Constitutionality of Legislation Establishing the Cost Accounting Standards Board
If th e C o st A c c o u n tin g S tan d ard s B oard (C A S B ) is v iew ed as an E x e c u tiv e B ran ch en tity , th e sta tu to ry m echanism for ap p o in tin g its m em bers is u n co n stitu tio n al u n d e r th e A p p o in tm en ts C lause; h o w e v e r, it ca n be a rg u ed th at th e C A S B is a L eg islativ e B ran ch en tity , an d th at its a c tio n in p ro m u lg a tin g co st a c c o u n tin g sta n d a rd s is ad v iso ry w ith resp ect to ex ecu tiv e agencies. T h e D e p a rtm e n t o f Ju stice has a d u ty to d efen d th e co n stitu tio n ality o f a sta tu te ex cep t in ex cep tio n al circu m stan ces, and it th u s m ay be a p p ro p ria te to b rin g to a c o u r t’s a tte n tio n any p lausible a rg u m e n t th at w o u ld perm it th e c o u rt to u p h o ld a statute.
June 19, 1980 MEMORANDUM OPINION FOR TH E ASSISTANT ATTORNEY G EN ER A L, CIV IL DIVISION
This responds to your memorandum informing us of the position your Division plans to take in pending litigation regarding the constitu tionality of the statute establishing the Cost Accounting Standards Board (CASB), Pub. L. No. 91-379, Title I, 84 Stat. 796, 50 U.S.C. App. § 2151 et seq. Since receiving your memorandum, we have kept in touch with the staff attorney in your Division handling the matter, and have learned that the constitutional issue has not yet been briefed. We believe that the position elaborated in your m em orandum 's persuasive. We essentially agree with your analysis that, insofar as the CASB is viewed as an Executive Branch entity whose members are to be appointed pursuant to the Appointments Clause of the Constitu tion, Art. II, § 2, cl. 2, the statute establishing the CASB is unconstitu tional because the mechanism it creates for appointing members is not in conformity with that clause.1 Although you have not formally asked for our opinion on the consti tutional issue, because of its importance we wish to take this opportu nity to comment. We think that an additional, plausible argument could
1 T h e C A SB com prises the C om ptroller G eneral and four o thers appointed by him. A lthough the C om ptroller G en eral—w ho is appointed by the President by and w ith the advice and consent o f the Senate, see 31 U.S.C. § 4 2 —is appointed in conform ity w ith the A ppointm ents Clause, the o th e r four m embers are not. F o r the C om ptroller G eneral is p roperly view ed as a Legislative Branch official, and thus not as “h ead ” o f a ’‘D ep artm en t” for purposes o f the A ppointm ents Clause. See Buckley v. Valeo. 424 U - S ,l, 127 (1976); 31 U.S.C. §43, 53, 65(d); Reorganization A ct o f 1949, 63 Stat. 205; R eorganiza tion A ct o f 1945, 59 Stat. 616; C orw in, Tenure o f Office and the Removal Power, 27 C olum . L. Rev. 353, 396 (1927); W. W illoughby, T he Legal Status and Functions o f the G eneral A ccounting O ffice o f the National G overnm ent 12-16 (1927); c f H. Mansfield, T h e C o m p troller G eneral 74-92 (1939).
