PAGENO="0001"
OVERSIGHT HEARING ON THE IMPOUNDMENT CONTROL
ACT OF 1974
7 ~ (~
DIE PUS IT'C)RY
HEARING
BEFORE THE
TASK FORCE ON BUDGET PROCESS
OF THE
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
NINETY-FIFTH CONGRESS
SECOND SESSION
JUNE 29, 1978
Printed for the use of the Committee on the Budget
K~II ~P
RUTGERS 1PN~J SCHOOl UBRAfl~'
CAMDEN, N. J. 08102
GOVERNMEI\!T DOCUM~T
U.S. GOVERNMENT PRINTING OFFICE
31-188 0 ( WASHINGTON : 1978 TF-1-95-39
t~ ~ ~
PAGENO="0002"
THE COMMITTEE ON THE BUDGET
JIM WRIGHT, Texas
THOMAS L. ASHLEY, Ohio
ROBERT L. LEGGETT, California
PARREN J. MITCHELL, Maryland
OMAR BURLESON, Texas
LOUIS STOKES, Ohio
ELIZABETH HOLTZMAN, New York
BUTLER DERRICK, South Carolina
OTIS G. PIKE, New York
DONALD M. FRASER, Minnesota
DAVID R. OBEY, Wisconsin
WILLIAM LEHMAN, Florida
PAUL SIMON, Illinois
JOSEPH L. FISHER, Virginia
NORMAN Y. MINETA, California
JIM MATTOX, Texas
MACE BR0IDE, Executive Director
WENDELL BELEW, Chief Counsel
BRUCE MEREDITH, Assistant Director, Budget Priorities
NANCY TEETERS, Assistant Director, Economic Analysis
WILLIAM LILLEY III, Minority Staff Director
BUTLER DERRICK, South Carolina, Chairman
DELBERT L. LATTA, Ohio
MARJORIE S. HOLT, Maryland
JOHN S. ROUSSELOT, California
EDWARD STARR, Administrator
SHIRLEY RUHE, Senior Analyst
NICHOLAS A. MASTERS, Director, Majority Associate Staff
ROBERT N. GIAIMO, Connecticut, Chairman
DELBERT L. LATTA, Ohio
JAMES T. BROYHILL, North Carolina
BARBER B. CONABLE, JR., New York
MARJORIE S. HOLT, Maryland
JOHN H. ROUSSELOT, California
JOHN J. DUNCAN, Tennessee
CLAIR W. BURGENER, California
RALPH S. REGULA, Ohio
TASK FORCE ON BUDGET PROCESS
THOMAS L. ASHLEY, Ohio
NORMAN Y. MINETA, California
(II)
PAGENO="0003"
CONTENTS
Page
Statement of-
Dembling, Paul G., General Counsel, General Accounting Office; accompa-
nied by Milton J. Socolar, Deputy General Counsel 2
McOmber, Hon. Dale R., Assistant Director, Office of Management and
Budget, Executive Office of the President 23
Schick, Dr. Allen, senior specialist, Library of Congress 28
Additional information submitted for the record by-
Dembling, Paul G.:
Prepared statement 9
Enclosures to statement:
Status of Recommendation to 0MB To Improve Impoundment
Reporting ii
Draft Bill 11
Program Curtailment Control Act of 1978 13
Tables submitted on the first 2 years of operation of the Impoundment
Control Act:
A. Proposed Rescissions, Fiscal Year 1977 3
B. Proposed Deferrals, Fiscal Year 1977 4
C. Proposed Rescissions, Fiscal Year 1978 5
D. Proposed Deferrals, Fiscal Year 1978 6
Mc0mber, Hon. Dale R., prepared statement 26
Schick, Dr. Allen, prepared statement 37
Staats, Hon. Elmer B., Comptroller General of the United States, corre-
spondence re executive branch action on the Impoundment Control Act
of 1974 and also the B-i bomber:
June 29, 1978, to Hon. Robert N. Giaimo 20
August 1, 1978, to Hon. Strom Thurmond with enclosure dated August
5, 1977, to Hon. John J. LaFalce, re Minuteman III Intercontinental
Ballistic Missile 53, 55
March 17, 1978, Hon. Abraham Ribicoff 56
May 10, 1978, Hon. Frank Horton 58
Enclosure to letter:
Draft Bill 59
Program Curtailment Control Act of 1978 60
(III)
PAGENO="0004"
PAGENO="0005"
OVERSIGHT HEARING ON THE IMPOUNDMENT
CONTROL ACT OF 1974
THURSDAY JUNE 29 1978
HOUSE oF REPRESENTATIVES,
TASK FORCE ON'BUDGET PROCESS,
COMMITTEE ON THE BUDGET,
Washington, D.C.
The task force met, pursuant to notice, at 9:30 a.m., in room 210,
Cannon House Office Building, Hon. Butler Derrick, chairman of
the task force, presiding. .
Mr. DERRICK. We will get started. We expect to have another one
or two Members here shortly.
It is a pleasure to have you here today at the Budget Process
Task Force oversight hearing on title X of the Budget Act. This
hearing is intended to focus on the. operation of the impoundment
title from several institutional viewpoints, and over the timespan
since it was enacted. . , . . .. .. . . . . *.
In the beginning, as with any new law, the going was rough,
every issue was resolved for the, first time after heated battles and
a' thorough search of the legislative history. Many of the key actors
involved were discouraged and overloaded with detail.
I am hoping that `we have sufficient' experience to sort out those
growing pains' which we have experienced in the beginning. stages*
of the act and to put `them in* perspective, which are the `persistent
problems which should be addressed and which are the necessary
adjustments which beset the implementation of any new law
The Impoundment Control Act `was .passed in `1974 as a reaction
to the Nixon impoundments. In the 3 months' following his reelec-
tion, Richard Nixon delayed, diminished, or terminated ,scores of
Federal programs by impounding their funds; $21 billion in 1 year
alone. Congress protested; legal scholars obj~cted; suits were filed,
newsmen discussed a constitutional crisis but no remedy existed for
Congress to stop the impoundments.
After considerable effort, Congress passed the Impoundment Con-
trol Act of 1974, attaching it to the Congressional Budget Act, and
the public outcry over impoundment died down. Now we tend to
focus instead on individual impoundment issues such as the B-l
bomber or the Minuteman III actions; and in many ways, title X,
the major impetus for reform at the time, has now taken a back
seat to the implementation of the Budget Act itself.
I hope today to bring out some of the specific problem areas,
either technical or philosophical, which have provided persistent
and serious problems in implementing the act.
(1)
PAGENO="0006"
2
I am pleased to have here today some of the key people in this
process who can provide insight into the operation of the act: Paul
G. Dembling, General Counsel of GAO, who has formulated the
legal base upon which the act has grown and taken shape; Dale R.
McOmber, Assistant Director of 0MB, who has played a key role in
better budgeting in the executive branch through many adminis-
trations; and Dr. Allen Schick, Senior Specialist in the Library of
Congress who lived through the formulation of the impoundment
title word by word and has written some of the best interpretative
material on the first few years of its operation. Would the lady
from Maryland like to add anything?
Mrs. HOLT. No, thank you.
Mr. DERRICK. I would like to proceed with the first witness from
the GAO and to follow each witness with questions and answers.
STATEMENT OF PAUL G. DEMBLING, GENERAL COUNSEL, GEN-
ERAL ACCOUNTING OFFICE; ACCOMPANIED BY MILTON J.
SOCOLAR, DEPUTY GENERAL COUNSEL
Mr. DEMBLING. Thank you very much, Mr. Chairman. Mr. Chair-
man, Mrs. Holt, we appreciate the opportunity to discuss with you
our experience under the Impoundment Control Act of 1974.
Today's hearing focuses upon title X of the budget control legisla-
tion that was enacted in July 1974, known as the Impoundment
Control Act of 1974. This act creates the procedural means by
which the Congress considers and review executive branch with-
holdings of budget authority. The statute requires the President to
report promptly to the Congress all withholdings of budget authori-
ty and to abide by the outcome of the congressional impoundment
review process. By and large, the Impoundment Control Act has
worked well.
The statute assigns several functions to the Comptroller General
and GAO. We evaluate for the Congress impoundments reported by
the executive branch. We also report to the Congress impound-
ments which the executive branch has failed to disclose and report.
We identify undisclosed impoundments through our audit efforts
and information provided to us by persons inside and outside the
Government. Under certain circumstances GAO may sue an execu-
tive agency to compel the proper release of impounded funds.
Let me briefly summarize the key features of the Impoundment
Control Act: There are two types of impoundments: Rescissions and
deferrals. Deferrals are temporary withholdings of funds, while
rescissions are requests to the Congress to cancel budget authority.
Either House of Congress can reject a deferral by passage of a
simple resolution. Passage of such an impoundment resolution re-
quires the executive branch to terminate the impoundment and to
make the deferred funds available for obligation immediately.
Requests to rescind the budget authority involve the entire legis-
lative process, since a bill or joint resolution passed by both houses
and signed by the President is necessary to accomplish a rescission.
Under the act, if a rescission bill is not passed within 45 days of
continuous congressional session after the day on which the re-
quest is first received by the Congress, the funds withheld during
the pendency of the request must be made available for obligation.
PAGENO="0007"
3
Proposal number and agency or program Amount Date proposed Approved 45 days ended
Rh-i-Legal Services Corporation $45,000,000 July 29, 1976 Oct. 1, 1976
R77 -2-Corps of Engineers, Army 6,600,000 Sept22, 1976 Mar. 1, 1977
R77-3-lnterior-Bureau of Mines Helium 47,500,000 H.R. 3347, P.L 95-10
Fund. $47,500,000, Mar. 10,
1977.
35,000,000
R77-4-Federal Highway Administration,
DOT 1
R77-5-lnternational Security Assistance .... 41,500,000
Jan. 17, 1977 H.R. 3839, $41,500,000
Mar. 25, 1977.
Mar. 14, 1977
Do.
R77-6--Commerce-U.S. Travel Service 525,000
R77-7-Commerce-NOAA 1,500,000
R77-8-DOD, Retired Pay 143,600,000 H.R. 3839, $143,600,000,
Mar. 25, 1977.
R77-9-DOD, Navy Shipbuilding 721,000,000 H.R. 3839, $452,600,000,
Mar. 25, 1977.
R77-10-DOD-Procurement, Air Force 14,350,000 H.R. 3839, $14,350,000,
Mar. 25, 1977.
R77-11-State-lnternational Peacekeep- 12,000,000 H.R. 3839 $12,000,000
ing Activities. Mar. 25, 1977.
R77-12-DOT-Coast Guard 6,803,000
R77-13-SBA 2 60,000,000
R77-14-DOD-Navy Shipbuilding 126,212,000 May 18, 1977 July 22, 1977
R77-15-National Transportation Safety 850,000 July 17, 1977 Sept 25, 1977
Board.
R77-16-lnternational Security Assistance. 21,090,000 July 19, 1977 Oct. 4, 1977
Rh-il-GSA--Federal Building Fund 75,000,000
R77-18-DOD, Aircraft Procurement, Air 462,000,000
Force.
R77-19-DOD-Missile Procurement, Air 1,400,000
Force.
R77-20-DOD-Missile Procurement, Air 105,000,000 July 26, 1977 Oct 15, 1977
Force.
Agriculture-Forest Service 3,672,000 Aug. 2, 1977
1 Rescission R77-4) withdrawn Nov. 5, 1976 (4th message).
2Rescission R77-13) withdrawn Mar. 9, 1977 (8th message).
Reported by Comptroller General.
Mar. 14, 1977
The Comptroller General is authorized to report to the Congress
undisclosed rescissions and deferrals. Impoundments reported by
the Comptroller General are treated as though coming from the
President.
Complementary to this reporting process, the Comptroller Gener-
al also is required to notify the Congress when an impoundment
has been improperly classified by the President. Such a report
triggers the appropriate congressional review mechanism and nulli-
fies the process initiated by the prior Presidential message.
The Comptroller General is empowered to sue the appropriate
representative in the executive branch to make funds available for
obligation when he finds the executive branch has not complied
with the statute's requirements that the funds be released.
While we believe the basic framework of the act is sound, we
have suggested a number of possible refinements to the law and
the way in which it is administered by the executive branch. In our
*view, implementation of these recommendations would streamline
and clarify the operation of the statute. All of our administrative
and legislative recommendations are discussed in detail in a report
we submitted to the Congress on the first 2 years of operation of
the Impoundment Control Act, and we wish to submit a copy of
that for the record.
Mr. DERRICK. Without objection.
[The information referred to follows:]
LISTING OF IMPOUNDMENTS FOR FISCAL YEARS 1977 AND 1978- JUNE 20, 1978
A. Proposed Rescissions, Fiscal Year 1977
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PAGENO="0009"
5
B. Proposed Deferrals, Fiscal Year 1977-Continued
Proposal No. Agency or program Amount Date proposed Disapproved
D77-53 Corps of Engineers, Army 20 $2,665,000 Mar. 24, 1977
077-54 Interior-Bureau of Reclamation 214,790,000
D77-55 ERDA-operating expenses 80,500,000 Apr. 4, 1977
D77-56 1 ERDA-plant and capital equipment ... 46,660,000
D77-57 Treasury 228,453,000 Apr. 28, 1977
D77-58 1 ERDA-CRBRP 2337,400,000 May 18, 1977
D77-59 State 18,000,000
D77-60 1 Treasury 150,000,000
D77-61 D0T-FAA 2,100,000
D77-62 DOD, military personnel 12,465,000 July 19, 1977
D77-63 Commerce-EDA 11,000,000
D77-64 ERDA-plant and capital equipment ... 2411,300,000 Aug. 16, 1977
Agriculture-Forest Service 25 11,537,000
Do 1,775,000
Do 2,110,000
`Policy deferrals.
2 D77-2A changed D77-2 $1,609,608).
D77-5A changed D77-5 $145,665).
4D77-6A changed D77-6 ($1,770,716).
D77-9A changed D77-9 ($355,550).
6077..1OC changed D77-1OB ($381,651,837), D77-1OA ($335,883,000), 077-10 ($76,483,201).
7D77-12A changed D77-12 $362,600).
S D77-13Achanged D77-13 $1,113,000).
9D77-14A changed D17-14 $31,701,606).
10077....15A changed 077-15 $17,271,878).
11 D77-16A changed D77-16 $5,426,000).
12 D77-24A changed 077-24 ($463,585).
13 D77-25B changed D77-25A ($287,095,484), 077-25 ($276,101,000).
14 077-27A changed 077-27 ($10,000,000
15 D77-28A changed 077-28 ($81,500,000 .
1607729A changed 077-29 $1,709,000).
`7D77-31A changed 077-31 $1,345,874).
18077.37A changed 077-37 ($73,000,000).
19 D77-46A changed 077-46 $7,500,000 .
20 D77-53A changed 077-53 $7,760,000
21Temporary, Mar. 10, 1977 to Mar. 15, 1977, withholding.
2207757A changed 077-57 ($6,030,000).
2307758A changed 077-58 ($31,800,000).
24Comptroller General reported July 28, 1977.
25 Reported by Comptroller General Aug. 2, 1978.
.
C. Proposed Rescissions, Fiscal Year 1978
Proposal number and agency or program Amount Date proposed Approved
45 days ended
R78-1-Justice, LEAA 1 $2,668,000 Sept.23, 1977
R78-2-International Security Assistance .... 40,200,000 Jan. 27, 1978 H.R. 10982, P.L 95-
254, Apr. 4, 1978,
$40,200,000.
R78-3-State-international peacekeep- 5,000,000 H.R. 10982, P.L 95-
ing activities. 254, Apr. 4, 1978,
$5,000,000.
R18-4-Federal Home Loan Bank Board 10,055,000 H.R. 10982, P.L 95-
254, Apr. 4, 1978,
$10,055,000.
R18-5-Agriculture Stabilization and 30,000,000 May 12, 1978 July 15, 1978
Conservation Service.
R78-6-lnternational security assistance 48,000,000 June 5; 1978 July 29, 1978
`Comptroller General reclassified 578-1 to a deferral Oct. 28, 1977.
31-1880-78---2
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6
D78-1. Foreign Agriculture Service .
D78-2 Agricultural Stabilization and Conser-
vation Serv~ce.
D78-3 Forest Service-brush disposal
D78-4 Forest Service
D78-5 Commerce, EDA
D78-6 do
D78-7 1 Commerce-MOM
D78-8 do
078-9 do
D78-1O do
D78-11 DOD-military construction
D78-12 DOD-Civil Wildlife Conservation
078-13 HEW-OE
078-14 HEW-SSA
078-15 Interior-BureauofLandManagement..
078-16 Interior-Bureau of Outdoor Rec-
reation.
078-17 Interior-Geological Survey
078-18 Interior-Bureau of Mines
D78_191 Interior--Office of Territorial Affairs
078-20 Justice-Federal Prison System
078-21 DOD-Coast Guard
078-22 DOT-FM
078-23 do
078-24 do
078-25 do
D78-26 Treasury
078-27 do
078-28 do
078-29' Treasury-Bureau of the Mint
D78-30 1 ERDA-gas-cooled reactors
D78_351 ERDA-inte~secting storage ring ac-
celerator.
D78_361 ERDA-molton salt breeder reactor
project
078-37 GSA-rare silver dollar program
D78_381 GSA-Federal Preparedness Agency
078-39 Foreign Claims Settlement Commission
078-40 ICC
078-41 USIA
078-42 U.S. Railway Association
078-43 Emergency Refugee and Migration
Association Fund.
078-44 DOD-shipbuilding, Navy
D78_451 DOE-b mW central receiver solar
thermal powerplant
078-46' NSF
078-47 Internationcl security assistance
078-48 do
078-49' do
078-50 Treasury
078-51 1 Commerce, EDA
078-52 Panama Canal
078-53 HEW-scientific activities overseas
D78_541 Justice-LEAA
078-55 Labor-Employment and Training Ad-
ministration.
D78_561 NSF
078-57 Commerce, Maritime Administration
078-58 Treasury
078-59 Agriculture, Forest Service
078-60 DOD-Corps of Engineers
2 $1,040,128 Oct 23, 1978
2,871,000
~36,150,790
~226,738
4,000,000
54,599,543
3,750,000
66,067,967
6,177,030
~950,343
438,438,904
458,399
3,740,098
13,865,200
833,180,327
30,000,000
H. Res. 851,
Nov. 2, 1977.
H. Res. 852,
Nov. 2, 1977.
H. Res. 853,
Nov. 2, 1977.
5,000,000 H. Res. 854,
Nov. 2, 1977.
1,500,000
1,710,000
79,918
10,738,000
13,700,000
141,653,000
260,000,000
157,800,000 Nov. 10, 1977
871,125,000
31,000,000
4,500,000
131,200,000
2,000,000
673,250,000
3,406,000
123,646,769 Jan. 27, 1978
309,000
3,497,000
2,668,000
1,380,114,000
0. Proposed Deferrals, Fiscal Year 1978
Proposal No. Agency or program Amount Date proposed Disapproved
34,000
3,490,967
12,000,000
42,245,000
13,031,000 S. Res. 282,
Nov. 1, 1977.
1,010,000
p148,123
320,650,484
74,880,000
1011 148000
11 82461000
125779000
5,729,883
15,000,000
078-31 ` ERDA-plen~m fill experiment `~2,300,000
D78-32 1 ERDA-clean boiler fund from coal 46,660,000
project
D78_331 ERDA-fusion material test facil- 7,500,000
ity.
D78_341 ERDA-intense neutron source facility 11,300,000
6,900,000
122,000,000 Feb. 23, 1978
388,000
4,500,000 Mar. 10, 1978
5,450,000 May 12, 1978
PAGENO="0011"
7
D. Proposed Deferrals, Fiscal Year 1978-Continued
Proposal No. Agency or program
Amount
Date proposed Disapproved
D78-61 1 DOE-fuel freezing option bomb
production.
D78-62 DOE
D78-63 1 Interior-Bureau of Reclamation
078-64 Commerce-Regional Planning Com-
mission.
$23,497,000
12,300,000
17,700,000
1,618,000
May 12, 1978
June 15, 1978
D78-.65 Commerce-NOAA
D78-66 Treasury-antirecession financial as-
sistance fund.
1,433,000
5,000,000
1 Policy deferrals.
2D78-1A changed 078-1 ($987,928).
3D78-3A changed 078-3 $31,312,165).
4D78-4A changed 078-4 $140,665).
D78-6A changed D78-6 $3,900,000
60788A changed 078-8 $5,428,873
7D78-1OA changed 078-1 $715,926).
`D78-15A changed 078-15 $31,700,000).
9D78-23A changed 078-23 ($134,293).
1°D78-26C changed D78-26B $10,709,000), D78-26A ($10,609,000), 078-26 ($8,184,000).
11 D78-27C changed D78-27B $81,732,000), D78-27A ($59,351,000), 078-27 ($35,446,000).
12D78-28B changed D78-28A $1,500,000), 078-28 ($35,446,000).
13 D78-31A changed 078-31 $1,500,000 -
14 D78-41A changed 078-41 $1,153,000
15 D78-43A changed 078-43 ($2,000,000).
Mr. DEMBLING. A summary of the status of the recommendations
for administrative improvements that we made to 0MB in our
June 1977, report is appended to my statement.
On the administrative side, we recommended that first, 0MB
specify the duration of proposed partial-year deferrals; second,
identify all impoundments of congressional add-ons to executive
branch budget requests; third, note whether there have been previ-
ous impoundments proposed for each program in which withhold-
ings currently are proposed; and fourth, improve the timeliness of
Presidential impoundment reports.
One of our legislative recommendations is the repeal of the re-
quirement to report routine impoundments in the form of budge-
tary reserves pursuant to the Antideficiency Act or otherwise spe-
cifically authorized by law. Our experience suggests that the cur-
rent requirement to report these impoundments produces little
congressional reaction and greatly inceases paperwork and admin-
istrative burdens on the executive branch, the Congress, and the
GAO.
Excluding routine impoundments would allow the Congress to
focus on the policy issues that precipitated the act's passage, as
indicated in your opening remarks, Mr. Chairman. It should also
have the beneficial effect of reducing the expense and time re-
quired to process impoundment reports to the Congress.
Our other legislative recommendations include providing a
means to reduce the 45-day period during which funds can be
withheld pending rescission requests.
The current 45-day period of continuous session for consideration
of rescissions often extends well beyond the calendar day equiva-
lent, and the actual duration of the rescission period is uncertain
at the time a proposal is submitted. In our report we indicate that
the average has been about 80 calendar days, which translates
from the 45 days required in the act.
PAGENO="0012"
8
We believe that the more certain time period of 60 calendar days
would better serve the interests of all parties.
We also believe it would be helpful to amend the act so that the
Congress can express its disapproval of proposed rescissions with-
out having to wait for the statutory rescission period to expire.
This could be done by providing a mechanism under which either
House, by simple resolution, could express its disapproval of a
proposed rescission. The waiting* period would then stop and the
funds being withheld pending rescission would have to be made
available for obligation.
