The President, if he directs the Bureau of the Budget to withhold funds from any governmental agency, we do not touch any constitutional prerogative of the President to take such action. We do not have the authority and I do not know in my judgment how we could get to that. The President in my judgment would not be able to operate an efficient form of government if we tried to take this power away from him. 114 Cong. Rec. 29481. 7(a). Question: If the President's budgetary duties are statutory, then is it not within the power of Congress to add to them in any way deemed desirable! Answer: As demonstrated in the previous answer, the President's budgetary duties derive substantially from the Constitution. To the extent that the duties are statutory, they are, of course, subject to legislative amendment.

8. Question: Where in the Constitution is it stated that the President is the "sole organ of the nation in the conduct of its foreign affairs?”

Answer: Certainly, the Constitution itself does not contain this language. It is, however, the language of John Marshall, later Chief Justice, during a debate in the House of Representatives in 1800. 10 Annals of Cong. 613. It is cited with approval by Justice Sutherland in United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319 (1936), and in Justice Harlan's dissenting opinion (joined by Chief Justice Burger and Justice Blackmun) in New York Times Co. v. United States, 403 U.S. 713, 756 (1971). See question 1.

8(a). Question: Does Congress not have express power, under Article I of the Constitution, to legislate in the areas of foreign commerce and also in declaring war and making rules for the armed services?

Answer: Yes. See question 1.

8(b). Question: Does not that express power to make rules for the armed serv ices necessarily include the President as Commander-in-Chief? Is not the express power augmented by the “necessary and proper" clause?

Answer: Insofar as Congressional rulemaking for the armed services does not infringe upon the President's power as Commander-in-Chief, the rules enacted by the Congress would apply to the President. However, I do not view this rulemaking power as granting the Congress authority to compel the full expenditure of defense appropriations. History strongly supports that conclusion. See question 1. The "necessary and proper" clause enables Congress to implement the powers granted to it under the military rulemaking provision. See question 3.

8(c) Question: At the very least, is not the power over the conduct of foreign relations, as set out in the Constitution and the cases, a shared power between the executive and legislative branches of the Federal Government?

Answer: Yes. See question 1.

9. Question: Cite the express language in the Antideficiency Act that gives the power to impound, as distinguished from the power to allocate reserves to prevent deficiencies.

Answer: The primary purpose of the Antideficiency Act (31 U.S.C. 665) is, as you suggest, to prevent deficiencies. However, certain language in section 665 (c) (1) and (2) does permit the Office of Management and Budget to take steps to ensure efficient use of funds, and to effect savings under certain circumstances, action which would not necessarily be required to prevent deficiencies.

[A]ll appropriations or funds not limited to a definite period of time, and all authorizations to create obligations by contract in advance of appropriations, shall be so apportioned as to achieve the most effective and economical use thereof.

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

10. Question: On page 676 of the transcript, Senator Muskie asked: “Could the President or could the Administrator, in your judgment, change Administration policy and allow the sums that were not allotted prior to January 1st [pursuant to the Water Pollution Bill]?" You answered: “I am not prepared to answer that." Having had the time to study the matter, please supply the Committee with the Department's answer.

Answer: Section 205(a) of the Federal Water Pollution Control Act amendments of 1972 provides in pertinent part that—

Sums authorized to be appropriated pursuant to section 207 for each fiscal year beginning after June 30, 1972, shall be allotted by the Administrator not later than the January 1st immediately preceding the beginning of the fiscal year for which authorized, except that the allotment for fiscal year 1973 shall be made not later then 30 days after the date of enactment of the Federal Water Pollution Control Act Amendments of 1972.

The evident purpose of these time limits is to ensure that the states and localities will know as soon as practicable how much money is potentially available for their projects in particular years, thereby facilitating advance planning. However, the legislative history of the statute makes it quite clear, in my view, that not all the sums authorized by section 207 need be allotted. See footnote 22 of my statement before your Subcommittee. While a literal reading of the quoted language might suggest that no funds may be allotted after the statutory time limits, I do not believe that such a reading would be truly reflective of Congressional intention. I interpret the quoted statutory language to mean that the President's best judgment under circumstances prevailing at the time as to the amounts that may be prudently allotted should be exercised by the statutory time limits. However, changed circumstances following those dates might justify subsequent allotment of additional funds within and for the fiscal years specified, in the President's discretion.

