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demobilization. Harry S. Truman, defender of project control as a Senator, found an early use for that instrument as President. In May, 1946, he ordered the Director of the Budget to impound funds appropriated in the War Department Civil Functions Appropriation Act, 1947, for the Kings River project, pending final determination of costs and repayment provisions.' An important use of impounding for program control occurred in 1949 when the President ordered into reserve the $615 million which Congress had appropriated, above his request, for a 48-group Air Force.

Neither the President's attitude nor the temporary inclination of Congress to use the policy could resolve doubts in the minds of some of the officials in the Budget Bureau about its legal authority to impound funds in peacetime when the war power of the President could no longer be relied upon. Largely on the insistance of some of the officials in the Estimates Division-who were rigorously disputed by others in the Bureau-it was decided to seek statutory approval from Congress for impounding: not for project control, but for program control. Sinet the Budget Bureau and the General Accounting Office were collaborating in suggesting improvements in fiscal management to Congress, a reference to impounding was included in this report. A draft bill, submitted with the report on June 5, 1947, to the Senate Appropriations Committee, contained the following provision :

"In apportioning any appropriation, reserves may be established to provide for contingencies, or to effect savings whenever savings are possible by or through changes in quantitative or personnel requirements. greater efficiency of operations, or other developments subsequent to the date on which such appropriation was made available."

The bill was ignored that year, but two years later the Hoover Commission urged Congress to confirm the President's authority "to reduce expenditures under appropriations, if the purposes intended by the Congress are still carried out." Occasional efforts were made within Congress to grant the President an outright item veto, but though these were unsuccessful, receptiveness to impounding appeared to mount. On May 11, 1949, for example, Senators Gordon (Rep., Ore.) and Knowland (Rep., Cal.) both expressed a belief that the President “may refuse to spend any of the money provided by appropriations wills if he wishes to do so. The fact that the appropriation has been made does not carry with it any mandate to spend the money."

Legislative approval came finally in a rider (Section 1211) attached to the General Appropriations Act of 1950. It followed closely the 1947 Budget Bureau-General Accounting Office draft:

"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. ...

“Any appropriation subject to apportionment shall be distributed by months, calendar quarters, operating seasons, or other time periods, or by activities. functions, projects, or objects, by a combination thereof, as may be deemed appropriate by the Officers designated to make apportionments and rear portionments. Except as otherwise specified by the officer making the oppor tionment, amounts so apportioned shall remain available for obligation, in aecordance with the terms of the appropriation, on a cumulative basis unless reapportioned. (31 U'SC 65.7)"

Paragraph (4) of the same section provided for quarterly review of appor. tiouments, at which times reapportionments may be made “or such reserves established, modified, or released as may be necessary to further the effective use of the appropriation concerned."

In addition to these provisions, the Act went on in Section 1214 to order the reduction by Executive action of $550 million from the amount appropriated Jy the Act. The reduction was to be accomplished “through the apportionment procedure provided for in Section 1211 of this Act." On October 10, 1970, in pusuance of Section 1214, the Budget Bureau announced that it had (ut a total of $580 million from nondefense appropriations.

To some Bureau officials, the new law afforded welcome relief from the uncertainties and attacks which had plagued them during the war. Section 1211 of

1 See Arthur Vaass: "The Kings River Projert" in the ICP Series, also publishert in Harold Stein: Public Administration and Policy Derelopment (N.Y., Harcourt Brace, 1952).

the 1950 Act seemed a firmer ground for impounding than authority inferred from the Anti-Deficiency Acts of 1905-06. But other officials disagreed. Was it a good thing, they asked, to have Congress define a power which the Bureau had exercised up to that point without such explicit definition ? "He who can give, can take away". Officials inclined to 'strict interpretation" emphasized that Section 1211 reduced rather than expanded the Bureau's authority by stating only two purposes for which reserves might be established: to provide for contingencies or to effect savings (and savings only in those situations where there was a change in requirements, greater efficiency of operations, or other developments subsequent to the date on which the appropriation was passed). Would either stated purpose have authorized the Bureau to halt construction * of the two Nevada airports because certain agencies did not share Senator McCarran's views about proper airport location ?

