Order Code RL30365
Federal Government Corporations:
An Overview
Updated January 31, 2008
Kevin R. Kosar
Analyst in American National Government
Government and Finance Division

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Federal Government Corporations: An Overview
Summary
This report provides an overview of federal government corporations, a category
currently consisting of some 18 corporate agencies performing functions assigned to
them in law. A government corporation, as defined in this report, is a government
agency that is established by Congress to provide a market-oriented public service
and required to produce revenues that meet or approximate its expenditures.
Government corporations should not be confused with quasi governmental entities,
such as government-sponsored enterprises, which are amalgams of the governmental
and private sectors.
The government corporation model has been utilized by the federal government
for over a century. Today’s government corporations cover the spectrum in size and
function from large, well-known entities, such as the U.S. Postal Service and the
Federal Deposit Insurance Corporation, to small, low-visibility corporate bodies,
such as the Federal Financing Bank in the Department of the Treasury and Federal
Prison Industries in the Department of Justice (UNICOR).
The federal government does not possess a general incorporation statute as
states do. Each government corporation is chartered through an act of Congress. The
use of separate acts has resulted in wide variance in the legal and organizational
structure of government corporations. That said, the Government Corporation
Control Act of 1945, as amended, does provide for the standardized budget, auditing,
debt management, and depository practices for those corporations listed in the act.
Within the executive branch, there is little central-management agency oversight
or supervision of government corporations as a class of agency. Congress, at present,
does not conduct comprehensive management oversight of government corporations
by a single committee, preferring instead that oversight be performed by subject-field
committees on a corporate-specific basis.
Many government corporations have been established to exist in perpetuity.
Other government corporations, such as the U.S. Enrichment Corporation, though,
have been designed to serve as transition vehicles to transform agencies into private
firms.
Congress has found the government corporation an attractive governance option.
The government corporation typically does not require annual appropriations since
it generates revenues from the provision of goods and services. Moreover, each
government corporation may be endowed with the administrative flexibilities
required to accomplish its goals while remaining responsive to Congress and the
President. Finally, as noted above, the government corporation may be established
to serve an enduring purpose or may serve as a vehicle for privatization.
This report will be updated annually.

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Contents
Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Evolution of the Federal Government Corporation . . . . . . . . . . . . . . . . . . . . . . . . 4
Characteristics of a Government Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legal Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Budget and Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Location and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Central Management Agency Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Government Corporations as Transition Organizations . . . . . . . . . . . . . . . . . . . . 14
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
List of Tables
Appendix 1. Federal Government Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 18

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Federal Government Corporations:
An Overview
Context
There is continuing interest in Congress, the executive branch, and the scholarly
community in a class of entities known collectively as government corporations.1
This continuing interest2 raises a rudimentary question: What is a federal government
corporation, or, more precisely, what are the essential characteristics of a government
corporation?
As defined in this report, a government corporation is an agency of government,
established by Congress to perform a public purpose, which provides a market-
oriented product or service and is intended to produce revenue that meets or
approximates its expenditures. By this definition, there are 18 entities that are
government corporations.3
The U.S. Code does not provide a single definition of the term “government
corporation.” Title 5 of the U.S. Code defines “government corporation” as “a
1 This report was originally authored by Ronald C. Moe, who retired from CRS. It has been
revised a number of times by the current author. Readers with questions about government
corporations may contact Kevin R. Kosar.
2 Thomas H. Stanton and Ronald C. Moe, “Government Corporations and Government-
Sponsored Enterprises” in Lester M. Salamon, ed., The Tools of Government: A Guide to
the New Governance (New York: Oxford University Press, 2002), pp. 80-116; Jerry
Mitchell, The American Experiment with Government Corporations (Armonk, NY: M.E.
Sharpe, 1999); A. Michael Froomkin, “Reinventing the Government Corporation,”
University of Illinois Law Review, (1995), pp. 543-634; Harold Seidman, Politics, Position
and Power: The Dynamics of Federal Organization, 5th ed. (New York: Oxford University
Press, 1998), pp. 189-96; U.S. General Accounting Office, Government Corporations:
Profiles of Recent Proposals, GAO/GGD-95-57FS (Washington: GAO, 1995); U.S. Senate,
Committee on Governmental Affairs, Managing the Public’s Business: Federal Government
Corporations, by Ronald C. Moe, S.Prt. 104-18, 104th Cong., 1st sess. (Washington: GPO,
1995).
3 For a list of federal government corporations, as defined in this report, please consult
Appendix 1. This report’s definition of “government corporation” excludes a great many
federal entities. It excludes private corporations created by federal statute (e.g., Securities
Investor Protection Corporation, Fannie Mae) and congressionally chartered corporations
(American National Red Cross). It also excludes some corporations that Congress itself has
called “government corporations.” For example, the 108th Congress established the
Millennium Challenge Corporation (MCC) as a “government corporation.” (P.L. 108-199)
Though clearly a federal entity, MCC is not included on this report’s list because MCC does
not provide market-oriented products or services — MCC is a grant-awarding agency that
is not expected to be financially self-sufficient.

