Posted: 3:48 pm PT
Last month, we wrote about the 1974 Congressional Budget and Impoundment Control Act; the Act inspired by then President Nixon’s refusal to disburse nearly $12 billion of appropriated funds by Congress.
Today, Politico is reporting that Secretary Tillerson is resisting the pleas of State Department officials to spend nearly $80 million allocated by Congress for fighting terrorist propaganda and Russian disinformation.
“It is highly unusual for a Cabinet secretary to turn down money for his department. But more than five months into his tenure, Tillerson has not issued a simple request for the money earmarked for the State Department’s Global Engagement Center, $60 million of which is now parked at the Pentagon. Another$19.8 million sits untouched at the State Department as Tillerson’s aides reject calls from career diplomats and members of Congress to put the money to work against America’s adversaries.”
The $60 million will expire on Sept. 30 if not transferred to State by then, current and former State Department officials told POLITICO.
Last month, Republican Sen. Rob Portman of Ohio pressed Deputy Secretary of State John Sullivan on whether Tillerson considers the Global Engagement Center a priority and urged that hiring caps be lifted so the center can expand.
We anticipate that Congress could allocate more funds for the State Department than requested by the Trump Administration. Given that the Administration has proposed some 30% cuts in its own request, it will be worth watching what Tillerson will do with the bulk of appropriated funds that the Administration did not ask for. The reported $80 million for the State Department’s Global Engagement Center that the State Department has not released could be the first test.
The State Department could violate the 1974 Impoundment Control Act (ICA) if it refuses to obligate funds for policy reasons without President Trump sending a special message to both Houses of Congress. It is also considered a violation is if it sets aside funds or intentionally slows down spending, or if it proposes a deferral but the timing is such that funds could be expected to lapse before they could be obligated.
Under ICA, an impoundment is any action or inaction by an officer or employee of the federal government that precludes obligation or expenditure of budget authority. The Act applies to salaries and expenses appropriations as well as program appropriations.
The Impoundment Control Act of 1974 (ICA) provides authority for agencies to “impound” or withhold the obligation of funds in certain circumstances. There are two ways for withholding funds, through a deferral or through proposed rescission. In both both cases, the President is required to send a “special message” to the House and the Senate specifying the following:
(1) the amount of budget authority which he proposes to be rescinded or which is to be so reserved;
(2) any account, department, or establishment of the Government to which such budget authority is available for obligation, and the specific project or governmental functions involved;
(3) the reasons why the budget authority should be rescinded or is to be so reserved;
(4) to the maximum extent practicable, the estimated fiscal, economic, and budgetary effect of the proposed rescission or of the reservation; and
(5) all facts, circumstances, and considerations relating to or bearing upon the proposed rescission or the reservation and the decision to effect the proposed rescission or the reservation, and to the maximum extent practicable, the estimated effect of the pro- posed rescission or the reservation upon the objects, purposes, and programs for which the budget authority is provided.
A deferral is used if the President wants to temporarily withhold obligation of funds (but not beyond the end of the fiscal year). A rescission is used if the President wants to permanently withhold funds from obligation and for Congress to cancel the budget authority (before that authority would otherwise expire). The latter can be accomplished only through legislation.
The GAO’s Principles of Federal Appropriations Law notes that “The President is authorized to withhold budget authority that is the subject of a rescission proposal for a period of 45 days of continuous session following receipt of the proposal. Unless Congress acts to approve the proposed rescission within that time, the budget authority must be made available for obligation.”
Since Congress is on break in August, and the fiscal year ends on Sept 30, we don’t think there’s enough time to notify Congress of the rescission if that’s something the State Department is considering for the $80 million GEC funds.
So what happens if an agency withholds appropriated funds, and refuses to spend it?
The Comptroller General of the United States, the director of the Government Accountability Office (GAO) is required to review each special message under ICA, including ensuring that the impoundment is not misclassified (deferral vs. rescission), and report to Congress. The Comptroller General must also report to Congress any impoundment which the President has failed to report. Members or Committees of Congress, intended recipients, or auditors may bring any impoundment/withholding to the GAO’s attention for review.
We’ll have to wait and see if Republican Sen. Rob Portman of Ohio or Democratic Sen. Chris Murphy of Connecticut would ask for a GAO review given their expressed interest in the Global Engagement Center.
In 1978, a member of Congress asked the GAO whether the Department of Labor violated the Act when it allowed $500,000 in budget authority appropriated to the Bureau of Labor Statistics to lapse without notification to Congress. The funds were not obligated as of the last day of their availability, the end of the fiscal year, September 30, 1977, and they reverted to the Treasury Department.
Under the Act, the Comptroller General is also authorized bring a civil action in the U.S. District Court for the District of Columbia if an agency does not release budget authority for obligation. The Comptroller General must first report the circumstances that necessitates a civil action to the Speaker of the House and the President of the Senate. After that report is made, the Comptroller General may not initiate an action until 25 days of continuous session of Congress have passed.
We understand that the GAO has filed 25-days reports on several occasions but has filed only one lawsuit in 1976, in the District Court for the District of Columbia (Staats v. Lynn). In those cases, the funds were reportedly released. The Staats v. Lynn case involves the Department of Housing and Urban Development in relation to appropriated funds for the housing program:
According to Paul G. Dembling, the then GAO General Counsel in 1975, “the concern in impoundment litigation is with the underobligation of appropriations which threatens to frustrate congressional intent.“
In 2006, executive agencies had impounded funds the President had proposed for cancellation in 13 instances. The funds were proposed for cancellation without submitting a message on impoundments under the Impoundment Control Act. Officials reportedly explained that no message were submitted because the Administration was not withholding funds from obligation. In all 13 instances, the agencies released the impounded funds as a result of GAO’s inquiries.