We also suggested amending the act to require a statement of
the exact duration of proposed partial-year deferrals, eliminate the
25-day waiting period before the Comptroller General can initiate
legal proceedings to compel the release of impounded budget au-
thority, and specifically when impoundments may be proposed
after prior impoundments for the same program have been rejected
by the Congress.
Finally, since our June 1977 report on the Impoundment Control
Act, certain events took place which demonstrate limitations on
the applicability of the Impoundment Control Act as a congression-
al oversight tool. I refer to the President's curtailment of the B-i
bomber and the Minuteman III missile programs. In these pro-
grams the executive branch took steps to cancel certain aspects of
B-i bomber and Minuteman III production-such as termination of
production contracts-before notifying the Congress.
In the case of the B-i bomber, stop-work orders were issued on
June 30, 1977, yet the Congress was not notified of the already
implemented change in program plans until July 19, when the
President proposed to rescind funds in excess of those needed to
pay off liabilities created in part by the curtailment action.
Similarly, contract stop-work and termination orders were sent
to the major Minuteman III contractors on July ii, 1977, but it was
not until July 26, 1977, that the matter was formally presented to
the Congress through a proposed rescission of budget authority.
Several Members of Congress expressed concern that curtail-
ments of major programs were not more promptly brought to the
attention of the Congress. The Impoundment Control Act does not
apply to program curtailment. or termination decisions as such but
only deals with budgetary impacts; that is, so long as budget au-
thority is to be used the Impoundment Control Act does not come
into play. In light of this, several Members of Congress asked us to
consider how the Congress could assure its review of proposed
curtailments or terminations by the executive branch in the future
prior to their implementation.
We responded to these concerns in letters to key legislative offi-
cials and representatives of the executive branch. Our letter sug-
gested a possible legislative approach to permitting an expedited
congressional review of proposed curtailments.
Later we drafted legislation that provides a review procedure
under which Congress could disapprove proposed curtailments
within 14 days after they are submitted. A copy of the draft is also
appended to my statement.
Under this approach, the review procedure would not be self-
executing; the Congress would specify in other statutes those pro-
PAGENO="0013"
9
grams to be made subject to the procedure. . Our proposal was not
designed as a definitive solution to the program curtailment prob-
* lem but :it may serve as a focus for consideration of the many
issues which arise here.
Our contacts with the Members of Congress and their staffs
indicate interest in the advantages and disadvantages of the idea
* as well as the desire to study closely how such a procedure might
be implemented. .
Mr. Chairman, we would also like to submit for the record copies
of matériàls that we believe would be of interest to the task force
in its deliberatiOns concerning the effectiveness of the Impound-
ment Control Act of 1974. These materials include selected corre-
spondence relating* to the President's curtailment of the B-l
* bomber and the Minuteman III missile programs, and the draft of
a legislative mechanism requiring prior congressional consultation
before program curtailments cOuld be implemented.
This concludes my. prepared statement, Mr. Chairman. We would
be happy .to reply to questions,. if we can. Let me also introduce to
you Milton Socolar, Deputy General Counsel of GAO, who is accom-
panying me here this morning.
[Testimony resumes on p. 14.]
[The prepared statement of Mr. Dembling along with enclosures
referred to in colloquy follows:]
PREPARED STATEMENT OF PAUL G. DEMBLING
Mr. Chairman and members of the task force: We appreciate the opportunity to
discuss with you~ our experience under the Impoundment Control Act of 1974.
Today's hearing focuses upon title X of the budget control legislation that was
enacted~ in July 1974-known. as the Impoundment Control Act of 1974. This act
creates the procedural means by which the Congress considers and reviews execu-
tive branch withholdings of budget authority. The statute requires the President to
* report promptly to the Congress all withholdings of budget authority aiid to abide
by the outcome of the congressional impoundment review process. By and large, the
Impoundment Control Act has worked well.
*The statute, assigns several . functions to the Comptroller General and GAO. We
e~ialuate for. the Congress impoundments reported by the .execiltive branch. We also
report to the Congress impoundments which. the~ executive branch has failed to
disclose and report We identify undisclosed impoundments through our audit ef-
forts and information provided to us by persons inside and outside the Government.
Under certain circumstances GAO may sue an executive agency to compel the
proper release of impounded funds.
Let me briefly summarize the key features of the Impoundment Control Act:
There are two types of impoundments: Rescissions and deferrals.
Deferrals are temporary withholdings of funds while rescissions are requests to
the Congress to cancel budget authority.
Either House of Congress can reject a deferral by passage of a simple resolution.
Passage of such an impoundment resolution requires the executive to terminate the
impoundment and to make the deferred funds available for obligation immediately.
Requests to rescind the budget authority involve the entire legislative process
since a bill r joint resolution passed by both Houses and signed by the President is
necessary to accomplish a rescission. Under the act, if a rescission bill is not passed
within 45 days of continuous congressional session after the day on which the
request is first received by the Congress, the funds withheld during the pendency of
the request must be made available for obligation.
The Comptroller General is authorized to report to the Congress undisclosed
rescissions and deferrals. Impoundments reported by the Comptroller General are
treated as though coming from the President.
Complementary to this reporting process, the Comptroller General also is re-
quired to notify the Congress when an impoundment has been improperly classified
by the President. Such a report triggers the appropriate congressional review mech-
anism and nullifies the process initiated by the prior Presidential message.
PAGENO="0014"
10
The Comptroller General is empowered to sue the executive branch to make funds
available for obligation when he finds the executive branch has not complied with
the statute's requirements that the funds be released.
While we believe the basic framework of the act is sound, we have suggested a
number of possible refinements to the law and the way in which it is administered
by the executive branch. In our view, implementation of these recommendations
would streamline and clarify the operation of the statute. All of our administrative
and legislative recommendations are discussed in detail in our report to the Con-
gress on the first 2 years of operation of the Impoundment Control Act. A summary
of the status of the recommendations for administrative improvements that we
made to 0MB in our June 1977 report is appended to my statement.
On the administrative side, we recommended that 0MB specify the duration of
proposed partial-year deferrals; identify all impoundments of congressional "add-
ons" to executive branch budget requests; note whether there have been previous
impoundments proposed for each program in which withholdings currently are
proposed; and improve the timeliness of presidential impoundment reports.
Foremost among our legislative recommendations is the repeal of the requirement
to report routine impoundments in the form of budgetary reserves pursuant to the
"Antideficiency Act" or otherwise specifically authorized by law. Our experience
suggests that the current requirement to report these impoundments produces little
congressional reaction and greatly increases paperwork and administrative burdens
on the executive branch, the Congress, and the GAO. Excluding routine impound-
ments would allow the Congress to focus on the policy issues that precipitated the
act's passage. It should also have the beneficial effect of reducing the expense and
time required to process impoundment reports to the Congress.
Our other legislative recommendations include providing a means to reduce the
45-day period during which funds can be withheld pending rescission requests. The
current 45-day period of continuous session for consideration of rescissions often
extends well beyond the calendar day equivalent; and the actual duration of the
rescission period is uncertain at the time a proposal is submitted. We believe that
the more certain time period of 60 calendar-days would better serve the interests of
all parties. We also believe it would be helpful to amend the act so that the
Congress can express its disapproval of proposed rescissions without having to wait
for the statutory rescission period to expire. This could be done by providing a
mechanism under which either House, by simple resolution, could express its disap-
proval of a proposed rescission. The waiting period would then stop and the funds
being withheld pending rescission would have to be made available for obligation.
We also suggested amending the act to: Require a statement of the exact duration
of proposed partial-year deferrals; eliminate the 25-day waiting period before the
Comptroller General can initiate legal proceedings to compel the release of im-
pounded budget authority; and specify when impoundments may be proposed after
prior impoundments for the same program have been rejected by the Congress.
Finally, since our June 1977 report on the Impoundment Control Act, certain
events took place which demonstrate limitations on the applicability of the Im-
poundment Control Act as a congressional oversight tool. I refer to the President's
curtailment of the B-i bomber and Minuteman III missile programs. In these
programs, the executive branch took steps to cancel certain aspects of B-i bomber
and Minuteman III production (such as termination of production contracts) before
notifying the Congress. In the case of the B-i bomber, stop-work orders were issued
on June 30, 1977, yet the Congress was not notified of the already implemented
change in program plans until July 19, when the President proposed to rescind
funds in excess of those needed to pay off liabilities created in part by the curtail-
ment action. Similarly, contract stop-work and termination orders were sent to the
major Minuteman III contractors on July ii, 1977, but it was not until July 26,
1977, that the matter was formally presented to the Congress through a proposed
rescission of budget authority.
Several Members of Congress expressed concern that curtailments of major pro-
grams were not more promptly brought to the attention of the Congress. The
Impoundment Control Act does not apply to program curtailment or termination
decisions as such, but only deals with budgetary impacts. That is, so long as budget
authority is to be used, the Impoundment Control Act does not come into play. In
light of this, several Members of Congress asked us to consider how the Congress
could assure its review of proposed curtailments or terminations by the executive
branch in the future prior to their implementation.
We responded to these concerns in letters to key legislative officials and represent-
atives of the executive branch. Our letter suggested a possible legislative approach
to permitting an expedited congressional review of proposed curtailments. Later, we
PAGENO="0015"
11
drafted legislation that provides a review procedure under which Congress could
disapprove proposed curtailments within 14 days after they are submitted. (A copy
of the draft is also appended to my statement.) Under this approach, the review
procedure would not be self-executing; the Congress would specify in other statutes
those "programs" to be made subject to the procedure. Our proposal was not
designed as a definitive solution to the program curtailment problem; but it may
serve as a focus for consideration of the many issues which arise here.
Our contacts with Members of Congress and their staffs indicate interest in the
advantages and disadvantages of the idea as well as the desire to study closely how
such a procedure might be implemented.
Mr. Chairman, we would like to submit for the record copies of materials that we
believe would be of interest to the task force in its deliberations concerning the
effectiveness of the Impoundment Control Act of 1974. These materials include
selected correspondence relating to the President's curtailment of the B-i bomber
and Minuteman III missile programs, and the draft of a legislative mechanism
requiring prior congressional consultation before program curtailments could be
implemented.
This concludes my prepared statement, Mr. Chairman.
Enclosures.
STATUS OF RECOMMENDATIONS TO 0MB TO IMPROVE IMPOUNDMENT REPORTING
GAO recommendation
Expedite the reporting of impoundments.
0MB response/status
Still a problem from time to time. See our report on 8th special message for fiscal
year 1978, dated June 6, 1978.
GAO recommendation
Specify deferral ending dates.
0MB response/status
0MB disagreed with recommendation. Not done.
GAO recommendation
Identify prior impoundment proposals in each meassage.
0MB response/status
0MB agreed. Has been done.
GAO recommendation
Identify congressional "add-on" budget authority when proposed for impound-
ment.
0MB response/status
0MB agreed when the "add-on" influences the decision to impound.
GAO recommendation
Identify cognizant executive branch official to contact on each message.
0MB response/status
0MB disagreed. Not done.
DRAFT BILL
SEC. --. (a) For purposes of this section:
(1) "Program" means any project, activity, or weapons system expressly made
subject to this section by law, in amounts specified in appropriation acts.
(2) "Comptroller General" means the Comptroller General of the United States.
(3) "Curtail" means to discontinue, in whole or in part, the execution of a pro-
gram, resulting in the application of less budget authority in furtherance of the
program than provided by law.
(4) Continuity of a session of the Congress shall be considered as broken only by
an adjournment of the Congress sine die, and the days on which either House is not
in session because of an adjournment of more than 3 days to a day certain shall be
excluded in the computation of the 14-day period referred to in subsection (b)(2) of
this section. If a special proposal is transmitted under subsection (b) of this section
during any Congress and the last session of such Congress adjourns sine die before
the expiration of 14 calendar days of continuous session (or a special proposal is so
PAGENO="0016"
12
transmitted after the last session of the Congress adjourns sine die), the message
shall be deemed to have been retransmitted on the first day of the succeeding
Congress and the 14-day period referred to in subsection (b)(2) of this section (with
respect to such special proposal) shall commence on the day after such first day.
(5) "Disapproval resolution" means a concurrent resolution which expresses disap-
proval of a special proposal transmitted under subsection (b) of this section.
(6) "Special proposal" means a proposal sent by the President to tlie Congress
pursuant to subsection (b) of this section notifying the Congress of the executive
branch's determination to curtail a program.
(b) Proposals to curtail programs:
(1) Whenever the executive branch has determined to curtail any program the
President shall transmit to both Houses of Congress a special proposal specifying-
(A) the program proposed to be curtailed;
(B) the department or establishment of the Government which is responsible for
implementing the program;
(C) the reasons why the program should be curtailed;
(D) to the maximum extent practicable the estimated fiscal economic and budge
tary effects of the proposal; and
(E) all facts circumstances and considerations relating to or bearing upon the
proposal, and to the maximum extent practicable, the estimated effect of the propos-
al upon the purposes which the program was to accomplish.
(2) No actions shall be taken to curtail any program for a period of 14 days of
continuous session after the date on which a special proposal is received by the
Congress. If, during this 14-day period, a disapproval resolution is passed, the
curtailment shall not be implemented.
(3) Passage of a disapproval resolution shall have the same force and effect aS an
impoundment resolution passed pursuant to section 1013(b) of the Impoundment
Control Act of 1974.
(4) Passage of a disapproval resolution shall terminate the 45-day period referred
to in section 1012(b) of the Impoundment Control Act of 1974.
(c) Transmission of messages publication
(1) Each special proposal transmitted under subsection (b) of this section shall be
transmitted to the House of Representatives and the Senate on the same day and
shall be delivered to the Clerk of the House of Representatives if the House is not in
session and to the Secretary of the Senate if the Senate is not in session Each
special proposal shall be printed as a document of each House.'
(2) A copy of each special proposalS transmitted under subsection (b) shall be
transmitted to the Comptroller General on the same day it is transmitted to the
House of Representatives and the Senate. In order to assist the Congress in the
exercise of its functions under subsection (b) of this section the Comptroller General
shall review each special proposal and inform the House of Representatives and the
Senate as promptly as practicable with respect to the, facts surrounding the. propos-
al.
(3) If any information contained in a special proposal transmitted under subsec-
tion (b) of this section is subsequently revised, the President shall transmit to. both
Houses of Congress and the Comptroller General . a supplementary special proposal
stating and explaining such revision. Any such supplementary special proposal shall
be delivered and printed as provided in (1) of this subsection. The Comptroller
General shall promptly notify the House of `Representatives and the Senate of any
changes in the information submitted by him under (2) of this subsection which may
be necessitated by such revision. . ` `
(4) Any special proposal transmitted under subsection (b)of this section and any
supplementary special proposals transmitted under (3) of this subsection shall be
printed in the first i sue of the FEDERAL REGISTER published after such transmittal
(d) Reports by Comptroller General: `
If the Comptroller General finds that the President, the Director of the Office of
Management and Budget, the head of any department or agency of the United
States, or any other officer or employee of the United States has determined to
curtail a' program with respect to which the President is required to transmit a
special proposal under subsection (b) and that. the President has failed' to transmit a
special proposal with respect to such determination, the Comptroller General shall
make a report thereon. Such report of the Comptroller General ~shall have the same'
`effect as if it were a special proposal transmitted by the President under subsection
(b)of this section, and, for purposes of this section, such report shall be considered, a
special' proposal transmitted under subsection (b) of this section~
(e) Suits by Comptroller General:
PAGENO="0017"
13
If under subsection (b)(2) of this section, a curtailment proposal is disapproved, the
Comptroller General is hereby expressly empowered, through attorneys of his own
selection, to bring a civil action in the United States District Court for the District
of Columbia to enforce the requirements of subsection (b)(2) through (4) of this
section, as applicable, and the court is hereby expressly empowered to enter in the
civil action, against any department, agency, officer, or employee any order which is
necessary or appropriate to compel compliance with such requirements.
(f) This ~section may be cited as the "Program Curtailment Control Act of 1978."
PROGRAM CURTAILMENT CONTROL ACT OF 1978
EXPLANATORY STATEMENT
The draft legislation would provide a mechanism for prior congressional review
and potential disapproval of executive branch decisions to curtail programs. This
mechanism would afford Congress a preliminary, expedited review at the decision
stage. The purpose of the expedited review is to alleviate potential shortcomings in
the operation of the Impoundment Control Act either where a curtailment decision
does not involve an impoundment subject to that act or where unilateral implemen-
tation of a curtailment decision would lessen the effectiveness of later congressional
review of any impoundment which is involved.
Program coverage.-The legislation enacts as permanent law a curtailment review
procedure, but it does not identify the programs subject to the procedure. This is left
for congressional action in other laws. Thus the only criteria in the definition of
"program" (subsection (a)(1)) are that a project, activity or weapons system be
expressly made subject to the curtailment procedure by another statute, and that
the program amount be specified in an appropriation act.
It would be extremely difficult to define in general terms what types of programs
should be subject to the curtailment procedure, or even to define "program" in the
abstract. The identification of covered programs is really a matter of congressional
preferences and priorities at any given time. The assumption underlying the legisla-
tion is that Congress, applying whatever criteria it sees fit, will list in other statutes
the specific programs to be covered. This could probably be done most conveniently
through the annual budget process. Likewise, requiring that the program amount be
specified by law avoids problems in ascertaining the funding level desired by Con-
gress where budget authority for a covered program is provided by means other
than a discrete line-item appropriation.
Application of curtailment procedure.-The review procedure is triggered by an
executive branch decision to "curtail" a program which has been made subject to
the bill. The definition of "curtail" (subsection (a)(3)) requires that the executive
branch decision result in a reduction of budget authority applied in furtherance of
the program. As noted above, the level of budget authority for this purpose would be
the amount so specified in an appropriation act. The reduction relates to the use of
funds "in furtherance of the program." Thus, although the full amount of budget
authority may be spent in some manner, e.g., to pay contract termination costs or
other liabilities incident to the curtailment, such a use of funds still involves a
reduction in funding for affirmative program purposes which triggers the review
provisions.
Curtailment review procedure.-The review procedure would generally be similar
to the procedure `for reviewing deferrals of budget authority under the Impound-
ment Control Act, except that congressional disapproval would take the form of a
concurrent resolution. The President would report a proposed curtailment decision
to Congress, together with appropriate information (subsection (b)), and supplemen-
tãry reports would be made for any revisions (subsection (c)(3)). The proposal, and
any supplementary reports, would be printed in the Federal Register (subsection
(c)(4)).
A copy of the proposal and any revision would also be transmitted to the Comp-
troller General, who would submit comments to the Congress (subsection (c)(2)). The
Comptroller General would report to the Congress for review and action proposed
curtailment decisions which the executive branch fails to report (subsection (d)). The
Congress would have 14 days of continuous session in which to disapprove a pro-
posed curtailment (subsections (b)(2), (a) (4)-(5)). After a proposal is disapproved, the
Comptroller General could bring judicial enforcement actions if necessary to effect
compliance with the disapproval and assure that any impounded funds are made
available (subsection (e)).
Relationship to impoundments-The curtailment review procedure would not
diminish congressional review opportunities under the Impoundment Control Act;
rather, the two procedures would be complementary. When the curtailment propos-
31~188O-78"3
PAGENO="0018"
14
al involves a deferral or rescission of budget authority, the requirements of the
Impoundment Control Act would also attach. If Congress disapproves the curtail-
ment, this action would, in addition to precluding implementation of the curtail-
ment as such, require that any impounded budget authority be made available
(subsection (b) (3) and (4)). On the other hand, even if Congress fails to disapprove
the curtailment within 14 days, the Impoundment Control Act review period would
continue to run for the remainder of the statutory 45 days. Thus Congress would
retain in full its precent review authority over any impoundments involved in a
curtailment proposal.
Mr. DERRICK. Thank you very much, Mr. Dembling, for an excel-
lent statement. We do have several questions here that we would
like to pursue with you.
My first question involves our 45-day period. Congress can, as
you stated in your testimony, only disapprove a rescission request
by allowing the 45-day period to expire. You have proposed that
Congress also be able to end a rescission sooner by passage of a
simple resolution of disapproval. Could you amplify on this maybe
just a little bit for us?
Mr. DEMBLING. Yes, sir. The problem that faces the Congress at
the present time is that if it plans to take no action on a rescission
proposal of the President within 45 days, the executive branch feels
that it must wait the 45-day period before it can make available for
obligation the funds that are in the proposal; however, there have
been times where the Congress feels that it knows that it is not
going to pass a rescission bill and would like to speed up the
process. We feel that there ought to be some mechanism for speed-
ing up the 45-day wait which, as I have said translates itself into
about 80 days many times. We propose that passage of a simple
resolution by either House would indicate that a rescission bill will
not be passed and consequently expresses the view of the Congress,
and then the funds could be made available for obligation.
Mr. DERRICK. I believe that you have also suggested that we
might go on a calendar-day basis to let that time run?
Mr. DEMBLING. Yes, sir.
Mr. DERRICK. And maybe a 60-day calendar day basis would be
more reasonable?
Mr. DEMBLING. Yes, sir.
Mr. DERRICK. Do you think that a simple resolution of disapprov-
al can overturn part of a rescission? In other words, can it be
directed to a line-item?
Mr. DEMBLING. Since a rescission bill requires the passage by
both houses of Congress and signature by the President in order to
be effective, a simple resolution would indicate that one House was
not going to pass the rescission bill. The rationale of the simple
resolution is that the intent of the Congress not to pass the rescis-
sion bill is expressed.
Mr. DERRICK. Thank you. The gentlelady from Maryland.
Mrs. HOLT. Thank you, Mr. Chairman. Your recommendation
that we repeal the requirement that 0MB report routine impound-
ments disturbs me a little bit.
Wouldn't we be sacrificing some of the information that was
intended under the act if we did that? Couldn't there be a better
way worked out? In other words, what was the purpose of doing it
that way? Wasn't it to give us all of the information?
PAGENO="0019"
15
Mr. DEMBLING. There was at the outset, if you recall, a feeling
that perhaps the Impoundment Control Act didn't really mean to
encompass Antideficiency Act reserves and actions, since those
impoundments were made pursuant to law-in other words, that
the President had authority to take actions under the Antidefi-
ciency Act. When the Impoundment Control Act was passed the
Congress decided that all reserves should be reported to the Con-
gress in order to be aware of all actions taken-made either pursu-
ant to law or for policy reasons.
In review of our first 2 years' experience under the Impound-
ment Control Act, we found that there were about 157 actions that
were reported by the President dealing with Antideficiency Act
impoundments. The Congress felt that these were routine, and did
not react to them. It was more concerned about the other actions
that were taken-the impoundments that involved policy and fiscal
considerations. Therefore, we felt that in order to lessen the
burden on everyone this area could be curtailed; in other words,
not to report the routine impoundments or reserves made under
the Antideficiency Act. That is the reason for it.