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corporation owned or controlled by the Government of the United States” (5 U.S.C.
103).4 Meanwhile, the Government Corporation Control Act ((GCCA) 31 U.S.C.
9101-10) states that the term “government corporation” means “a mixed-ownership
Government corporation and a wholly-owned government corporation.” It then lists
25 entities as government corporations (31 U.S.C. 9101).5
In addition to the enumeration of corporations provided in the GCCA, there
have been several other listings of corporations available, each different and based
upon the definition employed by the compiler. Corporations cover the spectrum from
such large, well-known corporations as the United States Postal Service and the
Federal Deposit Insurance Corporation to such small, low-visibility corporate bodies
as the Federal Financing Bank in the Treasury Department and Federal Prison
Industries (UNICOR) in the Justice Department.
The number of federal corporations is in moderate flux. New corporations are
added from time to time (e.g., National Veterans Business Development Corporation
in 1999), whereas others are dissolved and disestablished (e.g., Pennsylvania Avenue
Development Corporation in 1996 and National Veterans Business Development
Corporation in 2004).6
Government corporations should not be confused with other corporate
organizations with ties to the federal government, such as government-sponsored
enterprises (GSEs). A GSE (e.g., Fannie Mae)7 is a privately owned, federally
chartered financial institution with nationwide scope and lending powers that benefits
from an implicit federal guarantee to enhance its ability to borrow money. GSEs are
important institutions worthy of separate analysis, but they are not discussed, except
in passing, in this report.8 Finally, there are corporate bodies that are part of the
growing “quasi government,” to use Harold Seidman’s phrase, where the legal and
political lines of accountability are both intentionally and unintentionally made
4 This definition holds only for “the purpose of this title,” i.e., Title 5 of the U.S. Code.
5 This definition, it must be noted, the law declares to be only “for the purpose of this
chapter,” i.e., chapter 91 of Title 31 of the U.S. Code.
6 The 2004 Omnibus Appropriations Act (P.L. 108-447, Div. K, Sec. 146) declared that the
National Veterans Business Development Corporation (NVBDC), thought by some to be a
government corporation, was “a private entity and is not an agency, instrumentality,
authority, entity, or establishment of the United States Government.” On NVBDC as a
government corporation, see Office of the Legal Counsel, United States Department of
Justice, Memorandum for Jennifer Newstead, General Counsel, Office of Management and
Budget, March 19, 2004. As page 6 of this report indicates, just because Congress has
declared NVBDC to be a government corporation does not necessarily make it one.
7 In 1996, the board of directors of the Federal National Mortgage Association changed its
name to Fannie Mae, although the law still refers to the organization by its former name.
8 For a discussion of GSEs, consult CRS Report RS21663, Government-Sponsored
Enterprises: An Institutional Overview, by Kevin R. Kosar; and Thomas H. Stanton,
Government-Sponsored Enterprises: Mercantilist Companies in the Modern World
(Washington: AEI Press, 2002).

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tenuous.9 In 1996, for instance, the Office of Personnel Management (OPM) created
the United States Investigation Services Corporation as an employee stock-ownership
plan (ESOP), an entry into the quasi government category that has sparked debate
regarding its status and authority.10
Interest in the government corporation option, and variations on this theme, has
increased in recent years.11 Three factors contributing to this interest are worth
noting. First, the restrictive character of the federal budget encourages agencies to
develop new sources of revenue (e.g., outsourcing services to the private sector and
to other agencies) and to attempt to avoid increasing outlays.12 Second, experience
suggests that it is politically easier for corporate bodies to be exempted by Congress
from general management law provisions (e.g., Freedom of Information Act,
personnel and compensation ceilings) than it is for traditional agencies. Finally, the
corporate concept appears to many, correctly or otherwise, to be supportive of the
“New Public Management” that emphasizes entrepreneurship, risk-taking, and
private sector practices in federal administration.13
In a typical contemporary session of Congress, several bills are introduced to
establish government corporations. These actions prompt questions as to their legal
character, their utility vis-a-vis traditional agencies, and their limitations as units of
9 Harold Seidman, “The Quasi World of the Federal Government,” The Brookings Review,
vol. 2, summer 1988, pp. 23-27; CRS Report RL30533, The Quasi Government: Hybrid
Organizations with Both Government and Private Sector Legal Characteristics, by Ronald
C. Moe; Jonathan G. S. Koppell, The Politics of Quasi Government: Hybrid Organizations
and the Dynamics of Bureaucratic Control (Cambridge, UK: Cambridge University Press,
2003); Ronald C. Moe, “The Emerging Federal Quasi Government: Issues of Management
and Accountability,” Public Administration Review, vol. 61, May/June 2001, pp. 290-312.
10 U.S. General Accounting Office, Privatization of OPM’s Investigations Service,
GAO/GGD-96-97 (Washington: GAO, 1996); Ronald P. Sanders and James Thompson,
“Live Long and Prosper: How One Former Federal Organization Is Adjusting to Life After
Government,” Government Executive, vol. 29, Apr. 1997, pp. 51-53; Stephen Barr, “OPM,
in a First, Acts to Convert an Operation into Private Firm,” Washington Post, Apr. 14, 1996,
p. A4; Dan Broidy, The Iron Triangle: Inside the Secret World of the Carlyle Group (New
York: John Wiley, 2003).
11 U.S. General Accounting Office, Government Corporations: Profiles of Recent Proposals,
GAO/GGD-95-57FS (Washington: GAO, 1995).
12 For a discussion of how the Patuxent River Naval Air Station contracts out its services to
state governments and private organizations, including use of their Defense Department
aircraft, see Steve Vogel, “Pentagon Recruits New Business: Military Turns to Private
Enterprise to Help Pay Bills,” Washington Post, Aug. 8, 1998, p. B1.
13 The term “New Public Management” has gained currency in part through its use by the
Organization for Economic Cooperation and Development (OECD) to refer to the literature,
propositions, and practices that promote the conceptual convergence of governmental and
private sector management. OECD, Governance in Transition: Public Management
Reforms in OECD Countries (Paris: OECD, 1995); Donald F. Kettl, The Transformation of
Governance: Public Administration for 21st Century America (Baltimore: The Johns
Hopkins University Press, 2002); Robert D. Behn, Rethinking Democratic Accountability:
Performance and the New Public Management (Washington: The Brookings Institution,
2001).

