         Fiduciary Obligations Regarding Bureau of Prisons
                         Commissary Fund

31 U.S.C. § 1321 and its accompanying Department of Justice regulations do not impose a fiduciary
   obligation on the Bureau of Prisons to expend Commissary Fund moneys only in accordance with
   the terms o f the Commissary Fund trust.

                                                                                                     M a y 22, 1995


             M e m o r a n d u m O p in io n f o r t h e A s s is t a n t A t t o r n e y G e n e r a l
                                               C iv il D iv is io n


  You have asked whether the Office of Legal Counsel continues to adhere to
the analysis of the “ Commissary fund, Federal prisons” (“ Commissary Fund” )
contained in the Memorandum for Norman Carlson, Director, Bureau of Prisons,
from Samuel A. Alito, Jr., Deputy Assistant Attorney General, Office of Legal
Counsel, Re: Disposition o f Income From Prison Vending Machines Under the
Randolph-Sheppard Act (Mar. 25, 1986) (“ Randolph-Sheppard Memorandum” ).
See Memorandum for Walter Dellinger, Assistant Attorney General, Office of
Legal Counsel, from Frank W. Hunger, Assistant Attorney General, Civil Division,
Re: Revision o f Previous Request fo r Informal Legal Opinion Concerning the
Limitations on Expenditures from the Bureau of Prisons Commissary Fund at 2
(Apr. 13, 1995).
   The Randolph-Sheppard Memorandum states that because the Commissary Fund
is classified as a “ trust” account under 31 U.S.C. § 1321(a)(22), the Bureau of
Prisons (“ BOP” ) has the power to expend funds in the account only in a fiduciary
capacity. Randolph-Sheppard Memorandum at 4. Applying general principles of
trust law, it concludes that income from prison vending machines which would
otherwise accrue to the Commissary Fund is not subject to the income-sharing
provisions of section 7 of the Randolph-Sheppard Act. See Randolph-Sheppard
Act Amendments of 1974, Pub. L. No. 93-516, sec. 206, §7, 88 Stat. 1622, 1627
(codified as amended at 20 U.S.C. § 107d-3).
   Because the Randolph-Sheppard Memorandum mischaracterizes the Com­
missary Fund as a common law trust and suggests that, as trustee, the BOP has
a fiduciary obligation to federal prison inmates to expend Commissary Fund
income in accordance with the terms of the trust, see Randolph-Sheppard Memo­
randum at 4, 10, we disavow those aspects of the opinion which analyze the Com­
missary Fund under general trust law principles. Instead, for the reasons stated
below, we conclude that 31 U.S.C. §1321 and its accompanying Department of
Justice (“ DOJ” ) regulations do not impose a fiduciary obligation on the BOP
to expend Commissary Fund moneys pnly in accordance with the terms of the
Commissary Fund.
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  Although we recognize that the trust fund analysis contained in our Randolph-
Sheppard Memorandum was based to some degree on our interpretation of a
memorandum attachment to a Letter for Honorable Elmer B. Staats, Comptroller
General of the United States, General Accounting Office, From Frank M.
Wozencraft, Assistant Attorney General, Office of Legal Counsel, Re: Set-Offs
Against Prisoners’ Trust Funds (Aug. 23, 1968) (“ Prisoners’ Trust Fund Memo­
randum” ), we nonetheless reaffirm the analysis presented in the Prisoners’ Trust
Fund Memorandum. However, we limit the memorandum’s applicability solely
to those “ trust funds” established under 31 U.S.C. § 1321 that do impose fiduciary
obligations on the United States.
  This memorandum does not question the Randolph-Sheppard Memorandum’s
conclusion that the income-sharing provisions of section 7 of the Randolph-
Sheppard Act do not apply to income from prison vending machines which would
otherwise accrue to the Commissary Fund, only the reasoning by which the
conclusion was reached.

                                  I. BACKGROUND

   DOJ established the prison commissary system in 1930 to sell to prison inmates
articles not regularly provided by federal prisons, such as toothpaste, soap, stamps,
arts and crafts, newspapers and magazines. Department of Justice Circular No.
2126, *Jf][9—11 (Aug. 1, 1930). At the same time, it established the Commissary
Fund in order to finance the purchase of the articles to be sold in the commissaries,
pay the salaries of commissary employees, and retain certain commissary system
profits in a capital fund for the future operation of the commissaries. Id. CH 9,
14, 15, 18.
   In 1930, DOJ also established an Inmate Trust Fund at each federal prison,
wherein inmates were permitted to deposit money brought into the prison upon
arrival, money sent to them while in prison and money earned while incarcerated.
Id. TK2-4. The Inmate Trust Fund was intended to operate in conjunction with
the commissary. When purchasing articles from the commissaries, inmates were
required to have their Inmate Trust Fund accounts debited in the amount of such
articles.
   In addition, DOJ created a “ Welfare Fund” in 1930, wherein “ a portion of
the [commissary] profits” could, upon “ written order of the Warden” and with
the “ approval of the Director, Bureau of Prisons,” be credited and disbursed “ for
any purpose accruing to the benefit of the inmate body, as a whole, such as amuse­
ments, education, library, or general welfare work.” Id.     17-19.
   DOJ adopted rules pertaining to the management, use and operation of these
activities and functions in the Circular establishing them. These rules afforded
the BOP wide-ranging authority to promote its peneological and administrative
interests. See, e.g., id. tJ[23 (“ The Warden or Superintendent of an institution may