Mr. SOCOLAR. If I might interject a comment here-the recom-
mendation to eliminate the routine impoundments is really de-
signed to deal with the paperwork burden but would not affect the
Comptroller General's authority-as we view the recommenda-
tion-to continue to review those reserves that had been estab-
lished, but were not being reported, and the Comptroller General
would still have the authority to report any improper impound-
ments that were not being reported.
Mrs. HOLT. What is bothering me is that I feel this information,
or directing our attention to it, is valuable to us. I know we don't
have enough time to react to everything, but I am reluctant to
think about not having it at least brought to our attention. On the
other hand, are you saying that there was no action taken on these
routine notifications?
Mr. DEMBLING. I believe there was action taken on 2 of them, 2
out of the 157 that were reported.
Mrs. HOLT. Thank you very much. Thank you, Mr. Chairman.
Mr. DERRICK. Mr. Mineta.
Mr. MINETA. Thank you, Mr. Chairman. First of all, Mr. Dem-
bling, I appreciate your appearance here today. I was just wonder-
ing to whom did that June 1977, report to the Congress go?
Mr. DEMBLING. It should have gone to all Members of the Con-
gress.
Mr. MINETA. And did the specific committee that might have
responsibility for any oversight functions on this aspect of that
June 1977, report or the Budget Impoundment Control Act of 1974
have hearings on this whole matter and get into it as a followup to
your report?
Mr. DEMBLING. No; we have not had any hearings on the Im-
poundment Control Act, except for this one.
Mr. MINETA. I assume that it is the Rules Committee that would
have jurisdiction on that matter?
Mr. DEMBLING. Yes, sir.
Mr. MINETA. And on the recommendations that you made to
0MB, I notice that you have about four, I guess, where they have
PAGENO="0020"
16
actually responded .to your recommendation. Except for that last
one, where you identify cognizant executive branch officials to
contact on each message where 0MB disagreed-I don't know why
they would disagree on that matter-but in any event on those
other items would they require legislation?
Mr. DEMBLING. No, we don't believe so.
Mr. MINETA. But if you are not going to get them to respond in a
positive manner to your recommendations and they say, "Well,
stick it in your ear" or "Go fly a kite," how are you going to get
that response, a positive response?
Mr. DEMBLING. These recommenations were to speed up our in-
formation or to make it a little easier for us to report to the
Congress. Generally, I must say that the information that we need
has been forthcoming from the Office of Management and Budget
and we do have a good working relationship with them in connec-
tion with the substantive issues that face us and that we require in
order to report to the Congress.
In addition, the General Accounting Office does have audit staffs
that are located in most of the agencies in the Government. Our
audit staffs do check and verify the information that has been
submitted either by the agency to 0MB or by 0MB through the
President to the Congress. We verify that information in the var-
ious agencies, and there, again, we have had no problem in getting
that material from the agencies.
Mr. MINETA. To that extent, who initiates those requests for
audits? Do you do any of that yourself, on your own initiative do
you start some of those audit investigations?
Mr. DEMBLING. Well, in connection with a Presidential message
that is submitted to the Congress on a list of impoundments, we
verify each impoundment. Routinely we go through the process of
asking our audit staffs to check each of the impoundments that are
listed in the impoundment message that the President sends to the
Congress. We do that as a routine matter; we will check and verify
each of the impoundment actions.
Mr. MINETA. One of the big things around here right now seems
to be. the phrase "fraud, abuse and waste." It is a good cliche. It
sort of covers the whole waterfront. Who looks into those kinds of
things?
Mr. DEMBLING. The Antideficiency Act that Mrs. Bolt was speak-
ing about earlier provides for specific curtailments of funds or
reserve of funds when cost savings would be required.
I have a copy of the act here and it says that in apportioning any
appropriations-I am reading from 31 U.S.C. 665, which is the
Antideficiency Act: "Reserves may be established solely to provide
for contingencies or to affect savings whenever savings are made
possible by or through changes in requirements for greater efficien-
cy of operations." The Antideficiency Act gave the executive au-
thority to curtail funding for various programs and the Office of
Management and Budget does implement requirements of the Anti-
deficiency Act.
Mr. MINETA. Where does GAO step into that? As I listened to it,
it was really more the executive branch--
Mr. DEMBLING. We review those reserves when they are estab-
lished and reported under the Impoundment Control Act.
PAGENO="0021"
17
In addition, actions taken by various agencies under the Antide-
ficiency Act are reviewed by our audit teams in the agencies, apart
from any impoundments that may be disclosed, to check any that
have been undisclosed, for example.
Mr. DERRICK. We have a vote in progress. The committee will
recess until about 10:15. We will be back. Thank you. If you will
bear with us.
[After recess.]
Mr. DERRICK. We will get started. Grant projects and construc-
tion projects frequently suffer from slowdowns, either if program
regulations take too long to write or if construction progress is
slow. When a slowdown proceeds to the point that funds will prob-
ably lapse, GAO reports a de facto rescission to Congress. This has
the same legal effect as a Presidential rescission request. This
remedy for slowdowns is not adequate, for two reasons: First, by
the time GAO reports a de facto rescission, it is probably too late to
prevent funds from lapsing; and second, no-year funds will not
lapse no matter what, so GAO doesn't have any reason to report a
de facto rescission.
My question is: If a grant or construction project is proceeding
slowly, you might report a de facto rescission; but by then funds
will probably have lapsed anyway. On the other hand, if no-year
funds are involved, then you don't have any reason to report a de
facto rescission. How can these problems be minimized?
Mr. DEMBLING. The funds have been made available for obliga-
tion and if there is really a slowdown in the expenditure of the
funds, you really don't have an impoundment under the Impound-
ment Control Act. There isn't very much that we can do under the
Impoundment Control Act to speed up the expenditure of funds.
If you are talking about deferrals, of course, the mechanism of
the Impoundment Control Act comes into play. We are dealing
with funds that are available for obligations and whenever the
0MB does make those funds available for obligation they have met
the requirements of the Impoundment Control Act and there
doesn't appear to be a deferral in those cases.
When you are talking about a slowdown, of the expenditure of
funds, it really doesn't come within the purview, as we understand
it, of the Impoundment Control Act.
Mr. DERRICK. But what steps might be taken? You recognize this
is a problem. I assume you agree with me on that. I am not
suggesting that you do something; what I am asking for are sugges-
tions as to what we might do to minimize these problems. I under-
stand maybe it does not come under the act.
Mr. SOCOLAR. We did make a legislative recommendation to deal
with that problem. Where there is a slowdown to the point where
we feel that there is not sufficient time before the funds lapse to
effectively carry that particular program forward, we have recom-
mended that the act be amended in that kind of a situation to
preserve the funds involved, so that there will be sufficient time to
proceed through the court action, if necessary, without having to
be concerned that an intervening, lapsing period would cause those
funds to be lost.
Mr. DERRICK. Give me a little more of the mechanics of your
amendment.
PAGENO="0022"
18
Mr. SOCOLAR. Suppose, for example, the executive branch were to
defer obligations under a particular program and the Comptroller
General in his review were to conclude that the deferral is proceed-
ing for such a length of time that effectively there will evolve a
rescission of those funds because by the time the executive branch
decides to stop the deferral there won't be enough time as a practi-
cal matter to carry the program out. That is the point in time at
which we would report a de facto rescission.
If by the time that moment arrives there is not enough time as a
practical matter to do anything about it before the funds lapse, we
have recommended that in that kind of a situation those funds be
frozen and in a sense be considered as obligated, so that they don't
lapse, in order to force the ultimate carrying out of that program.
Mr. DERRICK. I thank you.
Mr. DEMBLING. Mr. Chairman, may I go back to a question that
Mr. Mineta asked before, as to what is being done by GAO with
regard to abuses with regard to spending programs?
This is outside the Impoundment Control Act and goes to the
core of the authority and responsibility of the General Accounting
Office generally.
The responsibility and duties of the General Accounting Office
are to review programs and activities of the executive branch to
see that they are carried out economically, effectively, and effi-
ciently, and in accordance with the legislation which established
those programs that was passed by the Congress; so that is some-
thing that the GAO has been doing since its creation in 1921; and
it is the GAO's responsibility to see that the executive branch is
carrying out the programs for which it has responsibility in an
effective, efficient, and economical manner.
Mr. MINETA. The thing is, we had, for instance, a couple of weeks
ago the HEW appropriations bill in which I think $1 billion was cut
out for fraud, waste and abuse for fiscal year 1979.
I was wondering how do we know, let's say, on June 23, that in
fiscal year 1979 we are going to have fraud, waste, and abuse of $1
billion worth? And next year, what we are going to put in the
budget is a line item for $7 billion of waste, fraud and abuse, and
then we will all vote for an amendment to take out $7 billion for
fraud, waste, and abuse.
We will be way ahead of the game. Where does GAO fit into
that? I understand you say it is outside the Impoundment Control
Act; is it part of your basic task to identify those?
Mr. DEMBLING. Usually we respond to requests by the various
committees-for example, the authorizing committees and the ap-
propriations committees-to do surveys and audits on specific pro-
grams. That is in response to requests by the Congress.
Mr. MINETA. That has to come on a specific request?
Mr. DEMBLING. That comes on specific requests. Such requests
amount to about 35 percent of the work that the GAO does. The
other 65 percent is self-initiated-to try to anticipate the needs of
the Congress for information on which to make its decisions. We
submit reports to the Congress on various programs which are
being carried out by the executive branch.
Mr. MINETA. To followup on that point then, what is the defini-
tion of a routine impoundment?
PAGENO="0023"
19
Mr. DEMBLING. Routine impoundments are impoundments under
the Antideficiency Act-curtailments in connection with savings
which the executive branch feels would be effected because of
changed conditions or changed requirements or changed needs, and
there the President has the authority to curtail obligating such
funds for such programs.
Mr. MINETA. Under section 1015 of the Budget and Impoundment
Control Act you have certain responsibilities in terms of identify-
ing where those impoundments might be. What kind of a system do
you have of checking up or catching those kinds of impoundments
other than those where they are reported to you? Do you have
some way of being able to identify these things, or is it happen-
stance? How do we really know, in fact, here in the Congress? I
look at the 1977 report, just in terms of your introduction, and you
have a bar chart on deferrals and rescissions on various kinds of
programs, whether it is housing and community development, man-
power, education, defense, science research and development, high-
ways, roads, others, and we have impoundments of $11 billion in
housing and community development in fiscal years 1975 and 1976,
in highways and roads of, again, close to $11 billion in those 2
fiscal years. What kind of a system does GAO have to report to the
Congress on those impoundments?
Mr. DEMBLING. Each impoundment message is considered and we
comment on each impoundment referred to the Congress.
Mr. MINETA. That is fine for those that someone says: "OK,
Congress, I am going to impound these funds," but what about
some of these other things that are going on that are not visible,
how do you catch those?
Mr. DEMBLING. We have audit staffs in practically all of the
departments and agencies of the Government. They are stationed
there and are familiar with the programs and the actions taken by
the departments and agencies. The audit staffs report back to us
any undisclosed impoundments or those that appear to be of such a
character.
We also get information from the Congress and from interested
parties who are affected by various programs. For example, gran-
tees will inform us of actions which appear to be impoundments
and in those cases those that are directly interested and affected
usually make for the best reporters to us with regard to actions
that are being taken by the executive branch.
Mr. MINETA. I haven't yet heard in your response where you find
these things by a normal, routine procedure of checking on things.
I mean, you identified where the executive branch sends up a
message to the Congress. You have identified snitches,. but you
haven't identified where you have a regular system of being able to
identify and report to the Congress.
Mr. DEMBLING. The only regular system we have is that the
audit staffs that reside in the departments and agencies inform us
of any actions that are taken by the departments and agencies.
Mr. SOCOLAR. We do make periodic reviews of the financial state-
ments of the agencies and we concentrate our efforts in those areas
where the impoundments are most likely to occur. We feel that it
makes the most sense to concentrate our efforts, for example, in
PAGENO="0024"
20
connection with water projects, those areas where the impound-
ments are most likely to occur.
Mr. MINETA. I think I heard the figure that, for instance, in case
of fraud, waste, and abuse, that in the HEW budget it may amount
to 3 percent. If General Motors could do as well in that same area,
they would be doing well. Do you have any kind of reaction to that
kind of a general statement?
Mr. SocoI~&R. I am not sure that I follow the import.
Mr. MINETA. The Government is always accused of having waste,
fraud, and abuse, but what about the private sector, are they
devoid of waste, fraud, and abuse?
Mr. SocoI~&R. I suspect not.
Mr. MINETA. Is 3 percent an unreasonable figure in terms of that
general classification?
Mr. SocoIAR. I don't know whether it is really possible to estab-
lish what a reasonable figure would be. I think that the ultimate
aim of all of us is. to examine what is going on and to keep such
fraud and abuse as does appear through those examinations at the
very minimal level that we can.
Mr. MINETA. The other thing that we have been doing recently
with appropriations bills is a 2-percent across-the-board cut and no
one item to be cut by any greater than 5 percent. It seems to me
what the Congress has done is delegated to the executive branch
the determination as to where those cuts ought to be.
The Department of Energy may not cut anything as far as nucle-
ar programs are concerned; 76 percent of their money goes into
nuclear power, and all of us are interested in alternative sources of
energy. They may take zero cuts of nuclear power and maximize
those cuts in alternative energy programs and still keep within the
2-percent across the board.
How do we, the Congress, the GAO, really take a look at those to
see whether or not our priorities or mandates are being carried out
by the executive branch?
Mr. DERRICK. Would the gentleman yield?
Mr. MINETA. Surely.
Mr. DERRICK. I ask unanimous consent to enter in the record at
this time a letter on the date of June 29, to the chairman of the
Budget Committee from the Comptroller General.
[The letter referred to follows:]
COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, D.C., June 29, 1978.
Hon. ROBERT N. GIAIM0,
Chairman, Committee on the Budget,
House of Representatives.
DEAR MR. CHAIRMAN: This replies to your letter of June 16, 1978, in which you
asked whether the executive branch would have to report pursuant to the Impound-
ment Control Act, 31 U.S.C. §~ 1401 et seq., withholdings of budget authority made
in compliance with the so-called "Miller amendment" language.
Representative Miller, of Ohio, has offered amendments to a number of pending
appropriation bills that would require the withholding of 2 percent of the total
nonmandatory budget authority provided in the bill, but not more than 5 percent of
the nonmandatory authority in each account, activity, and program. For example,
his amendment to H.R. 12929, the Departments of Labor and Health, Education,
and Welfare appropriations bill, 1979, adopted by the House on June 13, 1978 (see
124 Cong. Rec. H5381 (daily ed. June 13, 1978)), states:
Of the total budget authority provided in this Act, for payments not required
by law, 2 per centum shall be withheld from obligation and expenditure: Pro-
PAGENO="0025"
21
vided, That of the amount provided in this Act for each apprppriation account,
activity, and project, for payments not required by law, the amount withheld
shall not exceed 5 per centum.'
We interpret the Impoundment Control Act as applying only tO those withhold-
ings of budget authority that are essentially the product of an executive branch
exercise of discretion not to utilize available budgetary resources. Cf. 31 U.S.C.
§~ 1401 (1)(B), 1402(a) and 1403(a). Thus we do not believe that the act covers
withholdings mandated by law. As noted above, the language of the Miller amend-
ment requires that 2 percent of the total nonmandatory portion of'an appropriation
act be withheld from obligation and expenditure. The effect is to make unavailable
as a matter of law 2 percent of the aggregate nonmandatory budget authority.
While some discretion probably exists in making the withholdings (subject to the 5-
percent limitation), compliance with the ultimate 2-percent reduction is clearly a
firm legal requirement under the terms of the amendment. Therefore, we believe it
is reasonable to view such withholdings as representing essentia1ly~ the implementa-
tion of a statutory mandate.
In addition, application of the Impoundment Control Act to Miller amendment
withholdings would produce incongruous results. Presumably such withholdings, if
subject to the act, would take the form of proposed rescissions of budget authority,
rather than temporary deferrals, and would therefore require affirmative congres-
sional action, i.e., enactment of rescission bills. See 31 U.S.C. §~ 1401(3) and 1402.
This approach would, in effect, require Congress to act twice and thereby make
implementation of the Miller amendment a matter for Congress rather than the
executive branch.
By virtue of the Miller amendment's 5-percent limitation, the mix of individual
withholdings may become quite complex. Thus, attempting to implement the neces-
sary withholding through the rescission process in a manner consistent with the
aggregate 2-percent requirement and the individual 5-percent limitations would be
likely to create a procedural morass for both Congress and the executive branch.
Even more significantly, either House of Congress would effectively nullify the
Miller amendment by failing to pass the necessary rescission legislation.
In sum, subjecting Miller amendment withholdings to the Impoundment Control
Act would essentially reduce the amendment to a mandate for the submission of
rescission proposals. Its stated requirements would be deprived of any finality and
would, in fact, have no legal effect as such. We believe that application of the
Impoundment Control Act in this context is untenable as a matter of law.
We also note that the legislative history concerning the Miller amendment devel-
oped thus far suggests an understanding that the Impoundment Control Act would
not apply. During the House debate on HR. 12936, the Department of Housing and
Urban Development-Independent Agencies Appropriations Bill, 1979, Representative
Miller introduced an amendment identical.to that adopted by the House in connec-
tion with H.R. 12929. In the course of the debate on the Miller amendment to H.R.
12936, Representative Boland said:
* * * What this amendment would do is give the executive branch consider-
able leeway in applying the reduction. That would take away authority and
power from the Congress and fly in the face of the Congressional Budget and
Impoundment Control Act of 1974. That is exactly what we are doing if we
adopt the position of the gentleman from Ohio (Mr. Miller). 124 Cong. Rec. 5814
(daily ed. June 19, 1978).
The desirability of the Miller amendment in this regard was a specific point of
contention during debate on the HUD-Independent Agencies bill, and the amend-
ment was ultimately rejected here. However, both proponents and opponents of the
amendment seemed to agree that the executive branch would retain discretion in
making the required withholdings. See generally, 124 Cong. Rec., supra, at
H5813-14. In fact, Representative Miller suggested that the absence of congressional
involvement in effecting the budget cuts was a necessary feature of his amendment.
Id. at H5813. The only other statement on this point which we have found during
debate on the various Miller amendments likewise suggests that the required with-
holdings would not be subject to congressional review. See 124 Cong. Rec. H5381
(daily ed., June 13, 1978) (remarks of Representative Conte on the Labor-HEW bill).
For the reasons stated above, it is our opinion that if the Miller amendment
language is enacted in its present form, the required withholdings of budget author-
1 This amendment is similar to. other amendments introduced to HR. 12928, the Public Works
appropriations bill, 1979, 124 Cong. Rec. H5713-14 (daily ed. June 16, 1978) H.R. 12936, the
HUD Independent Agencies appropriations bill, 1979, 124 Cong. Rec. H5813 (daily ed. June 19,.
1978); HR. 12934, the State Justice Commerce Judiciary appropriations bill, 1979, 124 Congi Rec.
H5550 (daily ed. June 14, 1978); and H.R. 12935, the legislative branch appropriations bill, 1979,
124 Cong. Rec. H5558 (daily ed. June 14, 1978) (5 percent-lO percent formula).
PAGENO="0026"
22
ity would not be subject to the reporting and review procedures of the Impoundment
Control Act. Of course, the act would apply to any withholdings that go beyond the
2- and 5-percent thresholds of the Miller amendment. Accordingly, if the amend-
ment becomes law, it will be essential that the executive branch fully and specifical-
ly identify those withholdings taken to implement Miller amendment requirements,
as opposed to other withholdings of budget authority.
We hope the foregoing will be of assistance to you.
Sincerely yours,
ELMER B. STAATS,
Comptroller General of the United States.
Mr. MINETA. Great.
Mr. DERRICK. If you have that before you, they address that
question specifically and they are in agreement with what you are
suggesting, that the Congress has given to the executive branch
that authority to do pretty much what they please within the 2-
and the 5-percent limitations, and I do not mean to interrupt you.
I would be glad to hear them comment on that further. You have
already asked the question, but I will reinforce what I perceive
from the testimony; that this, in fact, is what Mr. Miller intended
to do. Be that as it may, we have given the executive branch a
great deal of flexibility there, to be kind to them, and it is some-
thing that the Congress, I believe, should retain. I would like to
know what we might do about it.
Mr. DEMBLING. That is correct. The discretion is, as Mr. Mineta
points out, that there can't be a cut beyond the 5 percent in any
one program, and as long as it averages out to 2 percent across the
board, then it is within the provisions of the so-called Miller
amendment.
Mr. DERRICK. Let me interject something here: As I understand
it, there is enough flexibility in the opening, in addition to this
Miller amendment, in the latter, too, that we have given there,
that it could be substantially more than 5 percent. You are going
to have to track down or they are going to have to designate, as I
understand it, what they are withholding under the Miller amend-
ment.
Mr. DEMBLING. We recognize that, Mr. Chairman, and we recog-
nize that we are going to have to track and monitor what the cuts
are in order to make sure that there are no impoundments. In
other words, if they exceed the 5 percent in any one program, of
course, it is an impoundment, and if they exceed the 2-percent
overall cut, that is an impoundment; so that we will have to track
and make sure that they are adhering to the 2- and the 5-percent
limitations.
Mr. MINETA. That goes back to my original question on section
1015 of the act, whether or not you have a procedure set up for
catching those kinds of things.
Mr. DEMBLING. As I indicated, the procedure we have is that our
audit staffs reside at the various departments and agencies; and, as
Mr. Socolar pointed out, are atuned to those kinds of programs
which lend themselves to curtai1ments~
Mr. MINETA. Thank you, Mr. Dembling. Thank you very much,
Mr. Chairman.
Mr. DERRICK. Let me pursue this just a little further.
The fact of the matter is that the executive branch already had a
substantial amount of flexibility in there without the Miller
amendment, in that they could transfer in certain instances from
PAGENO="0027"
23
one program to another without having to answer to Congress and
without that being considered an impoundment; is that correct?
Mr. DEMBLING. Yes, sir.
Mr. DERRICK. Would you amplify on that just a little?
Mr. DEMBLING. Yes, sir. The way appropriation acts are enacted,
they are lump-sum appropriations. While the agencies come before
the Congress and indicate how they propose to spend the money
and justify the various programs, when the Congress appropriates
its funds it usually does it on a lump-sum basis.
Mr. DERRICK. If I might interject, I guess probably the breeder
reactor funds last year are an excellent example of that.
As I understand it, the Congress appropriated these funds for the
continuation and the funds were actually used within the same
program for the termination; is that correct?
Mr. DEMBLING. Yes, sir; but there, in addition to the appropri-
ation act, you also had the breeder reactor act that provided for
certain conditions and criteria under which the President could
terminate the program. In that situation you had a condition
where he could not terminate the program except under the crite-
ria specified in the breeder reactor act.