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governmental institutions. For example, bills were introduced in the 109th Congress
to create a Louisiana Reconstruction Corporation (H.R. 4100 and S. 2172). This
federal entity would have engaged in commercial-type transactions, purchasing and
selling real estate in areas of Louisiana affected by Hurricane Katrina.
A government corporation is not always an the optimal administrative entity for
achieving governance objectives. There are times when it may be an appropriate
choice and times when it may not. Understanding the unique character of
government management, based as it is upon tenets of public law, provides guidance
in weighing these choices.14
Evolution of the Federal Government Corporation
Historically, the federal government has been involved in few commercial
enterprises. There were some early instances of the federal government participating
in otherwise private corporate enterprises on a shared ownership basis, most notably
the first and second Banks of the United States. This practice came into question,
however, as a consequence of a Supreme Court ruling in 1819.15 From that time to
this, the federal government, with few exceptions, has consciously avoided shared
ownership involvement with private, nongovernmental entities.
The first time the federal government acquired a corporation outright occurred
in 1903, when the Panama Railroad Company was purchased from the French
Panama Canal Company.16 Since then, a number of corporate bodies have been
established as part of the federal government, with growth in that number tending to
come in spurts and generally in response to emergencies. The first large-scale use of
the corporate option accompanied the mobilization for World War I.17 Later, the
Depression of the 1930s fostered numerous corporations (e.g., the Reconstruction
Finance Corporation, and Tennessee Valley Authority).18 Finally, World War II
prompted the establishment of additional federal corporations. After the passing of
14 See, for example, Ronald C. Moe, “The Importance of Public Law: New and Old
Paradigms of Government Management,” in Phillip J. Cooper and Chester A. Newland, eds.
Handbook of Public Law and Administration (San Francisco: Jossey-Bass Publishers,
1997), pp. 41-57.
15 McCulloch v. Maryland (17 U.S. (4 Wheat.) 315 (1819)). The Supreme Court’s ruling
implied that partial federal ownership of a corporation, in this instance the Bank of the
United States, assigned the corporation certain attributes normally reserved to the sovereign
authority (e.g., non-taxable status). The Court also declared that the Necessary and Proper
Clause of the Constitution (Art. I, sec. 8, cl. 18) permitted Congress to establish
corporations. See also Osborn v. Bank of the United States, 17 U.S. (4 Wheat.) 738 (1824).
16 Marshall Dimock, Government-Operated Enterprises in the Panama Canal Zone
(Chicago: University of Chicago Press, 1934).
17 Harold A. Van Dorn, Government Owned Corporations (New York: Alfred A. Knopf,
1926).
18 John Thurston, Government Proprietary Corporations in English-Speaking Countries
(Cambridge: Harvard University Press, 1937).

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each of these emergencies, many of the corporations that dealt with them were
abolished or absorbed into the permanent executive branch agencies.
In 1945, partly in response to the proliferation of corporate bodies created for
the war effort, Congress passed the Government Corporation Control Act (GCCA;
59 Stat. 841; 31 U.S.C. 9101-9110). The act standardized budget, auditing, debt
management, and depository practices for corporations. Notwithstanding unusual
provisions that may be present in their enabling statute, government corporations
remain “agencies” of the United States,19 and are therefore subject to all laws
governing agencies, except where exempted from coverage by provisions of general
management laws.20
The GCCA is not a general incorporation act such as is in effect in the states.
The charter for each federal government corporation is the separate enabling
legislation passed by Congress. The GCCA also does not offer a general definition
of what constitutes a government corporation. It simply enumerates the organizations
covered by the act.
In addition to the enumeration of corporations in the GCCA, there have been
several other listings of corporations available, each different and based upon the
definition employed by the compiler.21 The corporations cover the spectrum from
such large, well-known corporations as the United States Postal Service and the
Federal Deposit Insurance Corporation to such small, low-visibility corporate bodies
as the Federal Financing Bank and Federal Prison Industries (UNICOR).
In the absence of a general incorporation act with organizational definitions,
how is one to know when a government corporation is the most suitable option, and
what criteria should be met before a government corporation is established? In an
effort to provide criteria to determine when the corporate option was appropriate,
President Harry Truman, in his 1948 budget message, stated:
19 CRS Report RL30795, General Management Laws: A Compendium, Clinton C. Brass,
Coordinator.
20 The Supreme Court opinion in the 1946 case of Cherry Cotton Mills v. United States (327
U.S. 536) held that government corporations are agencies of the United States. “That the
Congress chose to call it [Reconstruction Finance Corporation] a corporation does not alter
its character so as to make it something other than what it actually is, an agency selected by
the Government to accomplish purely governmental purposes.”
21 In a 1988 report the GAO profiled some 44 government corporations. U.S. General
Accounting Office, Profiles in Existing Government Corporations, GAO/AFMD-89-43FS
(Washington: GAO, 1988). In 1995, using a more precise and narrow definition, the GAO
concluded that there were actually 22 government corporations. U.S. General Accounting
Office, Government Corporations: Profiles of Existing Corporations, GAO/GGD-96-14
(Washington: GAO, 1995). Some years earlier, in 1981, the National Academy of Public
Administration issued a substantial report on government corporations and listed 39
corporations. Report on Government Corporations, 2v. (Washington: National Academy
of Public Administration, 1981). Finally, in a major study of government corporations, A.
Michael Froomkin, using a somewhat eclectic definition, simply concluded that there were
“more than forty” government corporations. “Reinventing the Government Corporation,”
University of Illinois Law Review, 1995, p. 549.

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Experience indicates that the corporate form of organization is peculiarly adapted
to the administration of government programs which are predominately of a
commercial character — those which are revenue producing, are at least
potentially self-sustaining and involve a large number of business-type
transactions with the public. In their business operations such programs require
greater flexibility than the customary type of appropriations budget ordinarily
permits. As a rule, the usefulness of a corporation rests on its ability to deal with
the public in a manner employed by private enterprise for similar work.22
That said, Congress has created many entities titled “corporations” that do not
meet these criteria. The Corporation for Public Broadcasting and the Legal Services
Corporation are examples of “corporations” that do not perform commercial
functions and rely on appropriations.23 A principal intention behind assigning this
status and title was to provide considerable insulation from oversight by the central
management agencies and the application of the general management laws.
Characteristics of a Government Corporation
No two federal government corporations are completely alike. However, there
are sufficient commonalities among the several corporations, that it is possible to
make some generalizations about their authorities, organization, mission, and
behavior.24
Legal Status
Government corporations, no matter what function they perform or how
“private” they may appear to the public or to themselves, are agents of the state
subject to constitutional limitations.25 As the Supreme Court concluded in the 1995
Lebron case, a government corporation has certain inherent legal characteristics that
cannot be shed simply by legislative language or by corporate fiat.26 The nature of
22 U.S. Congress, House, Document No. 19, 80th Congress, 2nd session (Washington: GPO,
1948), pp. M57-M62.
23 Neither CPB or LSC are government corporations; the U.S. Code explicitly denies that
either is an agency or instrumentality of the federal government and neither support
themselves through commercial transactions. Both CPB and LSC are not-for-profit
corporations chartered under the laws of the District of Columbia (47 U.S.C. 396 and 42
U.S.C. 2996). Of course, as the Lebron decision indicated, the Supreme Court, not
Congress, is the ultimate arbiter of what is and is not a government corporation.
24 For further information on the legal status and laws on budgeting and finances of
government corporations, see General Accounting Office, Principles of Federal
Appropriations Laws, Vol IV, pp. 17-119 - 17-216.
25 Ronald C. Moe and Robert S. Gilmour, “Rediscovering Principles of Public
Administration: The Neglected Foundation of Public Law,” Public Administration Review,
vol. 55, Mar./Apr. 1995, pp. 135-46.
26 The Supreme Court in a 1995 case faced the issue of distinguishing between a
governmental and private corporation. The National Railroad Passenger Corporation
(continued...)