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                   Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund


deny or limit any inmate as to the privilege of purchasing from the ‘Institutional
Commissary.’ ” ); id. ‘fllO (“ Only those articles which from time to time shall
be authorized by the Director, Bureau of Prisons, may be procured through the
‘Institutional Commissary’ for the use of inmates.” ); id. *1111 (“ An approved list
of newspapers, books and magazines, for distribution through the ‘Institutional
Commissary,’ shall be issued from time to time by the Warden or Superintendent
of the institution.” ). The rules also stressed that “ [n]o inmate shall be entitled
to . . . earnings derived through operation of the ‘Institutional Commissary.’ ”
Id. 1121.
   New rules, promulgated in 1932, regarding the Commissary Fund and related
accounts and functions, see Department of Justice Circular No. 2244 (Jan. 1, 1932)
(“ Circular No. 2244” ), continued to vest the BOP with wide-ranging authority.
The operating expenses and employee salaries associated with the commissaries
continued to be financed through the Commissary Fund. Id. TRI19, 34. The BOP
retained authority to determine the articles sold in the commissaries, id. %23, the
reading materials available for distribution through the commissaries, id. H25, and
the inmates permitted to exercise commissary privileges. Id. ^21. Moreover, the
BOP retained the authority to determine whether and how much of the profits
from commissary operations would be distributed to the Welfare Fund to be dis­
bursed for the benefit of the inmate population as a whole. Id. <]ffll6, 41.
   The amended rules continued to deny inmates any entitlement to commissary
earnings. Id. %22. In addition, the separate account for inmates’ personal funds
was also retained, although it was renamed the “ Prisoners’ Trust Fund.” Id. <]H[1,
2, 5. Further, the amended rules provided for the deposit of the Commissary Fund
and Prisoners’ Trust Fund in the United States Treasury. Id. <fll2.1
   Congress first recognized the existence of the Commissary Fund in its fiscal
year 1933 Department of Justice appropriation. In response to a request from
Attorney General William D. Mitchell, Congress authorized DOJ to retain and
use proceeds from the operation of the commissaries to pay commissary
employees’ salaries. See Act of July 1, 1932, ch. 361, 47 Stat. 475, 493.2
   •Although the BOP occasionally updates its interpretation o f Circular No. 2244, the purpose o f the Prisoners*
Trust Fund and Commissary Fund “ remains essentially the same as when created: . . . To maintain inmates’ monies
. . . while they are incarcerated” and “ [t]o provide inmates the privilege o f obtaining merchandise not provided
by the [BOP] or o f a different quality.” Federal Bureau o f Prisons, U.S. Department o f Justice, Trust Fund M anage­
ment Manual, Program Statem ent 4500.3, ch. 4501 (1989).
   2 In requesting such authority, Attorney General Mitchell explained that the new commissary system, and the
authority to pay the salaries o f commissary employees through it, “ reduces the possibilities for contraband, assists
in the control o f the purchase o f extra articles by prisoners, and . . . will save the Government a substantia] sum
o f m oney.” Letter for Hon. William B. Oliver, Chairman, Subcommittee on Appropriations, from William D.
Mitchell, Attorney General at 1 (Jan. 27, 1932), reprinted in Department o f Justice Appropriation Bill for 1933:
Hearing before the Subcomm. on the Departments o f State, Justice. Commerce, and Labor Appropriation o f the
House Comm. on Appropriations, 72d Cong. 484 (1932) ( “ 1932 H earings” ). Similarly, referring to the personal
funds of inmates located in their individual trust accounts, a BOP statement accompanying the Attorney G eneral’s
statement declared that “ [t]he establishment o f so-called commissaries is not solely for the purpose of supplying
prisoners with special articles not furnished by the Government. It is rather an incident to the adoption o f m easures
for perfecting the control and management o f money owned by prisoners but in the custody o f prison officials.”
                                                                                                            Continued


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   In 1934, as part of the Permanent Appropriation Repeal Act, Congress classified
the Commissary Fund and the Prisoners’ Trust Fund as “ trust funds” and pro­
vided that “ [a]ll moneys accruing to these funds are hereby appropriated, and
shall be disbursed in compliance with the terms of the trust.” See Permanent
Appropriation Repeal Act, ch. 756, § 20(a), 48 Stat. 1224, 1233 (1934) (originally
codified at 31 U.S.C. §725s(a) (1934)). The statutory language pertaining to the
Commissary Fund and Prisoners’ Trust Fund has remained essentially unchanged
since 1934. Today the funds are listed as “ trust funds” at 31 U.S.C. § 1321(a)(22)
and (a)(21).3 Pursuant to 31 U.S.C. § 1321(b)(1), moneys “ received by the United
States Government as trustee shall be deposited in an appropriate trust fund
account in the Treasury. . . . [A]mounts accruing to these funds. . . are appro­
priated to be disbursed in compliance with the terms of the trust.” 4