Mr. DERRICK. Was this also true in the B-i situation?
Mr. DEMBLING. No, not in the B-i situation. The B-i situation
was a case in which there was a provision which made the funds
available but did not specify termination costs were going to be
included in the funds that had been appropriated.
Mr. DERRICK. Because it was not specified it was taken--
Mr. DEMBLING. That is correct. I presume what you are getting
at, Mr. Chairman, is the situation that in some appropriation acts
there are provisions for line-itemizing the program; it establishes a
maximum or minimum amount to be appropriated for a specific
program. In those situations, if that amount is not made available
for obligation, you have an impoundment; but in the lump-sum
appropriation for an agency, the agency, 0MB, and the executive
have discretion within the overall act as to how they are going to
utilize the funds after the appropriation act is enacted.
Mr. DERRICK. I thank you very much. I thank you for your
excellent testimony and for your statement.
If you would remain with us, we may have some more questions
down the line. Thank you.
Mr. DEMBLING. Thank you, Mr. Chairman.
Mr. DERRICK. Mr. Mc0mber, we are delighted to have you before
the committee this morning and thank you for taking the time,
and we will hear from you at this time.
STATEMENT OF HON. DALE R. McOMBER, ASSISTANT DIREC-
TOR, OFFICE OF MANAGEMENT AND BUDGET, EXECUTIVE
OFFICE OF THE PRESIDENT
Mr. MCOMBER. Mr. Chairman and members of the committee, I
am pleased to be here to discuss with you the administration of the
Impoundment Control Act of i974.
Almost 4 years have passed since the Impoundment Control Act
became law. Following an initial period when the reporting mecha-
nisms to carry out the law were being established, the administra-
tion of the act has become, mainly, routine. The actions of both the
PAGENO="0028"
24
legislative and the executive branches related to this law are now
generally predictable.
The Office of Management and Budget has the lead responsibili-
ty for preparing the reports on the impoundment of funds that are
transmitted by the President to the Congress. This responsibility is
related to the Office's responsibility for apportioning funds as re-
quired by the Antideficiency Act. While the Impoundment Control
Act requires reports on any action to withhold funds, whether
covered by an apportionment action or not, most impoundments
occur in connection with the apportionment of funds. Under direc-
tives issued by 0MB, each agency is responsible for reports to 0MB
on any action taken that withholds or delays the use of funds.
We believe that the act is working in the way the Congress
intended. Information is being reported to the Congress on the
withholding of funds and the Congress has been able to overturn
impoundments as it desires. We think that there is general agree-
ment that the President is complying with the language and spirit
of the act. We also have good working relationships with the Con-
gress and the General Accounting Office in administering the act.
Since President Carter came into office he has either proposed or
continued 23 rescissions totalling $1.7 billion in budget authority.
Of the 21 proposals on which the Congress has completed action,
most have been approved-79 percent of the dollar amount in 12
proposals. Similarly, of the $10 billion deferred by the President,
$64.4 million, or less than 1 percent, has been disapproved.
Most of these impoundments have been made routinely under
authority of the Antideficiency Act; that is, as Mr. Dembling noted
earlier, funds have been reserved to provide for contingencies or to
affect savings whenever possible because of changes in require-
ments or greater efficiency of operations.
Many deferrals are necessary because of the clear intention of
the Congress that funds not be used until other specific actions
occur. For example, the completion of a study is often required by
the Congress. In other cases the Congress provides funds for use in
later years.
As to 0MB concerns, while we think the act is working routinely
and well, we recognize some concerns with its operation. I will
discuss the concerns of the Congress in a few minutes, but first I
want to mention our own views.
It would not be surprising if we noted that the act is a burden on
the President and the executive branch; however, we recognize that
the Congress should be able to overturn Executive acts to withhold
funds. We support that principle and continuation of the Impound-
ment Control Act.
The fact that most of the impoundments reported are routine
and noncontroversial does raise a question about the act's require-
ment that every action be reported by the President. This require-
ment means that a number of voluminous reports must be devel-
oped each year and transmitted by the President. This is despite
general agreement that only a small number of the actions report-
ed will be of concern to the Congress.
Even though the reports have become quite routine, the necessi-
ty for the reports to travel through the executive branch network
all the way to the President is demanding in time and effort and is
PAGENO="0029"
25
a paperwork burden for the executive branch, and we might add, a
paperwork burden for the Congress as well.
We note that in his report in June 1977, on the Impoundment
Control Act, the Comptroller General indicated that the legislative
history of the act suggests that the Congress interest was on those
impoundments that represent fiscal or program policy differences
between the executive branch and the Congress and not those
actions authorized by law.
In that report, the Comptroller General recommended that the
act be amended to exclude reporting deferrals authorized by law, or
deferrals for administrative or routine purposes.
The Congress might wish to consider this recommendation, or
the Congress might wish to consider permitting the Director of the
Office of Management and Budget to transmit such deferrals, but
to require the President to continue to transmit rescissions and
deferrals that represent policy actions.
As to congressional concerns, we are aware of at least two kinds
of concerns of the Congress about operation of the act. One kind of
concern is with the fact that the act permits funds to be withheld
for 45 continuous days of the congressional session while a rescis-
sion proposal is being considered. Members of Congress have some-
times been concerned that the period can be too long, primarily
because interruptions in the session often cause funds to be with-
held for 90-calendar days or more. Also, there is sometimes uncer-
tainty about the end of the 45-day period.
We would agree with the suggestion of the Comptroller General
that the act be amended so that rescission proposals pend before
the Congress for a definite number of calendar days, like the 60-
day period he recommended.
We would not agree with suggestions from some Members of
Congress that no impoundment take place while a rescission is
pending before the Congress. It seems irrational and undesirable to
propose rescission of a specific sum and then to continue to obligate
some portion of that sum proposed for cancellation.
We also do not agree with the suggestion by the Comptroller
General that the President notify the Congress at the time a deci-
sion is made to undertake a major termination or curtailment. This
plan is the one outlined in Mr. Dembling's statement and in the
draft bill that accompanies that statement.
Under that plan, the Congress would have a short period-like
14 days-to review the proposal. If the Congress had not disap-
proved the proposal within the time specified in the draft bill, the
withholding could begin.
We do not believe that Congress should be asked to consider
major questions in such a short time. In the past many weeks have
been required for congressional discussion of such matters. For
example, the Congress took 148 days of continuous session to
review the proposed B-i bomber termination. We do not believe
that a hasty review of such serious matters is in the interests of
either the Congress or the President.
A related concern about the 45-day period for pending rescissions
sometimes develops when it seems apparent that the Congress will
take no action on a rescission. The act does not specify a way to
PAGENO="0030"
26
require release of impounded funds before the end of the 45-day
period.
The Congress might wish to provide for a concurrent resolution
expressing its view that funds proposed for rescission should be
released prior to the end of the period prescribed in law. Under
those circumstances the executive branch would immediately re-
lease the impounded funds.
A second major concern of Members of Congress has been the
timeliness of impoundment reports.
We do not believe that this is a significant problem. We have
made a determined effort to report deferrals and rescission propos-
als on a timely basis. Since the President must be involved in each
of the reports, we must balance the congressional need for speedy
reporting with the need to make effective use of the President's
time. This means that usually we should not submit impoundment
reports singly to the President. It also means that an impoundment
report and a presidential decision on a major policy rescission or
deferral will not occur simultaneously.
It is not reasonable to expect that every option reviewed by the
President be accompanied by potential impoundment reports that
have received necessary legal and technical scrutiny within both
the agency and the Executive Office of the President.
We believe that reports to the Congress have been submitted in a
reasonable time, with rare exceptions. I assure you that we will
continue to emphasize the need of the Congress for timely report-
ing.
Mr. Chairman, I would be glad to discuss these matters further.
[The prepared statement of Mr. McOmber follows:]
PREPARED STATEMENT OF HON. DALE R. MCOMBER
Mr. Chairman and members of the committee. I am pleased to be here today to
discuss with you the administration of the Impoundment Control Act of 1974.
Almost 4 years have passed since the Impoundment Control Act became law.
Following an initial period when the reporting mechanisms to carry out the law
were being established, the administration of the act has become, mainly, routine.
The actions of both the legislative and executive branches related to this law are
now generally predictable.
The Office of Management and Budget has the lead responsibility for preparing
the reports on the impoundment of funds that are transmitted by the President to
the Congress. This responsibility is related to the Office's responsibility for appor-
tioning funds as required by the Antideficiency Act. While the Impoundment Con-
trol Act requires reports on any action to withhold funds, whether covered by an
apportionment action or not, most impoundments occur in connection with the
apportionment of funds. Under directives issued by 0MB, each agency is responsible
for reports to 0MB on any action taken that withholds or delays the use of funds.
We believe that the act is working in the way the Congress intended. Information
is being reported to the Congress on the withholding of funds, and the Congress has
been able to overturn impoundments as it desires. We think that there is general
agreement that the President is complying with the language and the spirit of the
act. We also have good working relationships with the Congress and the General
Accounting Office in administering the act.
Since President Carter came into office, he has either proposed or continued 23
rescissions totalling $1.7 billion in budget authority. Of the 21 proposals on which
the Congress has completed action, most have been approved (79 percent of the
dollar amount in 12 proposals). Similarly, of the $10 billion deferred by the Presi-
dent, $64.4 million, or less than 1 percent, has been disapproved.
Most of these impoundments have been made routinely under authority of the
Antideficiency Act. This is, funds have been reserved to provide for contingencies, or
to effect savings whenever possible because of changes in requirements or greater
efficiency of operations. Many deferrals are necessary because of the clear intention
PAGENO="0031"
27
of the Congress that funds not be used until other specific actions occur like the
completion of a study. In other cases, the Congress provides funds for use in later
years.
0MB CONCERNS
While we think the act is working routinely and well, we recognize some concerns
with its operation. I will discuss the concerns of the Congress in a few moments. But
first, I want to mention our own views.
It would not be surprising if we noted that the act is a burden on the President
and the executive branch. However, we recognize that the Congress should be able
to overturn executive acts to withhold funds. We support that principle and continu-
ation of the Impoundment Control Act.
The fact that most of the impoundments reported are routine and noncontrover-
sial does raise a question about the act's requirement that every action be reported
by the President. This requirement means that a number of voluminous reports
must be developed each year and transmitted by the President. This is despite
general agreement that only a small number of the actions reported will be of
concern to the Congress. Even though the reports have become quite routine, the
necessity for the reports to travel through the executive branch network all the way
to the President is demanding in time and effort-and is a paperwork burden for
both the executive branch and the Congress.
We note that in his report in June 1977, on the Impoundment Control Act, the
Comptroller General indicated that the legislative history of the act suggests that
the Congress' interest was on those impoundments that represent fiscal or program
policy differences between the executive branch and the Congress and not those
authorized by law. In that report, the Comptroller General recommended that the
act be amended to exclude reporting deferrals authorized by law, or deferrals for
administrative or routine purposes. The Congress might wish to consider this recom-
mendation. Or the Congress might wish to consider permitting the Director of the
Office of Management and Budget to transmit such deferrals but to require the
President to continue to transmit rescissions and deferrals that represent policy
actions.
CONGRESSIONAL CONCERNS
We are aware of at least two kinds of concerns of the Congress about operation of
the act. One kind of concern is with the fact that the act permits funds to be
withheld for 45 continuous days of the congressional session while a rescission
proposal is being considered. Members of Congress have sometimes been concerned
that the period can be too long primarily because interruptions in the session often
cause funds to be withheld for 90 calendar days or more. Also, there is sometimes
uncertainty about the end of the 45-day period. We would agree with the suggestion
of the Comptroller General that the act be amended so that rescission proposals
pend before the Congress for a definite number of calendar days, like the 60-day
period he recommended. We would not agree with suggestions from some Members
of Congress that no impoundment take place while a rescission is pending before the
Congress. It seems irrational and undesirable to propose rescission of a specific sum
and then to continue to obligate some portion of that sum proposed for cancellation.
We also do not agree with the suggestion by the Comptroller General that the
President notify the Congress at the time a decision is made to undertake a major
termination or curtailment. Under that proposal, the Congress would have a short
period, like 14 days, to review the proposal. If the Congress had not disapproved the
proposal within the time specified, the withholding could begin. We do not believe
that Congress should be asked to consider major questions in such a short time. In
the past, many weeks have been required for congressional discussion of such
matters. For example, the Congress took 148 days to review the proposed B-i
bomber termination. We do not believe that a hasty review of such serious matters
is in the interests of either the Congress or the President.
A related concern about the 45-day period for pending rescissions sometimes
develops when it seems apparent that the Congress will take no action on a
rescission. The act does not specify a way to require release of impounded funds
before the end of the 45-day period. The Congress might wish to provide for a
concurrent resolution expressing its view that funds proposed for rescission should
be released prior to the end of the period prescribed in law. Under those circum-
stances, the executive branch would immediately release the impounded funds.
A second major concern of Members of Congress has been the timeliness of
impoundment reports. We do not believe that this is a significant problem. We have
made a determined effort to report deferrals and rescission proposals on a timely
basis. Since the President must be involved in each of the reports, we must balance
PAGENO="0032"
28
the congressional need for speedy reporting with the need to make effective use of
the President's time. This means that usually we should not submit impoundment
reports singly to the President. It also means that an impoundment report and a
Presidential decision on major policy rescissions or deferrals will not occur simulta-
neously. It is not reasonable to expect that every option reviewed by the President
be accompanied by potential impoundment reports that have received necessary
legal and technical scrutiny within both the agency and the Executive Office of the
President.
We believe that reports to the Congress have been submitted in a reasonable time
with rare exceptions. I assure you that we will continue to emphasize the needs of
the Congress for timely reporting. I will be glad to discuss these matter further.
Mr. DERRICK. Thank you, Mr. McOmber, for an excellent state-
ment.
If you will bear with us, we have a vote on and I am going to
recess the committee for about 10 minutes to allow us to vote, and
then when I come back I am going to ask Dr. Schick if he will give
his testimony, and then ask questions of both of you at the same
time. I think it might facilitate matters. Since we are getting into
the Housing Act, and we will probably have a good many votes, it
might be a little better to do it that way. Thank you.
Mr. DERRICK. I didn't ask you, but would that suit your schedule
to wait until Dr. Schick testifies and then answer questions?
Mr. MCOMBER. Oh, yes, indeed.
[After recess.]
Mr. DERRICK. Dr. Schick, I am delighted to have you before the
committee this morning. I feel a real attachment to you and your
shop over there. You have always been helpful to us over the last
few years. You have written some tremendous material for us, and
I would like to hear from you now.
STATEMENT OF DR. ALLEN SCHICK, SENIOR SPECIALIST,
LIBRARY OF CONGRESS
Dr. SCHICK. Thank you, Mr. Chairman. I am pleased to testify. I
am also pleased to have Dale McOmber right next to me to assist
in answering questions.
Let me mention at the outset that this statement reflects my
views only and not those of either the Congressional Research
Service or the Urban Institute.
I am going to read excerpts from my statement and ask permis-
sion that the entire statement be placed in the record.
Mr. DERRICK. I feel kinder toward you now than I did before.
Dr. SCHICK. Thank you, sir. The Impoundment Control Act has
been in effect for almost 4 years. It took effect during the historic
transition from the Nixon to the Ford Presidency, and it has sur-
vived the transition from a Republican to a Democratic White
House. During these years, more than $50 billion in proposed re-
scissions and deferrals have been submitted to Congress. The 1974
law definitely did not put an end to impoundments; no legislation
short of an airtight bar on executive discretion in the use of public
funds could do that. Nor did the act completely end all controversy
over impoundments, though the passions and strife of the Nixon
era impoundments have abated.
However, except for occasional spasms, impoundment control has
settled into a three-stage process involving Presidential recommen-
dations and reports, Comptroller General review, and congressional
action or-in most cases-inaction. At each of these stages, Con-
PAGENO="0033"
29
gress has been confronted with a great amount of documentation
and paperwork, much required by the law itself, and some growing
out of the manner in which it has been implemented. More than
500 proposed rescissions and deferrals, packaged into dozens of
Presidential messages, have been forwarded to Congress, along
with numerous supplementary messages revising earlier submis-
sions. Congress has received more than 100 communications and
reports from the General Accounting Office and it has considered
almost a dozen rescission bills. More than 100 impoundment resolu-
tions have been introduced in Congress and 50 have passed.
An examination of the raw statistics on impoundment control
leads to a number of conclusions: The volume of deferrals has been
consistently higher than proposed rescissions. In dollar terms, at
least three times as much has been deferred in each of the past 4
years than has been proposed for rescission. Over the full span,
deferrals have totaled $45.5 billion compared to $8.8 billion for the
rescissions. The executive branch can be expected to favor deferrals
over rescissions; the former can continue in effect if Congress fails
to act; the latter must cease unless Congress passes a rescission bill
within the 45-day period. Nevertheless, the preponderance of defer-
rals is due to the fact that this type of action is more likely to deal
with routine rather than policy issues.
As both Mr. Dembling and Dale McOmber indicated, the bulk of
impoundments thus far have been for routine Executive actions
and most of those have been in the deferral category.
Second, impoundment is a declining activity, with the total
volume of both deferrals and rescissions much lower under Presi-
dent Carter than under President Ford. Each year's deferrals have
been lower than the preceding year's level. Rescissions were slight-
ly higher in fiscal year 1975, but with Carter in office, they
dropped in half during fiscal year 1977. During the current fiscal
year, the President appears to have virtually abandoned the rescis-
sion route, except for a few routine matters.
If we try to explain the dropoff in impoundments, I think again
you can offer several explanations.
The executive branch has received the message by and large that
the Impoundment Control Act cannot give it across the board a
second time at bat, and so very often the executive branch found
that rather than gaining through taking the second crack, by sub-
mitting a deferral or rescission, it found that Congress resisted it,
and therefore it has tended, except in the case of military expendi-
tures, except in that major category, to submit by and large routine
rescissions and deferrals.
There is a marked difference in the disposition of the rescissions
and deferrals. Almost every deferral is sustained by congressional
inaction; most rescissions proposed by the President have been
overturned by congressional inaction. Only 12 percent of the defer-
rals have been disapproved by Congress; 65 percent of the rescis-
sions have been "disapproved" by congressional unwillingness to
pass a rescission bill.
In dollar terms, the figures have to be adjusted to take into
account an early disapproval of more than $9 billion withheld from
highway programs. With the highway deferral excluded, Congress
31-1880-78--4
PAGENO="0034"
30
has disapproved less than 2 percent of the dollars deferred by the
President; it has disapproved 80 percent of the proposed rescissions.
These overall statistics, however, mask important differences be-
tween the Ford and Carter years. President Carter has had a much
higher success rate, particularly with regard to rescissions. Con-
gress has vetoed less than $100 million of the more than $10 billion
temporarily withheld by President Carter; it has gone along with
approximately two-thirds of his rescissions. It shouldn't surprise
one that a President of the same party as the majority of Congress
should be able to be more persuasive and successful than his prede-
cessor was.
Mr. DERRICK. We hope that is true.
APPRAISAL OF THE IMPOUNDMENT CONTROLS
My assessment of the Impoundment Control Act is much the
same as it was 2 years ago when I first reviewed its implementa-
tion. In my judgment, the act has established a workable, though
cumbersome, procedure for congressional review of Presidential
impoundments. It does not resolve basic constitutional questions of
legislative-executive relations and the reach of Presidential power,
but it offers a method of settling impoundment disputes without
raising these more portentious questions.
Congress has been able to prevent the President from unilateral-
ly withholding funds, and the President has been able to manage
the financial affairs of the Government without undue rigidity. The
impoundment battles of the early 1970's have not been ended, but
now they usually are fought through agreed upon means. Com-
pared to the contests of the Nixon era, the Impoundment Control
Act provides for limited warfare and, in most cases, for resolution
of differences within a limited period of time.
The plain fact is that both Presidents Ford and Carter have
generally conformed to the procedures of the 1974 act. There have
been few unreported impoundments brought to the attention of
Congress by GAO and few serious misclassifications of rescissions
or deferrals. Both Presidents have expeditiously released funds
after deferrals have been disallowed or after the 45-day period for
rescissions has ended. The impoundment controls have proven to
be workable when Congress and the President are of different
parties as well as when they are of the same party. The controls
have worked despite significant shifts in Presidential usage and
priorities.
Only about 5 percent of President Ford's rescissions were de-
fense-related; more than 90 percent were in domestic programs. By
refusing to act on the bulk of the rescission proposals, Congress
denied the President a "second chance" on appropriations for social
programs. The pattern has been different during the Carter years.
Almost 90 percent of Carter's rescissions have been in defense
programs, and Congress has been willing to go along with most of
them.
It could be that the Impoundment Control Act has worked be-
cause we have a President willing to operate within the boundaries
and requirements of law.
PAGENO="0035"
31
It could be that a President bent on overridding the policies of
Congress might disregard the impoundment controls as well. One
can only speculate as to what might have happened if the im-
poundment law was in operation during the early 1970's when a
willful President unilaterally cut off funds for programs estab-
lished by Congress. My own hypothesis is that no President could
act with the impoundment controls now on the books as he might,
and in fact as a President did, in the absence of the 1974 legisla-
tion. Nixon exploited the absence of law-the fuzzy demarkation of
powers between the two branches-to take power into his own
hand. Congress has successfully denied that unacceptable option to
future Presidents by establishing the Impoundment Control Act.
Yet the Impoundment Control Act has been far from perfect and
Congress has expressed its dissatisfaction with the procedures from
time to time. In a number of instances, it has effectively amended
or bypassed the impoundment controls; on occasion, it has gone on
record with the argument that the executive branch has not lived
up to its part of the bargain. While I do not believe that wholesale
change in the Impoundment Control Act is either necessary or
desirable, it is appropriate to examine the main problem areas, to
ascertain their causes and possible remedies.
Both of the previous witnesses have discussed the paperwork
burden imposed by the Impoundment Control Act, and both have
indicated that they would be inclined to favor a procedure which
would limit impoundment reports to policy rather than routine
impoundments.
The flow of messages and documents generated by the Impound-
ment Control Act has been extraordinary and has burdened the
committees of jurisdiction as well as the House and Senate. The
impoundment controls have been part of recent legislative efforts
to more vigorously oversee and constrain executive actions. The
load has diminished, however, as the volume of impoundments
have decreased. Thus, the problems arising out of Ford's tens of
billions of dollars of impoundments have been lessened by Carter's
scaledown of impoundment actions.
The volume of impoundments is much more than a matter of
paperwork, for it can skew the outcomes as well. The probable
effects include:
First, giving the President an advantage in deferrals, for their
large number undermines congressional ability to detect every
policy outcome; and
Second, deterring the Congress from acting on some routine re-
scissions proposed by the President. In other words, the paperwork
has encouraged congressional inaction, favoring the President in
deferrals and penalizing him in rescissions.