11. Question: On page 686 of the transcript, you asserted that the President has power to "cut programs" 100 percent. What is the source of Executive power to terminate programs authorized by Congress and signed into law by the President?

Answer: In my view, the President is authorized substantially to reduce spending for a wide variety of federal programs, and, in some circumstances, he may cut spending 100 percent of particular programs. However, he is, of course, not authorized to make spending cuts arbitrarily.

As noted in my prepared statement, the typical federal spending program statute "authorizes" expenditures by the executive branch, and implementing appropriation acts merely establish a spending ceiling, not a floor. Literally read, therefore, the President could spend as little as he deems appropriate under such statutes, or nothing at all.

Impounding of funds for a particular program is justified in many circumtances where spending may have the effect of violating other statutory provisions. The debt ceiling is a good example of this, and it is discussed in my statement before your Subcommittee.

More fundamentally, substantial authority to impound funds for particular programs flows from the "executive Power" conferred upon the President by Article II. See question 7. This power plainly includes a duty to promote efficiency in government, and to prevent waste. In the past 40 years, Congress has enacted hundreds of spending programs. Once established, these programs become entrenched in the federal bureaucracy and develop powerful political relationships in the Congress and among special interest groups. In short, they acquire a self-perpetuating momentum, regardless of their logical relationships to other programs, and to changing national needs. In these circumstances, the President is authorized, for example, to merge essentially duplicative programs and to eliminate programs which are no longer needed.

But it is impossible to answer this question fully in the abstract. Significant impounding actions must be evaluated in their overall contexts.

11(a). Question: Does not your position give the President an item-veto power long after he has either signed a bill or a bill has been enacted over his veto? If so, where in the Constitution does the President get an item-veto power?

Answer: My position does not give the President an item-veto power, a power he does not possess under the Constitution. If the President had an item-veto power, he could effectively abolish particular programs for no reason at all— subject to the power of Congress to override his action. Impounding actions may not be arbitrary.

12. Question: You stated, in answer to a question from Senator Percy, that "we think [Rehnquist's position on impoundment] was erroneous." Please indicate in detail how and why you believe Rehnquist to be erroneous-making specific reference to his memorandum in your answer.

Answer: The substance of Mr. Rehnquist's rather lengthy memorandum of December 1, 1969, concerning the federal impacted area school subsidy program

is that Congress can compel spending by the Executive in the domestic area, if it clearly manifests an intention to do so. I do not believe that further extended reference to the memorandum here would be productive. My disagreement with Mr. Rehnquist's position rests primarily upon four grounds.

First, the memorandum does not deal at all with the historic practice of Presidents in impounding funds, particularly for the purpose of controlling inflation. In my judgment, the warrant of historic practice is perhaps the strongest support for my position. See questions 4 and 6.

Second, although the memorandum acknowledges some Presidential authority to impound in the defense and foreign relations areas, it takes an unduly narrow view of that authority, and does not adequately take into account the relationships between those areas and the domestic area. See question 6.

Third, the Rehnquist position appears to rely substantially upon the Kendall case. As demonstrated in my statement before your Subcommittee, that case has very little bearing upon the current impounding issues.

Fourth, in my view, the Rehnquist memorandum adopts far too restrictive a view of the Executive power conferred by Article II. Concededly, it is difficult to argue against such abstract statements in the memorandum as

It may be argued that the spending of money is inherently an executive function, but the execution of any law is, by definition, an executive function, and it seems an anomalous proposition that because the Executive branch is bound to execute the laws, it is free to decline to execute them.

I believe, however, that the matter is far more complex than those statements suggest, as indicated by my previous answers. Under the Rehnquist position, for example, it would seem that the President's responsibilities with respect to managing spending could be made almost entirely clerical. As explained more fully in questions 6 and 7, I strongly disagree with that view.

12(a). Question: If you believe Mr. Rehnquist's memorandum was erroneous, what steps have you taken to rectify it?

Answer: My testimony before your Subcommittee expresses the Department of Justice position on this matter.