                                           EL LEGAL ANALYSIS

   At common law, “ [a] trust. . . is a fiduciary relationship with respect to prop­
erty, subjecting the person by whom the title to the property is held to equitable
duties to deal with the property for the benefit o f another person, which arises
as a result o f a manifestation o f an intention to create it.” Restatement (Second)
of Trusts §2 (1959) (emphasis added).5 “ No trust is created unless the settlor
manifests an intention to impose enforceable duties.” Id. §25. Moreover, as sov­
ereign, the United States has the capacity to act as a common law trustee. See
2 Austin Wakeman Scott & William Franklin Fratcher, The Law o f Trusts § 95
(4th ed. 1987).
   Supreme Court precedent informs our decision to recede from our previous
observation that 31 U.S.C. §1321 creates a fiduciary relationship between the
United States, as trustee, and inmates with respect to the management and oper­
ation of the Commissary Fund. While we are not aware of any court decisions
discussing whether 31 U.S.C. §1321, or a predecessor provision in the United

 1932 H earings at 4 84-85. The statement provided further that “ [c]ommissaries were . . . established as a means
to insure the safe and econom ical procurement and distribution o f special articles which by custom prisoners have
always been perm itted to procure through paym ent from their personal funds.” Id. at 48S. In addition, the statement
argued that the com m issary system ,4[m]inimizes [the] possibility o f introduction of contrabands such as dope, liquor,
weapons, etc.” Id.
   3 The Com m issary Fund is listed as “ C om m issary funds, Federal prisons.** The Prisoners* Trust Fund is listed
as “ Funds o f Federal Prisoners.”
   4 In 19S2, Congress authorized the A ttorney General to make small loans from the Commissary Fund to deserving
inmates upon their release from prison and accept gifts o r bequests o f m oney for credit to the Commissary Fund.
See Act o f M ay 15, 1952, ch. 289, 66 S ta t 72 (originally codified at 18 U.S.C. §4284 (1956)). However, the
provision giving the A ttorney General the authority to make small loans to released inmates was repealed prospec-
tively in 1984. See Comprehensive Crime Control Act o f 1984, Pub. L. No. 98-473, § 2 18(a)(3), 98 Stat. 1976,
2027 (1984). The repeal was effective N ovem ber 1,1986.
   9 “ A person in a fiduciary relation to another is under a duty to act for the benefit o f the other as to matteis
within the scope o f the relation. . . . Fiduciary relations include not only the relation o f trustee and beneficiary,
but also, am ong others, those o f guardian and ward, agent and principal, attorney and client. . . . The scope of
the transactions affected by the relation and th e extent o f the duties imposed are not identical in all fiduciary relations.
The duties o f a trustee are more intensive th a n the duties o f som e other fiduciaries.” Id. § 2 cmt. b.


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                  Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund


States Code, imposes fiduciary obligations on the United States with respect to
“ trust funds,” it must be noted that 31 U.S.C. § 1321 currently classifies as “ trust
funds” ninety-one different funds located in the United States Treasury. These
funds range from moneys that are identifiable to particular persons (e.g., “ Money
and effects of deceased patients,” Public Health Service, 31 U.S.C. § 1321(a)(30))
to moneys simply dedicated to a particular public purpose (e.g., “ Library of Con­
gress trust fund, investment account,” 31 U.S.C. § 1321(a)(9); “ Violent Crime
Reduction Trust Fund,” 31 U.S.C. § 1321 (a)(91)). The wide-ranging diversity of
the Treasury “ trust funds” and the lack of identifiable beneficiaries of a number
of them suggests that, in enacting the statute. Congress did not intend for the
United States to be held to the same duties and obligations as a private, common
law trustee with respect to all such Treasury accounts.
   In the absence of federal court decisions interpreting 31 U.S.C. § 1321, we must
look to interpretations of other statutes to glean the factors which distinguish statu­
tory trusts that impose fiduciary obligations on the United States from those that
do not. Several sovereign immunity decisions provide guidance. In United States
v. Mitchell, 445 U.S. 535 (1980) (“ Mitchell I” ), Quinault Indian allottees of land
held “ in trust” by the United States sought damages against the United States
under the Tucker Act, 28 U.S.C. §1491, and the Indian Claims Compensation
Act, 28 U.S.C. § 1505, for breach of trust and mismanagement of timber resources
found on the land. The threshold question resolved by the Supreme Court in
Mitchell I was whether the General Allotment Act of 1887, ch. 119, 24 Stat. 388
(codified as amended at 25 U.S.C. §§331-358), creates a fiduciary obligation on
the part of the United States to manage the timber resources properly, the violation
of which could subject the United States to suit.6 After noting that “ [a] waiver
of sovereign immunity ‘cannot be implied but must be unequivocally expressed,’ ’’
Mitchell I, 445 U.S. at 538 (quoting United States v. King, 395 U.S. 1, 4 (1969)),
the Supreme Court concluded that the trust language of the General Allotment
Act does not impose any fiduciary management duties on the United States or
render it answerable for breach thereof, but merely prevents alienation of the
allotted lands and immunizes them from taxation. Id. at 544.
   Although the General Allotment Act expressly required the United States to
“ hold the land . . . in trust for the sole use and benefit” of the allottee, Mitchell
I, 445 U.S. at 541 (quoting the General Allotment Act §5, 24 Stat. at 389 (codified