Yet, it is also true that Congress has been able to act when it
wants. The huge number of deferrals in fiscal years 1975 and 1976
did not prevent Congress from selectively disapproving those Presi-
dential actions which it deemed to be serious departures from
established policies. Congress has been able to sort through the
hundreds of Presidential messages to actively determine the dispo-
sition of any Presidential impoundment. For this reason, I find no
compelling need to modify the Impoundment Control Act to lessen
the number of reports and messages.
PAGENO="0036"
32
Most of the proposals for change are predicated on a distinction
between routine and policy impoundments. But this useful analytic
distinction cannot be etched into law without creating a new host
of problems and conflicts. A matter deemed to be routine by the
President might be considered a policy issue by Congress. In this
regard, it is worth noting that several deferrals classified by GAO
as "routine" have been overturned by impoundment resolutions. If
the President were given the option to decide whether a matter is
routine or policy, he would be vulnerable to charges of misleading
Congress; if GAO was given a role in screening Executive submis-
sions and deciding which policy ones should be brought to the
attention of Congress, it would have an effective veto over congres-
sional action.
Congress in 1974 opted for a broad definition of impoundments.
It decided that excessive paperwork is preferable to excessive strife.
Let the executive branch report everything; let Congress decide
what action to take. This is the underlying philosophy of impound-
ment control and it should not be altered.
After all, routine versus policy is more an analytic category than
a legal one. It is easy for us to look at the reports submitted by the
President, and to define them as either routine or policy matters. It
is much more difficult to write that kind of ironclad distinction
into law.
INFORMING CONGRESS OF EXECUTIVE ACTIONS
The Impoundment Control Act gives Congress an imperfect mon-
itoring capability: the Comptroller General is to revie~w all reported
impoundments and also notify Congress of any unreported ones as
well as of errors in classification. However, the Comptroller Gener-
al cannot inspect every administrative action affecting the avail-
ability of funds. GAO cannot always distinguish between delays
caused by prudent management and delays promoted by policy
motives. Even when it is vigilant, GAO ordinarily becomes aware
of an Executive action sometime after it has taken effect.
GAO has adopted a reactive posture toward executive branch
impoundments. That is, rather than initiating investigations, it
gets involved only after the President has filed an impoundment
report or if a third party complains about Executive action. GAO
explained its procedures in a 1976 letter to Senator Warren Mag-
nuson:
To fulfill our responsibilities to detect unreported withholdings, we monitor the
handling of budget authority by the administration, in addition to receiving infor-
mation from Members of Congress, committee staff, interest groups, and constitu-
ents on possible unreported withholdings. While we believe this has worked reason-
ably well in the past to enable us to detect unreported withholdings, we cannot
monitor all budget authority simultaneously, even with the help of interested third
parties. Furthermore, once a suspected withholding has been found, we believe it
prudent to obtain 0MB and agency documentation (apportionment and allotment
schedules) evidencing the existence of budgetary reserves, and, when necessary,
prepare analyses of relevant statutes to determine whether the failure to make the
budget authority available legally constitutes an unreported withholding under the
act. Consequently, unreported withholdings cannot always be reported immediately.
This procedure does not always adequately protect congressional
interests. A case in point was the controversial B-i bomber for
which funds had been appropriated before the President decided
not to proceed with the weapon. The Defense Department con-
PAGENO="0037"
33
cealed B-i contracts 3 weeks before it notified Congress. Although
Congress was not confronted with a fait accompli-disapproval of
the rescission proposal would have compelled the Defense Depart-
ment to resume work on the airplane-restarting the program
would have entailed considerable costs.
GAO is constrained from more active vigilance by two limita-
tions: Staff resources and conflicts with its other roles. In order for
it to monitor all-or even a large portion-of relevant executive
branch activities, GAO would have to multiply the staff devoted to
impoundment work. In view of its other duties, GAO has been
reluctant to expend limited resources on active surveillance, prefer-
ring instead to respond to reports and complaints brought to its
attention.
The second reason is that GAO is charged by law to promote
efficiency in Federal expenditure. Overzealous enforcement of the
impoundment controls could force the executive branch to waste-
fully spend great sums of money. The B-i case illustrates GAO's
dilemma. After the President proposed a rescission, the 45-day
clock started to run. But the period ended before Congress complet-
ed action on a rescission bill. According to the impoundment con-
trol procedures, GAO should have ordered the immediate obliga-
tion of some $460 million in budget authority, and the resumption
of work on the canceled contracts. Instead, GAO gave fuzzy re-
sponses to congressional inquiries and the Defense Department was
able to release the funds without actually spending them. In this
manner, GAO was able to reconcile the conflicting demands of the
Impoundment Control Act and its responsibilities for financial effi-
ciency.
This morning, Mr. Dembling has submitted a proposed Program
Curtailment Act as one possible way of coping with that situation.
I have not been able to examine the proposed law, but it does seem
to me that the executive branch can do a much better job of timely
notification of Congress. In the B-i bomber case, for example, there
is nothing inherent in the Impoundment Control Act which called
for that delay, and perhaps if the President were to act more
expeditiously, we would not have to have a program curtailment
procedure.
The next problem is the 45-day period, and I think all parties are
agreed that the Impoundment Act is in need of revision.
In procedural terms, the 45-day period has evoked more contro-
versy than any other provision of the Impoundment Control Act. In
practice, the 45 days usually stretch to a much lengthier period of
time. During the i975 and i976 fiscal years, the interval between
the submission of a rescission proposal and the end of the 45-day
period averaged 80 calendar days, to which, if we add the 30 days
or more prior to the President's notification of Congress, we are
talking about one-third or more of the fiscal year going by without
release of the funds.
Since impoundments do not have to be reported until the 30 days
allowed by law for the apportionment of funds, the actual time
between appropriation and termination of an impoundment aver-
ages more than iOO days.
As a consequence of this delay, the President has been able to
put unwanted programs into cold storage for much of the fiscal
PAGENO="0038"
34
year, thereby frustrating congressional intent and impairing pro-
gram effectiveness. Delay sometimes has been sought for its own
sake and, possibly, for political advantage as well. Whatever the
motive or cause, Congress thus far has had no remedy when the
President has manipulated the rescission rules to hold up pro-
grams.
The problem is compounded by the tendency of Congress to wait
until the last moment to take up rescission bills. As a result,
Congress bypasses an opportunity to give the executive branch an
early indication of its intentions. There is reason to believe that
earlier action by Congress would lead to earlier release of funds by
the President.
The Comptroller General has offered two proposals to ameliorate
congressional helplessness during the waiting period:
First, convert from 45 days of continuous session to 60 calendar
days, thereby shortening the amount of time between submission of
rescission and the expiration of the waiting period while still
giving Congress ample opportunity to act on the rescission. This
sensible approach also would have the advantage of fixing a defi-
nite date for the end of the waiting period.
Second, GAO also has proposed that the President be required to
release the withheld funds if either the House or Senate passes a
resolution indicating its disapproval of the rescission. In effect,
Congress would have a legislative veto over rescissions comparable
to the veto it now has over deferrals.
Congress has fashioned its own remedy-advance rejection of an
expected impoundment. During fiscal year 1977, President Carter
announced his opposition to certain water projects. To avert a
possible impoundment, Congress inserted the following sections
into the Public Works Employment Act of 1977-Public Law 92-28:
SEC 201. Congress hereby finds and declares that: * * * such projects should not
be discontinued except by following the legislative process provided by * * * the
Congressional Budget. and Impoundment Control Act of 1974.
SEC 202. Notwithstanding the deferral and rescission provisions of Public Law
93-344, all appropriations provided in Public Laws 94-355 and 94-351-fiscal 1977
appropriations for public works and agriculture-for construction projects or for
investigations, planning, or design related to construction projects shall be made
available for obligation by the President and expended for the purposes for which
the appropriations are made * * *
SEC 203.* * * section 202 of this act shall be equivalent to and have the legal
effect of a resolution disapproving any deferral of budget authority previously
provided for construction projects * * * section 202 is also equivalent to a congres-
sional statement of intent not to uphold any rescission of budget authority * * *
This provision in effect nullified the expected impoundment of
water resource projects in advance. I make two points with regard
to that procedure. One is that the particular formula used by
Congress was unclear, and some might say, contradictory. There
were three sections of that provision, and one section seemed to
give what another section took away.
But the second point I would like to make is much more impor-
tant, and that is if Congress were to apply this approach across the
board to all appropriations, it would effectively negate the Im-
poundment Control Act, that is, if Congress were to attach a rider
to every appropriation saying that it has already disapproved of
the rescission or the deferral, then the Impoundment Control Act
would cease to have operational effect.
PAGENO="0039"
35
Revision of the 45-day period also must reckon with the tendency
of Congress to defer action until the last moment or beyond. Many
rescissions, perhaps even the bulk of rescissions which have been
approved by Congress after the end of 45 days. Funds for the B-i
bomber, for example, were repealed more than 3 months after the
45 days were over. Congress might consider a revision in the dis-
charge procedure for rescission bills along with a mechanism for
timely or automatic introduction of such bills in the House.
As you know, Mr. Chairman, the House Budget Committee last
year passed a resolution directing the chairman of the Budget
Committee to take timely action to assure that this problem
doesn't arise in the future.
The final, and I think most important issue which I would dis-
cuss, is the scope of the Impoundment Control Act.
During the course of each year, executive agencies take many
thousands of actions affecting the rate and level of expenditure.
Specifications are drawn and revised repeatedly for grants and
contracts; administrative units are reorganized, slowing or speeding
the processing of applications for funds; regulations are introduced
or redrawn; funds are shifted from one use to another; efficiencies
are introduced in administrative operations and the savings are
applied to other activities.
It is possible to read the Impoundment Control Act to cover each
and every one of these actions. In the Nixon era climate, Congress
opted for the broadest definition of impoundments. These are the
bare words of section iOu of the act: Deferral of budget authority
includes-
(A) withholding or delaying the obligation or expenditure of
budget authority * * * provided for projects or activities; or
(B) any other type of Executive action or inaction which effec-
tively precludes the expenditure of budget authority.
The Comptroller General has reasonably interpreted this provi-
sion to cover only willful actions which reduce the total amount of
budget authority obligated or expended in a budget account. On
June ii, i975, he ruled that the "act does not support to invalidate
the exercise or reasonable administrative discretion in the adoption
of program provisions and regulations * * *"
On September 28, i976, he advised Representative James J.
Florio,"That a failure to obligate the full amount of an appropri-
ation does not, per se, constitute a withholding of budget authority
within the meaning of the Impoundment Control Act. There must
be sufficient evidence of behavior on the part of responsible execu-
tive agency officials that demonstrates an intention to refrain from
obligating available budget authority."
In other words, neither routine adminstrative actions nor short-
falls are deemed to be impoundments. These are reasonable and
productive applications of the Impoundment Control Act. The in-
terests of Congress in establishing particular programs and funding
levels remain fully protected against Executive attempts to termi-
nate or curtail programs.
Much more troubling than these adminstrative actions have been
personnel limits mandated by the Office of Management and
Budget and reprogramings of funds by executive agencies. Both
types of actions have precipitated congressional efforts to strength-
PAGENO="0040"
36
en the impoundment controls. When 0MB establishes yearend per-
sonnel ceilings for agencies, it affects the level of expenditure in
two ways: First, the amount of money spent on salaries is likely to
be less than the amount provided by Congress; second, personnel
shortages can slow down administrative operations and reduce the
level o. expenditure below the amount appropriated for programs.
For example, an agency might not be able to process all eligible
loan applications because 0MB ceilings prevent it from hiring
needed personnel.
While Congress has a legitimate interest in assuring that pro-
grams are carried out at the levels provided in law, in my judg-
ment, the Impoundment Control Act should not be used as an all-
purpose remedy against every type of Executive action that affects
the level of expenditure. If personnel ceilings were covered by the
act, it would also seem logical to cover instances in which agencies
hold down personnel-and other-costs in order to avert a supple-
mental appropriation. It is quite common for agencies-on their
own volition or as ordered by 0MB-to apply savings to some of
the unbudgeted costs of pay increases and unexpected develop-
ments. A rigid application of impoundment controls to these situa-
tions would weaken executive branch incentives to be efficient and
would surely lead to increased spending, not only in situations
where personnel levels have been constrained in order to reduce
program operations but also where the sole intent is to promote
operational efficiencies.
Congressional concern over impoundment by means of personnel
ceilings is reflected in the agriculture appropriation bill for fiscal
year 1979-H.R. 13125. The House Appropriations Committee has
protested:
The tendency of the executive branch to establish arbitrary personnel ceilings to
slow down or stop various programs * * in violation of the spirit, if not the letter,
of the Impoundment Control Act.
On several occasions, funds have been appropriated for additional staff deemed
essential by the Congress, and then used as additional funds for travel or equipment
and supplies.
The Appropriations Committee restructured the 1979 budget ac-
counts for several agriculture programs to prevent these practices:
* * * to avoid such de facto impoundments in the future, the committee has
recommended in many instances separate appropriations for "personnel compensa-
tion and benefits" and "for other expenses." As a result of this bill language, and
attempt to withhold funds for salaries must be reported to Congress for its consider-
ation under the law.
In effect, Congress has moved to "line itemize" certain appropri-
ations, thereby bringing the particular items under the scope of the
Impoundment Control Act. It has taken similar action to thwart
reprogramings-the transfer of funds from one purpose to another
within the same budget account. GAO has ruled that reprogram-
ings do not violate the Impoundment Control Act as long as there
is no net withholding of funds. The issue arose when President
Carter sought to apply funds appropriate for development of the
Clinch River Breeder Reactor to the termination of the project. In
a June 23, 1977, letter to Senator Jackson, the Comptroller General
held that this division of the funds did not violate the impound-
ment controls:
PAGENO="0041"
37
The act is concerned with the rescission or deferral of budget authority, not the
rescission or deferral of programs. Thus, a lump-sum appropriation for programs A,
B, and C used to carry out only program C would not necessarily indicate the
existence of impoundments regarding programs A and B. So long as all budgetary
resources were used for program C, no impoundment would occur even though
activities A and B remain unfunded.
The congressional response to reprograming has been to extend
impoundment controls to particular programs and projects. Thus,
section 304 of the second suppplemental appropriation for fiscal
year 1977, sponsored by Representative Cederberg, has the follow-
ing prohibition:
None of the funds appropriated or otherwise made available in this act shall be
obligated or expended for the termination or deferral of any project, activity, or
weapons system approved by Congress, except specific projects, activities, or weap-
ons systems for which, and to the extent, budget authority has been rescinded or
deferred as provided by law.
Although Representative Cederberg insisted that this provision
would not bar reprogramings, the effect would seem to be other-
wise. If a similar provision were extended to all appropriations, the*
Federal budget would be effectively converted to a line item basis
and most, if not all, reprogramings would be prescribed.
In my view, Congress should not apply the impoundment con-
trols in a manner that robs the Executive branch of all administra-
tive flexibility. Congress and the President can coexist without
having every aspect of the expenditure of funds nailed down in
law. Congress can tolerate gray areas in its relationship with the
executive branch, even though these are the breeding ground for
ambiguity and controversy.
If I might, Mr. Chairman, insert a metaphor at this point, the
gray area between the executive and legislative branch can be
regarded as a DMZ, a demilitarized zone, for through 200 years of
constitutional skirmishing, Congress and the President have pa-
trolled their boundaries, the borders of the DMZ, crossing the line
a bit to take advantage.
What happened in the early 1970's, and what provoked the en-
actment of the Impoundment Control Act was a massive, full-scale
invasion of the DMZ by the executive branch. In other words, I
believe we can continue to tolerate some of these ambiguities, some
of these gray `areas. What we cannot tolerate, and what the Im-
poundment Control Act effectively puts an end to is the massive
disregard of law which once occurred.
However, if Congress tries to nail down every dime and every
item of expenditure, and if it therefore succeeds in fully curbing
Executive discretion, in my judgment, the American taxpayer
might have to pay a very high price for this victory. Thank you.
[Testimony resumes on p. 44.]
[The prepared statement of Dr. Schick follows:]
PREPARED STATEMENT OF DR. ALLEN SCHICK
Mr. Chairman, this statement expresses my views and does not represent the
views of the Congressional Research Service or the Urban Institute. The Impound-
ment Control Act has been in effect for almost 4 years. It took effect during the
historic transition from the Nixon to the Ford Presidency, and it has survived the
transition from a Republican to a Democratic White House. During these years,
more than $50 billion in proposed rescissions and deferrals have been submitted to
Congress. The 1974 law definitely did not put an end to impoundments; no legisla-
PAGENO="0042"
38
tion short of an airtight bar on executive discretion in the use of public funds could
do that. Nor did the act completely end all controversy over impoundments, though
the passions and strife of the Nixon era impoundments have abated.
However, except for occasional spasms, impoundment control has settled into a
three-stage process involving Presidential recommendations and reports, Comptrol-
ler General review, and congressional action or-in most cases-inaction. At each of
these stages, Congress has been confronted with a great amount of documentation
and paperwork, much required by the law itself, and some growing out of the
manner in which it has been implemented. More that 500 proposed rescissions and
deferrals, packaged into dozens of Presidential messages, have been forwarded to
Congress, along with numerous supplementary messages revising earlier submis-
sions. Congress has received more than 100 communications and reports from the
General Accounting Office and it has considered almost a dozen rescission bills.
More than 100 impoundment resolutions have been introduced in Congress and 50
have passed.
An examination of the raw statistics on impoundment control lead to a number of
conclusions:
The volume of deferrals has been consistently higher than proposed rescissions. In
dollar terms, at least three times as much has been deferred in each of the past 4
years than has been proposed for rescission. Over the full span, deferrals have
totaled $45.5 billion compared to $8.8 billion for the rescissions. The executive
branch can be expected to favor deferrals over rescissions; the former can continue
in effect if Congress fails to act; the latter must cease unless Congress passes a
rescission bill within the 45-day period. Nevertheless, the preponderance of deferrals
is due to the fact that this type of action is more likely to deal with routine rather
than policy issues.
Impoundment is a declining activity, with the total volume of both deferrals and
rescissions much lower under President Carter than under President Ford. Each
year's deferrals have been lower than the preceding year's level. Rescissions were
slightly higher in fiscal year 1975, but with Carter in office, they dropped in half
during fiscal year 1977. During the current fiscal year, the President appears to
have virtually abandoned the rescission route, except for a few routine matters.
Well over half of the deferrals have been for routine purposes authorized by the
Antideficiency Act. As noted, rescissions are more likely to be for policy reasons,
though many of them also are routine matters.
There is a marked difference in the disposition of rescissions and deferrals.
Almost every deferral is sustained by congressional inaction; most rescissions pro-
posed by the President have been overturned by congressional inaction. Only 12
percent of the deferrals have been disapproved by Congress; 65 percent of the
rescissions have been "disapproved" by congressional unwillingness to pass a rescis-
sion bill. In dollar terms, the figures have to be adjusted to take into account an
early disapproval of more than $9 billion withheld from highway programs. With
the highway deferral excluded, Congress has disapproved less than 2 percent of the
dollars deferred by the President; it has disapproved 80 percent of the proposed
rescissions.
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39
RESCISSIONS AND DEFERRALS, FISCAL YEARS 1975-78-THROUGH MAY 1978
[In thousands of dollars]
RESCISSIONS
Year
Number 1
Total
proposed
Amount
approved
Percent
of dollars
rescinded
Percent
of proposals
approved-in
whole or part
1975
1976 2
1977
1978
91(4)
50(1)
21(1)
5
$3,328,500
3,608,363
1,835,602
85,255
$391,295
138,331
1,271,040
55,255
12
4
70
65
43
14
48
60
Total
167
8,857,721
1,855,821
20
35
DEFERRALS
Year
Number I
Amount Amount
deferred disapproved
Number
disapproved
Percent
of dollars
disapproved
Percent
deferrals
disapproved
1975
19762
1977
1978
159
119 (2)
68(4)
63
$24,574,236 $9,318,217
9,209,780 393,081
6,831,194 25,600
4,902,064 51,831
16
~24
3
5
38
4
4
1
10
20
5
8
Total
409
45,517,263 9,788,730
48
~22
12
1 Numbers in parentheses are GAO notifications of unreported impoundments.
2 Fiscal year 1976 data includes the transition quarter. A proposal to rescind funds in both fiscal year 1976 and the transition
quarter is counted as a single proposal.
3Two fiscal year 1976 deferrals were disapproved by both the House and Senate; they are counted only once here.
Excluding the disapproval of $9.1 billion in highway funds, Congress has disapproved only 2 percent of the deferred dollars.
Source: House Appropriations Committee.
These overall statistics, however, mask important differences between the Ford
and Carter years. President Carter has had a much higher success rate, particularly
with regard to rescissions. Congress had vetoed less than $100 million of the more
than $10 billion temporarily withheld by President Carter; it has gone along with
approximately two-thirds of his rescissions.
APPRAISAL OF THE IMPOUNDMENT CONTROLS
My assessment of the Impoundment Control Act is much the same as it was 2
years ago when I first reviewed its implementation. In my judgment, the act has
established a workable, though cumbersome, procedure for congressional review of
Presidential impoundments. It does not resolve basic constitutional questions of
legislative-executive relations and the reach of Presidential power, but it offers a
method of settling impoundment disputes without raising these more portentious
questions. Congress has been able to prevent the President from unilaterally with-
holding funds, and the President has been able to manage the financial affairs of
the Government without undue rigidity. The impoundment battles of the early
1970's have not been ended, but now they usually are fought through agreed upon
means. Compared to the contests of the Nixon era, the Impoundment Control Act
provides for limited warfare and, in most cases, for resolution of differences within a
limited period of time.
The plain fact is that both President Ford and Carter have generally conformed to
the procedures of the 1974 act. There have been few unreported impoundments
brought to the attention of Congress by GAO and few serious misclassifications of
rescissions or deferrals. Both Presidents have expeditiously released funds after
deferrals have been disallowed or after the 45-day period for rescissions has ended.
The impoundment controls have proven to be workable when Congress and the
President are of different parties as well as when they are of the same party. The
controls have worked despite significant shifts in presidential usage and priorities.
Only about 5 percent of President Ford's rescissions were defense related; more than
90 percent were in domestic programs. By refusing to act on the bulk of the
PAGENO="0044"
40
rescission proposals, Congress denied the President a "second chance" on appropri-
ations for social programs. The pattern has been different during the Carter years.
Almost 90 percent of Carter's rescissions have been in defense programs, and
Congress has been willing to go along with most of them.
It could be that a President bent on overriding the policies of Congress might
disregard the impoundment controls as well. One can only speculate as to what
might have happened if the impoundment law was in operation during early 1970's
when a willful President unilaterally cut off funds for programs established by
Congress. My own hypothesis is that no President could act with the impoundment
controls on the books as he might in the absence of the 1974 legislation. Nixon
exploited the absence of law-the fuzzy demarcation of powers between the two
branches-to take power. into his own hand. Congress has successfully denied that
unacceptable option to future Presidents.