13. Question: You state that, in the judgment of the Department, the President's power to impound derives in part from his duty to take care that the laws are faithfully executed. State the criteria by which choices are made between allegedly inconstant (sic) laws of the Congress. For example, why is the debtceiling limitation chosen over specific appropriations?

Answer: In situations where impounding action is taken in order to harmonize inconsistent statutes, the governing criterion, of course, is the intention of the Congress. The problem is frequently made difficult by the fact that the conflicting laws were enacted without reference to each other, and Congress has not made its intention clear. In those circumstances, the President is bound to harmonize the conflicting purposes of the statutes on the basis of their language, legislative histories, and indirect indications of probable Congressional intent. The process is illustrated by an opinion rendered by Attorney General Mitchell to the Chairman of the Cost of Living Council concerning the relationship between the Economic Stabilization Act and the 1971 military pay raise statute. A copy of that opinion is attached.

The debt ceiling imposes an overall spending limitation on the federal government. As such, it governs over specific spending authorizations for hundreds of separate spending programs, except to the extent that a particular program statute or implementing appropriation act specifically might provide that money for that program may be spent without regard to the debt ceiling.

14. Question: You stated that the President could lawfully impound funds appropriated for the independent regulatory commissions. Please state the legal basis for that assertion. In your answer, please inform the Committee as to why Humphrey's Executor v. United States, and Wiener v. United States do not state a judicial position contrary to yours. Also indicate the extent to which the President can control decisions of the independent regulatory commissions.

Answer: The special status of the "independent regulatory commissions" was recognized by the Supreme Court in Humphrey's Executor v. United States, 295 U.S. 602 (1935), and Wiener v. United States, 357 U.S. 349 (1958). These cases stand for the proposition that the President cannot remove a member of an independent commission before his term expires simply because he prefers a man of

his own choosing. In line with these decisions, it is clear that the President cannot control decisions of such commissions, nor take any other action which would significantly detract from their independent status. At the same time, it is clear that the independent regulatory commissions do not enjoy total freedom from Executive supervision. See Cushman, The Independent Regulatory Commissions 666 (1941). Thus for example, supergrades are allocated to an independent commission by the Civil Service Commission; and the federal property and administrative services of commissions are under the direction of the Administrator of General Services, who in turn is subject to the direction and control of the President. See 40 U.S.C. 471 et seq.

Executive control over the budgetary maters of independent commissions is important from the point of view of maintaining overall control on Government spending, and has become an established practice. See Cary, Politics and the Regulatory Agencies 11-12 (1967). The Budget and Accounting Act requires that the independent commissions submit their budgets to the Office of Management and Budget and authorizes that Office to "assemble, correlate, revise, reduce, or increase the requests for appropriations." 31 U.S.C. 16. The Antideficiency Act also clearly applies to appropriations made for independent regulatory commissions. Thus, with respect to budgeting and management of appropriated funds, an independent commission is, by definition, a "department or establishment" and "any appropriation" for it is subject to the control of the Office of Management and Budget to ensure sound and efficient operation. 31 U.S.C. 2, 665 (c) (2). In the example put to me by Professor Miller during my testimony before your Subcommittee, it was pointed out that $620,000 was withheld from the $25,189,000 appropriated for the Federal Trade Commission for fiscal 1972. In fact, such an amount was placed on reserve in November of 1971 as part of the Government-wide effort to cut pay costs of all agencies by 5%. This amount was released in February 1972 in order to cover the cost of 1972 salary increases for the Commission's employees. Any such action by the Executive branch which does not endanger the independent status of the agency in question does not contravene the principle set forth in the Humphrey and Wiener decisions.

15. Question: You stated that you "would hesitate to make a statement" about the power of the President to impound funds for the use of Congress "without looking into it futher." Now that you have had the time look into it, what is the position of the Department on that question?

Answer: Action by one branch of our Government which threatens the orderly and independent operation of a co-equal branch may run afoul of the principle of seperation of powers. Such a principle is not expressly set forth in the Constitution, but is generally recognized to be implicit in the separate and distinct establishment of the three branches of government provided by the Constitution. See Ex Parte Grossman, 267 U.S. 87, 119 (1925).