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the function performed (e.g., managing a railroad) has no effect upon its
governmental character. The governmental and private sectors are fundamentally
separate and distinct, with the distinctions based largely in legal theory, not economic
theory.27 This understanding is essential to recognizing both the potentialities and
limitations of the government corporate concept. The government corporation
remains governmental in character until Congress determines it shall be fully private,
thereby coming under private law.
As a general proposition, the attorney general is vested with central control over
the litigation to which the U.S. government is a party.28 Various statutes recognize
that the attorney general is the chief legal officer for all departments and agencies.
However, in an uneven pattern over the years, exceptions have been permitted to this
central authority. The independent regulatory commissions, for instance, have some
independence (although the degree of independence varies considerably from
commission to commission) in their litigation authority.29 While the Justice
26 (...continued)
(AMTRAK) established by Congress (45 U.S.C. 451), and enumerated as a “mixed-
ownership corporation” under 31 U.S.C. 9101, was sued by Michael Lebron for rejecting,
on political grounds, an advertising sign he had contracted with them to display. Lebron
claimed that his First Amendment rights had been abridged by AMTRAK because it is a
government corporation, and therefore an agency of the United States. AMTRAK argued,
on the other hand, that its legislation provides that it “will not be an agency or establishment
of the United States Government” and thus is not subject to constitutional provisions
governing freedom of speech. The Court decided that, although Congress can determine
AMTRAK’s governmental status for purposes within Congress’s control (e.g., whether it
is subject to statutes such as the Administrative Procedure Act), Congress cannot make the
final determination of AMTRAK’s status as a government entity for purposes of
determining constitutional rights of citizens affected by its actions. To do so, in the Court’s
view, would mean that the government could evade its most solemn constitutional
obligations by simply resorting to the corporate form of organization. Michael A. Lebron
v. National Railroad Passenger Corporation; 513 U.S. 374 (1995).
AMTRAK continues to seek distance from the application of the general management
laws. In the AMTRAK Reform and Accountability Act of 1997 (P.L. 105-134; 111 Stat.
2570), AMTRAK was removed from the list of mixed-ownership government corporations
in Title 31. And in any year when AMTRAK receives no government subsidy, it will be
exempt from coverage under the Inspector General Act of 1978.
27 Robert S. Gilmour and Laura S. Jensen, “Reinventing Government Accountability: Public
Function, Privatization and the Meaning of ‘State Action,’” Public Administration Review,
vol. 58, May/June 1998, pp. 247-58; Harold J. Sullivan, “Privatization of Public Services:
A Growing Threat to Constitutional Rights,” Public Administration Review, vol. 47,
Nov./Dec. 1987, pp. 461-68; Ronald C. Moe, “Exploring the Limits of Privatization,” Public
Administration Review, vol. 47, November/December 1987, pp. 453-60.
28 28 U.S.C. 519: “Except as otherwise authorized by law, the Attorney General shall
supervise all litigation to which the United States, an agency, or officer thereof is a party,
and shall direct all United States attorneys, assistant United States attorneys, and special
attorneys appointed under section 543 of this Title in the discharge of their respect duties.”
29 For a discussion of litigation authority being delegated to agencies, see U.S. Congress,
Senate, Committee on Governmental Affairs, Study on Federal Regulations, 5v.
(Washington: GPO, 1974), vol. 5 (Regulatory Organization), pp. 54-67; U.S. Administrative
(continued...)

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Department has consistently favored central coordination of litigation, this view has
been difficult to maintain in practice. With the relatively small staff of the department
and its understandable reluctance to become responsible for routine litigation, there
has been a trend toward awarding greater authority and flexibility to the departments
and agencies in their legal affairs. With respect to government corporations, though,
often their enabling legislation assigns them a legal personality distinct from that of
the United States. Most are subject to, and may initiate, civil suits. Government
corporations, being agencies of the United States, have their employees come under
the limited waiver of immunity provided in the Federal Tort Claims Act (FTCA).30
Distinguished public administrator Harold Seidman notes: “As a body corporate,
a government corporation has a separate legal personality distinct from that of the
United States. A corporation, therefore, does not enjoy the traditional immunity of
the United States from being sued without its consent.” Generally, a corporation is
provided authority “to determine the character and the necessity for its expenditures,
and the manner in which they shall be incurred, allowed and paid.” Some
corporations may borrow funds through the Federal Financing Bank of the Treasury
Department.31
In practical terms, the purpose of permitting corporations to sue and be sued in
their own name is to enable a private business to contract with a government
corporation under the assurance that if something goes amiss, it can go to court to
settle the matter. With a regular government agency, however, a contractual dispute
must normally go through a laborious process in the Court of Claims; if the
contractor wins, he must wait for an appropriation; the Departments of Justice and
Treasury, the Office of Management and Budget (OMB), the President, and both
houses of Congress may become involved in the claim. With the government
corporation, however, this process is simplified, and when a contractor prevails, he
can usually obtain a prompt settlement.
Budget and Finance
The budget process is a useful management tool for planning as well as for
maintaining accountability. Regular agencies of the executive branch, with few
exceptions, are subject to uniform rules and regulations with respect to the budgets.
Both the President and Congress use agency budgets as management tools.
Government corporations, on the other hand, are exempt either individually or
29 (...continued)
Conference of the United States, “Multi-Member Independent Regulatory Agencies: A
Preliminary Survey of Their Organization” (revised edition), May 21, 1990.
30 The Federal Tort Claims Act defines federal agencies to include “the executive
departments, ... independent establishments of the United States, and corporations (other
than contractors) primarily acting as instrumentalities or agencies of the United States.” 28
U.S.C. 2671.
31 Seidman, Politics, Position, and Power, 5th ed., p. 190.