Yet the Impoundment Control Act has been far from perfect and Congress has
expressed its dissatisfaction with the procedures from time to time. In a number of
instances it has effectively amended or bypassed the impoundment controls; on
occasion it has gone on record with the argument that the executive branch has not
lived up to its part of the bargain. While I do not believe that wholesale change in
the Impoundment Control Act is either necessary or desirable, it is appropriate to
examine the main problem areas, to ascertain their causes and possible remedies.
Paperwork burden.-The flow of messages and documents generated by the Im-
poundment Control Act has been extraordinary and has burdened the committees of
jurisdiction as well as the House and Senate. The impoundment controls have been
part of recent legislative efforts to more vigorously oversee and constrain executive
discretion. In recent years, Congress has multipled reporting requirements and
legislative vetoes. By themselves, the impoundment controls might not be much of a
load; in combination with requirements in other policy areas, they have made it
difficult for Congress to keep track of executive actions. The load has diminished,
however, as the volume of impoundments has decreased. Thus, the problems arising
out of Ford's tens of billions of dollars of impoundments have been lessened by
Carter's scaledown of impoundment actions.
The volume of impoundments is much more than a matter of paperwork, for it
can skew the outcomes as well. The probable effects include: (1) giving the President
an advantage in deferrals, for their large number undermines congressional ability
to detect every policy outcome; and (2) deterring the Congress from acting on some
routine rescissions proposed by the President. In other words, the paperwork has
encouraged congressional inaction, favoring the President in deferrals and penaliz-
ing him in rescissions.
Yet, it is also true that Congress has been able to act when it wants. The huge
number of deferrals in fiscal years 1975 and 1976 did not prevent Congress from
selectively disapproving those Presidential actions which it deemed to be serious
departures from established policies. Congress has been able to sort through the
hundreds of Presidential messages to actively determine the disposition of any
Presidential impoundment. For this reason, I find no compelling need to modify the
Impoundment Control Act to lessen the number of reports and messages.
Most of the proposals for change are predicated on a distinction between routine
and policy impoundments. But this useful analytic distinction cannot be etched into
law without creating a new host of problems and conflicts. A matter deemed to be
routine by the President might be considered a policy issue by Congress. In this
regard, it is worth noting that several deferrals classified by GAO as "routine" have
been overturned by impoundment resolutions. If the President were given the
option to decide whether a matter is routine or policy, he would be vulnerable to
charges of misleading Congress; if GAO was given a role in screening Executive
submissions and deciding which policy ones should be brought to the attention of
Congress, it would have an effective veto over congressional action.
Congress in 1974 opted for a broad definition of impoundments. It decided that
excessive paperwork is preferable to excessive strife. Let the executive branch
report everything; let Congress decide what action to take. This is the underlying
philosophy of impoundment control and it should not be altered.
Informing Congress of Executive actions-The Impoundment Control Act gives
Congress an imperfect monitoring capability: the Comptroller General is to review
all reported impoundments and also notify Congress of any unreported ones as well
as of errors in classification. However, the Comptroller General cannot inspect
every administrative action affecting the availability of funds. GAO cannot always
distinguish between delays caused by prudent management and delays promoted by
policy motives. Even when it is vigilant, GAO ordinarily becomes aware of an
executive action sometime after it has taken effect.
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41
GAO has adopted a reactive posture toward executive branch impoundments.
That is, rather than initiating investigations, it gets involved only after the Presi-
dent has filed an impoundment report or if a third party complains about Executive
action. GAO explained its procedures in a 1976 letter to Senator Warren Magnuson:
To fulfill our responsibilities to detect unreported withholdings, we monitor
the handling of budget authority by the administration, in addition to receiving
information from Members of Congress, committee staff, interest groups, and
constituents on possible unreported withholdings. While we believe this has
worked reasonably well in the past to enable us to detect unreported withhold-
ings, we cannot monitor all budget authority simultaneously, even with the
help of interested third parties. Furthermore, once a suspected withholding has
been found, we believe it prudent to obtain 0MB and agency documentation
(apportionment and allotment schedules) evidencing the existence of budgetary
reserves, and, when necessary, prepare analyses of relevant statutes to deter-
mine whether the failure to make the budget authority available legally consti-
tutes an unreported withholding under the act. Consequently, unreported with-
holdings cannot always be reported immediately.
This procedure does not always adequately protect congressional interests. A case
in point was the controversial B-i bomber for which funds had been appropriated
before the President decided not to proceed with the weapon. The Defense Depart-
ment canceled B-i contracts 3 weeks before it notified Congress. Although Congress
was not confronted with a fait accompli-disapproval of the rescission proposal
would have compelled the Defense Department to resume work on the airplane-
restarting the program would have entailed considerable costs.
GAO is constrained from more active vigilance by two limitations: staff resources
and conflicts with its other roles. In order for it to monitor all (or even a large
portion) of relevant executive branch activities, GAO would have to multiply the
staff devoted to impoundment work. In view of its other duties, GAO has been
reluctant to expend limited resources on active surveillance, preferring instead to
respond to reports and complaints brought to its attention.
The second reason is that GAO is charged by law to promote efficiency in Federal
expenditure. Overzealous enforcement of the impoundment controls could force the
executive branch to wastefully spend great sums of money. The B-i case illustrates
GAO's dilemma. After the President proposed a rescission, the 45-day clock started
to run. But the period ended before Congress completed action on a rescission bill.
According to the impoundment control procedures, GAO should have ordered the
immediate obligation of some $460 million in budget authority, and the resumption
of work on the canceled contracts. Instead, GAO gave fuzzy responses to congres-
sional inquiries and the Defense Department was able to release the funds without
actually spending them. In this manner, GAO was able to reconcile the conflicting
demands of the impoundment Control Act and its responsibilities for financial
efficiency.
Forty-five-day period-In procedural terms, the 45-day period has evoked more
controversy than any other provision of the Impoundment Control Act. In practice,
the 45 days usually stretch to a much lengthier period of time. During the 1975 and
1976 fiscal years, the interval between the submission of a rescission proposal and
the end of the 45-day period averaged 80 calendar days. Since impoundments do not
have to be reported until the 30 days allowed by law for the apportionment of funds,
the actual time between appropriation and termination of an impoundment aver-
ages more than 100 days.
As a consequence of this delay, the President has been able to put unwanted
programs into cold storage for much of the fiscal year, thereby frustrating congres-
sional intent and impairing program effectiveness. Delay sometimes has been
sought for its own sake and, possibly, for political advantage as well. Whatever the
motive or cause, Congress thus far has had no remedy when the President has
manipulated the rescission rules to hold up programs.
The problem is compounded by the tendency of Congress to wait until the last
moment to take up rescission bills. As a result, Congress bypasses an opportunity to
give the executive branch an early indication of its intentions. There is reason to
believe that earlier action by Congress would lead to earlier release of funds by the
President.
The Comptroller General has offered two proposals to ameliorate congressional
helplessness during the waiting period: (1) Convert from 45 days of continuous
session to 60 calendar days, thereby shortening the amount of time between submis-
sion of rescission and the expiration of the waiting period while still giving Congress
ample opportunity to act on the rescission. This sensible approach also would have
the advantage of fixing a definite date for the end of the waiting period. (2) GAO
PAGENO="0046"
42
also has proposed the President be required to release the withheld funds if either
the House or Senate passes a resolution indicating its disapproval of the rescission.
In effect, Congress would have a legislative veto over rescissions comparable to the
veto it now has over deferrals.
Congress has fashioned its own remedy-advanced rejection of an expected im-
poundment. During fiscal year 1977, President Carter announced his opposition to
certain water projects. To avert a possible impoundment, Congress inserted the
following sections into the Public Works Employment Act of 1977 (Public Law
95-28):
SEC. 201. Congress hereby finds and declares that: * * * such projects should
not be discontinued except by following the legislative process provided
by * * * the Congressional Budget and Impoundment Control Act of 1974.
SEC. 202. Notwithstanding the deferral and rescission provisions of Public
Law 93-344, all appropriations provided in Public Laws 94-355 and 94-451
[fiscal year 1977 appropriations for public works and agriculture] for construc-
tion projects or for investigations, planning, or design related to construction
projects shall be made available for obligation by the President and expended
for the purposes for which the appropriations are made * * *
SEC. 203. * * * section 202 of this act shall be equivalent to and have the
legal effect of a resolution disapproving any deferral of budget authority previ-
ously provided for construction projects * * * section 202 is also equivalent to a
congressional statement of intent not to uphold any rescission of budget author-
ity * * *
While the language of the three sections appears to be contradictory-section 201
seems to uphold impoundment control procedures while section 202 seems to bypass
them-the intent is clear: To head off a possible rescission or deferral by announc-
ing that Congress would disapprove the action. This appears to be a remedy only
when Congress and the President have fought over specific spending items during
the appropriations stage. If it was applied across the board to all appropriations,
this procedure would effectively negate the Impoundment Control Act.
Revision of the 45-day period also must reckon with the tendency of Congress to
defer action until the last moment or beyond. Many rescissions have been approved
by Congress after the end of 45 days. Funds for the B-i bomber, for example, were
repealed more than 3 months after the 45 days were over. Congress might consider
a revision on the discharge procedure for rescission bills along with a mechanism
for timely or automatic introduction of such bills in the House.
THE SCOPE OF IMPOUNDMENT CONTROL
During the course of each year, executive agencies take many thousands of
actions affecting the rate and level of expenditure. Specifications are drawn and
revised repeatedly for grants and contracts; administrative units are reorganized,
slowing or speeding the processing of applications for funds; regulations are intro-
duced or redrawn; funds are shifted from one use to another; efficiencies are
introduced in administrative operations and the savings are applied to other activi-
ties.
It is possible to read the Impoundment Control Act to cover each and every one of
these actions. In the Nixon-era climate, Congress opted for the broadest definition of
impoundments: These are the bare words of section 1011 of the act:
Deferral of budget authority includes-
(A) withholding or delaying the obligation or expenditure of budget authority
* * * provided for projects or activities; or
(B) any other type of Executive action or inaction which effectively precludes
the expenditure of budget authority.
The Comptroller General has sensibly interpreted this provision to cover only
willful actions which reduce the total amount of budget authority obligated or
expended in a budget account. On June ii, 1975, he ruled that the:
Act does not support to invalidate the exercise or reasonable administrative
discretion in the adoption of program provisions and regulations * * *
On September 28, 1976, he advised Representative James J. Florio:
that a failure to obligate the full amount of an appropriation does not, per se,
constitute a withholding of budget authority within the meaning of the Im-
poundment Control Act. There must be sufficient evidence of behavior on the
part of responsible executive agency officials that demonstrates an intention to
refrain from obligating available budget authority.
In other words, neither routine administrative actions nor shortfalls are deemed to
be impoundments. These are reasonable and productive applications of the Im-
poundment Control Act. The interests of Congress in establishing particular pro-
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grams and funding levels remain fully protected against executive attempts to
terminate or curtail programs.
Much more troubling than these administrative actions have been personnel
limits mandated by the Office of Management and Budget and reprogramings of
funds by executive agencies. Both types of actions have precipitated congressional
efforts to strengthen the impoundment controls. When 0MB establishes yearend
personnel ceilings for agencies, it affects the level of expenditure in two ways: First,
the amount of money spent on salaries is likely to be less than the amount provided
by Congress; second, personnel shortages can slow down administrative operations
and reduce the level of expenditure below the amount appropriated for programs.
For example, an agency might not be able to process all eligible loan applications
because 0MB ceilings prevent it from hiring needed personnel.
While Congress has a legitimate interest in assuring that programs are carried
out at the levels provided in law, in my judgment, the Impoundment Control Act
should not be used as an all-purpose remedy against every type of executive action
that affects the level of expenditure. If personnel ceilings were covered by the act, it
would also seem logical to cover instances in which agencies hold down personnel
(and other) costs in order to avert a supplemental appropriation. It is quite common
for agencies-on their own volition or as ordered by 0MB-to apply savings to some
of the unbudgeted costs of pay increases and unexpected developments. A rigid
application of impoundment controls to these situations would weaken executive
branch incentives to be efficient and would surely lead to increased spending, not
only in situations where personnel levels have been constrained in order to reduce
program operations but also where the sole intent is to promote operational efficien-
cies.
Congressional concern over impoundment by means of personnel ceilings is re-
flected in the agriculture appropriation bill for fiscal year 1979 (H.R. 13125). The
House Appropriations Committee has protested:
The tendency of the executive branch to establish arbitrary personnel ceilings
to slow down or stop various programs * * * in violation of the spirit, if not the
letter, of the Impoundment Control Act.
On several occasions, funds have been appropriated for additional staff
deemed essential by the Congress, and then used as additional funds for travel
or equipment and supplies.
The Appropriations Committee restructured the 1979 budget accounts for several
agriculture programs to prevent these practices:
* * * to avoid such de facto impoundments in the future, the committee has
recommended in many instances separate appropriations for "personnel com-
pensation and benefits" and "for other expenses." As a result of this bill
language, an attempt to withhold funds for salaries must be reported to Con-
gress for its consideration under the law.
In effect, Congress has moved to "line itemize" certain appropriations, thereby
bringing the particular items under the scope of the Impoundment Control Act. It
has taken similar action to thwart reprogramings-the transfer of funds from one
purpose to another within the same budget account. GAO has ruled that reprogram-
ings do not violate the Impoundment Control Act as long as there is no net
withholding of funds. The issue arose when President Carter sought to apply funds
appropriate for development of the Clinch River Breeder Reactor to the termination
of the project. In a June 23, 1977, letter to Senator Jackson, the Comptroller
General held that this division of the funds did not violate the impoundment
controls:
The act is concerned with the rescission or deferral or budget authority, not
the rescission or deferral of programs. Thus, a lump-sum appropriation for
programs A, B, and C used to carry out only program C would not necessarily
indicate the existence of impoundments regarding programs A and B. So long as
all budgetary resources were used for program C, no impoundment would occur
even though activities A and B remain unfunded.
The congressional response to reprograming has been to extend impoundment
controls to particular programs and projects. Thus, section 304 of the second supple-
mental appropriation for fiscal year 1977, sponsored by Representative Cederberg,
has the following prohibition:
None of the funds appropriated or otherwise made available in this act shall
be obligated or expended for the termination or deferral of any project, activity,
or weapons system approved by Congress, except specific projects, activities, or
weapons systems for which, and to the extent, budget authority has been
rescinded or deferred as provided by law.
PAGENO="0048"
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Although Representative Cederberg insisted that this provision would not bar repro-
gramings, the effect would seem to be otherwise. If a similar provision were ex-
tended to all appropriations, the Federal budget would be effectively converted to a
line item basis and most, if not all, reprogramings would be prescribed
In my view, Congress should not apply the impoundment controls in a manner
that robs the executive branch of all administrative flexibility. Congress and the
President can coexist without having every aspect of the expenditure of funds nailed
down in law. Congress can tolerate gray areas in its relationship with the executive
branch, even though these are the breeding ground for ambiguity and controversy.
If Congress succeeds in curbing executive discretion, the American taxpayer might
have to pay a very high price for its victory.
Mr. DERRICK. Thank you, Dr. Schick, for an excellent testimony.
Mr. Dembling, why don't you come up here and take this end
chair.
[Discussion off the record.]
Mr. DERRICK. I thank you all for your very excellent testimony.
As I proceed, not to simplify the matter, the problem we have
here as the testimony from 0MB indicated, is that of the $10
billion in deferrals. Since Congress did not agree with, about $64
million, if we assume that Congress is aware of what is going on,
this means the majority were not of any particular consequence
and were routine, as opposed to policy. I would agree with Dr.
Schick's statement, that we don't want to sacrifice the prerogatives
of Congress just over a little more paperwork. We could eliminate a
great deal of the problem we are having here, doing something
about the 45-day period-maybe 60 calendar days, would be an
answer to it. In addition, we could eliminate or require the execu-
tive branch in some way not to eliminate the lag time of 2 or 3
weeks that they sometimes have and allow the Congress, as has
been suggested, a disapproval resolution with immediate release of
funds. We must also decide the matter of how do we determine
what is policy and what is routine, who makes that decision.
I think the others have some reasonable alternatives, but that is
the one area that I have not resolved, and I would be glad to have
all of you address yourselves to that. Mr. Mc0mber, why don't you
start?
Mr. MCOMBER. Mr. Chairman, the point that you have made has
been one that has long concerned us. As a matter of fact, it is fair
to say that we have argued in past years that it would be difficult
indeed to make the distinction between policy and routine items,
and that the arguments that would occur might make. such distinc-
tions not worth trying.
However, in thinking about the matter in connection with the
hearings you called, we concluded that we should recognize that all
of these matters are often the subject of judgment, and that if the
Congress chose to make such a distinction, and to incorporate it
into law, that we would recognize that it is a very gray area
indeed, and we would lean over backwards to try to send to the
Congress all of the things that we believed might possibly be con-
troversial, or about which there is any doubt.
We would undoubtedly, even under those circumstances, some-
times make mistakes in judgment. But if the Congress should
choose to move in this direction, all we can do is to promise that
we would do our best to avoid the sort of controversy and differ-
ences of opinion that might occur.
Mr. DERRICK. That is a tremendous responsibility. Dr. Schick.
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45
Dr. SCHICK. Several hundred deferrals have been submitted to
Congress during the past 4 years which are routine and involve no
controversy or policy issue. GAO has done an effective screening
job for these, telling Congress in a boiler plate sentence that these
are authorized under the Antideficiency Act, and the facts as pre-
sented by 0MB appear to be accurate. This is certified by GAO.
I don't see any great burden to Congress in continuing to deal
with that arrangement. I would call to your attention that several
so-called routine impoundments have been overturned by Congress,
and I would hate to deny Congress the option of taking whatever
action it deems to be appropriate in regard to any rescission or
deferral of funds.
Mr. DERRICK. Mr. Dembling, would you care to comment?
Mr. DEMBLING. Yes. I agree that this is a gray area. Any im-
poundment under the Antideficiency Act we have considered "rou-
tine" such an impoundment is made for cost savings perhaps by
curtailing ofa program. Those that are made on an economic basis
or fiscal basis are more of the policy category-not made under the
Antideficiency Act.
Recognizing that if this is carried too far there might be abuse,
but up to this time, we have recognized none of the abuse that
some people are concerned about. Therefore we felt that those that
were made under the Antideficiency Act could be considered rou-
tine, recognizing that there were only two that the Congress did
overturn out of 157 that we identified in the first 2 years of
operation.
We feel that it is working properly. We don't have a problem
with it, and as we pointed out earlier, we could always monitor
those kinds of reserves and notify the Congress if we felt that there
were some major policy impoundments that Congress should be.
aware of.
Mr. DERRICK. Thank you. Mr. Mc0mber, who makes this decision
as to what is policy and what is routine? Is it made at 0MB? Do
you make. it? Is it made by the agency? Is there some procedure
that you would have set up, or what?
Mr. MCOMBER. I can answer that question in terms of a little bit
of experience we have had. You may remember that prior to the
Impoundment Control Act itself, there was, for a brief time, a law,
the Federal Impoundment and Information Act that required 0MB
to report impoundments. The Congress expected us to make the
distinction in those reports.
We set up some criteria which distinguished between routine and
policy impoundments, which I believe were generally acceptable.
They included the distinction that Mr. Dembling has made, that is,
we identified Antideficiency Act impoundments as being routine in
nature. However, we did, as I remember it, classify or permit the
classification of certain kinds of antideficiency actions which
seemed to be controversial on their face as being policy-based with-
holdings.
Mr. DERRICK. Another concern that we have is the impoundment
in many instances starts substantially before the 45 days begin to
run.
PAGENO="0050"
46
Would you support an amendment that would start the 45 days
at the instance of the impoundment? I am asking you, Mr.
McOmber.
Mr. MCOMBER. We have indicated that we would support a
change in the law tied to a calendar day period.
Now to answer your question, I think I should respond by noting
that we do not believe it unreasonable to have as much time as 3
weeks elapse between a decision to withhold funds and the report-
ing of that decision to Congress. For example, if such a withholding
occurs deep within the Department of Defense, it may well take 3
weeks for the proposal to be developed and for the President to
sign the document and transmit the special message informing the
Congress.
Mr. DERRICK. Why not do it simultaneously though? If I might
interject, I don't have all the legislative history before me on that.
I would perceive that Congress intended originally, when they said
45 days, that they meant 45 days, and, of course, if you take these 3
weeks and put it on top of the 80-day average, with the other
matters of termination dates and that sort of thing, you are really
talking about much more than 45 days. And this adds to it, to the
problem that we are addressing, rather substantially.
Mr. MCOMBER. Yes. We recognize that in certain controversial
areas where there were definitive actions like those that occurred
in connection with the B-i rescission proposal and a few others
where so-called stop orders were issued, that the circumstances
were well defined and an argument can be made about the need for
more rapid reporting. The problem, however, is one of identifica-
tion of when that point begins; that is, if indeed the President is to
make the determination, as he is required to do with all rescission
proposals, some sort of action document must travel to the Presi-
dent and must travel back down.
As I noted in my statement, it would be impractical, if not
inconceivable, for every option laid before the President to be
accompanied by a rescission report, so that the President could
make the decision and sign the report simultaneously.
Mr. DERRICK. Do you think that this would become practical if
we were able to eliminate much of the routine?
Mr. MCOMBER. I doubt that it would be. That is, it is going to be
necessary, under most of the circumstances that we can conceive,
once the President has made a decision, for that decision to be
translated into documents of explanation. It requires a reasonable
amount of time to develop the technical reports. It is hard for me
to imagine that we could have a situation in which, on the same
day that the President makes a decision, we could transmit all of
the congressionally required information concerning that decision.
Mr. DERRICK. I gather that the answer to the question is that you
would not support it?
Mr. MCOMBER. We would not.
Mr. DERRICK. That is as I suspect.
Dr. SCHICK. Mr. Chairman, can I make one comment?
Mr. DERRICK. Yes.
Dr. SCHICK. I think there is a reasonable remedy to the problem
which Mr. McOmber has just brought to the table, and that is to
require instant notification with a deadline for submitting the
PAGENO="0051"
47
backup material. In other words, you can require the President to
notify Congress at the time the action occurs and within no later
than a fixed number of days to provide Congress the information
required by the Impoundment Control Act.
Mr. DERRICK. How about this as an alternative? Why not put
your 60 calendar days in there, and say either/or, but under no
circumstances shall it be over 60 days from the date of impound-
ment?
Dr. SCHICK. That would be all right, but the other thing that has
to be done is if you hold the executive branch to the fire, you sort
of have to hold Congress to the fire as well, that is, you would have
to adjust the number of days in the discharge procedure. If a
sizable portion of the 45 or 60 days had been consumed by late
reporting of the action, then in effect Congress is depriving itself of
the opportunity to act.
Mr. DERRICK. I understand, but I was assuming that Congress
would get immediate notification and that would be a requirement
as you suggest.