  6 Section 5 o f the General Allotment Act stated:
     Upon the approval o f the allotments provided for in this act by the Secretary o f the Interior, he shall
     cause patents to issue therefor in the name o f the allottees, which patents shall be o f the legal effect,
     and declare that the United States does and will hold the land thus allotted, for the period o f twenty-
     five years, in trust for the sole use and benefit o f the Indian to whom such allotment shall have been
     made . . . and that at the expiration o f said period the United States will convey the same by patent
     to said Indian . . . in fee, discharged o f said trust and free o f all charge or incumbrance w hatsoever
     Provided, That the President o f the United States may in any case in his discretion extend the period.
Mitchell /, 445 U S at 541 (quoting the General Allotment Act § 5 , 24 Stat. at 389 (codified as amended at 25
U.S.C. § 348)). Congress extended the period during which the United States was to hold the allotted land indefinitely
in the Indian Reorganization Act o f 1934, ch. 576, §2, 48 Stat. 984, 984 (codified as amended at 25 U.S.C. §462).


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                    Opinions o f the Office o f Legal Counsel in Volume 19


as amended at 25 U.S.C. §348)), the Supreme Court, referring to the language
and legislative history of the statute as a whole, concluded that “ the Act created
only a limited trust relationship between the United States and the allottee that
does not impose any duty upon the Government to manage timber resources.”
Id. at 542. As the basis for its conclusion, the Supreme Court noted that the Gen­
eral Allotment Act “ does not unambiguously provide that the United States has
undertaken full fiduciary responsibilities as to the management of allotted lands.”
Id. The Supreme Court also opined that Congress included the “ in trust” language
in the statute “ not because it wished the Government to control use of the land
and be subject to money damages for breaches of fiduciary duty, but simply
because it wished to prevent alienation of the land and to ensure that allottees
would be immune from state taxation.” Id. at 544. Finally, the Supreme Court
declared that “ events surrounding and following the passage of the General Allot­
ment Act indicate that the Act should not be read as authorizing, much less
requiring, the Government to manage timber resources for the benefit o f Indian
allottees." Id. at 545 (emphasis added).
   In United States v. Mitchell, 463 U.S. 206 (1983) (“ Mitchell II"), the Supreme
Court once again considered whether the United States had assumed fiduciary
obligations, as trustee, to Quinault Indians as to the management of timber on
their allotted lands. In Mitchell II, it held that the Tucker Act waives sovereign
immunity for claims of breach of fiduciary duty where specific statutes or regula­
tions give rise to the fiduciary duty in question. Id. at 218. The Supreme Court
reviewed several congressional statutes and government regulations affecting the
management of Indian lands. “ In contrast to the bare trust created by the General
Allotment Act,” which was found in Mitchell I not to have imposed fiduciary
obligations upon the United States, it held that the statutes and regulations before
it “ clearly give the Federal Government full responsibility to manage Indian
resources and land for the benefit of the Indians.” Id. at 224. Accordingly, the
Supreme Court concluded that the statutes and regulations “ establish a fiduciary
relationship and define the contours of the United States’ fiduciary responsibil­
ities.” Id.
   In support of its holding, the Supreme Court stressed Congress’s and the Depart­
ment of Interior’s long-standing involvement in the management of Indian timber
lands. It declared that Congress, as demonstrated by its successive legislative
efforts to improve the management of Indian timber lands, desired to ensure that
such lands were as productive as possible for Indians. See id. at 219-223. The
Supreme Court also stated that “ [t]he language of [the] statutory and regulatory
provisions directly supports the existence of a fiduciary relationship,” noting that
one of the examined acts “ expressly mandates that sales of timber from Indian
trust lands be based upon the [Interior] Secretary’s consideration of the ‘needs
and best interests of the Indian owner and his heirs’ and that proceeds from such
sales be paid to owners ‘or disposed of for their benefit.’ ” Id. at 224 (quoting

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                  Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund


25 U.S.C. § 406(a)). The Supreme Court provided further that “ even in its earliest
regulations, the Government recognized its duties in ‘managing the Indian forests
so as to obtain the greatest revenue fo r the Indians consistent with a proper protec­
tion and improvement of the forests.’ ” Id. (emphasis added) (quoting U.S. Office
of Indian Affairs, Regulations and Instructions for Officers in Charge of Forests
on Indian Reservations 4 (1911)).7
   Lower courts applying Mitchell I and Mitchell II have refrained from recog­
nizing the existence of fiduciary obligations on the part of the United States where
congressional statutes and governmental regulations, by their own terms, do not
expressly subject the United States to suit for breach of fiduciary duties, unambig­
uously provide that the United States has assumed fiduciary duties, or commit
the United States to acting in a comprehensive fashion in the best interest or on
behalf of trust beneficiaries. See, e.g., Han v. United States Dep’t o f Justice, 45
F.3d 333, 337 (9th Cir. 1995) (refusing to require the United States to file a breach
of trust action against the state of Hawaii under section 5(f) of the Hawaii Admis­
sion Act, Pub. L. No. 86-3, 73 Stat. 4, 6 (1959), on account of the fact that
the Hawaii Admission Act “ ‘does not unambiguously provide that the United
States has undertaken full fiduciary responsibilities as to the management o f ”
lands that had been allotted by the United States for agricultural and homestead
use) (quoting Mitchell I, 445 U.S. at 542); National Ass’n o f Counties v. Baker,
842 F.2d 369, 375-76 (D.C. Cir. 1988), cert, denied, 488 U.S. 1005 (1989) (cita­
tion omitted) (concluding that the Revenue Sharing Act, Pub. L. No. 97-258, 96
Stat. 877, 1010 (1982), though establishing a trust fund and naming the Treasury
Secretary as trustee of the trust fund, created only a limited trust relationship
similar to the relationship found in Mitchell I: “ In Mitchell /[,] the Supreme Court
concluded that the General Allotment Act does not confer a right to recover dam­
ages against the United States. In Mitchell II, the Supreme Court discussed
Mitchell I and placed great significance on the fact that the ‘trust language of
the Act does not impose any fiduciary management duties or render the United
States answerable for breach thereof’. . . . We do not think that when Congress
created [the State and Local Government Fiscal Assistance] Trust Fund and made
the Secretary trustee, Congress did so with the intent that the trustee would be
subject to money damages for breach of fiduciary duties. Rather, Congress created
the Trust Fund in order to ensure constant funding for the Revenue Sharing Pro­
grams. Indeed, there is no indication in the Revenue Sharing Act or its legislative
history that the Secretary owes any common law fiduciary obligations to Trust
Fund recipients.” ); Hohri, 782 F.2d at 244 (distinguishing non-statutory commit­
   7TTie Supreme Court also stated that “ a fiduciary relationship necessarily arises when the Government assumes
such elaborate control over forests and property belonging to Indians.’* Id. at 225. However, like the District o f
Columbia Circuit, “ [w]e do not read this alternative holding . . . as articulating a broad rule in favor of finding
fiduciary relationships by implication whenever the government assumes pervasive control over a group’s property.
Read in context, the Court created only a narrow exception — for Indian tribes— to the requirement that the govern­
ment must expressly state its intent to manage the would-be beneficiaries’ property as a trustee.” Hohri v. United
States, 782 F.2d 2 2 7 ,2 4 4 n.39 (D.C. Cir.), vacated and remanded on other grounds, 482 U.S. 64 (1987).

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ments by the United States to act for the benefit of Japanese-American evacuees
during World War II from a “ comprehensive obligation to provide for the ‘best
interests’ of the evacuees” ); see also Short v. United States, 719 F.2d 1133, 1134-
36 (Fed. Cir. 1983) (affirming the jurisdiction of the Court of Claims and the
Claims Court over an action for breach of fiduciary duties against the United
States by Indians where the Indian lands at issue were, like the lands in Mitchell
II, subject to the comprehensive control of the Government for the benefit of
Indians), cert, denied, 467 U.S. 1256 (1984).
   Applying the standards forged in Mitchell I, Mitchell II and their progeny, we
conclude that 31 U.S.C. § 1321 does not impose fiduciary obligations on the BOP
to expend Commissary Fund moneys only in accordance with the terms of the
trust. As stated above, 31 U.S.C. §1321 and its predecessor statutes provide that
the Commissary Fund is a “ trust fund.” However, under the cases discussed
above, the mere inclusion of the term “ trust” in a federal statute is insufficient
to impose fiduciary obligations on the United States as trustee. See Mitchell I,
445 U.S. at 540-46. The statute also refers to the United States as “ trustee”
of the “ trust funds.” Similarly, under the cited precedent, identification of the
United States as trustee in a statute, without more, is insufficient to impose
common law fiduciary duties. See National Ass’n of Counties, 842 F.2d at 375-
76.
  The legislative history of 31 U.S.C. § 1321 does not support a conclusion that
Congress intended to impose fiduciary obligations on the United States with
respect to the Commissary Fund. As noted above, the language of 31 U.S.C.
§1321 originated in section 20(a) of the Permanent Appropriation Repeal Act.
The general purpose of that act was to give Congress greater control over the
appropriations process by abolishing many permanent appropriations.8 However,
section 20(a) carved out an exception from the general purpose of the act for
certain funds located in the Treasury (i.e., “ trust funds” ) that, in Congress’s view,
did not belong to the United States.
   Congress enacted section 20(a) to prevent the Comptroller General from exer­
cising unfettered control over the withdrawal of “ trust fund” moneys from the
Treasury. By permanently appropriating moneys accruing to Treasury “ trust
funds,” Congress ensured that the Comptroller General would no longer be able
to exercise such control. According to the House of Representatives committee
report accompanying the act:

  8 According to the House o f Representatives committee report accompanying the act:
     [P erm an en t appropriations are a vicious usurpation and invasion o f the rights of sitting Congresses . . . .
     [TJhey com plicate bookkeeping in the Office o f the Treasurer . . . m ake auditing in the Comptroller G en­
     e ral’s O ffice difficult; conceal from Congress many avenues o f receipts and expenditures (which in itself
     is an invitation to extravagance) and, for lack o f proper annual disclosure, make the work of the appropria­
     tions subcom m ittees conjectural and uncertain.
H.R. Rep. No. 73-1414, at 2 (1934).


