apportionment of
carryover, because it will always have an apportionment” (quoting OMB
Letter at 2)). This argument rests on the premise that, as the Federal Cir-
cuit has held, section 1517 does not bar obligations or expenditures in
advance of an apportionment. See Cessna Aircraft, 126 F.3d at 1451. We
will assume for purposes of this opinion that this conclusion is correct.
Even with this assumption, we do not think the Department’s argument is
convincing. The Department in effect asserts that the ADA prevents OMB
from creating a situation in which an agency will never find itself without
an apportionment, because it would then never have the opportunity to
obligate or expend funds in advance of an apportionment. But as we
explained above, nothing in the ADA bars automatic apportionments,
requires that apportionments be account-specific, or requires that appor-
tionments always be made in non-zero amounts. See supra p. 97. Thus, so
long as an automatic apportionment meets the standards for apportion-
ment in the ADA, see supra p. 98 (discussing standards), it is a valid
apportionment, even if it precludes agencies from ever being without an
apportionment. Indeed, such a result seems fully consistent with the
ADA’s statutory design. As discussed earlier, Congress specifically cre-
ated deadlines for apportionments of carryover funds, seeking to ensure
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that they would be completed before the start of any fiscal year. If agen-
cies and OMB adhered to their statutory deadlines, there would—at least
in the ordinary course—never be a situation in which an agency had
available carryover funds without an apportionment. Thus, the mere fact
that OMB has created an automatic-apportionment mechanism that en-
sures that an apportionment will always be in effect does not by itself
make section 120.57 invalid, and in fact accords with congressional
design.
The Department’s second argument is that section 120.57 should be
considered a kind of administrative rule that “temporarily precludes the
use of funds as a matter of administrative control” while enabling “OMB
to comply with [its statutory] deadlines,” rather than an “apportionment
that prescribes [the relevant funds’] use in definite amounts by time
periods or activities”—violation of which would trigger potential penal-
ties under the ADA. Torczon E-mail. The Department appears to suggest
that, if an OMB rule is merely designed to temporarily prevent agencies
from using funds for purposes of administrative control and to ensure
OMB’s own ADA compliance, rather than to actually apportion funds
under the standards set forth in the ADA, it would not be appropriate to
subject agency officials to ADA penalties for violating that rule. Cf.
Talbert-Duarte E-mail (“[T]he question we are raising does not concern a
‘zero dollar’ apportionment in a specific situation where programmatic
needs dictate that amounts are not necessary for a particular time period.
Our question concerns only the automatic, across-the-board application
of [section] 120.57.”); Torczon E-mail (While “agencies and OMB are
required to comply with the time deadlines established for submitting and
approving apportionments,” “[a] violation of the deadlines . . . is not a
reportable violation of the [ADA], and we question the appropriateness
of factoring the deadlines into the analysis of the issue we raise regarding
a reportable violation of section 1517.”). We need not decide whether a
rule that merely precluded the use of funds as a matter of administrative
control and deadline compliance would be a valid apportionment under
the ADA, however, because, at least as applied in situations where an
agency fails to submit an apportionment request before the start of a
fiscal year, we do not believe section 120.57 is such a rule. For the rea-
sons explained above, see supra pp. 96–99, OMB’s automatic zero-dollar
apportionment for carryover funds complies with the ADA’s formal
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requirements for apportionments, and represents a reasonable exercise of
OMB’s apportionment discretion. If an agency fails to request an appor-
tionment before the start of a fiscal year, it is reasonable to presume that
the agency has no programmatic need for the relevant funds during that
year. There is thus no basis to conclude that a rule setting a zero-dollar
apportionment in such a situation is merely an administrative control
measure that prevents obligations and expenditures until OMB has time
to make an account-specific apportionment.