The Budget Bureau officially has taken the conservative view of its peacetime authority to impound. The 1952 edition of the Examiner's Handbook, the Bureau's "Bible", states:

"Reserves must not be used to nullify the intent of Congress with respect to specific projects or level of programs." Project Impounding Since 1950

According to Carl H. Schwartz, Jr. Chief of the Resources and Civil Works Division of the Bureau, project control by impounding has not been attempted since 1950. He writes (1955) :

"The Bureau since establishment of reserves under Section 1214 of the General Appropriation Act, 1951, has not impounded funds on any civil works projects for the purpose of preventing construction of improrements on which this Bureau had raised objections but for which appropriations had been made by the Congress. There have been instances where funds have temporarily been placed in reserve pending the fulfillment of requirements prescribed by the Congress to be met before construction could start."

The disuse of project impounding since 1950 is due partly to the fact that during the period of the Korean conflict and immediately after the armistice the administratio operated a "no new starts" rule for public works. Emphasis was on developing power projects at a more rapid rate in a reas important to defense production. Most of these projects had been started before the Korean conflict broke out. A second reason for the avoidance of project impounding has been the general philosophy of the Eisenhower administration not to precipitate disputes with Congress.

However, on July 19, 1955, President Eisenhower was reported in the Washington Post to have threatened to impound funds appropriated by Congress to the Corps of Engineers for navigation and flood control projects, pending completion of cost and engineering studies. The Post reported adverse reactions from Senators O'Mahoney, Morse, Mansfield, and Humphrey, with Senator O'Mahoney saying that the President's decision would “transfer to the Bureau of the Budget and its anonymous assistants the legislative power that exists in the Congress of the United States". Senator Humphrey was quoted as saying that the Budget Bureau is "taking on the aspect of a second parliament.”

Whatever intepretation is placed by the Budget Bureau on the powers accorded it in Section 1211, strong Presidents, relying in peacetime on their responsibilities as general managers of the Executive Branch, are as likely in the future as in the past to order impounding of funds for projects which they believe to be inimical to the national interest. No provision of statutory law is likely to settle permanently the question of whether Congress can force the President to allow the expenditure of appropriations against his will.

When the strong President of the future does order public works project impounding, certain differences in congressional reaction to project and program control are likely to continue to manifest themselves. While the establishment of reserves to reduce the level of military budgets, foreign aid, or crop slipport may evoke disagreement from Congressmen who strongly believe in these programs, such impoundings are likely to be tolerated. They will not appear to due personal insults or attacks. But when the President halts a minuscule flood control project in the home district of an individual Congressman, a reputation as a "go getter" with his constituents may suddenlr be shattered and chances for reelection imperiled. Project impounding is likely to continue to produce outraged charges of Executive usurpation of the spending power of Congress and demands to know "Who's Boss?"



Washington, D.C., May 16, 1972.
To: The Honorable Adlai E. Stevenson, III,
Attention : Sam Black.
From: Government and General Research Division ; Charles W. Harris, Division

Research by: Louis Fisher
Subject: Congressional Remedies for Impoundment of Funds.

This is in response to your request for legislative techniques that have been used in an attempt to force the President to spend appropriated funds.

1. Force Leveis. One method adopted by Congress is to set “floors" (minimum levels) below which the Administration cannot go. For example, in 1958 the Eisenhower Administration wanted to keep the strength of the Army Reserves at 270,000 and reduce the Army National Guard from 400,000 to 360,000.(1) In a counter move, Congress inserted in the defense appropriation bill a higher level for personnel strengths. A proviso for Army Reserve personnel specified that it “shall be maintained at an end strength of not less than three hundred thousand for the fiscal year 1959.” A similar proviso for the Army National Guard directed that the Guard “shall be maintained at an average strength of not less than four hundr thousand for the fiscal year 1959." (2) Subsegédent appropriation acts for the Defense Department also contained minimum force levels for Army Reserve components. (3)

A more recent use of statutory floors appears in the fiscal 1972 appropriations act for the Department of Housing and Urban Development, space. science, veterans, and other independent executive agencies. The bill appripriated $23 billion to the Veterans Administration for medical care, provided that the appropriation “shall not be apportioned to provide for less than an average of 97,500 operating beds in Veterans Administration hospitals or furnishing inpatient care and treatment to an average daily patient load of less than 85,500 beneficiaries during the fiscal year 1972." (4) The Administration had proposed that the daily patient load be reduced from 85,547 in 1970, to $3.013) in 1971, and to 79,000 in 1972. (5)

2. Mandatory Language. Congress occasionally resorted to the use of mandatory language in authorization and appropriation bills, such as the use of “shall" or "direct." In 1950 a bill to authorize the construction of naval vessels contained this language: (6)

Be it enacted, etc., That the President of the United States is hereby authorized and directed to undertake the construction of not to exceed 50,000 tons of modern naval vessels in the following categories:

“(a) Combatant vessels, 30,000 tons.
(b) Auxiliary vessels, 10,000 tons.