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                   Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund


          The committee is unanimous in its approbation of the course being
          followed by the Comptroller General in requiring that moneys, held
          and administered by Government officers, be deposited into the
          Treasury, where proper account and audit may be made of all
          disbursements, but it cannot follow any line of reasoning that will
          allow the Comptroller General, without specific authority, to permit
          the withdrawal of moneys so deposited in the Treasury without the
          express appropriation thereof by Congress. The constitutional provi­
          sion touching on this matter is unambiguous and direct. Once
          moneys are covered into the Treasury, regardless of the nomen­
          clature that may be applied to the account in which they are depos­
          ited, they are bound, by the constitutional inhibition that “ No money
          shall be drawn from the Treasury but in consequence of appropria­
          tions made by law.”

H.R. Rep. No. 73-1414, at 12.
   Congress understood that retaining some permanent appropriations was incon­
sistent with the overriding purpose of the Permanent Appropriation Repeal Act.
It justified this deviation, however, by distinguishing “ trust funds” from funds
that belong to the United States:

             In order to close the question as to the right of the Comptroller
          General to approve withdrawals of trust-fund moneys without actual
          appropriation- thereof by Congress, language has been inserted in
          this section appropriating the moneys in the trust funds listed in
          this section as well as in trust funds of similar character established
          in the future. While this is in fact a permanent appropriation in
          itself, it appears to be the most effective way of meeting the
          problem, and is entirely justifiable on the ground that the moneys
          are not Government moneys, and in no way enter into the fiscal
          program of the Government, and follows the policy heretofore
          employed as to all trust funds.

Id. 9
  Like the legislative history of the General Allotment Act discussed in Mitchell
I and the legislative history of the Revenue. Sharing Act discussed in National

   9 That Congress considered “ trust fu n d " moneys different from moneys accruing to the United States in its capacity
as sovereign is bome out by a discussion o f receipt classification in the same committee report.
      As a primary thesis, there are, essentially, but two forms o f government receipts, (1) those accruing* to
      the Government, in its sovereign capacity, as a result o f [the] law, and (2) those accruing to the Government
      as a trustee o f m oneys belonging to individuals, either in consequence o f law or as a result of the factual
      relationship existing between the Government and such individuals. Thus, in the instance o f the former,
      the moneys belong to the Government; in the case o f the latter, they belong to the individual.
Id. at 3.

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A ss’n o f Counties, section 20(a)’s legislative history reveals that it was enacted
for a purpose other than imposing fiduciary obligations on the United States. The
fact that Congress distinguished between Treasury “ trust funds” and funds truly
belonging to the United States in the section’s legislative history does not dem­
onstrate Congress’s unambiguous desire to subject the United States to suit for
breach of fiduciary obligations.10 Accordingly, the legislative history of 31 U.S.C.
§1321 does not support the position that the statute imposes fiduciary obligations
on the BOP with respect to the funds it classifies as “ trust funds.” 11
   Finally, the terms of the Commissary Fund, as set forth by DOJ in Circular
No. 2244, also do not support the imposition of fiduciary obligations. Far from
imposing fiduciary duties on the BOP, the provisions of Circular No. 2244 which
establish and set forth the operating rules pertaining to the Commissary Fund
merely create a mechanism through which inmates may secure items not generally
available through the prisons. See, e.g.. Circular No. 2244, <fll9 (“ For the procure­
ment of articles not regularly issued as a part of the institutional administration
there is hereby authorized the establishment of an ‘Institutional Commissary’
through which all articles shall be procured and charged to the fund entitled ‘Com­
missary Fund, Federal Prisons, Trust Fund.’ ” ). Nowhere in Circular No. 2244
is it suggested that the BOP is subject to suit for breach of fiduciary duties. Like­
   ,0 Congress has enacted laws pertaining to the Commissary Fund twice since enactment o f the Permanent Appro­
priation Repeal Act. As stated in note 4, supra , in 1952 it authorized the A ttorney General to make small loans
to released inmates from the Commissary Fund and accept gifts or bequests o f money on behalf of the Commissary
Fund. In 1984, it repealed the Attorney G eneral's authority to make small loans from the Commissary Fund. When
Congress enacted legislation relating to the Commissary Fund in 1952, the committee report accompanying the legis­
lation in the House o f Representatives stated:
   . [The Commissary Fund] obtains its revenue through the sale o f tobacco, candy, handkerchiefs, inexpensive
      watches, and other small items, at a sm all margin o f profit, from the inmates o f the various Federal institu­
      tions. Ordinarily these profits are used for purposes which benefit the inmate body as a whole, such as
      amusements, libraries, and general welfare.
H.R. Rep. No. 82-1662, at 2 (1952), reprinted in 1952 U.S.C.C.A.N. 1424, 1424-25. The report's description of
the Commissary Fund is consistent with the language o f Circular No. 2244, and demonstrates that Congress has
never altered the original relationship established between the BOP and inmates with respect to the Commissary
Fund.
   11 W hile the statutory language and legislative history o f 31 U.S.C. §1321 do not unambiguously demonstrate
that Congress intended the U nited States to assume fiduciary obligations as to the management and operation of
the “ trust funds,” they do suggest that Congress intended that moneys accruing to these “ trust funds” be permanently
appropriated, and therefore, generally subject to laws pertaining to congressional appropriations. See Soboleski v.
Commissioner, 88 T.C. 1024, 1034 (1987) ( “ With limited exceptions not here applicable, all amounts credited to
all o f the U.S. Treasury trust funds . . . are appropriated funds.” ), a jfd , 842 F.2d 1292 (4th Cir. 1988). In fact,
the C om ptroller General has reasoned that amounts located within Treasury “ trust funds” are appropriated funds
and, therefore, subject to its jurisdiction. See 58 Comp. Gen. 81, 86-87 (1978) (concluding that the General
Accounting O ffice has the authority to review the propriety o f contract awards made under the Department of
D efense’s Foreign M ilitary Sales Program, in part, because funds in the Foreign Military Sales Tm st Fund, a “ trust
fund” established under a predecessor provision to 31 U.S.C. §1321, were appropriated funds); see also Letter
for Sidney R. Yates, Chairm an, Subcommittee on the Department o f the Interior and Related Agencies, House Com­
mittee on Appropriations, from Milton J. Socolar, Comptroller General o f the United States, General Accounting
Office, 1985 W L 53671, at 2 (Dec. 12, 1985) (“ Like a number o f other Federal entities, the [United States Holocaust
M emorial] Council expends both appropriated funds and donated funds to accomplish its purposes. As a general
rule, expenditures from both sources would be regarded as appropriated fund expenditures and would be subject
to all statutes governing such expenditures. See, e.g., . . . 31 U.S.C. § 1321(a).” ). Accordingly, as with any federal
agency expending appropriated funds, the B O P may apply Commissary Fund moneys “ only to the objects for which
the appropriations were made except as otherw ise provided by law .” 31 U.S.C. § 1301(a); see also I United States
General Accounting Office, Office of General Counsel, Principles o f Federal Appropriations Law 4 -2 (2d ed. 1991)


