 The Secretary of the Treasury’s Authority with Respect to the
         Civil Service Retirement and Disability Fund

5 U.S.C. § 8348 empowers the Secretary o f the Treasury to suspend the investment of additional con­
   tributions to the Civil Service Retirement and Disability Fund and redeem prior to maturity CSRDF
   investment assets in order to avoid exceeding the statutory debt limit.

In exercising his CSRDF redemption authority, the Secretary of the Treasury may, during a “ debt
    issuance suspension period,” redeem CSRDF investment assets based on the total amount of civil
    service retirem ent and disability benefits authorized to be paid during the period.

The Secretary o f the Treasury has discretion to designate the length of a debt issuance suspension
   period based on factors, identified by the Secretary, that are reasonably relevant to his determina­
   tion.

T he suspension during a debt limit crisis o f CSRDF investment and the redemption of CSRDF invest­
    m ent assets would not cause a violation of the public debt limit.

                                                                                           November 10, 1995

                     M e m o r a n d u m O p in io n f o r t h e G e n e r a l C o u n s e l
                                   Depa r tm en t o f t h e T rea su ry


  You have requested advice from this Office on the authority of the Secretary
of the Treasury (“ Secretary” ) with respect to the investment assets of the Civil
Service Retirement and Disability Fund (“ CSRDF” or “ Fund” ) during a debt
limit crisis. Specifically, you have asked this Office:

         (1) whether the statute governing the Fund allows the Secretary
         to suspend the investment of Fund contributions in Treasury-issued,
         United States debt obligations that are subject to 31 U.S.C.
         § 3101(b) (the “ debt limit” ) (such debt obligations herein referred
         to as “ obligations of the United States” ) during a debt limit crisis;

         (2) whether the Secretary has the authority to disinvest or redeem
         Fund investment assets during a debt limit crisis; and

         (3) if the Secretary has the authority to disinvest or redeem, the
         conditions under which such authority may be exercised.

   As the discussion below reveals, we conclude, based largely on the express
terms of 5 U.S.C. § 8348, that the statute empowers the Secretary to suspend the
investment of additional contributions to the CSRDF and redeem prior to maturity
Fund investment assets in order to avoid exceeding the debt limit. In addition,
we conclude that, in exercising his redemption authority, the Secretary may, during
a “ debt issuance suspension period,” redeem Fund investment assets based on

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the total amount of civil service retirement and disability benefits authorized to
be paid during the period. Moreover, we conclude that redemptions so executed
would free up debt issuance capacity under the debt limit, which could, in turn,
be exhausted through the issuance of obligations of the United States to supple­
ment Treasury’s general cash account during a debt limit crisis. In addition, we
conclude that the Secretary has discretion under the CSRDF statute to designate
the length of a debt issuance suspension period, but that this discretion, though
broad, is not unlimited. We also conclude that the Secretary has the authority
to identify factors, consistent with the statute, that are reasonably relevant to his
determination of the length of a debt- issuance suspension period. Finally, we
believe that the suspension of CSRDF investment and the redemption of CSRDF
investment assets during a debt limit crisis as described below would not cause
a violation of the statutory debt limit.

                                                I. Background

   The Secretary is required under the CSRDF statute to accept Fund contributions
and pay civil service retirement and disability benefits to qualifying individuals.
See 5 U.S.C. § 8348(a), (b). Treasury estimates that each month it receives
approximately $5 billion in CSRDF contributions and disburses approximately
$3.2 billion in benefits. Under present law, the Secretary is required to invest
in interest-bearing obligations of the United States monies contributed to the Fund
that are not immediately required to pay benefits. Id. § 8348(c).
   According to Treasury officials with whom we have spoken, when it is not
confronted with a debt limit crisis, Treasury typically invests all CSRDF contribu­
tions it receives in obligations of the United States and pays civil service retire­
ment and disability benefits, via electronic fund transfer and checks, at the begin­
ning of each month out of its general cash account. In connection with its monthly
benefits payments, Treasury reimburses its general cash account by redeeming
prior to maturity, Fund investment assets in an amount equal to the total amount
of the benefits paid.1
   You have informed us that Treasury is considering altering this process during
the impending debt limit crisis. You have suggested that the Secretary might be
prohibited by the debt limit from investing additional CSRDF contributions. In
addition, you have informed us that the Secretary might consider accelerating the
redemption of an amount of CSRDF investment assets based on a number of
   1 For example, we have been informed by Treasury officials that on August 1, 1995, Treasury paid approximately
$3.2 billion in civil service retirement and disability benefits to qualifying individuals from its general cash account.
$2.5 billion of those benefits were paid via electronic fund transfer on that date and approximately $700 million
were paid with checks. To support the benefits payments made by electronic fund transfer, Treasury redeemed $2.5
billion worth o f Fund investment assets on August 1, 1995. On the fourth and fifth business days following August
1, Treasury redeemed investment assets in an amount equal to the benefits paid by check on August 1, thereby
affording the Fund the benefit o f continued investment earnings during the period between when the benefits checks
were issued and when the benefits checks were expected to be presented for payment.


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months worth of civil service retirement and disability benefits payments at some
point during the debt limit crisis and using the debt issuance capacity gained by
the redemption to auction obligations of the United States to the public. You have
also informed us that the auction proceeds would be used to augment Treasury’s
general cash account, so that government obligations, including obligations to pay
civil service retirement and disability payments, could be paid during the debt
limit crisis.

