"The term 'appropriations' as used in this Act includes, in appropriate context, funds and authorizations to create obligations by contract in advance of appropriations."

Since we are not aware of any objections to impoundments falling squarely within the literal language of subsection (c) (2) of the Antideficiency Act or specifically authorized in other law, it is suggested that the Committee might consider amending S. 373 to provide that its provisions shall not apply to funds being withheld in accordance with this and other specific requirements of law. Also, we suggest that you include a statement in the Committee report to the effect that the term "impound" is intended to include any action which effectively prevents the creation of obligations or expenditures of appropriated funds or of authorizations to create obligations in advance of appropriations, for any period of time irrespective of whether such action is taken by the Office of Management and Budget or the agency head.

Finally, we should like to comment on one aspect of S. 373. Under section 2 of S. 373 the President is required to release impoundments within sixty days after notice of the impoundment has been sent to the Congress unless the Congress grants approval of the impoundment. Under this language, the President could subsequently impound the funds, make his report, and continue the practice. In the case of appropriations with fiscal year limitations this practice could be continued until the appropriation authority expired and in the case of no-year funds this practice could be repeated.

In recent public discussions on the subject of impoundment, I have noted very little reference to the authority of the President to reserve funds under the Antideficiency Act, 31 U.S.C. 665. Subsection (c) (2) of that Act provides that in apportioning any appropriations, reserves may be established (1) to provide for contingencies, or (2) to effect savings whenever savings are made possible by or through: (a) changes in requirements; (b) greater efficiency of operations; or (c) other developments subsequent to the date on which such appropriation was made available.

As we interpret this Act, the President has authority to reserve funds to provide for unforeseen or uncertain events which might otherwise cause a deficiency in the appropriation. There are, for example, seasonal programs such as flood relief, forest fire control, and so forth, which can be anticipated to some degree but difficult to estimate with precision.

The second purpose of this Act is to effect savings where these are made possible by changes in requirements or through management improvements. These are economies which again cannot be fully predicted and do not affect the level of the programs being carried out.

The third type of situation relates to savings resulting from developments which may occur subsequent to the date on which appropriations were made available. For example, a weapons system, upon testing, may be found to require major modification with reduced financial requirements for the fiscal period involved. There are many other types of situations where developments could not be foreseen at the time of the appropriations action where it is only common sense that the funds would be reserved. In a great many of these instances, the money is not legally available for any other purpose.

There is abundant legislative history in connection with the enactment of the Antideficiency Act to support our conclusion that this legislation goes no further than authorizing the President to establish reserves to provide for contingencies, to reflect savings, and to take into account changes in requirements subsequent to the appropriation action, and to reserve funds because of changing circumstances. We are not aware of any specific authority which authorizes the President to withhold funds for general economic, fiscal, or policy reasons.

A more detailed discussion of the legislative history leading up to the enactment of the Antideficiency Act is included as an attachment to this statement. In spite of the limitations established in the Antideficiency Act, funds have been impounded by Presidents in the past. For example,

In 1942. President Roosevelt directed the Secretary of War, in cooperation with the Director of the Bureau of the Budget, "to establish reserves in the amount that can be set aside at this time by the deferment of construction projects not essential to the war effort."

President Truman, in 1949, impounded funds appropriated for a seventygroup Air Force. It is of interest to note in this case that he acted as Commander-in-Chief as well as President because doubts were raised as to his authority to otherwise impound the funds.

In 1950, the Aircraft Carrier Forrestal was cancelled by the Department of Defense after funds had been appropriated.

In 1956, the Department of Defense refused to spend an appropriation of the Congress "earmarked for the construction of 20 superfort bombers."

In 1959, the Administration impounded funds appropriated for the initial procurements of NIKE-ZEUS hardware.

In 1966, the Administration reduced the obligations available under the Highway Trust Fund and sizeable cutbacks were made in programs for Housing and Urban Development; Health, Education, and Welfare; Agriculture; Interior.

In 1972, the Administration impounded monies from the Highway Trust Fund. This impoundment has resulted in a lawsuit which is still in litigation. It can be argued that these actions differ in substantial degree from the recent decision taken by the Administration to withhold large sums in order to keep Fiscal Year 1973 expenditures at the level of approximately $250 billion.