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                  Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund


wise, nowhere in Circular No. 2244 is it unambiguously provided that the BOP
has assumed fiduciary duties.
   As discussed above, Circular No. 2244 makes clear that the BOP wields com­
prehensive authority over the management and operation of the commissaries and
Commissary Fund. However, unlike the statutes and executive department regula­
tions which were found to impose fiduciary obligations on the United States and
define the contours of the United States’ fiduciary responsibilities in Mitchell II,
Circular No. 2244 does not mandate that the BOP act in the best interest of or
for the benefit of inmates when operating the commissaries or administering the
Commissary Fund.12 As stated above, Circular No. 2244 also provides that “ [n]o
inmate shall be entitled to any portion of the earnings derived through operation
of the ‘Institutional Commissary’.” Id. %22. Further, unlike the relationship held
to be suggestive of a fiduciary relationship between the United States and Quinault
Indians in Mitchell II, nothing in the history of the BOP’s relationship with
inmates concerning the Commissary Fund suggests the creation of a fiduciary rela­
tionship.
   Based on our examination of 31 U.S.C. §1321, its legislative history and Cir­
cular No. 2244, we conclude that the arrangement between the United States,
inmates, and the Commissary Fund which we analyzed in the Randolph-Sheppard
Memorandum as a common law trust does not, in fact, satisfy the requirements
for a common law trust involving the United States as trustee set forth in Mitchell
I, Mitchell II, and their progeny. Although the Commissary Fund was established
to allow inmates the opportunity to purchase goods not ordinarily provided by
federal prisons and moneys accruing to the Commissary Fund Treasury account
do not belong to the United States in the same manner as miscellaneous receipts,
nothing in Circular No. 2244 suggests that inmates have a property right in
moneys accruing to the Commissary Fund or that the BOP is under a fiduciary
obligation to the inmates as to the management and operation of the Commissary
Fund.
   Although we have established that 31 U.S.C. §1321 and the rules set forth
in Circular No. 2244 pertaining to the Commissary Fund do not impose fiduciary
obligations on the BOP with respect to the Commissary Fund, we believe that
31 U.S.C. §1321 and the rules set forth in Circular No. 2244 pertaining to the
   12 Instead o f requiring the BOP to channel all or a portion o f the profits from commissary operations into the
Welfare Fund to be disbursed for the benefit o f the inmate body as a whole. Circular No. 2244 merely affords
the BOP the discretion to do so. See Circular No. 2244, §41. It would be permissible under the rules for the BOP
to channel all the profits from the operation o f the commissaries back into the Commissary Fund for the future
operation o f the commissaries, and disburse no funds for the benefit o f the inmate population as a whole. See id.
§ 16. Similarly, Circular No. 2244 provides:
     The W arden or Superintendent at each institution may in his discretion authorize the selection by the
      inmates of a representative committee o f . . . inmates who shall together with the W arden and the com ­
      missary clerk constitute an advisory committee who may make suggestions and recommendations to the
     end that the scheme herein outlined shall be conducted in the best interests of the institution and its inmates.
Id. §20. Like the provision governing distribution o f commissary profits for the welfare o f the inmates, this provision
is styled not as a mandate o r an obligation, but merely as an option to the supervisor o f each prison for seeking
advice from the inmates on ways to improve the operation o f the commissaries and Commissary Fund.