Dr. SCHICK Very good, fine.
Mr. DERRICK. Sixty days after Congress receives the immediate
notification.
Dr. SCHICK. Yes, fine.
Mr. MCOMBER. Mr. Chairman, I would like to make one other
point concerning the matter that you raise. We refer to the Presi-
dent's actions as if those were the sole matter that concerns us, but
after all, proposals have to be made to the President. That is, if an
agency, for one reason or another, determines that it is appropriate
to recommend to the President that he withhold funds and curtail
a program, then development of that recommendation also requires
time. I would suggest that it is inappropriate for an agency to send
such a recommendation forward and not begin to withhold simulta-
neously. That is, if an agency is proposing that the funds be with-
held, then a dilemma exists. It could hardly propose the withhold-
ing of $100 million in funds and then continue to use those funds
while the President and his advisers consider the matter, reducing
the funds to $90 million or $80 million. So there is a need for a
reasonable amount of time to make these determinations.
Mr. DERRICK. I understand, and your thoughts are well taken.
However, I think it is a matter of judgment about what is a
reasonable amount of time, and I think that Congress probably
thought that 45 days was a reasonable amount of time. But it has
become, at least in the view of many, an unreasonable amount of
time because of the 3-week lag and the various other things that
run to 120 or 130 days. Of course, what we are really getting to is
this-you don't think that the administration should have a right
to switch funds in programs, obviously thwarting the original pur-
pose of what Congress had in mind, such as the breeder reactor.
Surely you wouldn't think that?
Mr. MCOMBER. Mr. Derrick, with emphasis on your word "obvi-
ously," I certainly would agree.
Mr. DERRICK. You caught me cold on that one. I would agree
with you. I think that we certainly are going to have to address
that situation.
PAGENO="0052"
48
Mr. Dembling, do you have any comments on the matters that
we have discussed?
Mr. DEMBLING. No.
Mr. DERRICK. Mr. Mineta.
Mr. MINETA. Thank you, Mr. Chairman. It seems to me, to char-
acterize Dr. Schick's DMZ thing, we have this problem of again
what is routine or what is policy.
Second, this question of this notification, and when the impound-
ment of funds comes along.
Just following up on what you are saying, Mr. McOmber, about
the impoundment of funds, if the impoundment of funds doesn't
occur, or the time doesn't start on it until the President makes his
decision, then the 45 days start running, would that make a differ-
ence, other than the fact that you say it doesn't make sense for the
agency to have made a recommendation to the President and it is
going through whatever mechanics or process it has to go through,
and then in the meantime funds are being used if you don't im-
pound the funds immediately? But suppose the impoundment of
funds doesn't begin until the President makes the decision, and
then the notification to the Congress?
Mr. MCOMBER. Certainly, everything is a matter of degree. It
would be more reasonable to do that than to require it at the time
when someone deep within an agency issues a stop order. Again, I
would have to note, however, that it is important to recognize that
the President often makes decisions on the basis of general papers
that are brought before him. If those 45 days begin at the point of
his decision-at the time he puts a checkmark on an approval box
on a piece of paper-then we have the problem of preparing the
information that is necessary for the Congress to evaluate the
proposal.
Sometimes preparing the justification and technical materials
takes an amount of time because the President makes general
policy determinations. Translating them into specific effects, in-
cluding the precise dollar amount affected, does often take time. I
would simply reiterate that we do need a reasonable amount of
time in order to prepare reports. It might very well be that we
would not be able to prepare those papers until several weeks have
elapsed, and the Congress would in the meantime not have the
opportunity to review the information.
Mr. MINETA. Under present practices, after an appropriations
bill is signed into law, I take it there is some time period for the
apportionment of funds to be made.
Mr. MCOMBER. Yes, the law and our regulations say "30 days."
Mr. MINETA. Under that situation, you say that you have to
make that apportionment of funds within 30 days?
Mr. MCOMBER. Yes.
Mr~ MINETA. Are there any decisions made at that point relative
to what ought not to be-is that where the Antideficiency Act then
* picks up? *
Mr. MCOMBER. Yes. That is, most deferrals that are reported to
the Congress are decided upon during that apportionment period.
Mr. MINETA. Who makes that? 0MB makes those?
PAGENO="0053"
49
Mr. MCOMBER. 0MB makes recommendations to the President
`with respect to the impoundment of funds. 0MB makes the deter-
mination on the apportionment.
Mr. MINETA. And that is notified to the department and then
what do they do?
Mr. MCOMBER. There are two circumstances. First of all, the
Department very often recommends routine deferral or even rescis-
sion actions. If we initiate those proposals, we then advise the
Department, work with `them on preparing an impoundment
report, and make the recommendation,' including the report on the
impoundment proposal to the President
Mr MINETA That is under the Antideficiency Act?
Mr MCOMBER Most of the withholdings made at that time will
be under the Antideficiency Act but not all of the recommenda
tions made to the President will be under that authority
Mr.' M~NETA~ DO :1" understand, that. GAOrs recommendation is
that those that are under the Antideficiency Act are to be summa
rily concerned as routine and not have to go through all this
paperwork tO the' President? ` ` ` ` ``
`Mr. DI~MBLING. What. we have proposed was that those impound-
ments or reserves that are created under the authority of the
Antideficiency Act would not have to be reported to the Congress.
That was our suggestion. The apportionment process and the provi-
,sions for apportioning the funds to the agencies that the 0MB goes
`through would remain. Those reserves that are authorized by. the
Antideficiency Act would not have to be reported to `the Congress.
Mr. MINETA. Mr. ,Mc0mber, . yOu' menti'on on page 6 the' need to
balance the congressional need for speedy reporting and the effec
tive use of the President s time
Suppose you. were' to ~do this' on a quarterly, basis rather than ;on
each individual action, the time running on each individual action
but sort of bundling these things. up on a quarterly basis in the
report to the Congress. It necessarily lengthens the~ time. .~ But is
there a way of balancing again, the two? .` ` . `
"Mr. MCOMBER. Quarterly reports would certainly ,reduce the.,
problem of use of.the Président's time. I think, because Of the way
impoundment, questions arise, it' wouid'be unfair .to the. Congress to
wait. that :Iong in many cases.' That. would `be `too long because.
decisions are hardly made on a quarterly basis. ` `
Mr. DEMBLING. If .1' might interject, `you' might also. have the
probl~m.'where,' if you. waited too.long'a period of' time during the
fiscal. year, and you `were dealing with 1-year funds, that `deferrals.
might really be rescissioris if they were' referred to the Congress: too
late' in the year. ,` ` ` `. . . . ` . ` , ` ,
Mr., MINETA. Just' a general `question. HOw"does this `relatë'to
where `agencies' haven't spent' their full amount' of `moneys~ and
then you see all of a sudden the expenditure of funds, because they
are afraid if they. don't use it up, next year's appropriations might
`be' cut back? Is there some `way `of dealing with that issue?' , , ,` .
Mr. MCOMBER. We' have interpreted the `law and. opinions issued
by the Comptroller General' to mean that if in situations where'
there `has been no deliberate action to .prevent the obligation' of
funds , and the funds lapse because the agency has' not, `under
PAGENO="0054"
50
reasonable circumstances, been able to obligate them, and an im-
poundment report is not necessary.
Now that line of thought sometimes is judgmental, as you will
recognize. Our instructions try to recognize that fact, and we hope
that they lean in the direction of the doubt going to the side of the
Congress. That is, where there is not a clear indication that the
cause of unobligated funds has been the result of deliberate action,
then we have insisted upon reporting.
We have tried to lean in the direction of reporting. However, we
may not have been completely successful in every instance.
Mr. MINETA. Mr. Chairman, I don't believe I have any more
questions. Thank you very much.
Mr. DERRICK. I have one more question of Dr. Schick. As to the
Miller amendments, the 2-percent amendments that were ad-
dressed in the letter to the chairman from GAO. Do you agree with
GAO's opinion that they do not feel that the Executive is under
obligation and that there is a tremendous latitude, only with the
exception of exceeding the 5 percent?
Dr. SCHICK. I suppose quick decisions generate instant analysis. I
think that the decision in this case is not in compliance with the
Impoundment Control Act. Let me explain why.
Miller gave the President two numbers, 2 percent or 5 percent.
Mr. DERRICK. Two percent, not to exceed 5 percent.
Dr. SCHICK. Two percent off total HEW, not to exceed 5 percent
off any appropriation within that bill.
What this meant was that the President and executive officers
have a great deal of discretion, running into hundreds of millions
of dollars in big appropriation accounts, whenever the budget au-
thority is withheld from any one of the appropriation accounts in
the Labor-HEW bill, it is an act of executive discretion. Every
single impoundment of funds in the Labor-HEW bill without excep-
tion represents a discretionary action by the executive branch.
Why? Because the executive branch could uphold and carry out
Miller's requirement of 2 percent by not withholding a single dollar
from any particular appropriation, but withholding them from
others. In other words, as regards any particular appropriation, the
executive branch has a range of discretion going from zero to 5
percent.
With regard to the totality of appropriations, it doesn't have
discretion. It has to be 2 percent, but after all, in past rulings, GAO
has held that the Impoundment Control Act lies against the budget
authority in each appropriation account. The Labor-HEW bill con-
tains several dozens of appropriation accounts. We have to look at
each of those appropriation accounts, and with regard to each, if
there has been a withholding of funds under Miller, in my judg-
ment, it constitutes an impoundment which should be reported to
Congress.
Mr. DERRICK. I thank you. Would you care to respond to that Mr.
Dembling?
Mr. DEMBLING. We felt that here the Congress had acted to
continue the discretion. It is like the lump-sum appropriation en-
actment in reverse. In other words, when the Congress appropri-
ates "lump sums" to an agency, it says to the executive:
PAGENO="0055"
51
Though you came up and justified this appropriation with specificity on a variety
of programs, but in enacting the Appropriation Act we are going to give you
discretion as to how you are going to really expend that money.
This is in the reverse. They have said:
Now we have cut 2 percent of that Appropriation Act, and we are going to give
you discretion as to how you are going to arrive at that decrease of the 2 percent.
However, we are going to limit that discretion by saying that no one program can
be cut more than 5 percent.
So we have looked at it from the standpoint of the Congress
enacting this discretionary authority for the Executive and have
taken a look at it from the standpoint of saying it is 2 percent
overall, 5 percent in any one program. If it exceeds those limits
then it is an impoundment. Otherwise we felt it would be very
cumbersome to even try to determine each appropriation action
that was being taken.
Mr. MCOMBER. Mr. Chairman, there is a related point here that
perhaps is being overlooked. Under the regulations that we have
issued, we would treat the choice as to the 2- to 5-percent reduction
in any one account differently from impoundments. To be specific,
on the apportionment form, which Mr. Dembling's auditors have
under their scrutiny, we will identify the amount of the reduction
from the basic appropriation and show that amoUnt separately
from other budgetary sources so a clear distinction can be made
between any reduction resulting from the general provision and
any impoundment that might occur in the same appropriation.
That distinction will be so clear that there should not be any
doubt in anybody's mind as to the amount of the general reduction
that applies to a particular appropriation.
Mr. DERRICK. I thank you, Mr. McOmber. I have one other ques-
tion that I just can't let you go without asking. Surely you don't
agree with the recent administration stance on legislative veto, do
you?
Mr. MCOMBER. I am not very familiar with the precise state-
ment.
Mr. DERRICK. Let me refresh your memory. The President, of
course, recently stated that the administration would not feel legal-
ly bound by most legislative vetoes. Of course, we might construe
this to mean that you wouldn't pay any attention to us on these
rescissions and deferrals. Surely you don't believe that.
Mr. MCOMBER. I would not disagree with the administration on
the point, you understand, but this question is directly related to
some of the matters that have arisen here this morning concerning
suggestions that Congress might end the 45-day period by passing a
single resolution by one House. I would note that the administra-
tion would not agree with such a proposal. After all, there have
been occasions on which the Houses have disagreed with each
other. There have even been occasions when one House has per-
suaded the other House to change its mind.
Mr. DERRICK. You know, if I might interject, I would find that
absolutely inconsistent with your testimony, most of it, so far
today. If you were to carry that to its finite conclusion, then the
Congress has spoken when it appropriates these funds, and you
have no business to impound them, rescind, or have anything to do
with it if you follow that conclusion on the other end.
PAGENO="0056"
52
Mr MCOMBER No We would simply argue that under the Tm
poundment Control Act we are required to report Under that
Impoundment Act the Congress can refuse to rescind
Mr DERRICK You can't have it both ways
Mr MCOMBER I believe it is not a matter of both ways in the
manner that you have described
Mr DERRICK Surely you don't believe that
Mr MCOMBER Surely I do, but we do think that it would be
most apprOpriate for the Congress as a whole to express .its opinion.
We have always been conc~rnOd with :this matter. of ,th~ 45-day
period, that while individual Members of Congress may say that
the Congress is not going to rescind, and that, therefore you should
release the funds before the end of the 45 days, we have always
taken `the po'siti6n that, if the Congress as a whole said that, which
could be done-- .` . .` .` . .
Mr. DERRICK. But the Congress as a whole said~ in the beginning
that they wanted, you to spend' this money. `. .
Mr. MCOMBER. But they also said---. .
Mr. DERRICK. Now you are telling us this. ft takes two. Houses to
pass, as you well `know. . . . . ..
Mr.. McOMBER. Oh, yes.
Mr. DERRICK. So why' should~ it be one way on one end and
another way on the other? . . . .. . .
Mr. MCOMBER. The Congress. passed' the `Impoundment ,Control
Act. . ` . "
Mr.. DERRICK. `.That' has nothing ,to do' with. the. Impoundment
Control Act, what I, am talking about. .That is a' judgment you
made. We didn't state `two Houses in .there at all, did we?
Mr. MCOMBER. You did not, with respect to overturning deferral
actions, that is correct. . ` . `
Mr. DERRICK. Surely you wouldn't suppose `that 0MB' would
make such.a judgment as that, would they?'.. . . `
Mr. `.MCOMBER. My point is simply this: The full Congress' has
passed an appropriation The President is permitted under the
Impoundment: Control Act to propose that the' Congress cancel
sOme of that action; It would `seem wise, since `the Congress as a
whole proposed doing s'o, that the Congress as a whole express its
will. about whether or not it refuses to cancel that action.
Mr. DERRICK. Of course, this colloquy has no answer to it, other
than I would just say, of course, if both Houses had not agreed to
begin with, so why not take it from the other end? If one House
disagrees, you wouldn't have it anyway? So if one House disagrees
on the other end, why shouldn't that be superior? I thank you all.
Mr. MINETA. Could I just ask one quick question? Roughly how
many employees do you have all together at 0MB?
Mr. MCOMBER. We have a little more than 550.
Mr. MINETA. And of that a little more than 550, how many are
Civil Service as compared to schedule C or any other kind of
political appointments?
Mr. MCOMBER. I don't know the precise figures. There are some-
thing like 14, 15 perhaps, who are schedule C or are appointed by
the President, and all of the rest are Civil Service employees.
PAGENO="0057"
*53*
My colleague points out that the number is probably a little
higher when we count..the schedule C secretaries, the confidential
secretaries to ~ome of these individuals. . .
Mr. MINETA. In terms of. professional staff, so to speak, you say
the number is about 15 or so? . . ..
Mr. MCOMBER. Yes, approximately that.
Mr. MINETA. Thank you very much.
Mr. DERRICK. Once again, I thank all three of you and your*
associates for being here this morning~ I think the hearing has
been very worthwhile, certainly for me, and I thank you for taking
the time. I enjoyed it. . .
[The following material was submitted for the record:]
COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, D.C. August 1, 1977.
Hon. STROM THURMOND, .
U.S. Senate. .
DEAR SENATOR THURMOND: This replies to your letter of July 22, 1977, in which
you requested our analysis of the authority of the executive branch to issue stop-
work orders for work on the B-i bomber. Your letter states your concern that such
instructions were given prior to the completion of congressional action on the
President's request pursuant to the Impoundment Control Act of 1974 to rescind
$462 million of fiscal year 1977 procurement funds that were provided to the
Department of Defense (DOD) for this purpose. Thus, you question whether the
President violated controlling law by issuing the stop-work.orders.
We conclude that the executive branch can legally terminate B-i bomber produc-
tion without the need for additional specific legislative authority other than the
action taken pursuant to the Impoundment Control Act. We do, however, have
serious policy reservations about the practice of beginning to dismantle a program
before the Congress has had an opportunity to express itself pursuant to the
Impoundment Control Act. We intend to express our views to the executive branch
on this matter shortly. There follows a discussion of our findings and conclusions.
I. DOD FISCAL YEAR 1977 AUTHORIZATION AND APPROPRIATION ACTS
A. THE FISCAL YEAR 1977 AUTHORIZATION ACT
The B-i bomber was not specifically authorized by DOD's fiscal year 1977 authori-
zation act, Public Law 94-361, approved July 14, 1976. Rather, procurement of these
aircraft was authorized by the general language of title I of the statute, "Procure-
ment":
For aircraft: for the Army, $554,100,000;. for the Navy and the Marine Corps,
$2,995,800,000, of which not more than $104,100,000 shall be available only for
the procurement of the A-6E aircraft; for the Air Force, $6,143,800,000. (Italics
added.)
The Committee reports on* HR. 12438, the bill that ultimately was enacted as
Public Law 94-361, clearly indicate that B-i bomber production was authorized by
and included within the above-quoted language. See S. Rep. No. 94-1004 (Committee
of Conference), 94th Cong., 2d Sess. 20 (1976); 5. Rep. No. 94-878, 94th Cong., 2d
Sess. 15 (1976); and HR. Rep. No. 94-967, 94th Cong., 2d Sess. 39 (1976).
B. THE FISCAL YEAR 1977 APPROPRIATION ACT
Similarly, except for a limitation on the use of funds for the B-i prior to Febru-
ary 1, 1977, the fiscal year 1977 DOD appropriation act. Public Law 94-419, ap-
proved September 22, 1976, did not provide funds specifically for the bomber pro-
curement. Instead, funding for the aircraft was included in the lump-sum appropri-
ation in title IV of the appropriation under the heading "Aircraft Procurement, Air
Force":
For construction, procurement, and modification of aircraft and equipment,
including armor and armament, specialized ground handling equipment, and
training devices, spare parts, and accessories therefor; specialized equipment;
expansion of public and private plants, Government-owned equipment and in-
stallation thereof in such plants, erection of structures, and acquisition of land
without regard to section 9774 of title 10, United States Code, for the foregoing
purposes, and such lands and interests therein, may be acquired, and construc-
PAGENO="0058"
54
tion prosecuted thereon prior to the approval of title as required by section 355,
revised statutes, as amended; reserve plant and Government and contractor-
owned equipment layaway; and other expenses necessary for the foregoing
purposes including rents and transportation in of things; $6, 067,700,000, and in
addition, $21,500,000, of which $8,600,000 shall be derived by transfer from
"Aircraft Procurement, Air Force, 197611978", and $12,900,000 which shall be
derived by transfer from "Aircraft Procurement, Air Force, July 1, 1976/1978",
to remain available for obligation until September 30, 1976. Until February 1,
1977, the obligation of funds appropriated in this Act for the procurement of the
B-i bomber shall be limited to a cumulative rate of not to exceed $87,000,000
per month.
The Committee rep3rts on HR. 14262, the bill that was enacted as the DOD fiscal
year 1977 appropriation act, indicate that, of the $6,067,700,000 appropriated, $948
million (in addition to prior-year advance procurement funds) was intended for use
for B-i bomber procurement. See S. Rep. No. 94-1046, 94th Cong., 2d Sess. 216
(1976); and H.R. Rep. No. 94-1231, 94th Cong., 2d Sess. 150 (1976).
II. THE PRESIDENT'S DECISION To CURTAIL B-i BOMBER PRODUCTION AND THE
IMPOUNDMENT CONTROL ACT OF 1974
On July 19, 1977, as a consequence of his decision not to proceed with the original
B-i bomber production plans, the President proposed the rescission under the
Impoundment Control Act of 1974, title X of Public Law 93-344, approved July 12,
1974, of $462 million. This amount was a part of the funds that had been appropri-
ated to DOD in Public Law 94-419, above, for aircraft procurement of the Depart-
ment of the Air Force during fiscal year 1977. The amount sought for rescission was
determined to be in excess of the Government's estimated termination liabilities
resulting from the President's decision to halt B-i bomber production. See Rescis-
sion Proposal No. R77-i8, July 19, 1977. We have determined that, prior to the date
of the rescission request, stop-work orders on B-i bomber production activities were
issued on June 30, 1977, and were followed by termination orders on July 6, 1977.
III. ANALYSIS
The question of whether the stop-work orders properly were issued to halt work
on the B-i bomber prior to completion of congressional action on the request to
rescind the $462 million focuses upon the basic authority of the executive branch to
both initiate and terminate B-i bomber procurement efforts.
In a recent opinion we considered the authority of the executive branch to change
the Clinch River Breeder Reactor Project (CRBRP) from a program for the construc-
tion and operation of a demonstration liquid metal fast breeder reactor to one only
for the design of such a reactor. In our letter to Senators Jackson and Baker of June
23, 1977, copy enclosed, we analyzed the legislative basis of the CRBRP. We found
that the CRBR project and funding therefor were specifically authorized by law.
Because the President indicated his intention not to proceed in accordance with the
legislation establishing and describing the CRBRP, we concluded that executive
branch actions and expenditures to implement the revised plans would be legally
improper.
The legislative basis for the B-i bomber is not similar to that of the CRBRP.
Unlike the breeder reactor where we found specific legislative authority for and a
description of the program, there is no specific legislative authority for procurement
of the B-i aircraft. Similarly, where we found constraints in the CRBRP authorizing
statute describing the purposes for which funds could be appropriated (construction
and operation of the demonstration plant) there are no limitations in either the
DOD authorization or appropriation acts for fiscal year 1977 limiting, at this time,
the executive branch's authority regarding B-i bomber production.
While it might be argued that the committee reports on the DOD authorization
and appropriation acts constrain the executive branch insofar as the bomber is
concerned, we must point out that, unless such constraints appear in the enacted
statutes, they have no legal effect and do not affect the executive branch's authori-
ty. See Matter of LTV Aerospace Corp. B-i8385i, October 1, 1975, copy enclosed.
Accordingly, and in light of the facts that: the B-i bomber was not specifically
authorized or described in law; funds were not specifically appropriated for produc-
tion of the bomber; and that both the DOD authorization and appropriation acts for.
fiscal year 1977 do not at this time constrain the executive branch's activities in the
B-i bomber program, we must conclude that issuance of stop-orders prior to comple-
tion of congressional action pursuant to the Impoundment Control Act of 1974 on
R77-i8 was not in violation of law.