                                             II. Legal Discussion

A . Statutory Language

  Congress created the CSRDF to support the payment of retirement and disability
benefits to certain former employees of the federal government. See 5 U.S.C.
§§ 8301—8351.2 When it created the Fund, Congress required the Secretary to
accept contributions to the Fund and invest in interest-bearing obligations of the
United States portions of the Fund not immediately required to pay civil service
retirement and disability benefits. See Act of Sept. 6, 1966, Pub. L. No. 89-554,
§ 8348(b), (c), 80 Stat. 378, 584 (codified at 5 U.S.C. § 8348(b), (c) (Supp. II
1965-1966)).3
  Obligations of the United States issued to the CSRDF are subject to the debt
limit. See 5 U.S.C. § 8348(d).4 Concerned that a failure to increase the debt limit
might negatively affect the Fund’s financial condition5 and apparently aware of
the overriding public interest in ensuring that a debt limit crisis not trigger default
on obligations of the United States,6 Congress in 1986 established rules under
   2 A federal governm ent employee who is covered by the Civil Service Retirement Act, 5 U.S.C. §§8301-8351,
m ust contribute a portion o f his o r her salary to the CSRDF. Id. § 8334.
   3 The provision governing Fund investments requires the Secretary to purchase on behalf of the Fund United
States securities with fixed maturities bearing an interest rate “ equal to the average market yield . . . borne by
all m arketable interest-bearing” United States debt obligations with a maturity of four years. 5 U.S.C. §8348(d).
   4 Article I, Section 8, Clause 2 of the Constitution grants Congress the authority to “ borrow [m]oney on the
credit o f the U nited States.” While C ongress has authorized the Secretary to borrow money, it has used the debt
lim it to restrict that borrowing. The debt lim it currently provides:
      The face amount o f obligations issued under this chapter and the face amount of obligations whose principal
       and interest are guaranteed by the U nited States Government (except guaranteed obligations held by the
       Secretary o f the Treasury) may not b e more than $4,900,000,000,000, outstanding at one time, subject
       to changes periodically made in that am ount as provided by law through the congressional budget process
      described in Rule XLDC o f the Rules o f the House o f Representatives or otherwise.
31 U.S.C. § 3 101(b)-
   5 See Civil Service Retirement Trust Fund: Hearing Before the Subcomm. on Compensation and Employee Benefits
o f the House Comm, on Post Office and Civil Service, 99th Cong. (1985) ( “ Civil Service Retirement Trust Fund
H earing” ) (exam ining the Secretary's decision, during the fall o f 1985, not to invest in obligations o f the United
States approxim ately $17 billion worth o f C SR D F funds and to accelerate the redemption of C SRD F investment
assets).
   6 In testim ony on Treasury’s actions w ith respect to the C SR D F during the 1985 debt limit crisis, John Niehenke,
D eputy A ssistant Secretary for Federal Finance, Department o f the Treasury, stated, “ [t]he debt limit impasse has
put us all in a position o f facing choices w e would rather not face. The Secretary has recently been faced with
choosing betw een defaulting on all U.S. obligations, including beneficiary payments, o r advancing the redemption


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                                                  Fund

which the Secretary could, during a debt limit crisis, suspend the investment of
Fund contributions and take other related ameliorative actions involving the Fund.
See Omnibus Budget Reconciliation Act of 1986, Pub. L. No. 99-509, § 6002(a)-
(c), 100 Stat. 1874, 1931-33 (codified at 5 U.S.C. § 8348(jMl)) (the “ 1986
Amendments” ).
  Under the 1986 Amendments, “ the Secretary . . . may suspend additional
investment of amounts in the Fund if such additional investment could not be
made without causing the public debt of the United States to exceed the . . .
debt limit.” 5 U.S.C. §8348(j)(l). The 1986 Amendments also provide that “ the
Secretary . . . may sell or redeem securities, obligations, or other invested assets
of the Fund before maturity in order to prevent the public debt of the United
States from exceeding the. . . debt limit.” Id. §8348(k)(l). The Secretary’s
redemption authority may be exercised, however, “ only during a debt issuance
suspension period, and only to the extent necessary to obtain any amount o f funds
not exceeding the amount equal to the total amount o f the payments authorized
to be made from the Fund” during the debt issuance suspension period. Id.
§8348(k)(2) (emphasis added). As defined under the 1986 Amendments, a “ debt
issuance suspension period” is “ any period for which the Secretary . . . deter­
mines . . . that the issuance of obligations of the United States may not be made
without exceeding the . . . debt limit.” Id. § 8348(j)(5)(B). The 1986 Amend­
ments also provide that “ [a] sale or redemption may be made . . . even if before
the sale or redemption, there is a sufficient amount in the Fund to ensure that
[civil service retirement and disability benefits] payments are made in a timely
manner.” Id. §8348(k)(2) (emphasis added).
  Anticipating that the CSRDF might incur financial losses as a result of actions
taken by the Secretary during a debt limit crisis, Congress sought to mitigate those
losses and ensure that, after the expiration of the debt limit crisis, the Fund would
be placed in the financial position it would have been in had the actions taken
by the Secretary not occurred. The 1986 Amendments provide that “ [a]ny
amounts in the Fund which, solely by reason of the . . . debt limit, are not
invested shall be invested by the Secretary . . . as soon as such investments can
be made without exceeding the . . . debt limit.” Id. § 8348(j)(2).7 In addition,
after the expiration of a debt issuance suspension period, the Secretary must:

o f trust fund obligations to pay those benefits. He chose (he latter course to ensure that millions o f Americans
would continue to receive their benefits in a timely fa sh io n /' Civil Service Retirement Trust Fund Hearing at 12.
   7 This provision raises questions as to when the Secretary is required to invest Fund contributions which, on
account of the debt limit, he was unable to invest when initially sent to Treasury. We believe an argument could
be made, based on the 1986 Amendments’ income restoration provisions and legislative history, that this statutory
language merely requires the Secretary to invest the uninvested hinds after the expiration of the debt issuance suspen­
sion period. We understand, however, that, during any debt issuance suspension period. Treasury will on a daily
basis use whatever debt issuance capacity it has available after financing the payment of government obligations
that come due on that date, to invest, on a pro rata basis up to the debt limit, as much o f the uninvested government
trust fund monies as is feasible. This practice will ensure that investments o f uninvested CSRDF contributions are
made as soon as practicable and will, in effect, reduce the amount o f interest income Treasury will have to restore
to the CSRDF following expiration o f the debt issuance suspension period.


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          immediately issue to the Fund obligations [of the United States]
          . . . bear[ing] such interest rates and maturity dates as are nec­
          essary to ensure that, after such obligations are issued, the holdings
          of the Fund will replicate to the maximum extent practicable the
          obligations that would then be held by the Fund if the suspension
          of investment . . . and any redemption or disinvestment . . .
          during [the debt issuance suspension period] had not occurred.

Id. §8348(j)(3). The 1986 Amendments also require the Secretary to restore, on
the first normal interest payment date after expiration of any debt issuance suspen­
sion period, the interest income that was lost to the Fund on account of actions
taken by the Secretary.8
   The 1986 Amendments require the Secretary to notify Congress in writing
whenever, by reason of the debt limit, he will no longer be able to invest Fund
monies. Id. §8348(/)(2). They also compel the Secretary to “ report to Congress
on the operation and status of the Fund during each debt issuance suspension
period for which the Secretary is required to take action’’ under the statute, within
thirty days of the first normal interest payment date occurring after the expiration
of the debt issuance suspension period. Id. §8348(/)(l)- Moreover, the 1986
Amendments mandate that the Secretary send a copy of the report to the Comp­
troller General. Id.
   To our knowledge, Treasury has never promulgated regulations pertaining to
the statutory provisions discussed above. We are also not aware of any court
decisions interpreting the provisions. Accordingly, our interpretation of the 1986
Amendments stems largely from our examination of their statutory language.
   The Supreme Court stated in Blum v. Stenson, 465 U.S. 886, 896 (1984),
“ [w]here . . . resolution of a question of federal law turns on a statute and the
intention of Congress, we look first to the statutory language and then to the
legislative history if the statutory language is unclear.” In this instance, we believe
that the relevant statutory language provides clear guidance on several of the ques­
tions you have posed. Based on our reading of the statutory language, we conclude
that the 1986 Amendments grant the Secretary authority to suspend the investment
of Fund contributions when, in his opinion, such investment would result in the
  8 The 1986 Amendm ents provide:
        O n the first normal interest payment date after the expiration o f any debt issuance suspension period,
     the Secretary . . . shall pay to the Fund, from amounts in the general fund of the Treasury o f the United
     States not otherw ise appropriated, an am ount determined by the Secretary to be equal to the excess of—
        (A ) the net amount o f interest that would have been earned by the Fund during such debt issuance
     suspension period if—
              (i) amounts in the Fund that w ere not invested during such debt issuance suspension period solely
              by reason o f the public debt limit had been invested, and
             (ii) redem ptions and disinvestments with respect to the Fund which occurred during such debt
             issuance suspension period solely by reason o f the public debt limit had not occurred, over
        (B) the net amount o f interest actually earned by the Fund during such debt issuance suspension period.
Id. § 8348(j)(4).

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                                                  Fund

