Interpretation of Inspector General Act

A lthough it is a clo se q uestion, the better interpretation o f the Inspector G eneral Act is that Congress
    did not in tend to lim it the phrase “ recom m endation that funds be put to better u se” to only those
    au d it reco m m en d atio ns that achieve identifiable m onetary savings.

                                                                                                          M arch 20, 1998


 M   em orandum     O p in io n   f o r the   A s s is t a n t A t t o r n e y G e n e r a l   fo r   A d m i n is t r a t io n
                                                       AND THE
                                              In sp e c t o r G e n e r a l


   You have asked us to resolve a dispute regarding the appropriate interpretation
of the phrase “ recommendation that funds be put to better use,” as used in the
Inspector General Act, 5 U.S.C. app. §§ 1-12 (1994) ( “ IG Act” ). It is our under­
standing that the Justice Management Division ( “ JM D” ) and the Office of the
Inspector General ( “ OIG” ) disagree as to which recommendations may properly
be identified and reported by OIG as “ funds put to better use.” See Memorandum
 for Dawn Johnsen, Acting Assistant Attorney General, Office of Legal Counsel,
from Stephen R. Colgate, Assistant Attorney General for Administration, and
Michael R. Bromwich, Inspector General, Re: A udit Resolution Committee Request
fo r Legal Opinion (July 11, 1997). JMD asserts that “ ‘funds put to better use’
may only be claimed when some type of savings results from the audit rec­
ommendation.” 

OIG, on the other hand, believes that the phrase also
encompasses “ recommendations that funds be redirected to achieve greater effi­
ciency, accountability, or internal control objectives even though not necessarily
monetized as savings.” 

explain more fully below, we conclude that, although it is a close ques­
tion, the better reading of the statute is that Congress did not intend to limit the
phrase ‘ ‘recommendation that funds be put to better use’ ’ to only those audit rec­
ommendations that achieve identifiable monetary savings.

                                                 DISCUSSION

  Section 5 of the IG Act requires each Inspector General to prepare semiannual
reports “ summarizing the activities of the Office” during the immediately pre­
ceding six-month period. 5 U.S.C. app. §5(a). The statute specifies certain
information that must, at a minimum, be contained in such reports. 

these requirements is:

         a listing, subdivided according to subject matter, of each audit
         report issued by the Office during the reporting period and for each
         audit report, where applicable, the total dollar value of questioned

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         costs (including a separate category for the dollar value of unsup­
         ported costs) and the dollar value of recommendations that funds
         be put to better use.

The statute further requires separate statistical tables summarizing,
with respect to audit reports pending and issued during the reporting period,
decisions made by management as a result of those reports: one table concerns
the status of management decisions in response to questioned costs, and the other
concerns the status o f management decisions in response to recommendations that
funds be put to better use. 

(9).
  The phrase “ recommendation that funds be put to better use” is defined in
the IG Act as follows:

         a recommendation by the Office that funds could be used more
         efficiently if management of an establishment took actions to imple­
         ment and complete the recommendation, including—

                   (A) reductions in outlays;
                   (B) deobligation of funds from programs or operations;
                   (C) withdrawal of interest subsidy costs on loans or loan
                   guarantees, insurance, or bonds;
                   (D) costs not incurred by implementing recommended
                   improvements related to the operations of the establishment,
                   a contractor or grantee;
                   (E) avoidance of unnecessary expenditures noted in
                   preaward reviews of contract or grant agreements; or
                   (F) any other savings which are specifically identified.

Looking first only to that portion of the definition that precedes items
(A) through (F), the critical interpretive question is whether “ a recommendation
. . . that funds could be used more efficiently” is limited to a recommendation
that funds could be saved. An affirmative answer to this question requires equating
efficiency with identifiable savings.1 However, the dictionary defines “ efficiency”
as the “ capacity to produce desired results with a minimum expenditure of energy,
time, money, or materials.” Webster’s Third New International Dictionary 725
(1986). Pursuant to this definition, efficiency could include, but need not nec­
essarily be limited to, monetary savings. Efficiency could be achieved, for
example, by accomplishing a particular task in a shorter amount of time, thereby
freeing up personnel resources to turn to another task. Although ultimately an
agency may save money by saving energy, time, or materials, such savings may
be neither identifiable nor quantifiable. We therefore conclude that, standing alone,
  1We use the term “ savings” as we understand JMD uses that term, i.e an identifiable reduction in costs See
W ebster’s Third New International Dictionary 2020 (1986)