"(c) Experimental types, 10,000 tons. "The President is authorized and directed to convert not to exceed 200,00 tons of existing naval vessels, from among those vessels on the Navy list deter. mined to be best fitted for conversion to modern navals vessels, of the following categories:

“(a) Combatant vessels, 125.000 tons.

"(b) Auxiliary vessels, 75,000 tons." The Senate opposed the use of the word "directed” and voted to delete it from the bill. There was no debate on this amendment; the result is merely reported in the Record. (7) The enacted measure followed the Senate's version, authorizing the President to construct and convert the vessels. (8)

Also in 1950, Congress appropriated $2.250,000,000 to carry out the prorisions of the Economic Cooperation Act, provided that the Administrator "is authorized and directed to issue notes from time to time during the fiscal year 1951 for purchase by the Secretary of the Treasury, who is hereby authorized and directed to make such purchases, in an amount not exceeding in the aggregate $62,500,000 for the purpose of assistance to Spain ..." (9) President Truman announced that he would ignore the mandatory language of this provision : (10)

"I also feel obligated to comment upon the provision of the bill which authorizes loans for the purpose of assistance to Spain. I do not regard this provision as a directive, which would be unconstitutional, but instead as an au

thorization, in addition to the authority already in existence under which loans to Spain may be made.

*Spain is not, and has not been, foreclosed from borrowing money from this Government. Money will be loaned to Spain whenever mutually advantageous arrangements can be made with respect to security, terms of repayment, purposes for which the money is to be spent, and other appropriate factors, and whenever such loans will serve the interests of the United States in the conduct of foreign relations."

The loan to Spain was eventually granted, however. The 1950 elections have been cited as one factor that convinced both Congress and the Administration to extend assistance: “The strength of catholicism among normally Democratic voters in the North was a force which congressmen of that party found it difficult to ignore as the election of 1950 drew near. . . . Among the determining factors were the accelerated mobilization following the outbreak of war in Korea and the McCarthy-Tydings investigation, with its presumption of special impact on Catholic voters in the North. Strategic considerations were probably uppermost, but in a climate of opinion dominated by anticommunism it would plainly De very difficult for any major American party to remain long opposed to Franco Spain." (11)

The use of "shall” as a directive appeared in an authorization bill for the Atomic Energy Commission in 1957. The Joint Committee on Atomic Energy authorized appropriations for three reactor projects which had not been requested by the Commission. With regard to Project 58–5–8, a production reactor for special nuclear materials, the bill read as follows: (12)

“The Commission shall proceed with sufficient design work, together with appropriate engineering and development work, necessary for the Commission to begin construction as soon as practicable after authorization by the Congress, of a large scale single or dual purpose reactor for the production of special nuclear materials." The two other projects were Project 584e-14, a natural uranium, graphitemoderate, gas-cooled, powerreactor prototype, and Project 58-e-15, a plutonium recycle experimental reactor, Section 110 of the bill contained this directive: *The Commission shall proceed with the design engineering, and construction under contract, as soon as practicable, of the prototype power reactor facilities authorized by section 101 for project 58-e-14 and project 58-2-15 at installations operated by or on behalf of the Commission and the electric energy generated shall be used by the Commission in connection with the operation of such installations."

AEC Director Lewis L. Strauss and the Bureau of the Budget opposed these congressional add-ons. (13) All three projects, however, were included in the bill enacted into law.(14) The use of “shall proceed ... as soon as practicable” was repeated in the 1958 AEC authorization statute. (15) After Strauss retired as AEC Director on June 30, 1958, the mandatory language for specific projects was omitted from future authorization bills.