United States exceeding the debt limit. See 5 U.S.C. §8348(j)(l). In addition,
we conclude that the 1986 Amendments authorize the Secretary to redeem Fund
investment assets prior to maturity in order to prevent the United States from
exceeding the debt limit. See id. §8348(k)(l). We also conclude that, pursuant
to his statutory redemption powers, the Secretary may, during a debt issuance
suspension period, redeem an amount of Fund investment assets not greater than
the total amount of civil service retirement and disability benefits authorized to
be paid during the period, even if a sufficient amount of cash exists in the Fund
to pay those benefits. See id. § 8348(k)(2). A necessary corollary to this conclusion
is that, when sufficient uninvested cash exists in the CSRDF to pay benefits, the
Secretary may use the debt issuance capacity freed up by his redemption of Fund
investment assets to increase, through the issuance of obligations of the United
States, the amount of cash available in Treasury’s general cash account.9
   While the 1986 Amendments define debt issuance suspension period as “ any
period for which the Secretary . . . determines . . . that the issuance of obliga­
tions of the United States may not be made without exceeding the . . . debt
limit,” they do not compel the Secretary to establish the debt issuance suspension
period as a specific period of time. See 5 U.S.C. § 8348(j)(5)(B). It is only when
the Secretary seeks to exercise his redemption powers that the requirement to iden­
tify a specific period of time arises, because, as indicated above, the power of
redemption is tied to a computation that requires the debt issuance suspension
period to be ascertained. Consequently, the permissible length of the debt issuance
suspension period becomes critical to any analysis of the Secretary’s redemption
authority under the Fund statute.
   Although the Secretary would have to declare the debt issuance suspension
period as a specific period in order to exercise his redemption powers, the 1986
Amendments do not expressly indicate how he would determine that period or
the factors he would be required to take into account in establishing it. As stated
above, the only guidance the statute provides is that the debt issuance suspension
period must be “ any period for which the Secretary . . . determines . . . that
the issuance of obligations of the United States may not be made without
exceeding the . . . debt limit.” Id. Moreover, we have discovered nothing in the
1986 Amendments’ legislative history that elaborates upon the express terms of
the statute.10
   9 Because the debt limit applies only to ‘'outstanding” obligations o f the United States, our operating assumption
has been that the accounting transaction involved in redeeming prior to maturity Fund investment assets would
free up borrowing capacity under the debt limit in an amount equal to the amount o f the investment assets redeemed.
See 31 U .S .C § 3l01(b).
   10The version o f the 1986 Amendments that was initially passed by the Senate contained a definition o f debt
issuance suspension period that was slightly different from the defmition ultimately enacted into law. The Senate-
passed version defined the period as “ any period for which the Secretary . . . determines that the issuance of obliga­
tions o f the United States sufficient to orderly conduct the financial operations o f the United States may not be
made without exceeding the . . . debt lim it/' 132 Cong. Rec. 24,944 (1986) (emphasis added). The fact that the
definitional language was changed in the conference held between the Senate and the House o f Representatives
                                                                                                            Continued


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   Because the statute and its legislative history are silent as to how the Secretary
is to determine the debt issuance suspension period, we believe the Secretary has
discretion to identify the factors he will rely upon in designating the length of
the period. As the Supreme Court stated in Chevron U.SA. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984):

           “ The power of an administrative agency to administer a congres-
           sionally created . . . program necessarily requires the formulation
           of policy and the making of rules to fill any gap left, implicitly
           or explicitly, by Congress.” Morton v. Ruiz, 415 U.S. 199, 231
           (1974). If Congress has explicitly left a gap for the agency to fill,
           there is an express delegation of authority to the agency to elucidate
           a specific provision of the statute by regulation. Such legislative
           regulations are given controlling weight unless they are arbitrary,
           capricious, or manifestly contrary to the statute.

Id. at 843-44 (alteration in original).
   In view of the statutory definition of debt issuance suspension period, we believe
it would be reasonable for the Secretary to take into account his assessment of
whether, and if so when, an increase in the debt limit would be enacted in deter­
mining, for purposes of redemption, the length of a debt issuance suspension
period.11 In the absence of an extraordinary infusion of extra cash, a statutory
increase in the amount of debt which may be issued under the debt limit would
be the only practical way Treasury could legally issue obligations of the United
States after the debt limit had been reached.12
   Although no public notice and comment procedures would have to be used,
the Secretary would have to make the assessment based on a factual record. Like
most agency fact-finding, the findings he would make to support his assessment
would be upheld in court as permissible unless they were found to be “ arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” 5
U.S.C. §706(2)(A).13
does not compel the conclusion that C ongress intended by the modification to narrow the Secretary’s discretion
in designating the period. Accordingly, we d o not believe this fact provides any guidance as to how the Secretary
should define the period.
    11 We assume for purposes o f this memorandum that, during a debt limit crisis, Treasury would continue its normal
practice o f financing scheduled principal paym ents of maturing obligations with additional borrowings. Therefore,
the fact that Treasury would, during a debt lim it crisis, be regularly retiring obligations o f the United States would
not, by itself, cause a reduction in the overall amount o f debt outstanding subject to the debt limit.
    12 It is true that debt issuance capacity could be freed up by means other than an increase in the debt limit.
D ebt issuance capacity would become available, for example, upon the redemption o f a significant amount of debt
subject to the debt limit. But when such d e b t obligations are held by the public, Treasury must have the cash on
hand to redeem them. Since Treasury’s cash position will likely be low during a debt limit crisis, early redemptions
o f debt held by the public would likely be o f limited use in freeing up debt issuance capacity. Refinancings as
described in footnote 11 could, o f course, continue during debt limit crises.
    13 Unlike the Secretary, a court evaluating the Secretary’s factual findings would probably have the benefit of
hindsight. However, the court would certainly have to take into account, according deference to the Secretary, the
situation as it existed at the time (he Secretary was required to make his decision. As the Comptroller General


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                                                   Fund