Finally, the Department argues that OMB’s “blanket presumption of no
programmatic need” is “inapposite in at least many cases where an agency
is actively engaged in the apportionment process with OMB.” Torczon
E-mail. The Department acknowledges that, in the situation involving
NOAA that gave rise to its opinion request, “internal revisions and delays
within the Department . . . caused the [proposed Fisheries Enforcement
AFF] apportionment to be submitted late to OMB.” Id. But it points out
that “issues raised by sequestration (among other things) delayed the
apportionment further for several months after submission to OMB.” Id.OMB’s rationale for its zero-dollar apportionment, the Department sug-
gests, may make sense prior to the point at which an agency makes a
request for a non-zero apportionment, but not during the period after such
a request is made, but before the account-specific apportionment process
is completed. See id. The Department thus contends that, whether because
OMB’s rule would not “achieve the most effective and economical use”
of the funds during that period, or because the rule would impermissibly
undermine Congress’s decision not to subject obligations and expendi-
tures in advance of apportionments to ADA penalties, violation of the rule
after a request has been submitted should not give rise to penalties under
the ADA. See id.Again, we disagree. For the reasons we have explained, it is in our view
reasonable for OMB to presume that, if a request for a non-zero appor-
tionment of carryover funds is not pending at the start of a fiscal year, the
agency has no current need for those funds. An agency’s belated request
for a non-zero apportionment might call into question the continuing
factual accuracy of OMB’s assumption after the request is made. But we
do not think such a belated request somehow undermines the validity of
the initial default apportionment. The ADA itself makes the start of each
fiscal year the critical time for making apportionments for carryover
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Obligating Carryover Funds in Violation of OMB Zero-Apportionment Rule
funds. See 31 U.S.C. § 1513(b)(2)(A). It is therefore reasonable for OMB
to set apportionments based on its analysis of the appropriate apportion-
ment as of the start of the fiscal year. The ADA does reflect the possibil-
ity that circumstances might change during a fiscal year, by requiring
OMB to review apportionments at least four times a year. See id.§ 1512(d). But the ADA does not provide any specific instructions about
what OMB must do if it determines that an apportionment is no longer
appropriate after one of its reviews, let alone provide a specific timeline
for providing a revised apportionment. The Act thus appears to leave
those matters to OMB’s discretion to “apportion an appropriation . . . as
[it] considers appropriate.” Id. § 1512(b)(2). In light of that discretion and
the statutory focus on the start of the fiscal year, we do not think the
passing of several months between an agency’s belated apportionment
request for carryover funds and OMB’s issuance of a new account-
specific apportionment would render the original, default apportionment
invalid at any point during the period in which the belated request was
pending. 8
III.
For the reasons set forth above, we conclude that, at least in circum-
stances where an agency fails to submit an apportionment request for
carryover funds before the start of a fiscal year, the automatic zero-dollar
apportionment in section 120.57 of OMB Circular A-11 is a valid appor-
8 The Department also argues that, in light of the potential penalties involved, the
question whether violation of section 120.57 constitutes an ADA violation “should be
examined with an eye to the familiar rule of statutory construction commonly known as
the rule of lenity.” Commerce Letter at 3–4; see also Use of Appropriated Funds to
Provide Light Refreshments to Non-Federal Participants at EPA Conferences, 31 Op.
O.L.C. 54, 69 (2007) (explaining that the rule of lenity holds that “if ambiguity remains in
a criminal statute after textual, structural, historical, and precedential analyses have been
exhausted, the narrower construction should prevail”). However, we do not believe this
question involves sufficient statutory ambiguity to justify application of the rule of lenity.
Rather, for the reasons explained above, we think it clear that, applying ordinary tools of
statutory construction to the relevant provisions in the ADA, section 120.57 effects a
valid apportionment under that statute. See Lockhart v. United States, 136 S. Ct. 958, 968
(2016) (“We have used the lenity principle to resolve ambiguity in favor of the defendant
only . . . when the ordinary canons of statutory construction have revealed no satisfactory
construction.”).
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tionment for purposes of the ADA. As a result, in such circumstances, 31
U.S.C. § 1517 would prohibit an agency from expending or obligating
funds exceeding that apportionment.
KARL R. THOMPSON
Principal Deputy Assistant Attorney General
Office of Legal Counsel
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