The issue of the President's legal authority is clouded to some degree by the fact, as some have argued, that actions to withhold funds can be justified in carrying out general statutes such as the Economic Stabilization Act of 1970, or to remain within the debt ceiling enacted by the Congress. The counter to this argument is that there is nothing explicit in those laws which authorize the President to go beyond the Antideficiency Act in accomplishing the objectives of these acts.

Even though the Antideficiency Act places rather specific limits on the President's discretion in impounding funds, the wording of the legislation nevertheless frequently could be read to support the thesis that appropriations represent authority to spend rather than mandates to spend by the executive branch. The wording of authorization and appropriation legislation is generally cast in terms of authorizations to spend rather than directing that certain program or expenditure levels be maintained. There have been exceptions, of course, which have established mandatory levels. In one case which I recall the Congress specified a quarterly level for small business loans; in another case, the minimum strength of the Marine Corps was specified. Clearly, the road is open to the Congress to be more explicit as to its intention with respect to program levels. It could specify the rate or the amount of the expenditure; it could authorize impoundments not to exceed a certain percentage; or it could provide the executive with discretion to shift funds from one activity to a related activity based on changing circumstances and the executive branch's assessment of program priorities. An example of the granting by the Congress of discretion was the authority given to President Truman following the outbreak of the Korean War to impound funds up to a specified level for programs which the President determined to be in competition with the defense effort.

The President has another course of action open to him which is authorized by the Antideficiency Act. That Act specifies that when funds are reserved under the Act the responsible office "shall recommend the recision of such amount in the manner provided in the Budget and Accounting Act, 1921, for estimates of appropriations." Aside from savings made under the Antideficiency Act, the President cbviously could submit recommended legislation for funds which he considers of lower priority or otherwise, in his judgment, excessive for any reason. Past Presidents have submitted such recommendations from time to time.

The Congress has open to it the option of withholding funds for programs desired by the executive branch when impoundments have been made in programs which the Congress judges to be of high priority. For example, Public Law 92–226 of February 7, 1972, specified that appropriations made pursuant to the Foreign Assistance Act of 1971 and the Foreign Military Sales Act for military assistance would not be available for obligation after April 30, 1972, unless the Comptroller General certified to the Congress that all funds previousy appropriated and thereafter impounded during fiscal year 1971 for programs and activities administered by or under the direction of the Department of Agriculture, HUD, and HEW, had been released for obligation and expenditure. The provision did specify that the section did not apply to "funds being withheld in accordance with specific requirements or law." While the purport of this qualification is perhaps debatable, we construed the provision to apply only to funds which were impounded under the limited provisions of the Antideficiency Act.

It has been suggested by some that the granting of an item veto authority to the President, along the lines of the practice in a majority of the States, might allay Executive desire or authority to impound funds. It is true that the grant

of such power would succinctly define the President's power to change or ignore the appropriation acts of the Congress. The majority view is that a constitutional amendment would be required to grant the President an item veto authority. Thus with a constitutional grant of item veto authority there would be a strong legal and constitutional position that the President's power over the use or non-use of appropriations does not extend beyond items vetoed under such authority. Of course, even with the item veto there would be no guarantee that future impoundments would be avoided. I am including an attachment discussing the item veto at greater length.

Even so, an item veto, if accompanied by provision making it possible for the Congress to override such a veto by majority vote, would be preferable to the present arrangement where questions continue to be raised as to whether an appropriation should be construed as a mandate to spend at the program levels specified in the appropriation act, or whether it merely represents a ceiling with the Executive Branch being free to make the judgment as to a possibly lower program level.

This concludes my prepared statement.

(Attachment to the Statement of the Comptroller General of the United States Before the Subcommittee on Separation of Powers Committee on the Judiciary, U.S. Senate, Jan. 30, 1973)

THE ANTIDEFICIENCY ACT: TYPES OF EXECUTIVE ACTION IN WITHHOLDING OR RESERVING APPROPRIATED FUNDS WHICH MAY BE TAKEN CONSISTENT THEREWITH The Antideficiency Act, section 3679 of the Revised Statutes, as amended, 31 U.S.C. 665, provides in subsection (c)(1) for the apportionment of fixed-year appropriations so as to prevent obligation or expenditure in a manner which would indicate a necessity for deficiency or supplemental appropriations for such period; and for the apportionment of no-year appropriations, and certain other obligational authority, so as to achieve the most effective and economical use thereof. Subsection (c) (2) of the act provides:

"In apportioning any appropriation, reserves may be established to provide for contingencies, or to effect savings whenever savings are made possible by or through changes in requirements, greater efficiency of operations, or other developments subsequent to the date on which such appropriation was made available. Whenever it is determined by an officer designated in subsection (d) of this section to make apportionments and reapportionments that any amount so reserved will not be required to carry out the purposes of the appropriation concerned, he shall recommend the rescission of such amount in the manner provided in the Budget and Accounting Act, 1921, for estimates of appropriations."