   In light of the foregoing discussion, we believe a decision by the Secretary
establishing a debt issuance suspension period of a number of months will be
consistent with his statutory authority over the CSRDF if, based on the information
available to him at the time, he is able reasonably to conclude that an increase
in the debt limit will not be enacted during the period. Moreover, in assessing
the prospects for an increase in the debt limit, we consider it appropriate for the
Secretary to take into account public statements made by congressional leaders
and the President concerning their willingness to take the steps necessary to cause
an increase in the debt limit, and future events that are more or less likely to
affect the positions and actions of Congress and the President.
   It could be argued that the term “ debt issuance suspension period” cannot prop­
erly refer to a specific period of time set by the Secretary based on his reasonable
assessment of when, after being prevented on account of the debt limit from
issuing obligations of the United States, Treasury will be able to issue those
obligations, but must, instead, refer to that length of time that follows the Sec­
retary’s initial determination of his inability to issue obligations of the United
States during which the conditions that gave rise to that determination remained
in effect. Under this alternative interpretation of 5 U.S.C. § 8348(j)(5)(B), the Sec­
retary would not have the direct authority to determine a period of time during
which obligations of the United States could not be issued without exceeding the
debt limit. Instead, he would simply be able to determine the fact that obligations
of the United States could not be issued without exceeding the debt limit. Subse­
quently, the “ debt issuance suspension period” would be ascertained simply as
that time period during which the Secretary had made such determinations.
  Under this alternative interpretation, the Secretary would have no authority to
establish in advance the length of a debt issuance suspension period for purposes
of redemption. Accordingly, he would not be able to redeem CSRDF investment
assets prior to maturity based on the length of such a period. Instead, he would
be limited in his redemption authority merely to redeeming on individual monthly
benefits payment dates CSRDF investment assets based on the amount of benefits
authorized to be paid on those dates, and nothing more.
  While the alternative interpretation of the statutory definition of debt issuance
suspension period is plausible, we believe the interpretation we have set forth

remarked in assessing the legality o f the Secretary’s actions with respect to the Social Security trust funds during
a 1985 debt limit crisis:
     In sum, it appears, on the basis o f the information now available, that the Secretary redeemed or failed
     to invest the Trust Funds’ assets in amounts and for periods o f time greater than absolutely necessary
     to pay [S]ocial [SJecurity benefits. However, this is a judgment reached only with the benefit of hindsight.
     The Secretary was required to act in a complex and fluid situation, without the benefit o f all o f the informa­
     tion now available. Further, the Secretary had many other duties to c an y out, including managing the
     governm ent’s finances and investing assets o f and making payments from other government-managed trust
     funds. Under all the circumstances involved, we conclude that he did not act unreasonably.
Letter for the Honorable James R. Jones, Chairman, Subcommittee on Social Security, from Charles A. Bowsher,
Comptroller General o f the United States, app. I, Legality o f Secretary o f the Treasury's Management o f Social
Security Trust Funds During the 1985 Debt Ceiling Crisis at 9 -1 0 (Dec. 5, 1985).

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 above is more consistent with the statute’s text and structure. First, the verb tense
 and sentence structure used in the statutory provision defining debt issuance
 suspension period do not militate against our interpretation, whereas they are
 somewhat at odds with the alternative proposal. If Congress had meant for the
 term debt issuance suspension period to take on the limited meaning suggested
 by the alternative interpretation, it could have drafted its statutory definition much
 more clearly. For example, instead of its current wording, the term could have
been defined as “ any period for which the Secretary . . . had determined . . .
 that the issuance of obligations of the United States could not have been made
without exceeding the . . . debt limit.”
   Second, the structure of the provisions added to the Fund statute in 1986 sup­
ports our interpretation more than it supports the alternative. In 1986, Congress
mandated that the Fund be made whole for the financial losses it incurs as a
result of redemptions conducted during debt issuance suspension periods. See 5
U.S.C. §8348(j)(3), (4). Under the alternative interpretation of § 8348(j)(5)(B),
which was enacted at the same time, this make whole provision could never have
any operative significance, because there would never be such losses. Under the
alternative interpretation, the 1986 Amendments would have limited the Secretary
to redeeming, on individual monthly benefits payment dates falling within debt
issuance suspension periods, only the amount of Fund investment assets that he
was already able to redeem in order to pay the month’s benefits under normal
circumstances, whether or not the debt limit prevented issuance of new obligations
of the United States. Redemptions of this kind in connection with the payment
of civil service retirement and disability benefits had been contemplated from the
inception of the Fund,14 and are routinely effected on monthly benefits payment
dates under normal circumstances.15 Consequently, the Fund is not, nor should
it be, compensated for the investment assets that are depleted and the interest
income that is not realized as a result of such routine action, because such redemp­
tions do not create Fund losses.
   On the other hand, if instead of merely mandating that the usual Fund manage­
ment practices continue during debt limit crises, Congress gave the Secretary the
authority to effect redemptions that are not contemplated by the Fund statute under
normal circumstances and that could result in temporary financial losses, as our
   14 In testimony concerning Treasury’s management o f the Fund during the 1985 debt limit crisis. Treasury's former
Deputy Assistant Secretary for Federal Finance, John Niehenke, stated:
         The investm ents [of the CSRDF] are to be made in special obligations of the Treasury at an interest
      rale set m onthly on the basis of a statutory formula. U nlike other trust fund statutes, the civil service
      fund statute does not explicitly provide for redemption o f [F]und investments in order to pay benefits.
         However, the statute does appropriate moneys in the [F]und for payment of benefits and administrative
      expenses. Since benefits cannot be paid unless investments either mature or are redeemed, it is obvious
      that the Secretary's authority to invest also contemplates redemption.
C ivil Service Retirement Trust Fund Hearing at 10.
   15 As stated above, see supra pp. 286-87, under normal circumstances. Treasury typically reimburses its general
cash account for the paym ent o f monthly civil service retirement and disability benefits by redeeming, prior to
maturity. Fund investment assets in an amount equal to those benefits.


