Fairness In Asbestos Injury Resolution Act of 2003, B-301397, September 4, 2003

B-301397 Sep 04, 2003 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Chairman: This is in response to your request that the General Accounting Office prepare a comparison of the program that would be created by S. 1125. Enclosed is a chart comparing the two statutory programs and S. 1125. FAIR Act Subsection 223(c) of the bill provides as follows: "(c) BORROWING AUTHORITY-The Administrator [of the Office of Asbestos Injury Claims Resolution] is authorized to borrow. Borrowing Authority Generally "Borrowing authority" is a type of budget authority that permits a federal agency to incur obligations and to liquidate those obligations out of borrowed moneys. Borrowing from the Treasury is the most common form of borrowing authority. Although commercial borrowing authority is less common than Treasury borrowing authority. View Decision Fairness In Asbestos Injury Resolution Act of 2003, B-301397, September 4, 2003 The Honorable Don Nickles Chairman, Committee on the Budget United States Senate Dear Mr. Chairman: This is in response to your request that the General Accounting Office prepare a comparison of the program that would be created by S. 1125, the "Fairness In Asbestos Injury Resolution Act of 2003 (FAIR Act)," recently reported in the Senate, and the existing National Vaccine Injury Compensation Program and Black Lung Benefits Program. You also asked that we comment on the borrowing authority in S. 1125. Enclosed is a chart comparing the two statutory programs and S. 1125. In response to your second request, we offer the following observations regarding the borrowing authority in S. 1125. FAIR Act Subsection 223(c) of the bill provides as follows: "(c) BORROWING AUTHORITY-The Administrator [of the Office of Asbestos Injury Claims Resolution] is authorized to borrow, in any calendar year, an amount not to exceed anticipated contributions to the [Asbestos Injury Claims Resolution] Fund in the following calendar year for purposes of carrying out the obligations of the Fund under this Act." The Senate report on the bill explains that the FAIR Act provides the Administrator with "authority to borrow from commercial lending institutions amounts to offset short term losses in an amount that does not exceed anticipated contributions for the following year." S. Rep. No. 108-118 at 29 (2003) (emphasis added). See also id. at 53. Borrowing Authority Generally "Borrowing authority" is a type of budget authority that permits a federal agency to incur obligations and to liquidate those obligations out of borrowed moneys. U.S. General Accounting Office, A GlossaryofTerms Used in the Federal Budget Process 22 (GAO/AFMD-2.1.1) (Exposure Draft) (Washington D.C. Jan. 1993). See generally U.S. General Accounting Office, Budget Issues: Inventory of Accounts With Spending Authority and Permanent Appropriations, 1996, GAO/AIMD-96-79, App. III, Figure III.2, "Authority to Borrow by Agency, Bureau, and Account" (Washington, D.C. May 1996). Borrowing from the Treasury is the most common form of borrowing authority. Borrowing authority also may include authority to borrow directly from the public, authority to borrow from the Federal Financing Bank (FFB), /1/ or some combination of authorities. For a general discussion, see U.S. General Accounting Office, Principles of Federal Appropriations Law at 2-6 (2nd ed. 1991). Commercial and Federal Borrowing Authority Subsection 223(c) of S. 1125 would permit the Administrator of the Office of Asbestos Injury Claims Resolution to "borrow, in any calendar year, an amount not to exceed anticipated contributions to the Fund in the following calendar year." The statutory language in the bill does not specify the source of the borrowing. The authority in subsection 223(c) appears to permit borrowing from commercial lending sources as well as borrowing from federal sources. See S. Rep. No. 108-118 29 (2003). Although commercial borrowing authority is less common than Treasury borrowing authority, it has been authorized by Congress for specific federal entities, either alone or in combination with Treasury borrowing authority. See, e.g., 12 U.S.C. Sec. 1795f (National Credit Union Administration Central Liquidity Facility); 39 U.S.C. Secs. 2005-06 (Postal Service). The Administrator also may borrow from FFB. The FFB's enabling legislation provides that any federal agency "which is authorized to issue, sell, or guarantee any obligation is authorized to issue or sell such obligations directly to the Bank." 12 U.S.C. Sec. 2285(a). See, e.g., B-248647, April 24, 1995 (no need for Congress specifically to authorize a federal financing arrangement in the Federal Triangle Development Act since the FFB has separate statutory authority to provide financing).