697 be made that would permit a court to uphold the statute. Given the Department’s duty to defend the constitutionality of statutes except in exceptional circumstances, it may well be appropriate to bring this argument to the court’s attention. At bottom, your analysis would appear to presume that the statute establishing the CASB and providing that its cost accounting standards “shall be used” by executive agencies creates an entity with the power to issue binding standards that must be followed by the Executive Branch. See 50 U.S.C. App. § 2168(g). This interpretation apparently accords with the relevant administrative practice, and is consistent with the facts of this case. However, it can be argued that the CASB is really a Legislative Branch entity, and that its action in promulgating cost accounting standards is appropriate to such an entity since it is, in the final analysis, advisory with respect to executive agencies. This approach, of course, avoids the Appointments Clause question. The view that the CASB is a Legislative Branch entity rests on the statute establishing it as “an agent of the Congress,” which is to be “independent of the executive departments. . . . ” 50 U.S.C. App. § 2168(a). The description of the CASB as an “agent of the Congress” recurs in the legislative history, see S. Rep. No. 91-890, reprinted 1970 U.S. Code Cong. & Admin. News 3768, 3772. Congress cannot constitu tionally delegate to a Legislative Branch entity the authority to impose binding substantive regulations on the Executive Branch, for that would violate basic separation of powers principles, as this Department has often noted in the context of so-called “legislative veto” devices. See, e.g.. Letter from Assistant Attorney General Parker to Chairman Ribicoff on S. 1945, April 21, 1980; opinion of the Attorney General to the Secretary of Education, June 5, 1980.* On the other hand, a Legislative Branch entity can take action in aid of the legislative functions of Congress, such as gathering information or investigating executive agencies. See Buckley v. Valeo, supra, 424 U.S. at 137-38. It could be argued here that, insofar as the cost ac counting standards are advisory, their promulgation is justified as in aid of Congress’ oversight of government contracts, for it seems clear that Congress is served by receiving uniform information about the cost accounting practices of government contractors. Although the statute provides that the CASB’s standards “shall be used” by government agencies and contractors, it could be suggested that this language does not unequivocally purport to bind executive agencies. First, it is an accepted canon of statutory construction that courts will seek, if at all possible, to construe a statute to avoid a serious question of its constitu
• N o t e : T h e text o f the A tto rn ey G eneral's opinion o f June S, 1980, appears in this volum e at p. 21. supra. Ed.
698 tionality.2 Second, in this case, a court might construe the direction that the CASB’s standards “shall be used” by executive agencies not to require that agencies follow such standards absolutely, but merely to require them to “use” the standards, which could include deciding whether to follow them in a given case. This interpretation draws support from the ordinary meaning of the verb “to use,” which indicates “any putting to service of a thing, usu[ally] for an intended or fit purpose . . Webster’s Third New International Dictionary 2524 (1976), or employing a thing “for a cer tain end or purpose.” First Federal Savings & Loan Ass’n v. Williams, 91 N.E. 2d 34, 36 (C.A. Ohio 1947); See. Yandle v. Hardware Mutual Ins. Co., 314 F.2d 435, 437 (9th Cir. 1963). The meaning of the verb must be ascertained with reasonable regard for the context in which it is em ployed. See McJimsey v. City o f Des Moines, 2 N.W. 2d 65, 68 (Iowa 1942); In re Holmes' Estate, 289 N.W. 638, 640 (Wis. 1940). It would stretch the ordinary meaning of “to use” to say that, standing alone, it means that in every situation regardless of the fitness of a thing to a given case, the thing must be employed. Accordingly, in the present context, it is possible to argue that the phrase “shall be used” should be construed to permit agencies, while being generally guided by the CASB’s cost accounting standards, not to follow given standards when the agency considers that they would impinge on the Executive Branch’s responsibility to execute the laws and thus would not be “fit” for a particular case.
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Constitutionality of Legislation Establishing the Cost Accounting Standards Board
If th e C o st A c c o u n tin g S tan d ard s B oard (C A S B ) is v iew ed as an E x e c u tiv e B ran ch en tity , th e sta tu to ry m echanism for ap p o in tin g its m em bers is u n co n stitu tio n al u n d e r th e A p p o in tm en ts C lause; h o w e v e r, it ca n be a rg u ed th at th e C A S B is a L eg islativ e B ran ch en tity , an d th at its a c tio n in p ro m u lg a tin g co st a c c o u n tin g sta n d a rd s is ad v iso ry w ith resp ect to ex ecu tiv e agencies. T h e D e p a rtm e n t o f Ju stice has a d u ty to d efen d th e co n stitu tio n ality o f a sta tu te ex cep t in ex cep tio n al circu m stan ces, and it th u s m ay be a p p ro p ria te to b rin g to a c o u r t’s a tte n tio n any p lausible a rg u m e n t th at w o u ld perm it th e c o u rt to u p h o ld a statute.