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interpretation admits as a possibility, then the requirements imposed by the 1986
Amendments to make the Fund whole for redemptions effected during debt
issuance suspension periods would not be rendered nugatory.16
   Mindful that statutes should be construed to give effect, if possible, to every
provision, see Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979); see also
Moskal v. United States, 498 U.S. 103, 109-10 (1990), and cognizant of the
Supreme Court’s recent admonition that “ [w]hen Congress acts to amend a statute,
we presume it intends its amendment to have real and substantial effect,” Stone
v. INS, 514 U.S. 386, 397 (1995), we conclude that our interpretation of the statu­
tory definition of debt issuance suspension period is the correct one. We also
find support for our interpretation in the fact that, in the 1986 Amendments, Con­
gress chose a verb tense and sentence structure for the statutory definition of debt
issuance suspension period that render its meaning, at worst, ambiguous. When
confronted with an ambiguous statute, an administrative agency is empowered to
give that statute a reasonable interpretation, Chevron, 467 U.S. at 843,17 which
we believe our interpretation is. Accordingly, we conclude it is a permissible
reading, and indeed the correct reading, of the 1986 Amendments.

B. Legislative History

  The 1986 Amendments’ legislative history does not appear to foreclose the Sec­
retary’s use of the CSRDF in the manner described above because statutory lan­
guage included in early versions of the legislation that would have arguably
   160 n e could argue that some temporary financial losses could accrue to the Fund, when compared to normal
fund management operations, whenever Treasury redeemed Fund investment assets earlier than it normally would,
even if the redemptions were early by only a matter o f days. In fact, Treasury engaged in som e slightly-earlier-
than-normal redemptions o f the Social Security trust funds in 1985, and its actions were the subject o f congressional
inquiry and a Comptroller G eneral’s report prior to the enactment o f the 1986 Amendments.
   Perhaps one o f Congress’s intentions in enacting the 1986 Amendments was to authorize such slightly-earlier-
than-normal redemptions in the future, redemptions that were made only slightly before they normally would have
been made to pay benefits, while at the same time ensuring that the CSRDF was in effect indemnified for lost
interest and that Fund investments were restored as nearly as practicable in such an event. The statute that was
enacted, however, contains no language that cabins the Secretary's discretion to determine a debt issuance suspension
period prospectively in such a way that he can only look slightly ahead in time. Instead, it simply states that the
Secretary has discretion to redeem an amount o f Fund investment assets not exceeding the total amount o f benefits
authonzed to be paid during a debt issuance suspension period, and also the discretion to determine that period.
   On the other hand, if the statute is interpreted in such a way that the Secretary lacks the discretion to determine
a debt issuance suspension period prospectively, as the alternative interpretation would have it, then even slightly-
earlier-than-normal redemptions would be barred, and the make whole provisions of the statute with respect to
redemptions would be superfluous, as we have argued in the text.
   17The Supreme Court stated in Chevron :
         When a court reviews an agency's construction of the statute which it administers, it is confronted with
      two questions. First, always, is the question whether Congress has directly spoken to the precise question
      at issue. If the intent o f Congress is clear, that is the end o f the matter, for the court, as well as the
      agency, must give effect to the unambiguously expressed intent o f Congress. If, however, the court deter­
      mines Congress has not directly addressed the precise question at issue, the court does not simply impose
      its own construction on the statute, as would be necessary in the absence o f an administrative interpretation
      Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court
      is whether the agency’s answer is based on a permissible construction of the statute.
Id. at 842-43 (footnotes omitted).

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prohibited such activity was significantly changed prior to enactment. Congress
enacted the 1986 Amendments as part of the Omnibus Budget Reconciliation Act
of 1986, Pub. L. No. 99-509, 100 Stat. 1874 (“ OBRA 1986” ), nearly one year
after a former Secretary, in response to a prior debt limit crisis, suspended the
investment of approximately $17 billion in Fund monies, see Civil Service Retire­
ment Trust Fund Hearing at 10, and accelerated the redemption of Fund invest­
ment assets, resulting in financial losses. See id. at 1, 11.
   Legislation allowing the Secretary to suspend the investment of Fund contribu­
tions and redeem Fund investment assets during a debt limit crisis was initially
introduced in the Senate by Senator Eagleton and others as an amendment to a
House-Senate joint resolution increasing the debt limit. See 132 Cong. Rec. 18,732
(1986). The Senate passed the amendment by unanimous consent on August 1,
1986. See id. at 18,733. As passed by the Senate on August 9, 1986, the joint
resolution contained the amendment. See id. at 20,377.
   According to Senator Eagleton, the purpose of the amendment was “ to both
modify and clarify the authority of the Secretary . . . in connection with his
responsibilities for investing the assets of the [Fund].” Id. at 18,732 (statement
of Sen. Eagleton). “ Specifically,” he provided:

       the amendment would allow the Secretary to temporarily suspend
       additional investment of the [F]und’s assets when such investments
       would otherwise result in the public debt limit being exceeded.

         Furthermore, after such a suspension, the Secretary would be
       required: First, to reimburse the [F]und for any investment lost as
       a result of the suspension and, second, to invest uninvested assets
       of the [F]und in a manner which, to the extent practicable, would
       make the [F]und whole, as though such suspension never occurred.