Essentially, the conditions justifying reservation of funds under the Antideficiency Act, and the extent and limits of such authority, are fully set forth in the first sentence of subsection (c) (2), quoted above. In this connection, Mr. Keller testified at Hearings before the Subcommittee on Separation of Powers of the Senate Judiciary Committee concerning Executive Impoundment of Appropriated Funds, 92d Cong., 1st sess. (hereafter "Hearings"), at 257:

“* * * Certainly, I would not argue, and I doubt that anybody else would, that all the impounding that is done is done under the Anti-deficiency Act, because the Antideficiency Act quite clearly states the types of conditions under which you can make a reservations of funds. I have generally spelled them out in my statement-reserves for contingencies and savings when made possible by changes in requirements, greater efficiency of operations, or other developments subsequent to the date appropriations are made available. So I think certainly there is a good deal of authority in the Antideficiency Act, but I do not think it is blanket authority to cover everything that may be done with regard to impounding of funds."

Without referring specifically to the Antideficiency Act, Senator Church offered, in effect, the same description of this provision in an article entitled Impoundment of Appropriated Funds: The Decline of Congressional Control Over Executive Discretion, 22 Stanford L. Rev. 1240 (1970), reprinted at Hearings, 364, 369 (footnotes omitted):

“I. Reserving funds to prevent deficiencies or effect savings.

"This method of holding up funds is by far the most common. When used to economize rather than to cripple programs, its usefulness is apparent. For example, "if an island, for whose inhabitants Congress appropriates X millions of dollars, suddenly were to disappear and all its residents perished, Congress would not expect the President, with a view to escaping its wrath over impounding, to direct that the unexpended portion of the funds thus allocated follow the decedents to their watery grave.

"Or, to use Professor Williams' classic example, when only $500,000 was needed by the Department of Agriculture to control the Mediterranean fruit fly, the remainder of the original $1 million appropriation was rightly placed in a federal reserve.

"In short, no one is opposed to returning moneys to the Treasury whenever a program costs less than originally expected, just as no one should object to apportioning funds to prevent deficiencies. These practices, aimed at fiscal responsibility and not policymaking, are better referred to as apportioning (in the case of deficiency prevention) and reserving (when funds are placed in the Treasury as a result of program economizing), rather than impounding. The distinction between reserving and impounding is, of course, a matter of degree. When the purpose of holding back funds is not to effect marginal savings but to alter the intention of a program or policy, then 'reserving' has become 'impounding.' The transition is one from fiscal responsibility and economizing-rightly pursued by all components of government to constitutional irresponsibility, with a concomitant decline of checks and balances and separate institutions."

The legislative history of the Antideficiency Act, while somewhat ambiguous in certain parts, on the whole strongly supports the foregoing construction. The act was amended generally by section 1211 of the so-called "General." or "Omnibus," Appropriation Act, 1951, approved September 6, 1950, ch. 896, 64 Stat. 595, 765-768. The 1950 amendment included, for the first time, language specifically authorizing the reservation of funds. The report on this legislation by the House Appropriations Committee contains only the following brief description with specific reference to the provision eventually enacted as section 1211:

"The so-called Antideficiency Act has been a part of the law for many years but the present statute is antiquated and was written at a time when the fiscal operations of the Government were far more simple. Current laws are so complex and the structure of the Government has become so involved as to render the current law inoperative in many cases. On that account the committee has included as [then] section 1111 in chapter XI a redraft of the Antideficiency Act. The purpose is to require careful apportionment of all types of funds expended by Federal agencies and efficient administration of the Government's business." H. Rept. No. 1797, 81st Cong., 2d sess. at 9. However, immediately preceding the foregoing there appears a general statement as follows:

"RESPONSIBILITY OF THE EXECUTIVE BRANCH

"Economy neither begins nor ends in the Halls of Congress. Under the Budget and Accounting Act, it is the responsibility of the executive branch of the Government to submit annually to the Congress the estimates of the amounts which officials in the executive branch feel are required to support the necessary activities of the Government. The Congress reviews these estimates and decides the maximum amounts which must be appropriated for these various activities, and the annual appropriation bill provides the sums so determined by the Congress.