June 19, 1980 MEMORANDUM OPINION FOR TH E ASSISTANT ATTORNEY G EN ER A L, CIV IL DIVISION
This responds to your memorandum informing us of the position your Division plans to take in pending litigation regarding the constitu tionality of the statute establishing the Cost Accounting Standards Board (CASB), Pub. L. No. 91-379, Title I, 84 Stat. 796, 50 U.S.C. App. § 2151 et seq. Since receiving your memorandum, we have kept in touch with the staff attorney in your Division handling the matter, and have learned that the constitutional issue has not yet been briefed. We believe that the position elaborated in your m em orandum 's persuasive. We essentially agree with your analysis that, insofar as the CASB is viewed as an Executive Branch entity whose members are to be appointed pursuant to the Appointments Clause of the Constitu tion, Art. II, § 2, cl. 2, the statute establishing the CASB is unconstitu tional because the mechanism it creates for appointing members is not in conformity with that clause.1 Although you have not formally asked for our opinion on the consti tutional issue, because of its importance we wish to take this opportu nity to comment. We think that an additional, plausible argument could
1 T h e C A SB com prises the C om ptroller G eneral and four o thers appointed by him. A lthough the C om ptroller G en eral—w ho is appointed by the President by and w ith the advice and consent o f the Senate, see 31 U.S.C. § 4 2 —is appointed in conform ity w ith the A ppointm ents Clause, the o th e r four m embers are not. F o r the C om ptroller G eneral is p roperly view ed as a Legislative Branch official, and thus not as “h ead ” o f a ’‘D ep artm en t” for purposes o f the A ppointm ents Clause. See Buckley v. Valeo. 424 U - S ,l, 127 (1976); 31 U.S.C. §43, 53, 65(d); Reorganization A ct o f 1949, 63 Stat. 205; R eorganiza tion A ct o f 1945, 59 Stat. 616; C orw in, Tenure o f Office and the Removal Power, 27 C olum . L. Rev. 353, 396 (1927); W. W illoughby, T he Legal Status and Functions o f the G eneral A ccounting O ffice o f the National G overnm ent 12-16 (1927); c f H. Mansfield, T h e C o m p troller G eneral 74-92 (1939).
697 be made that would permit a court to uphold the statute. Given the Department’s duty to defend the constitutionality of statutes except in exceptional circumstances, it may well be appropriate to bring this argument to the court’s attention. At bottom, your analysis would appear to presume that the statute establishing the CASB and providing that its cost accounting standards “shall be used” by executive agencies creates an entity with the power to issue binding standards that must be followed by the Executive Branch. See 50 U.S.C. App. § 2168(g). This interpretation apparently accords with the relevant administrative practice, and is consistent with the facts of this case. However, it can be argued that the CASB is really a Legislative Branch entity, and that its action in promulgating cost accounting standards is appropriate to such an entity since it is, in the final analysis, advisory with respect to executive agencies. This approach, of course, avoids the Appointments Clause question. The view that the CASB is a Legislative Branch entity rests on the statute establishing it as “an agent of the Congress,” which is to be “independent of the executive departments. . . . ” 50 U.S.C. App. § 2168(a). The description of the CASB as an “agent of the Congress” recurs in the legislative history, see S. Rep. No. 91-890, reprinted 1970 U.S. Code Cong. & Admin. News 3768, 3772. Congress cannot constitu tionally delegate to a Legislative Branch entity the authority to impose binding substantive regulations on the Executive Branch, for that would violate basic separation of powers principles, as this Department has often noted in the context of so-called “legislative veto” devices. See, e.g.. Letter from Assistant Attorney General Parker to Chairman Ribicoff on S. 1945, April 21, 1980; opinion of the Attorney General to the Secretary of Education, June 5, 1980.* On the other hand, a Legislative Branch entity can take action in aid of the legislative functions of Congress, such as gathering information or investigating executive agencies. See Buckley v. Valeo, supra, 424 U.S. at 137-38. It could be argued here that, insofar as the cost ac counting standards are advisory, their promulgation is justified as in aid of Congress’ oversight of government contracts, for it seems clear that Congress is served by receiving uniform information about the cost accounting practices of government contractors. Although the statute provides that the CASB’s standards “shall be used” by government agencies and contractors, it could be suggested that this language does not unequivocally purport to bind executive agencies. First, it is an accepted canon of statutory construction that courts will seek, if at all possible, to construe a statute to avoid a serious question of its constitu
• N o t e : T h e text o f the A tto rn ey G eneral's opinion o f June S, 1980, appears in this volum e at p. 21. supra. Ed.