          Moreover, the amendment would allow the Secretary to disinvest
       assets of the [F]und when the [F]und is holding uninvested assets
       due to the public debt limit, but only when necessary to ensure
       timely payment of amounts authorized to be made from the [F]und.

Id.
  The provision of the Eagleton amendment clarifying the Secretary’s redemption
authority during a debt limit crisis provided as follows:

       The Secretary of the Treasury may sell or redeem securities, obliga­
       tions, or other invested assets of the Fund only for the purpose
       of enabling the Fund to make payments authorized by the provi­
       sions of this subchapter or [provisions concerning benefits pay­
       ments] or related provisions of law. If the Fund holds any amounts

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                                                  Fund

        which, by reason of the public debt limit, are not invested, the Sec­
        retary may nevertheless make such sales and redemptions if, and
        only to the extent, necessary to ensure that such payments are made
        in a timely manner.

Id. The sponsors of the Eagleton amendment apparently intended to permit the
redemption of Fund investment assets during debt limit crises only for the purpose
of ensuring the timely payment of civil service retirement and disability benefits.
Noting disapprovingly that the CSRDF had been tapped in the past to ensure that
the United States remained solvent during debt limit crises, Senator Gore, a
sponsor of the Eagleton amendment, declared that “ [b]y treating [contributions
to the CSRDF] and the [g]ovemment’s share of retirement pension costs as usable
only for the payment of civil service retirement and disability benefits, the Con­
gress will be restoring the confidence that has undergone severe strain over the
past few years.” Id. at 18,733 (statement of Sen. Gore).
   When Senator Gorton included the language of the Eagleton amendment in an
amendment to the Senate’s version of OBRA 1986, S. 2706, 99th Cong. (1986),
no change was made to the text of the redemption provision. See 132 Cong. Rec.
at 24,900. Speaking in support of the Gorton amendment and describing provisions
in it delineating the Secretary’s authority to manage CSRDF and Social Security
trust funds investments, Senator Heinz said:

        The second provision in the [amendment] protects the Social Secu­
        rity and civil service trust funds from uncontrolled disinvestment
        in the face of a debt ceiling crisis. As most of us remember, last
        year’s disinvestment, even though it was fully repaid with interest,
        greatly damaged public confidence in the stability of the trust
        funds. . . . Under [this amendment], the Treasury can disinvest the
        trust funds only for the purpose of paying benefits; the borrowed
        money must be repaid with interest as soon as borrowing authority
        becomes available; and the Secretary . . . must provide advance
        notice of any disinvestment decisions. Enactment of this plan will
        send a message to retirees that the trust funds are not subject to
        the uncontrolled manipulation that occurred in the past.

Id. at 24,905 (statement of Sen. Heinz).
   The Senate passed the Gorton amendment by unanimous consent on September
19, 1986. See id. Later that day, the Senate passed S. 2706, as amended. See
id. at 24,918, 24,944-45. On September 25, 1986, the Senate amended H.R. 5300,
99th Cong. (1986), the version of OBRA 1986 passed by the House of Representa­
tives, by striking the language following the bill’s enacting clause and substituting
the text of S. 2706, as amended. It then appointed conferees to resolve the dif­

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ferences between the House and Senate-passed versions of the bill. See 132 Cong.
Rec. at 26,151.
   The legislative history preceding the conference committee on OBRA 1986 sug­
gests a legislative intention on the part of the Senate to allow the Secretary to
redeem Fund investment assets during debt limit crises only to the extent nec­
essary to ensure the timely payment of civil service retirement and disability bene­
fits. We know, however, that the legislative language delineating the Secretary’s
redemption powers changed significantly during conference with the House of
Representatives. See H.R. Conf. Rep. No. 99-1012, at 61-62 (1986); 5 U.S.C.
§8348(k).18 Although the conference report inexplicably failed to acknowledge
the language change,19 a comparison of the respective redemption provisions
reveals significant differences in the flexibility they afforded the Secretary. While
the Senate provision authorized redemption only as a means to ensure the timely
payment of benefits during debt limit crises, the redemption provision drafted by
the conference committee and ultimately enacted by Congress contained no such
limitation,20 expressly allowed the Secretary to redeem Fund investment assets
prior to maturity in order to avoid exceeding the debt limit, and expressly empow­
ered the Secretary to exercise his redemption powers even where a sufficient
amount of money exists in the Fund to ensure that benefits are paid in a timely
manner.21 Although the Senate-passed redemption language prohibited the use of
   18 In addition to effecting a m ajor change in the language o f the redemption provision, the conference committee
m ade a m inor change in the legislative language setting forth the Secretary's authority to suspend investment of
Fund contributions during a debt limit crisis. In place o f Senate bill language allowing the Secretary to 4‘suspend
additional investment o f amounts in the Fund i f necessary to ensure that the public debt o f the United States does
not exceed the public debt limit," 132 Cong. Rec. 24,944 (1986) (emphasis added), the conference report allowed
the Secretary to suspend investment of the contributions only “ if such additional investment could not be made
without causing the public debt o f the United States to exceed the public debt limit*' H.R. Conf. Rep. No. 9 9 -
1012 at 61 (em phasis added). This language change arguably narrowed the Secretary’s ability to use his suspension
powers as a debt managem ent device.
   19 The conference report on O BRA 1986 m erely provided as follows'
     Senate provision
        Section 1202 o f the Senate amendment modifies and clarifies the authority of the Secretary . . . to
     suspend investm ent o r to disinvest assets o f the Civil Service Retirement and Disability Fund. The provision
     permits the Secretary temporarily to suspend investment o f the Fund’s assets when such investment would
     otherw ise result in the public debt limit being exceeded. If the Secretary should suspend investment under
     these conditions, at the end o f the suspension period the Secretary is required to make the Fund whole
     for any earnings lost as a result of the suspension o r disinvestment by a combination o f special investment
     and cash paym ent actions.
    House provision
       The H ouse has no comparable provision.
     Conference agreement
         The Conference agreement contains the Senate language.
H.R. Conf. Rep. No. 99-1012, at 256, reprinted in 1986 U.S.C.C.A.N. 3868,3901.
   20 In fact, as stated above, the redemption provision ultimately enacted allows the Secretary, in effecting redemp­
tion, to “ obtain any amount o f funds not exceeding the amount equal to the total amount of [authorized civil service
retirement and disability benefits payments].” 5 U.S.C. §8348(k)(2). Notably, no limitation is placed on the use
of the proceeds from the redemption.
   21 W e note that a summary o f the conference agreement printed in the Congressional Record did describe the
1986 am endm ents as follows:
         A llow s disinvestm ent o f civil service retirement and disability trust funds to pay benefits when the debt
      ceiling is approached. Restores the portfolio and repays interest if disinvestment occurs.