"Appropriation of a given amount for a particular activity constitutes only a ceiling upon the amount which should be expended for that activity. The administration officials responsible for administration of an activity for which appropriation is made bear the final burden for rendering all necessary service with the smallest amount possible within the ceiling figure fixed by the Congress. Every official of the Government who has responsibility for administration of a program must assume a portion of the burden for the deficit in the Federal Treasury. In the first place, he must take into account the condition of the Federal finances when he recommends to the Bureau of the Budget the amount which, in his judgment, is necessary for supporting his activity. In the second place, it is his responsibility to so control

and administer the activities under his jurisdiction as to expend as little as possible out of the funds appropriated." Id. (Emphasis added.) The italic portion of the above-quoted excerpt has been cited as constituting legislative recognition of a general principle that appropriations are permissive rather than mandatory. See, e.g., 42 Op. Atty. Gen. No. 32 (February 25, 1967), 4-5; Hearings, 94 (testimony of Mr. Caspar W. Weinberger, then Deputy Director of the Office of Management and Budget). This principle is then often employed to support the position that the executive branch has broad authority to impound appropriated funds. However, as noted previously, the actual language enacted reflects a much narrower context. It is also worth noting that the same report, in addressing that portion of the bill dealing with certain Air Force appropriations, contains the following statement:

"On the question of increasing the Air Force program from 48 groups to 58 groups, there was much debate and consideration in the Congress over a period of months prior to the adoption of the 58-group program. In other words, the bill which was passed by the Congress and approved by the President embraced the 58-group program, but the impounding of funds by the President reduced the program, from a 58-group program to a 48-group program. A major question of policy was determined by the Congress, and funds were provided to implement the policy but the will of Congress was circumvented.

"It is perfectly justifiable and proper for all possible economies to be effected and savings to be made, but there is no warrant or justification for the thwarting of a major policy of Congress by the impounding of funds. If this principle of thwarting the will of Congress by the impounding of funds should be accepted as correct, then Congress would be totally incapable of carrying out its constitutional mandate of providing for the defense of the Nation." H. Rept. No. 1797, supra, at 311.

An additional consideration with respect to the legislative history of the 1950 amendment is that the language of section 1211 concerning reservation of funds apparently derived originally from almost identical language recommended in a report to the Chairman of the Senate Appropriations Committee submitted jointly by the Director of the Bureau of the Budget and the Comptroller General. See B-66949, June 5, 1947; J. D. Williams, The Impounding of Funds by the Bureau of the Budget, The Inter-University Case Program, ICP Case Series: No. 32 (November 1955), reprinted in Hearings, 378, 392. This report was submitted, in part, to recommend "what can be done to control the use of appropriations so as to prevent the incurring of obligations at a rate which will lead to deficiency or supplemental appropriations or to curtailment of necessary activities if such appropriations are not made ***." Report at 1. With respect to this problem the report stated:

"*** Changing conditions inevitably will make necessary certain deficiency or supplemental appropriations. On the other hand, situations frequently will arise where appropriations are in excess of requirements because of circumstances developing subsequent to the formulation of estimates and the enactment of appropriation acts. It is obvious that unless some action is taken to conserve such appropriations, there will be moneys available to the spending agencies for which there is no real need. These moneys frequently will be spent even though the Congress would not have made the appropriation if it had been requested to do so in the light of the circumstances existing when the appropriation was obligated." Id. at 7. The report also observed:

*** The Antideficiency Act, while designated to prevent deficiencies, does not fill the need for machinery to conserve appropriations which are in excess of actual requirements. ***

"The need for a continuous study of appropriations in order to determine whether such appropriations are required for the purposes for which they were provided is just as real in the case of appropriations for the ordinary day-to-day operations of the Government as it is in the case of appropriations for 'the national defense, war agencies, and the prosecution of the war.' While the appropriation acts referred to above provided for a continuous study of appropriations made for those particular purposes with a view towards repealing any parts of such appropriations no longer needed, there is no express statutory provision for a similar study by the Executive branch of other appropriations, except in the law requiring that personnel ceilings be established by the Director of the Bureau of the Budget. * * Id. at 13-14.