698 tionality.2 Second, in this case, a court might construe the direction that the CASB’s standards “shall be used” by executive agencies not to require that agencies follow such standards absolutely, but merely to require them to “use” the standards, which could include deciding whether to follow them in a given case. This interpretation draws support from the ordinary meaning of the verb “to use,” which indicates “any putting to service of a thing, usu[ally] for an intended or fit purpose . . Webster’s Third New International Dictionary 2524 (1976), or employing a thing “for a cer tain end or purpose.” First Federal Savings & Loan Ass’n v. Williams, 91 N.E. 2d 34, 36 (C.A. Ohio 1947); See. Yandle v. Hardware Mutual Ins. Co., 314 F.2d 435, 437 (9th Cir. 1963). The meaning of the verb must be ascertained with reasonable regard for the context in which it is em ployed. See McJimsey v. City o f Des Moines, 2 N.W. 2d 65, 68 (Iowa 1942); In re Holmes' Estate, 289 N.W. 638, 640 (Wis. 1940). It would stretch the ordinary meaning of “to use” to say that, standing alone, it means that in every situation regardless of the fitness of a thing to a given case, the thing must be employed. Accordingly, in the present context, it is possible to argue that the phrase “shall be used” should be construed to permit agencies, while being generally guided by the CASB’s cost accounting standards, not to follow given standards when the agency considers that they would impinge on the Executive Branch’s responsibility to execute the laws and thus would not be “fit” for a particular case. In particular, in putting the CASB’s standards into service “for a fit purpose,” an agency might choose not to follow a standard if it infringes on the agency’s responsibility of negotiating or administering public contracts. This reading of the statutory language would appear to be consistent with the Department’s view of it when it was in the form of an enrolled bill. In a memorandum to the Director of the Office of Man agement and Budget, the Deputy Attorney General suggested that the creation of the CASB apart from the Executive Branch might be justified on the ground that the Legislative Branch, in performing its normal oversight functions, may reasonably expect, and certainly would be assisted by, consistency and uniformity in the information it receives about public contracts, such as would be fostered by adherence to cost accounting standards. Viewing the statutory language on its face, the Deputy Attorney General was unable to conclude that it would inevita bly lead to conflicts of constitutional proportion between the CASB and the Executive Branch, for that “. . . would depend on the sub stance of the standards and regulations adopted by the Board.” Al
2 See, e.g.. United States v. Rumeley, 345 U.S. 41, 45 (1953); Crowell v. Benson, 285 U.S. 22, 62 (1932); Missouri Pacific R.R. Co. v, Boone, 270 U.S. 466, 471-72 (1926); United States v. Delaware & Hudson Co., 213 U.S. 366, 407-08 (1909); see also Ashwander v. TV A, 297 U.S. 288, 348 (1936) (Brandeis, J., concurring).
699 though the Deputy Attorney General feared that, as applied, the statute might eventually generate disputes between the Congress, with its inter est in receiving information about public contracts, and the Executive Branch, with its interest in managing the negotiation and administration of public contracts, the Deputy’s memorandum apparently took for granted that the statute could be given a facially constitutional reading. In sum, we are in substantial agreement with the analysis of your memorandum. But we offer for your consideration the further argu ment outlined above which, if accepted by the court, could prevent the statute from being held to be unconstitutional.
L eon U lm an Deputy Assistant Attorney General Office o f Legal Counsel