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collectively from many executive branch budgetary regulations.32 These exemptions
are predicated, for the most part, on the idea that with the corporate structure,
consumers of corporations’ products and services, rather than the general taxpayer,
are the principal source of revenue.
The GCCA, as amended in 1982 (96 Stat. 1042), provides that each wholly
owned government corporation shall prepare and submit to the President a “business-
type budget”
in a way and before a date the President prescribes by regulation for the budget
program. This budget program shall contain estimates of the financial condition
and operation of the corporation for the current and following fiscal years and the
condition and results of operations of the last fiscal year. Further, it shall contain
statements of financial condition, income and expense, and sources and uses of
money, an analysis of surplus and deficit, and additional statements and
information to make known the financial condition and operations of the
corporation, including estimates of operations by major activities, administrative
expenses, borrowings, the amount of U.S. Government capital that will be
returned to the Treasury during the fiscal year, and appropriations needed to
restore capital impairment.” (31 U.S.C. 9104)
The objective of the budget program is to permit the corporation sufficient financial
flexibility to carry out its activities. The President, after review and revision, submits
these budget programs to Congress with the executive branch budget. Under the
Chief Financial Officers Act of 1990 (CFOA),33 government corporations must
submit to Congress annual management reports, which are to include statements of
financial position, operations, and cash flows, a reconciliation to the budget report
of the government corporation (if applicable), and a statement on internal accounting
and administrative control systems.34
Traditional agencies of the United States receive the preponderance of their
financial support from funds appropriated by Congress. Government corporations,
on the other hand, generally receive most, if not all, their funds from users of their
services. Thus, the latter relationship has a business character in which it is the
obligation of the corporate body to provide services as long as the buyers are willing
to pay. This being the case, revenues, expenditures, and even personnel will tend to
fluctuate according to consumer demand.
Many Members of Congress feel somewhat uneasy with broad, “business type
budgets,” also referred to as “budget programs.” To be sure, Congress can alter these
budget programs and can limit the use of corporate funds for any purpose, but this
option is seldom employed. Faced with complex projections and agencies with little
direct budgetary impact, Members understandably give corporate bodies marginal
32 That said, government corporations are covered by some budgetary laws and regulations
(e.g., the Government Performance and Results Act of 1993). See OMB, Circular No. A-11,
section 200, pp. 2-3, available at [http://www.whitehouse.gov/omb/circulars/a11/
current_year/a_11_2006.pdf].
33 P.L. 101-576.
34 31 U.S.C. Sec. 9106(a)(2).

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attention. As a general assessment, the corporations come under comparatively little
congressional scrutiny, except when there is some political or financial threat evident.
As Seidman notes, “In essence, the business-type budget provides for a qualitative
rather than a quantitative review of proposed corporate expenses.”35
Until 1975, GAO was responsible under the GCCA for performing annual
financial audits of government corporations. At the request of GAO, the GCCA was
amended to provide for audits of the financial transactions of wholly owned
corporations at least once every three years, rather than annual audits. In 1990, as
part of the CFOA,36 GAO’s recommendation that government corporations be subject
once again to annual audits was accepted. Henceforth, however, the audit is to be
conducted by the corporation’s inspector general “or by an independent external
auditor, as determined by the inspector general or, if there is no inspector general, the
head of the corporation,” according to accepted government auditing standards.37
The Comptroller General, however, continues to be authorized to review the financial
statements of government corporations.
Location and Governance
The location, structure, and governance of government corporations varies
greatly. Corporations have been located in executive departments (e.g., the St.
Lawrence Seaway Development Corporation in the Department of Transportation),
or assigned independent status (e.g., the Export-Import Bank). Government
corporations have been structured so that they are but financial entities whose
employees are actually employees of the parent agency (e.g., the Federal Financing
Bank in the Department of the Treasury and the Commodity Credit Corporation in
the Department of Agriculture).
There is no one form of governance necessarily associated with government
corporations. Whether a government corporation is best managed by a full-time
board (e.g., TVA, formerly),38 a chief executive officer selected by a part-time board
and responsible to it (e.g., TVA currently), a part-time board consisting of Cabinet-
level officials of other agencies (e.g., Pension Benefit Guaranty Corporation),39 a
35 Ibid., p. 192.
36 P.L. 101-576, Sec.305-306.
37 31 U.S.C. 9105.
38 In 2004, P.L. 108-447, Div. C, Sec. 601 changed TVA’s three-member, full-time board
to a nine-member, part-time board.
39 Cabinet secretaries placed on corporate boards, or any boards for that matter, rarely attend
such meetings, sending subordinates instead to protect departmental interests. For approval
of this process, see U.S. Department of Justice, 6 Op. Off. Legal Counsel 257, Delegation
of Cabinet Members’ Functions as Ex-Officio Members of the Board of Directors of the
Solar Energy and Energy Conservation Bank (1982). The Pension Benefit Guaranty
Corporation (PBGC), an agency within the Department of Labor, provides evidence of the
problems that some analysts contend are associated with boards of directors that include
officials of other departments. The board of directors of the PBGC has three members: the
(continued...)