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the definition o f “ recommendation that funds be put to better use” that precedes
subsections (A) through (F) would best be interpreted as not requiring a dem­
onstration o f identifiable savings.
   JM D further contends, however, that each of the examples that follows in sub­
sections 5(f)(4)(A) through (F) refers to some type of savings, and therefore that
the definition of “ recommendation that funds be put to better use” also must
be interpreted as limited to specifically identified savings. Under the long-estab­
lished canon o f ejusdem generis, where a general term follows a specific one,
the general term should be construed to encompass only subjects similar in nature
to those subjects enumerated by the specific words. 2A Norman J. Singer, Suther­
land Statutory Construction §47.17 (5th ed. 1992). The doctrine is equally
applicable where specific words follow general ones: application of the general
term is then restricted to matters similar to those enumerated. 

how­
ever, that the rule is, like other canons of statutory construction, “ only an aid
to the ascertainment of the true meaning of the statute. It is neither final nor
exclusive.” H elvering v. Stockholms Enskilda Bank, 

, 89 (1934). The
canon should not govern “ when the whole context [of a statute] dictates a dif­
ferent conclusion.” Norfolk and Western Ry. v. American Train Dispatchers A ss’n,

, 129 (1991).
   There are two separate ejusdem generis arguments to be made with respect to
subsection 5(f)(4). The first relies upon the catchall reference in subsection
5(f)(4)(F) to “ any other savings” to reinforce a conclusion from the text of sub­
sections 5(f)(4)(A) through (E) that the categories itemized therein all enumerate
various examples o f savings. OIG, however, disputes that all of the examples listed
in subsections (A) through (E) constitute savings. OIG concedes that (A) ( “ reduc­
tions in outlays” ) and (B) (“ deobligation of funds” ) comprise savings, but ques­
tions whether (C) (“ withdrawal o f interest subsidy costs” ) would also fall into
this category, especially if the interest subsidy is recaptured and reallocated else­
where. See E-Mail for Beth Nolan, Deputy Assistant Attorney General, Office
of Legal Counsel, and Janis Sposato, Deputy Assistant Attorney General, Justice
Management Division, from Robert L. Ashbaugh, Deputy Inspector General,
Office of Inspector General (Dec. 19, 1997). Similarly, OIG asserts that sub­
sections (D) ( “ costs not incurred by implementing recommended improvements” )
and (E) ( “ avoidance of unnecessary expenditures” ) need not necessarily result
in savings, if the funds recovered are reinvested in the program. 

however, that the better reading of (C), (D), and (E) is that they do define different
categories of savings. The language used in these subsections suggests funds
recovered— e.g., “ withdrawal of . . . costs,” “ costs not incurred,” “ avoidance
of unnecessary expenditures” —and thus provides strong textual support for
application of ejusdem generis in this context.
   Under the second ejusdem generis argument, the general definition of “ rec­
ommendation that funds be put to better use” that precedes subsections 5(f)(4)(A)

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through (F) is limited by the items Listed in those subsections, i.e. the definition
is limited to identifiable savings. We believe this second argument, while not with­
out merit, is less tenable in light of both the textual definition of “ recommendation
that funds be put to better use” and the legislative history of the IG Act.
   Under the statute, a “ recommendation that funds be put to better use” is a
“ recommendation . . . that funds could be used more efficiently if management
of an establishment took actions to implement and complete the recommendation,
including” the list of examples of savings in subsections (A) through (F). 5 U.S.C.
app. § 5(f)(4). An interpretational difficulty is presented by the fact that the word
“ including” could be read to modify either the phrase “ recommendation . . .
that funds could be used more efficiently” or the phrase “ actions to implement
and complete the recommendation.” If the list of examples of savings is read
to modify the former, then the argument that “ recommendation that funds be put
to better use” is limited to savings is more forceful, for the various categories
of savings would exemplify the kinds of final recommendations that management
might make. However, if the list of savings instead modifies the noun “ actions,”
then the categories of itemized savings offer examples of the kinds of actions
management might take to “ implement” a particular recommendation for greater
efficiency. Under the second reading, achieving savings would be part of the
implementation of the recommendation; the decision whether to reinvest those
savings in the program from which they derived or to set them aside for some
other purpose would complete the recommendation. Thus, a recommendation that
funds be put to better use could require management to take steps to achieve
savings and then reallocate those savings to the same program or others in order
to realize a more efficient use of the funds, in terms of energy, time, or materials.
The end result need not necessarily produce identifiable savings, even though
savings would be achieved during one of the interim steps of the recommendation.
   Although it is a close question, we think that the second reading better rec­
onciles the list of examples in subsections 5(f)(4)(A) through (F) with the broader
definition o f “ recommendation that funds be put to better use” preceding that
list. In light of our conclusion that the term “ efficiently” is not limited to identifi­
able savings, it is more consistent with this broader understanding to interpret
subsections (A) through (F) as illustrative of the kinds o f interim actions that
might be taken to implement a particular recommendation.
   Because it is a close textual question, we look to the legislative history of the
 1988 amendments to the IG Act, in which the definition of “ recommendation
that funds be put to better use” first appeared, to see if we can find evidence
of congressional intent. The history is not particularly helpful with respect to the
question before us, but it does not contradict our textual interpretation. One of
Congress’s concerns in enacting the 1988 amendments was that the semi-annual
reports of inspectors general varied widely in format and in the terms used to
describe the audit resolution process. See S. Rep. No. 100-150, at 24 (1987).