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                            Opinions o f the Office o f Legal Counsel m Volume 19


Prisoners’ Trust Fund do impose fiduciary obligations on the BOP with respect
to moneys contained in inmates’ Prisoners’ Trust Fund accounts. We base our
conclusions on distinctions between the two “ trust funds.”
   First, the moneys in inmates’ Prisoners’ Trust Fund accounts are truly personal
funds. As stated above, each inmate’s Prisoners’ Trust Fund account contains
money he or she brought into prison, received from a person outside the prison,
or earned while in prison.13 Accordingly, Circular No. 2244 establishes an elabo­
rate accounting scheme to ensure that funds in inmates’ Prisoners’ Trust Fund
accounts are properly credited, see id. <H 4 -7 ,14 and debited, see id. ‘H8-10.
   Second, unlike provisions of Circular No. 2244 pertaining to the commissaries
and Commissary Fund, provisions pertaining to the Prisoners’ Trust Fund require
the BOP to act in the best interest of individual inmates in managing their Pris­
oners’ Trust Fund accounts. Circular No. 2244 limits the amount of money that
can be withdrawn monthly from inmates’ Prisoners’ Trust Fund accounts. How­
ever, it also provides that a prison warden may authorize larger monthly with­
drawals for restitution or reparation of damages, payment of fines, remittance to
a dependent in dire circumstances, books, tools or materials used for educational
or vocational purposes, and payments to lawyers if the Warden deems it “ nec­
essary or for the best interest of an inmate and is satisfied that no abuse would
result therefrom.” Id. 18. Circular No. 2244 also provides that “ [i]n no event
shall any transfer from one inmate’s account to that of another be permitted.”
Id. ^9. Moreover, the Circular states that while food and clothing will no longer
be accepted at federal prisons for use of inmates, “ money may be received and
placed to the credit of the individual inmates in the ‘Prisoners’ Trust Fund,’ to
be used fo r their benefit in accordance with rules and regulations herein pro­
vided.” Id. *][18 (emphasis added).
  Third, the BOP has historically recognized fiduciary obligations with respect
to inmates’ Prisoners’ Trust Fund accounts, generally refusing “ to allow attach­
ment or levy on the prisoners’ trust funds as inconsistent with the provisions of
the trust.” Prisoners’ Trust Fund Memorandum at 5. In affirming the BOP’s
understanding that it may not attach inmates’ Prisoners’ Trust Fund moneys to
satisfy claims by the United States, this Office has stated that “ [a] withdrawal

   13CircuJar No. 2244 provides that “ [a]ny inmate . . . may place a reasonable sum o f money in the hands of
the W arden o r Superintendent o f the institution, for credit to the inmate’s personal account.” Id. §2. Circular No.
2244 provides further that “ (a]ny person m ay send a reasonable amount by check, money order, or cash, to be
placed to the credit o f an inm ate." Id. § 3 . Moreover, C ircular No. 2244 requires that an inmate’s Prisoners’ Trust
Fund account be credited with any moneys earned by the inmate while employed in the prison. Id. §6.
   ,4 For exam ple, paragraph 7 o f Circular N o. 2244 provides:
      A receipt shall be furnished for all funds received for deposit in the “ Prisoners, (sic) Trust F und" from
      whatever source derived. Such receipts shall be prepared by the Accounting Section upon forms furnished
      for such purpose. The receipts shall g o to the prisoners’ fund accounting section for posting to the prisoners*
      personal accounts after which they will b e sent to the inmates.
Sim ilarly, paragraph 37 o f Circular No. 2 2 4 4 provides that “ [e]ach m onth the Accounting Section shall prepare
statem ents for the Director, Bureau of Prisons, Warden o r Superintendent of the Institution and for the inmates
who have been credited w ith money in the Prisoners’ Trust Fund, in such manner and form as prescribed.’’


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             Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund


of [Prisoners’ Trust Fund moneys] without the inmate’s consent . . . would seem
to constitute a breach of the terms of the trust.” Id. at 11.

                                 in. CONCLUSION

  For the foregoing reasons, we disavow that portion of our Randolph-Sheppard
Memorandum which concludes that the BOP has a fiduciary obligation to inmates
to expend Commissary Fund moneys only in a manner consistent with the terms
of the Commissary Fund trust. In contrast, we conclude that the BOP is not under
a fiduciary obligation to inmates concerning the management and operation of
the Commissary Fund. In addition, we reaffirm the analysis contained in our Pris­
oners’ Trust Fund Memorandum, but restrict the memorandum’s application to
statutory trusts, like the Prisoners’ Trust Fund, which impose fiduciary obligations
on the United States.

                                                         RICHARD L. SHIFFRIN
                                                   Deputy Assistant Attorney General
                                                       Office of Legal Counsel




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