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CRS-11
mixed board of governmental and private appointees (e.g., Overseas Private
Investment Corporation), or a single administrator responsible to a department
secretary, and ultimately to the President (e.g., Government National Mortgage
Association, “Ginnie Mae”), is an open question. There are positives and negatives
to the various options for corporate governance.
A board of directors is the trademark of a government corporation, according
to many lawmakers and attorneys. Marshall Dimock, an academic writing in 1949,
argued that a board of directors was considered an essential element for an
“authentic” government corporation. “Being a separate and distinct entity, headed
by its own board of directors, the corporation is inherently better able to succeed than
the ordinary department of government.”40
A few years later, Harold Seidman challenged the view that a board of directors
was an essential and necessarily desirable element for a government corporation.
Dimock’s view, he asserted, was based on an inappropriate borrowing of state
practice by the federal government. State incorporation laws require boards of
directors for private corporations to insure representation where ownership is held
by more than one party. In government corporations, under this reasoning, because
ownership resides in the government alone, there is no inherent need for a board of
directors.41 Government corporations, Seidman pointed out, have existed and
operated without boards of directors. A board of directors may well be found
advisable and useful under some circumstances, but, Seidman said, it is not the sine
qua non of a government corporation.42
Whether or not a board of directors is essential or desirable for a government
corporation, the fact is that all but two federal government corporations presently
have boards of directors. The two exceptions are Ginnie Mae and the St. Lawrence
Seaway Development Corporation. In a study published in 1981, the National
Academy of Public Administration was critical of boards of directors in general:
39 (...continued)
Secretary of the Treasury, the Secretary of Commerce, and as chairman, the Secretary of
Labor. “Such arrangements,” according to the National Academy of Public Administration
Report, “inherently cause confusion as to the corporation’s status and the role of the
Secretary of Labor. To have Cabinet officers serve as directors of a subordinate unit of an
executive department other than their own, places him and the head of that department in
an anomalous position. Can the Secretaries of the Treasury and Commerce give orders to
the Secretary of Labor? On the other hand, are the Secretaries of Treasury and Commerce,
when acting as PBGC directors, in any way required in formulating policies to conform to
the policies of the Secretary of Labor?” Perhaps because of such anomalies, although the
bylaws call for “regular meetings,” the board never met between March 1982 and April
1991. National Academy of Public Administration, Study of the Pension Benefit Guaranty
Corporation’s Corporate Status (Washington: NAPA, 1991), pp. 5-6.
40 Marshall E. Dimock, “Government Corporations: A Focus on Policy and Administration,”
American Political Science Review, vol. 43, Oct. 1949, pp. 914.
41 Harold Seidman, “The Theory of the Autonomous Government Corporation,” Public
Administration Review, vol. 12, spr.1952, pp. 93-111.
42 Ibid.

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We believe that this arrangement, borrowed from the private corporation model,
has more drawbacks than advantages and that in most cases the governing board
would be better replaced by an advisory board and the corporation managed by
an administrator with full executive powers. A governing board may cut or
confuse the normal lines of authority from the President or departmental
secretary to the corporation’s chief executive officer. With an advisory board,
the secretary’s authority to give that officer policy instruction is clear, as is the
officer’s right to report directly to the secretary and to work out any exemptions
from or qualifications of administration or departmental policies and practices
which the corporation requires.43
There is little doubt that a board of directors, particularly a part-time,
“outsiders” board, is a “buffer” between the corporation’s top executive and political
officials, including the President. Whether such a buffer is a desirable feature in the
overall administrative system, however, is a question subject to debate. Notably, it
is also argued that corporation board appointments are patronage plums for the White
House since the jobs are not generally demanding.
The effectiveness and utility of boards is dependent upon a number of factors:
the coherency of the enabling legislation, the conceptual integrity and soundness of
the program itself, and the number and quality of membership. Large boards
(comprising more than 12 members), for instance, may experience difficulty in
making decisions. The play of internal factors, such as the size of the board, the
primary loyalties of board members (whether to the corporation or to an outside
constituency group), and the relationship of the board to the corporate management
all also have their place in the managerial equation.
Central Management Agency Oversight
There is, at present, little central management agency oversight or supervision
of government corporations as a category of agency in the executive branch. Nor is
there any central unit charged with designing government corporations from the
perspective of presidential or central management interests.44 Government
corporations today are largely perceived as discrete entities, each with its own
political and administrative requirements, and each with its own route and degree of
political accountability. Individual corporations come under scrutiny from time to
time by OMB and Congress, or more precisely, a congressional committee
responsible for oversight. More often than not, the immediate impetus for the
oversight follows from indications that a corporation is operating at financial risk or
there is an appearance of wrongdoing.
43 National Academy of Public Administration, NAPA Report on Government Corporations,
2 vols. (Washington: NAPA, 1981), I, pp. 31-32.
44 See, for example, Alan Dean, Dwight Ink, and Harold Seidman, “OMB’s ‘M’ Fading
Away,” Government Executive, vol. 26, June 1994, pp. 62-64; Ronald C. Moe, “At Risk:
The President’s Role as Chief Manager,” in The Managerial Presidency, 2nd ed., ed. James
Pfiffner (Lawrence, KS: University Press of Kansas, 1999), pp. 265-84.

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CRS-13
The current absence of systematic oversight of corporations as a class runs
counter to the intentions of the sponsors of the GCCA. The Bureau of the Budget
(BOB), predecessor organization to OMB, was instrumental in the passage of the
GCCA, and created a separate office to oversee the formation, and monitor the
operation, of government corporations on behalf of the President. During the 1960s,
this specialized staff function atrophied until at some point in the 1970s it is fair to
conclude that there was little remaining central executive staff capacity to provide
information, expert advice, or oversight of government corporations or to develop
and implement consistent policies governing their formation, authorities, and
operations.45
Government corporations are not considered by OMB to be a category of
organization to be supervised collectively. OMB, in support of its position, contends:
The responsibility for oversight of government corporations was not changed by
the OMB 2000 reorganization. That is, government corporations will continue
to be reviewed by the Resource Management Office (RMO) which has
responsibility for the functional area most closely associated with the
corporation’s mission.... OMB does not review government corporations
separately from other government organizations that perform similar functions.46
The executive branch treatment of management responsibilities respecting
government corporations as a class of organization tends to place additional burdens
on Congress and its committees to determine if the corporations are respecting the
provisions of the general management laws (e.g., the National Environmental
Protection Act, 42 U.S.C. 4321).
One corollary of limited central management oversight of government
corporations is the lack of answers to fundamental issues regarding when and how
government corporations ought to be created and utilized. There are at least two
schools of thought respecting the proper use of the government corporation option
relating to its structure, authority, and financial systems. One school holds that
government corporations, including agencies called corporations but which do not
perform commercial activities, should be encouraged, provided maximum policy and
financial autonomy, and be subject to such oversight as is appropriate for other
agencies and instrumentalities in the same policy field. The legal responsibilities of
the corporation should be located in its enabling statute.
The position of the second school is that government corporations should be
established only when appropriate criteria and standards, developed by a central
45 BOB ceased to monitor government corporations and enterprises during the 1960s.
Charles Bingman, speaking to a 1978 conference on public enterprises, noted that he had
been the last person in the BOB to undertake this monitoring role. He stated that he ceased
the monitoring when it became apparent that the leadership of the agency was no longer
interested in this role. In his view, both the executive branch and Congress had effectively
abandoned the intent of the GCCA. Proceedings, Research Conference in Public
Enterprises, June 1, 1978 (Charlottesville, VA: Federal Executive Institute, 1978), p. 18.
46 Letter dated May 24, 1994, from OMB Director Leon Panetta to Senators David Pryor and
Carl Levin of the Senate Governmental Affairs Committee, p. 4.