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Congress wanted to standardize the reporting process in order to develop “ an
overall picture of the Federal government’s progress against waste, fraud and mis­
management.” 

same time, Congress enacted reforms “ to provide for
more independence for audit and investigative operations.” H.R. Rep. No. 100-
771, at 5 (1988), reprinted in 1988 U.S.C.C.A.N. 3154, 3158 ( “ House Report” ).
The House hearings on the 1988 amendments affirmed Congress’s “ strong
commitment to the IG concept and the indisputable preponderance of evidence
that IG ’s have greatly improved operations in their departments,and agencies, in
addition to saving the American taxpayers literally billions of dollars.” Inspector
General A ct Amendments of 1988: Hearing on H.R. 4054 Before the Subcomm.
on Legislation and National Security o f the House Comm, on Government Oper­
ations, 100th Cong. 21 (1988) (emphasis added) (statement of Rep. Horton)
(“ House Hearing” ).
   Originally, neither the Senate bill (S. 908) nor the House bill (H.R. 4054) pro­
posing the 1988 amendments to the IG Act included any reference to “ rec­
ommendation that funds be put to better use.” Rather, the phrase first appeared
in H.R. 4054 after committee markup. The precise scope of the definition is not
addressed in the legislative history. However, the House report offers some sup­
port for a broad reading of that phrase that comports with our interpretation of
the text:

       The format speaks of “ funds recommended to be put to better use.”
       The committee intends that inspectors general report the amounts
       o f fun ds o r resources that will be used more efficiently as a result
       o f actions taken by management or Congress if the inspector gen­
       eral’s recommendation is implemented.

House Report at 19, reprinted in 1988 U.S.C.C.A.N. at 3172 (emphasis added).
The com m ittee’s reference not only to “ funds” but also to “ resources” “ that
will be used more efficiently” is more consistent with an understanding of “ rec­
ommendation that funds be put to better use” that includes non-monetized effi­
ciencies.
  Moreover, while we recognize that the statements of individual legislators have
limited interpretive value, see G arcia v. United States, 

, 76 (1984),
we note a floor comment made by Senator Glenn, Chairman of the Senate Govern­
mental Affairs Committee that considered S. 908, who praised the historical suc­
cess o f inspectors general in achieving both identifiable savings and non-quantifi-
able efficiencies:

       According to the most recent report from the Council that coordi­
       nates IG activities, in the past 5 years more than $92 billion have
       been recovered or put to better use because of the IG efforts.

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          That comes out to about $18 billion per year. That is B for bil­
       lion. That is a significant amount of money. It could be even
       greater than that, because it is difficult to evaluate and quantify
       some o f these savings where you are making more efficient use o f
       money.

134 Cong. Rec. 615 (1988) (statement of Sen. Glenn) (emphasis added). Although
it is not clear that Senator Glenn, nor for that matter any other member of Con­
gress who spoke about the proposed legislation, was thinking of the distinction
between identifiable savings and other efficiencies in the context of “ rec­
ommendation that funds be put to better use” at the time he made his statement,
the comment suggests that Senator Glenn considered that funds “ recovered or
put to better use’ ’ would not necessarily be quantifiable.

                                   CONCLUSION

  Neither the text nor the legislative history of the IG Act offers clear evidence
of how broadly Congress intended to define “ recommendation that funds be put
to better use.” Nevertheless, we conclude that, on balance, the better interpretation
of that term is that it not be limited to only those audit recommendations that
achieve identifiable monetary savings.

                                                              DAWN JOHNSEN
                                                    Acting Assistant Attorney General
                                                         Office o f Legal Counsel




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