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55
While we conclude that, as a matter of law, the executive branch has not violated
the statutes governing the B-i bomber program, we believe the practice of initiating
major program terminations prior to the time Congress has been either informed of
such decisions or allowed to complete action under the Impoundment Control Act of
1974 to consider the rescission proposals on the program, creates a situation that
jeopardizes the possibility of restarting the program should the Congress disapprove
the rescission proposal and specifically direct continuation of the program. At a
minimum, terminating and then restarting the program could greatly increase
program costs. We intend to notify the executive branch of our views on this
practice and will keep you informed of the status of our discussions with them.
Sincerely yours.
ELMER B. STAATS,
Comptroller General of the United States.
Enclosures.
COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, D.C., August 5, 1977.
Hon. JOHN J. LAFALCE,
House of Representatives.
DEAR MR. LAFALCE: This replies to your letter of July 27, 1977, with enclosures, in
which you requested our analysis of whether the executive branch has violated the
Impoundment Control Act of 1974, title X of Pub. L. No. 93-344, approved July i2,
1974. Specifically, you are concerned that a violation of the act occurred when the
executive branch terminated the Minuteman III Intercontinental Ballistic Missile
(ICBM) program prior to the date on which Congress was requested to rescind $i05
million in budget authority that was determined to be in excess of program needs as
a consequence of the decision to terminate further production efforts. As pointed out
by your letter, the executive branch announced its plans regarding the missile by a
press release dated July 6, 1977.
We have determined that stop-work and termination orders were sent to the
appropriate contractors on July ii, 1977. However, it was not until July 26, 1977,
that the President formally requested the rescission of the excess procurement
budget authority resulting from the decision to curtail production. Rescission Pro-
posal No. R77-20, July 26, 1977.
In the light of these facts, you raised two questions concerning the propriety of
the executive branch's actions. Your questions and our answers thereto follow:
In a situation of this kind, when the precise date of the administration's
decision to seek a rescission can be clearly ascertained (i.e., the date of the
Defense Department's press release), will GAO consider this to be "constructive
notice" to the Congress for purposes of the 45-day period specified in the Budget
Act and, accordingly, start that period running on the first calendar day of
session thereafter?
We have previously considered whether the effective date, for the purposes of the
Impoundment Control Act, of a rescission proposal is the date on which the execu-
tive makes its decision not to use budget authority as opposed to the time at which
the Congress is formally requested to rescind such authority.
In our letter of September 24, 1976, copy enclosed, to Senator Magnuson, we
concluded that the language and history of the Impoundment Control Act do not
allow us to set a date prior to the date a message is transmitted to the Congress.
Accordingly, we must answer your first question in the negative.
Your second question is:
As noted above, the administration's actions in this case have had the cumu-
lative effect of destroying, or at least lessening significantly, the ability of those
involved to restart this program in the event the rescission proposal is disap-
proved by Congress. I liken this to the nursery rhyme about Humpty Dumpty,
where the administration has knocked him from the wall and, in effect, chal-
lenged Congress to put him back together again. In a "midstream" rescission
situation, not fully contemplated in the Budget Act, will GAO consider seeking
injunctive or other judicial relief to prevent this kind of fait accompli pending
congressional review as contemplated in the Act?
We share your concern and agree that the Congress should be promptly notified
of decisions to terminate programs. We do not believe that actions should be taken
to dismantle or curtail programs without the Congress having an opportunity to
fully consider the matter. In this regard, we think one of the major objectives of the
Impoundment Control Act-namely, that both the executive branch and the Con-
gress should jointly make decisions to delay or terminate programs-is thwarted
when situations such as the instant one occur. In such cases, as you point out in
your letter, the Congress may well be presented with what amounts to a fait
PAGENO="0060"
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accompli; the progr~m is already curtailed and it could be very difficult, if not
impossible, to resume the program within the original time and cost plans.
Unfortunately, the practice followed by the executive branch concerning the
Minuteman III ICBM is not unique. We recently discovered a similar situation in
connection with the President's decision to curtail the B-i bomber production;
termination orders were issued before the Congress was allowed to complete action
on the rescission proposal for that program.
Senator Thurmond asked us to review the propriety of the executive branch's
actions in the case of the B-i bomber, in light of his concern that a violation of the
Impoundment Control Act there occurred. Enclosed is a copy of our letter of August
1, i977, responding to the Senator.
Because we agree with you and Senator Thurmond that the handling of the
terminations of the B-i bomber and the Minuteman III missile are not in keeping
with the spirit of the Impoundment Control Act, we have written to the Director of
the Office of Management and Budget, copy enclosed, communicating our concern
with the present policy. We will keep you informed of the status of our discussions.
In the meantime, we must conclude that the act does not empower this Office to
seek injunctive or other judicial relief to alleviate the difficulties raised by the
present circumstances. The law only authorizes this Office to seek to have budget
authority made available for obligation-i.e., released from its impounded status-
when the President has failed to comply under the act with the mandate to do so.
Thus, until such time as the Congress fails to pass a rescission bill concerning the
Minuteman III ICBM and the President does not release the $i05 million currently
sought for rescission, this Office is without power to seek judicial redress.
We hope the foregoing will be helpful to you.
Sincerely yours,
ELMER B. STAATS,
Comptroller General of the United States.
COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, D.C., March 17, 1978.
Hon. ABRAHAM RIBICOFF,
Chairman, Committee on Governmental Affairs,
US. Senate.
DEAR MR. CHAIRMAN: The purpose of this letter is to address certain problems
that arise in connection with decisions by the executive branch to terminate or
curtail Federal programs or activities and to suggest the possibility of remedial
legislation in this area for consideration by the Congress.
The termination or curtailment by the executive branch of Federal programs and
activities is a frequent occurrence. For the most part, such actions are routine
matters of program administration which do not involve broad policy considerations.
However, some are of major importance and may represent significant shifts in
Government policy. The B-i bomber and Minutemen III programs are recent exam-
ples of contract terminations that have prompted considerable concern by Members
of Congress.
The principle purpose of the Impoundment Control Act of i974 is to subject to
congressional review executive branch actions limiting the obligation and expendi-
ture of budget authority. Nevertheless, the act in its current form does not ensure
that all significant decisions involving the termination or c~urtailment of Govern-
ment programs are subjected to congressional review or that congressional review,
to the extent required, is available on a fully effective basis.
If the entire amount of budget authority for a particular program is to be
expended in the termination process, a rescission proposal does not appear to be
required by the terms of the act since all available budget authority will in fact be
expended. Under this approach, the act provides no mechanism for congressional
review. The same result would follow where al~ budget authority affected by a
program curtailment will be expended to meet liabilities flowing from the curtail-
ment.
Problems concerning congressional review of termination or curtailment decisions
also arise where the decision involves an impoundment subject to the act, but the
impoundment affects only a portion of the available budget authority. In such cases
the opportunity for congressional review under the act may arise on a limited or
piecemeal basis, thereby precluding Congress from addressing the full impact and
consequences of the decision. Likewise, the remedy of requiring that the impounded
portion of budget authority be made available may be incomplete and largely
ineffective.
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57
The problem of congressional review under the act is particularly acute where
actions to terminate or curtail a program are taken prior to the submission of a
rescission proposal or during the 45-day period provided for congressional action on
a rescission bill. The ability to resume program plans within the initial time and
cost estimates may be impaired in the event the rescission proposal is not approved
Experience with the B-i bomber and Minutemen III programs serves to illustrate
each of thes problems
In the case of the B-i bomber, funding for. the aircraft was included in the lump-
sum appropriation in title IV of the i977 Department of Defense Appropriation Act
under the heading Aircraft Procurement Air Force The administration submit
ted a rescission proposal because $462 million of the budget authority would remain
unused after the payment of contract termination liabilities Thus only a portion of
the budget authority originally programed for the B-i was presented for congres
sional scrutiny under the Impoundment Control Act If all such budget authority
had been required for termination liabilities presumably there would have been no
rescission proposal and therefore no opportunity for congressional review of B-i
program decisions under the act
The timing of the B-i and Minuteman III rescission proposals in relation to
program decisions and actions is also a matter of concern We understand that stop
work orders on production activities on the B-i bomber were issued on June 30
i977 and production termination orders were sent to the appropriate contractors on
July 6 i977 As noted above the decision to terminate this work on the B-i
resulted. in an amount of funds becoming excess to the Department of the Air
Force s aircraft procurement needs during fiscal year i977 Although the contract
ing parties were informed of the . executive branch decision. toterminate. the B-i
contracts on July 6, i977, the Congress was not formally requested, pursuant to the
Impoundment Control Act, to rescind excess procurement funds until July .i9, i977,
several weeks after the decision and contract terminations were. made. Rescission
proposal R77-i8.
With .regard to the Minuteman III ICBM, the Department of Defense announced
the decision to terminate contracts on July 6, i977. Stop-work and termination
orders were sent to the major contractors on July ii i977 However the President s
request to rescind unneeded .procurement funds was not* sent to the Congress. until
July 26; i977, almost 3 weeks later. Rescission proposal R77-26. . . .
Thus, in the cases of the B-i bomber and Minutemen III ICBM, by the time the
Congress was requested to rescind excess budget authority, steps had already been
taken to implement the decisions on which the proposed rescissions were based
In effect the practice of initiating program terminations or curtailments prior to
the: time the Congress. has had an opportunity to complete action under the Im-
poundment. Control Acl~ on the rescissjon requests~ .can operate to deny to the
Congress meaningful review of the actions proposed-as one Member of Congress
indicated presenting for congressional approval what may amount to a fait accom
ph
We have recommended that proposed rescissions involving major programs be
submitted to the Congress contemporaneous with instructions to suspend further
program work rather than to terminate the program if such suspension is feasible
We believe that such an approach is in keeping with the spirit of the Impoundment
Control Act and would be preferable to the approach taken with respect to the B-i
bomber and Minuteman III
In many cases a choice must be made between terminating contracts and other
arrangements or continuing the program during pendency of the rescission propos
al Neither choice is without attendant pitfalls As discussed above termination
actiotis prior to the expiration of the 45 day period may present the Congress with a
fait accompit or result in increased costs in the event the Congress rejects the
proposed rescission On the other hand it may be very costly to continue a program
in its original form even at the minimum sustaining rate during the period of
congressional consideration of a rescission proposal i e 45 days of continuous
session Such costs could increi~se significantly during the review period particular
ly in the event of an adjournment of the Congress If the Congress approved the
rescission the funds spent to sustain the program would have been wasted
One possible means of alleviating these problems would by the enactment of
legislation providing for congressional review of major program terminations or
curtailments. at. the decision stage~. The legislation could require the President to .
notify the Congress at the time a decision is made to undertake such a termination
or curtailment and before taking any action to implement the decision A fixed
period of time such ~s i4 days of continuous session could be provided for expedit
ed congressional review of the proposed terminatiOn or curtailment actions. Unless
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58
the proposal was disapproved within the stated period, the executive could begin
implementing the decision.
The new expeditied review mechanism would afford Congress the opportunity to
take action at the decision stage. It would also provide a mechanism to review
certain major termination or curtailment decisions which may not involve impound-
ments cognizable under the present act. Obviously, the specific provisions of the
legislation, such as the time period for expedited reviews and the form of congres-
sional action, could be framed in different ways.
Perhaps the primary specific issue would be the identification of those program
termination or curtailment decisions to which the expedited review mechanism
should apply. One approach, among many conceivable alternatives, would be to
apply the expedited mechanism to terminations or curtailments involving "major
system acquisitions" as that concept is developed in Office of Management and
Budget Circular No. A-109 (April 1976). The Circular sets forth general criteria for
identifying major system acquisitions, and gives agencies discretion to establish
dollar thresholds. In this regard, the current Defense Department thresholds are
$75 million for research and development and $300 million for production. While
many civil agencies have not established dollar thresholds, such amounts could be
specified by legislation for purposes of the expedited review procedure. Another
approach might be to leave for identification in appropriation or authorization acts,
or through other means involving the cognizant congressional committees, the par-
ticular programs and types of termination or curtailment actions to which the
expedited review mechanism would apply.
We would be happy to discuss the problems outlined herein, and possible remedial
legislation, with you or members of your staff.
Sincerely yours,
ELMER B. STAATS,
Comptroller General of the United States.
COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, D.C., May 10, 1978.
Hon. FRANK HORTON,
House of Representatives.
DEAR FRANK: Thank you for your letter of April 19, 1978, responding to our recent
suggestion (March 17, 1978) that legislation be enacted to provide for prior congres-
sional review and disapproval of executive branch decisions to curtail certain Feder-
al programs.
Mr. Dick Thompson of the House Committee on Government Operations minority
staff requested that we provide you with draft legislative language that accom-
plishes the purposes outlined in our March 17, 1978, letter. Our respective staffs
could then further consider the issues raised by the suggestion and proposed remedi-
al legislation.
To this end, we have drafted legislation under which the executive branch would
be required to submit to the Congress its decisions to curtail those programs that
have been made expressly subject to the congressional review procedure of the draft
bill. These decisions could not be implemented for a period of, for example, 14
legislative days during which time the Congress would have an opportunity to
review them. If, within the 14-day period, a concurrent resolution of disapproval
were passed opposing a curtailment decision, the decision could not be implemented.
Provisions are made in the draft bill to allow the Comptroller General to bring a
civil action to compel the implementation of a program as required by the bill, as
well as for the Comptroller General to report to Congress executive branch decisions
to curtail programs that should have been, but were not, submitted by the Presi-
dent. The draft legislation and an explanatory statement are enclosed.
You will note that the draft bill does not include the detailed parliamentary
procedure by which the Congress would review curtailment plans. We believe this is
an area that should be decided by the Congress. We point out, however, that such a
procedure could be patterned after section 1017 of the Impoundment Control Act of
1974, 31 U.S.C. 1407.
Should you have any questions or wish to discuss the matter further, please do
not hesitate to call upon us.
Sincerely yours,
ELMER B. STAATS,
Comptroller General of the United State8.
Enclosures.
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59
DRAFT BILL
Sec. ---. (a) For purposes of this section-
(1) "program" means any project, activity, or weapons system expressly made
subject to this section by law, in amounts specified in appropriation acts.
(2) "Comptroller General" means the Comptroller General of the United States;
(3) "curtail" means to discontinue, in whole or in part, the execution of a pro-
gram, resulting in the application of less budget authority in furtherance of the
program than provided by law.
(4) continuity of a session of the Congress shall be considered as broken only by an
adjournment of the Congress sine die, and the days on which either House is not in
session because of an adjournment of more than 3 days to a day certain shall be
excluded in the computation of the 14-day period referred to in subsection (bX2) of
this section. If a special proposal is transmitted under subsection (b) of this section
during any Congress and the last session of such Congress adjourns sine die before
the expiration of 14 calendar days of continuous session (or a special proposal is so
transmitted after the last session of the Congress adjourns sine die), the message
shall be deemed to have been retransmitted on the first day of the succeeding
Congress and the 14-day period referred to in subsection (b)(2) of this section (with
respect to such special proposal) shall commence on the day after such first day.
(5) "disapproval resolution" means a concurrent resolution which expresses disap-
proval of a special proposal transmitted under subsection (b) of this section.
(6) "special proposal" means a proposal sent by the President to the Congress
pursuant to subsection (b) of this section notifying the Congress of the Executive
branch's determination to curtail a program.
(b) Proposals to curtail programs.
(1) Whenever the Executive branch has determined to curtail any program the
President shall transmit to both Houses of Congress a special proposal specifying-
(A) the program proposed to be curtailed;
(B) the department or establishment of the Government which is responsible for
implementing the program;
(C) the reasons why the program should be curtailed;
(D) to the maximum extent practicable, the estimated fiscal, economic, and budge-
tary effects of the proposal; and
(E) all facts, circumstances, and considerations relating to or bearing upon the
proposal, and to the maximum extent practicable, the estimated effect of the propos-
al upon the purposes which the program was to accomplish.
(2) No actions shall be taken to curtail any program for a period of 14 days of
continuous session after the date on which a special proposal is received by the
Congress. If, during this 14-day period, a disapproval resolution is passed, the
curtailment shall not be implemented.
(3) Passage of a disapproval resolution shall have the same force and effect as an
impoundment resolution passed pursuant to section 1013(b) of the Impoundment
Control Act of 1974.
(4) Passage of a disapproval resolution shall terminate the 45-day period referred
to in section 1012(b) of the Impoundment Control Act of 1974.
(c) Transmission of messages; publication.
(1) Each special proposal transmitted under subsection (b) of this section shall be
transmitted to the House of Representatives and the Senate on the same day, and
shall be delivered to the Clerk of the House of Representatives if the House is not in
session, and to the Secretary of the Senate if the Senate is not in session. Each
special proposal shall be printed as a document of each House.
(2) A copy of each special proposal transmitted under subsection (b) shall be
transmitted to the Comptroller General on the same day it is transmitted to the
House of Representatives and the Senate. In order to assist the Congress in the
exercise of its functions under subsection (b) of this section the Comptroller General
shall review each special proposal and inform the House of Representatives and the
Senate as promptly as practicable with respect to the facts surrounding the propos-
ar--
(3) If any information contained in a special proposal transmitted under subsec-
tion (b) of this section is subsequently revised, the President shall transmit to both
Houses of Congress and the Comptroller General a supplementary special proposal
stating and explaining such revision. Any such supplementary special proposal shall
be delivered and printed as provided in (1) of this subsection. The Comptroller
General shall promptly notify the House of Representatives and the Senate of any
changes in the information submitted by him under (2) of this subsection which may
be necessitated by such revision.
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60
(4) Any special proposal transmitted under subsection (b) of this section and any
supplementary special proposals transmitted under (3) of this subsection ~ha1l be
*printed in the' first issue of, the Federal Register published after `such transmittal.
* ` (d).Reports .by Comptroller General; ` : .*
If the Comptroller General finds.that the `President, the Director of. the Office .of
* Management and Budget,. the head of `any department or agency of the United
States, Or any other Qfficer or' employee of the' United States has determined to
curtail a program with respect `to, which `the President is required to `transmit `a
special proposal under subsection (b) and that the President has failed to transmit a
special proposal with respect to such determination the Comptroller General shall
make a report thereon. Such report of the Comptroller General shall have the same
effect as if it were a special proposal transmitted by the President under subsection
(b) of this section and for the purposes of this section such report shall be
considered a special proposal transmitted under subsection (b) of this section.
(e) Suits by Comptroller General.
If under subsection (b)(2) of this section, a curtailment proposal is disapproved, the
Comptroller General is~ hereby expressly empowered, through attorneys, of his own
selection, to bring a civil action in the United States District Court for the District
of Columbia to enforce the requirements of subsection (b) (2) through (4) ,of this
section, as applicable, and the court is hereby expressly empowered to enter in the
civil action, against any department, agency, officer, or employee any order which is
necessary or appropriate to compel compliance with such requirements.
(f) This section may be cited as the "Program Curtailment Control Act of 1978."
PROGRAM CURTAILMENT CONTROL ACT OF 1978
EXPLANATORY STATEMENT'
The draft legislation would proyide a mechanism for prior congressional review
and potential disapproval of executive' branch decisions to curtail programs. This
mechanism would afford Congress a preliminary, expedited review at, the decision
stage. The purpose of the expedited review is to alleviate potential shortcomings in
the operation of the Impoundment Control Act' either where a curtailment decision
does not involve an impoundment subject to that act or where unilateral implemen-
tation of a curtailment decision would lessen the effectiveness of later congressional
review of any impoundment which is involved.
Program coverage.-The legislation. enacts as permanent law a curtailment review
procedure, but it does not identify the .programs subject to the procedure. This is left
for congressional action in other laws. Thus the only criteria in the definition of
"program" (subsection. (a)(1)) rnare' that a project, activity or weapons system be
expressly made~ subject to the curtailment procedure by another statute, and that
the program amount be specified in an appropriate act.
It would be. extremely difficult to define in general terms what types of programs
should be subject to the curtailment procedure, or even to define "program" in' the
abstract. The identification of covered programs is really a matter ~of congressional
preferences. and priorities at any given, time. The assumption underlying the legisla-
tion is that Congress,'applying whatever criteria it sees fit, will list in other statutes
the specific programs to be covered. This could probably be done most conveniently
through the annual budget process. Likewise, requiring that the program amount be
specified by law avoids problems in ascertaining the funding level desired by Con-
gress where budget authority for a covered program is provided by means other
than a discrete line-item appropriation.
Application of curtailment procedure-The review procedure is triggered by an
executive branch decision to `curtail" a program which has been made subject to
the bill. The definition of "curtail" (subsection (a)(3)) requires that the executive
branch decision result in a reduction of budget authority applied in furtherance of
the program. As noted above, the level of budget authority for this purpose would be
the amount so specified in an appropriation act. The reduction relates to the use of
funds "in furtherance of the program." Thus, although the full amount of budget
authority may be spent in some manner, e.g., to pay contract termination costs or
other liabilities incident to the curtailment, such a use of funds still involves a
reduction in funding for affirmative program purposes which triggers the review,
provisions.
Curtailment review procedure-The review procedure would generally be similar
to the procedure for reviewing deferrals of budget authority under the Impound-
ment Control Act, except that congressional disapproval would take the form of a
concurrent resolution. The President would report a proposed curtailment decision
to Congress, together with appropriate information (subsection (b)),and supplemen-
PAGENO="0065"
61
tary reports would be made for any revisions (subsection (c)(3)). .The proposal, and
any supplementary reports, would be printed in: the Federal Register (subsection
(c)(4)) . " . . . . . . . ..
A copy of the proposal and any revision would also be transmitted to the Comp-
troller General, who woul.d submit comments to the Congress (subsection (c)(2)). The
* Comptroller General woUld report to the Congress for review and action proposed
curtailment decisions which the executive branch fails to report (subsection (d)). The
Congress would have 14 days of~ Continuous session in which to disapprove a pro-
posed curtailment (subsections (b)(2), (a),(4)-(5)). After a proposal is disapproved, the*
* Comptroller. General could' bring judicial enforcement actions if necessary to effect
compliance with the disapproval and assure that any impounded `funds are made~
available (subsection'(e)). ` ` `
Relationship to impoundments-The curtailment review procedure would not
diminish congressional review opportunities under the Impoundment Control `Act;
rather, the two procedures would be complementary. When the curtailment propos-'
al involves a deferral or rescission of budget authority, the requirements `of the
Impoundment Control Act would also attach. If Congress disapproves the curtail-
ment, this action would,' in addition to precluding implementation of `the curtail-
ment as such, require that any impounded budget authority be made available
(subsection (b) (3) and (4)). On the other hand, even if Congress fails to' disapprove
the curtailment within 14 days, the Impoundment Control Act review period would'
continue to run for the remainder of the: statutory 45 days. Thus Congress would'
retain in full its present review authority `over any `impoundments involved in a
curtailment proposal. ` ` ` `
[The publication entitled: "Review of the Impoundment Control'
Act of 1974 After 2 Years," submitted `by the Comptroller General,
is located in committee files.] ` `
[Whereupon, at 12:05 p.m., the Budget Process Task Force was
adjourned.] ` ` ` `
0
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