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CRS-14
management agency, are met. Such standards should be reflected in a national
incorporation law and apply to all proposed and functioning corporate bodies
properly defined. Government corporations should be considered to be part of the
executive branch, but with recognition of their distinctive needs and oversight
requirements as a category of institutions.
Government Corporations as
Transition Organizations
The government corporation concept may be considered a useful alternative to
privatization of some agency, or it may be employed as a transition step toward
eventual full privatization.47 Our interest here is limited to the corporation as a
transition option. The principal utility of the transitional government corporation is
that it can demonstrate marketability and asset value, critical elements in any
successful privatization venture.
An early successful example of the government corporation concept as a
transition vehicle involved Conrail. Conrail was created by Congress as a
government corporation in 1976 from the remnants of seven private, bankrupt
railroads. It took some 10 years and an investment of $8 billion by the federal
government to bring Conrail up to industry standards before entertaining a reasonable
expectation that the railroad would be attractive to private investors.48 The federal
government received approximately $2 billion from the sale, but the real payoff was
that the northeastern region of the country was once again provided a viable freight
rail system. The transition period as a government corporation was necessary to
develop a record as a potentially profit-making venture prior to a successful
privatization (divestiture) effort.49
More recently, the U.S. Enrichment Corporation (USEC) has completed its
transitional process toward full privatization, with mixed results. USEC, until 1993
a regular agency in the Department of Energy (DOE), operated uranium enrichment
plants in Kentucky and Ohio. In the 1950s, the plants produced highly enriched
47 In this report, privatization is defined narrowly to embrace only those actions resulting
in ultimate full divestiture. The term privatization has been defined and interpreted in
different ways. See CRS Report RL33777, Privatization and the Federal Government: An
Introduction, by Kevin R. Kosar.
48 National Academy of Public Administration, Conrail and the Uranium Enrichment
Corporation: A Comparison, by Alan Dean (Washington: NAPA, 1989), p. 5.
49 It should not be forgotten that before Conrail could be privatized, it first had to be
nationalized. Seven private railroad corporations went bankrupt and it required the federal
government to resolve bankruptcy issues, establish a long-term, comprehensive commercial
rail plan, develop corporate management capacity, invest capital funds, renegotiate
contracts, and get the whole project functioning in a short period of time. The federal
government was successful and only then was the private sector interested in “buying” the
railroad.

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CRS-15
uranium (HEU) for defense purposes. Times changed and the United States was
successfully challenged by new international entrants into the market.
The Energy Policy Act of 1992 (P.L. 102-486; 106 Stat. 2776) established the
U.S. Enrichment Corporation as a wholly owned government corporation. The
general intent of the legislation was to “privatize” the two plants and let them
compete in the world market. A privatization plan was delivered by USEC to the
President and Congress in 1995. The plan suggested that there were two primary
methods of corporate divestiture: an initial public offering (IPO) and a merger or
acquisition with another corporation or group of corporations.50 After considerable
discussion, the IPO option was selected, as it had been with Conrail.
The IPO of stock was completed on July 28, 1998, and raised an estimated $1.9
billion for the federal government. The USEC transition process highlighted,
however, one of the perennial problems in privatization efforts. Congress may intend
a corporation to be private, but it also may want the corporation to continue to be
involved in public policy implementation. In this instance, Congress wanted the
corporation to participate in implementing a foreign policy objective, which was to
purchase at above market rates a substantial amount of Russian enriched uranium
otherwise destined for Russian weapons. Under the HEU agreement, USEC received
enriched uranium from Russian nuclear weapons and, in addition to its payment for
the material, returned an equivalent amount of natural (unenriched) uranium to
Russia to sell on the world market. This arrangement, from the corporation’s
perspective, was not viable and in October 1999, the USEC solicited Congress for
“relief.”51
Another characteristic of a private corporation, legally organized and defined
as such, is the right to cancel a program or withdraw from an activity if it is not
deemed in the fiduciary interests of the shareholders. To the consternation of DOE
officials, such a decision was reached recently by the USEC board of directors. One
of the assets transferred from the DOE to USEC in the divestiture was the right to
commercialize a new enrichment technology called “atomic vapor laser and isotope
separation” (AVLIS), a technology in which DOE had invested over $2 billion. On
June 9, 1999, the board of directors of USEC determined that AVLIS was not
commercially viable and canceled the program. The board’s decision made manifest
the fiduciary distinctions between a government and private corporation.52
The federal government may, for whatever reason, choose to directly divest
itself of a commercial activity or asset and not follow the transition corporation
option to establish its value in the market. Although a transition corporation had
50 Peter Passell, “The Sticky Side of Privatization: Sale of U.S. Nuclear Fuel Plants Raises
Host of Conflicts,” New York Times, Aug. 31, 1997, p. 29.
51 Martha M. Hamilton, “Uranium Company Seeks Federal Aid: Privatized USEC Warns of
Losses,” Washington Post, Oct. 30, 1999, p. E8.
52 Daniel Guttman, “The United States Enrichment Corporation: A Failing Privatization,”
Asian Journal of Public Administration, vol. 23, December 2001, pp. 247-72.