Any attempt by the executive to cut off or reduce salaries of members of Congress or otherwise hold back appropriated funds essential to the performance of its functions would, in my view, be improper under the separation of powers principle. However, such action could be taken with the consent of Congress. For example, pursuant to the power grants to him by the Economic Stabilization Act, the President froze all salary increases temporarily, which included the salaries of Congressional employees. E.O. 11615.

16. Question: You did not state a position on the question of whether the President could impond funds appropriated for the Supreme Court. What is your position on that question, now that you have had time for reflection?

Answer: Article III, section 1 of the Constitution provides that judges "of the supreme and inferior Courts" shall receive compensation "which shall not be diminished during their Continuance in Office. Apart from the question of judicial salaries, I believe that the President could not cut back funds appropriated for the use of the Supreme Court where to do so would detract from its ability to perform its constitutional responsibilities. See question 15.

17. Question: Mr. Ash, in his testimony before the Committee, said that the choice had to be made between “good” programs and “very good” programs. How is that choice made? By what criteria are programs chosen? Are those criteria promulgated in Executive Orders or other Executive publications? If not, why not? In this connection, you may wish to refer to Secretary Butz's testimony on February 7, in which he said that there were no published or articulated criteria and also that the choice, in final analysis, was “political". If Secretary Butz was accurate then under what theory of law can it be said that the Executive is acting when impounding in accordance with the law? In your answer to that it should be noted that even if it is granted (for purposes of discussion) that an 90-538-73—55

Executive power of impoundment exists that applies only to the general power; specific impoundment actions within that general power are arbitrary or “political", unless made in accordance with known standards of judgment external to the decision-maker.

Answer: I believe that most substantive aspects of this question are covered in my preceding answers. It would be inappropriate for me to comment on the statements of Director Ash and Secretary Butz, except to say that I would have preferred to characterize the basis for making choices as the "judgment of political officials." I believe this is what the Secretary must have meant because irrespective of any criteria that might or might not have been articulated, the President or one of his designated appointees had to make the choices.

Senator SAM ERVIN,
Senate Office Building,
Washington, D.C.

HINCKLEY INSTITUTE OF POLITICS,

THE UNIVERSITY OF UTAH, SALT LAKE CITY, UTAH,
February 13, 1973.

DEAR SENATOR ERVIN: At a time when the issue of the impounding of funds is at fever-heat, I though you might be interested in the origins of that practice back in 1941. The enclosed case study tells the story of how a young budget examiner by the name of Charles Curran, anxious to carry out President Franklin Roosevelt's edict against any non-essential expenditures during the war effort, suggested to his superiors in the Bureau of the Budget that an old, well-accepted precedent of reserves to effect savings could perhaps be stretched to cover unwanted projects. The case study tells the story of the soul-searching that went on in the Bureau of the Budget, anticipating the hostile Congressional reaction. President Roosevelt's endorsement of the proposal, and the ultimate Congressional approval which the Bureau won in the Budgeting and Accounting Procedures Act of 1950.

I hope the study will be of some use in throwing light on the current controversy.

Very best wishes,

J. D. WILLIAMS,

Director.

Enclosure.

THE IMPOUNDING OF FUNDS BY THE BUREAU OF THE BUDGET

(By J. D. Williams)

(Inter-University Case Program No. 28)

I INTRODUCTION

This is the story of the efforts of the Budget Bureau to impound funds appropriated by Congress for public works projects during World War II in an effort to lessen inflationary pressures and to check the diversion of scarce materials from defense production. It is also a brief life history of a policy and its political and administrative repercussions.

If the makers of the Constitution had given the President an item veto over appropriation acts, the policy which this case focuses would never have been initiated. Under the Constitution, Congress is empowered to pass laws and to appropriate money. But the public usually holds the President responsible-particularly at election time-for the nation's economic health as well as for its security. As the federal government's role in economic affairs increased during the 1930's, it was inevitable that a President would some day have to find a means to avoid spending money appropriated by Congress for projects which, in his view, were not in the national interest.

President Roosevelt was confronted with such a situation following his reelection to a third term in 1940. As the nation's economy shifted to defense production and as the price index began to rise, it became apparent that non-essential expenditures would have to be curtailed to prevent inflation and to check the diversion of scarce materials from defense production. For this reason the