Title 10 of the United States Code, covering armed forces, provides this distinction between “shall” and “may”: (16)

"Shall" is used in an imperative sense.
"May" is used in a permissive sense. The words “no person may

mean that no person is required, authorized, or permitted to do the act prescribed. In 1966, in the armed forces authorization bill, "shall” was used to require construction of nuclear-powered vessels : (17)

"Notwithstanding the provisions of any other law, the Secretary of the Navy shall proceed with the design, engineering, and construction of the two nuclear powered guided missile frigates as soon as practicable." L. Mendel Rivers, chairman of the House Armed Services Committee, explained that the "purpose of this language is obvious. It says, in effect, Congress wants a nuclear Navy and we intend that the Department of Defense go ahead and get started on it." (18) (Congress had provided money the previous year for long leadtime items for the frigates but the Administration did not release the funds). By the time the 1966 armed forces authorization bill was enacted, the mandatory section had been modified to allow for executive discretion and judgment: “The contract for the construction of the nuclear powered guided missile frigate ... shall be entered into as soon as practicable unless the President fully advises the Congress that its construction is not in the national interest.” (19)

In March 1962, the House Committee on Armed Services voted to direct the Secretary of the Air Force to spend not less than $491 million during fiscal 1903 toward production of the RS-70 bomber. The committee report emphasized that the Secretary was "directed, ordered, mandated, and required" to spend the full $491 million. (20) President Kennedy wrote to Chairman Vinson of the Committee to urge that the word "authorized" be substituted for “directed." The President considered this more appropriate for an authorization bill-since funds had not yet been appropriated—and also thought the change in language would be "more clearly in line with the spirit of the Constitution” and its separation of powers. (ad) The House accepted the President's suggestion. (22)

3. Formula Grant Programs. On January 27, 1970, President Nixon retoud the Labor-HEW-OEO Appropriation Bill. Congress had appropriated $1.26 billion more for HEW than the President had requested; more than $1 billion of that increase was in the field of education. The President explained his veto partly on the ground that “nearly nine-tenths of these increases is for mandatory programs which leave the Executive Branch no discretion whatever either as to the level or the purpose of the added expenditures.” (23) The veto was sustained by Congress.

Several legal opinions by Administration officials explored in greater detail this question of mandatory programs. A memorandum prepared by William H. Rehnquist, Assistant Attorney General in the Office of Legal Counsel, concluded that the President did not have authority to impound funds for assistance to federally impacted areas. His conclusion, however, was hedged about with ser. eral qualifications: (1) the Commissioner of Education could exercise a certain amount of discretion in computing the “entitlement" of a local educational agency, (2) funds might be withheld in the event that a school district failed to comply with federal statutes and regulations, such as Title VI of the Civil Rights Act of 1964, and (3) spending ceilings adopted by Congress could possibly be a basis for impounding formula grants for education. (24) Moreover, the memorandum spoke tentatively of the “apparently mandatory provisions“ of impacted-areas legislation.

A separate memorandum by Mr. Rehnquist dealt with the President's authority to impound funds for other Office of Education programs. Some of the funds were considered mandatory. In other cases, however, the Commissioner of Education appeared to possess discretionary authority, such as in determining reallotments among the States : "this reallotment provision at least supports the argument that a State with an approved plan does not have a 'rested right to its full allotment." (25)

Still another memorandum regarding the President's authority to impound funds for formula grant programs was written by Robert C. Mardian, General Counsel of HEW. With the exception of Community Mental Health Center Construction Grants and Grants to the States for Public Health Services, and subject to certain other qualifications, he concluded that “these are mandatory programs and that there is no authority in the Executive Branch to withhold amounts from the appropriations for these programs." (26)

Unlike the Rehnquist memo, Mr. Mardian did not concede to administrators any discretionary power to determine a State's eligibility for federal grants. For instance, with regard to the program for educationally deprived children, Mr. Mardian stated that the "mandatory nature of the program is made clear by $ 107 (a) (1) which provides, The Commissioner shall pay to each State * * * the amount which it and the local educational agencies of that State are eligible to receive under this part.'" Yet who determines eligibility? Is that automatic or does it require adminisrative judgment? Similar questions are raised when Mr. Mardian describes the program for library resources as "clearly mandatory" because the State plan “must be approved if it complies with the statute ..." Who decides compliance? Mr. Mardian considered the program for undergraduate instructional equipment as mandatory "in that no discretion is left in the Commissioner either to withhold part of the appropriation or to withhold approval from an application which meets the statutory standards." That again begs the question: Who decides when an application satisties statutory standards?

President Nixon claimed in his veto message that “nearly nine-tenths of these {education) increases is for mandatory programs which leave the Executive Branch no discretion whatever either as to the level or the purpose of the added expenditures." It is evident that this overstates the conclusions reached in the two Rebnquist memoranda. The mandatory character of formula grants is ques

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