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 The Secretary o f the Treasury’s Authority with Respect to the Civil Service Retirement and Disability
                                                 Fund

redemption for purposes other than ensuring the timely payment of retirement and
disability benefits, the redemption provision ultimately enacted by Congress nec­
essarily allows the use of redemption for the additional purpose of freeing up
debt issuance capacity under the debt limit.

C. Debt Limit

   An issue that must be resolved in our analysis is whether the investment suspen­
sion and redemption activities contemplated by Treasury would violate the debt
limit. An argument could be made that the failure to invest additional Fund con­
tributions and the early redemption of Fund investment assets would create an
unauthorized liability from Treasury to the Fund equal to the amount of money
and/or investment assets needed to make the Fund whole after such actions. Our
operating assumption has been that the Secretary would suspend the investment
of Fund contributions only when, on account of the debt limit, obligations of the
United States could not be legally issued. Moreover, as stated above, see supra
note 9, we have also assumed that the accounting transaction involved in
redeeming Fund investment assets prior to maturity would free up borrowing
capacity under the debt limit in an amount equal to the amount of the investment
assets redeemed.

         The debt limit, 31 U.S.C. § 3101(b), provides:

             The face amount of obligations issued under this chapter and the
          face amount of obligations whose principal and interest are guaran­
          teed by the United States Government (except guaranteed obliga­
          tions held by the Secretary of the Treasury) may not be more than
          $4,900,000,000,000, outstanding at one time, subject to changes
          periodically made in that amount as provided by law through the
          congressional budget process described in Rule XLIX of the Rules
          of the House of Representatives or otherwise.

This limit applies to all United States debt obligations issued by Treasury, see
31 U.S.C. §§3102-3113, except obligations of the Federal Financing Bank issued
to the public with the approval of the Secretary, pursuant to 12 U.S.C. § 2288(a).
It also includes debt issued by certain other federal agencies and corporations
which is guaranteed as to principal and interest by the United States. See H.R.
Rep. No. 79-246, at 2-3 (1945); S. Rep. No. 79-106, at 2 (1945).
   Although Treasury would, more than likely, not be able to make the Fund whole
for the Secretary’s actions taken during a debt limit crisis until after an increase

132 Cong. Rec. 33,254 (1986). We believe, however, that this description is inconsistent with the express terms
o f the statute.


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in the debt limit, we believe any liability to the Fund created by the Secretary’s
actions would not constitute an obligation within the terms of §3101(b). Such
a liability would not resemble any of the obligations referred to in § 3 101(b) as
being subject to the debt limit. Moreover, subsections (j) and (k) of § 8348, the
1986 amendments’ investment suspension and redemption provisions, necessarily
contemplate these actions and Fund reimbursements following them, even though
the CSRDF statute also provides that Fund investments are subject to the debt
limit. See 5 U.S.C. § 8348(d).

                                    III. Conclusion

   Based on the foregoing, we conclude that the Secretary has the authority under
5 U.S.C. § 8348 to suspend the investment of Fund contributions and redeem Fund
investment assets in order to prevent the public debt of the United States from
exceeding the debt limit. We conclude further that, during a debt issuance suspen­
sion period, the Secretary may redeem Fund investment assets based on the
amount of civil service retirement and disability benefits authorized to be paid
during such period, and that redemptions so executed would create room for addi­
tional borrowing by Treasury under the debt limit. In addition, we conclude that
any decision designating the length of a debt issuance suspension period must
be reasonable, taking into account the Secretary’s assessment of the period of
time it would take for an increase in the debt limit to be enacted. Finally, we
believe the investment suspension and redemption activities contemplated by
Treasury would not contravene the statutorily prescribed debt limit.

                                                         WALTER DELLINGER
                                                        Assistant Attorney General
                                                         Office of Legal Counsel




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