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been recommended by an outside study,53 the Department of Energy determined to
directly divest itself of the California fields of the Elk Hills National Petroleum
Reserves.54
Conclusion
The government corporation form of federal agency is a useful option to
consider when establishing or reorganizing an agency with revenue potential. It is
helpful to bear in mind, however, that there is no general provision in law that
defines what, precisely, government corporations are. When writing the GCCA,
Congress and the executive branch simply viewed the various corporate bodies, and
defined them by enumeration, rather than by required characteristics. This relatively
unstructured approach has meant that some corporate bodies (e.g., U.S. Postal
Service) are not included in the GCCA enumeration, whereas other bodies, arguably
non-corporate in function and authority (e.g., Corporation for National and
Community Service) are listed.
There is little managerial oversight at present of government corporations as an
institutional category by either the President or Congress. What oversight there is
tends to be corporation-specific. In the case of Congress, corporations are assigned
to committees of subject-matter jurisdiction. A GAO report recommended that
corporations properly require both subject matter and management oversight, and that
the GCCA should be reconstituted to establish in law the characteristics of various
types of corporate bodies.55
Government corporations may be viewed as permanent agencies to perform a
continuing governmental function (e.g., Federal Deposit Insurance Corporation); a
temporary agency (e.g., Pennsylvania Avenue Development Corporation); or a
transition agency to facilitate the process whereby a governmental agency or program
is divested and transferred to the private sector (e.g., U.S. Enrichment Corporation).
These options indicate the flexibility of the government corporation concept and may
provide models for extending the corporate organization to other appropriations-
funded agencies (e.g., U.S. Patent and Trademark Office and the U.S. Mint). Both
53 National Academy of Public Administration, Restructuring the Naval Petroleum and Oil
Shale Reserves (Washington: NAPA, 1994).
54 The problems associated with estimating the value, both to the federal government and
to the would-be buyer, are discussed in Elizabeth Davis, “Once a Teapot in a Tempest, Now
Just a Lonely Outpost: Navy Oversees Unwanted Oil Field,” Washington Post, Aug. 14,
1998, p. A23. The attractiveness of the “unwanted” Naval Petroleum Reserve increased
with the rise in the world price of oil, and the Reserve was sold outright by the Department
of Energy in February 1999 to Occidental Petroleum for $3.65 billion. Susan Klann, “U.S.
Oil Reserve Sale Sets Record,” Denver Post, Mar. 2, 1999, p. C2. Thomas H. Stanton,
“Lessons Learned: Obtaining Value from Federal Asset Sales,” Public Budgeting and
Finance, vol. 43, Spring 1903, pp. 22-44.
55 U.S. General Accounting Office, Congress Should Consider Revising Basic Corporate
Controls Laws, GAO/PAD-83-3 (Washington: GAO, 1983).

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CRS-17
the latter agencies and their programs meet the basic criteria for a government
corporation and suggestions to this effect have been made.
The future of government corporations as a category of federal organization
appears generally bright although they are not widely understood in executive
management circles. The need for the executive branch and Congress to develop
new organizational structures that take into account both the public law requirements
of governmental status, and the flexibility that properly accompanies corporate
bodies dependent upon revenues for services will foreseeably increase rather than
diminish.56 The managerial quality of the law establishing a corporation, may be a
critical variable in determining the success or failure of that enterprise. If the
conceptual basis of the law establishing a corporation or economic assumptions
therein are faulty, as was allegedly the case with the Synthetic Fuels Corporation in
the late 1970s, a government corporation may become a liability to the executive
branch and face a short tenure.57 On the other hand, if a federal government
corporation is designed to conform with public law, governmental management
principles, and sound economics, as discussed earlier, a corporate agency may
provide a creative instrument to promote the public policy objectives of elected
officials.
Although it has been the purpose of this report to emphasize the distinctive
characteristics of federal government corporations, it is important to conclude with
a statement of their shared characteristics with other federal agencies. The mission
of both regular, appropriations-financed agencies and of government corporations is
the same, to implement the laws passed by Congress.
56 Most recently, the corporate option was considered, although not adopted, for what
became the Transportation Security Administration in the Department of Homeland
Security.
57 Ronald C. Moe, “Government Corporations and the Erosion of Accountability: The Case
of the Proposed Energy Security Corporation,” Public Administration Review, vol. 39, Nov./
Dec. 1979), pp. 566-572. Doug Bandow, “Synfuels, NoWinFuels,” New York Times, Sept.
1, 1983, p. 25.

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CRS-18
Appendix 1. Federal Government Corporations
1. Commodity Credit Corporation
(15 U.S.C. 714)
2. Export-Import Bank
(12 U.S.C. 635)
3. Federal Crop Insurance Corporation
(7 U.S.C. 1501)
4. Federal Deposit Insurance Corporation
(12 U.S.C. 1811)
5. Federal Financing Bank
(12 U.S.C. 2281)
6. Federal Prison Industries (UNICOR)
(18 U.S.C. 4121)
7. Financing Corporation
(12 U.S.C. 1441)
8. Government National Mortgage Corporation
(12 U.S.C. 1717)
9. National Railroad Passenger Corporation (AMTRAK)
(49 U.S.C. 241)
10. Overseas Private Investment Corporation
(22 U.S.C. 2191)
11. Pension Benefit Guaranty Corporation
(29 U.S.C. 1301)
12. Presidio Trust of San Francisco
(16 U.S.C. 460bb)
13. Resolution Funding Corporation
(12 U.S.C. 1441(b))
14. Rural Telephone Bank
(7 U.S.C. 942)
15. St. Lawrence Seaway Development Corporation
(33 U.S.C. 981)
16. Tennessee Valley Authority
(16 U.S.C. 831)
17. U.S. Postal Service
(39 U.S.C. 101)
18. Valles Caldera Trust
(16 U.S.C. 698-v4)

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