Department of Homeland Security: Appropriations Transfer Authority

Department of Homeland Security: Appropriations Transfer Authority

Order Code RL31514
Report for Congress
Received through the CRS Web
Department of Homeland Security:
Appropriations Transfer Authority
Updated November 15, 2002
Robert Keith
Specialist in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

Department of Homeland Security:
Appropriations Transfer Authority
Summary
The establishment of the Department of Homeland Security (DHS), as proposed
by President George W. Bush and Members of Congress, involves in large part the
transfer to the new department of existing functions carried out by many different
agencies and programs. Along with the authority to transfer functions, the legislative
proposals include authority to transfer related personnel and assets (including
appropriations). The proposals for appropriations transfer authority for the new
department have engendered controversy regarding the appropriate balance between
providing executive flexibility and retaining congressional control over spending.
Generally, appropriations may be spent only on the purposes specified (31
U.S.C. 1301(a)) and may not be transferred to other accounts without statutory
approval (31 U.S.C. 1532). Any appropriations so transferred are subject to the same
limitations provided under the original appropriations, except as provided by law.
Congress has granted transfer authority to the executive branch in two types of
measures—in substantive legislation, under the jurisdiction of House and Senate
legislative committees, and in annual appropriations acts, under the jurisdiction of
the House and Senate Appropriations Committees. Transfer authority in substantive
law pertains mainly to agency reorganization; most appropriations transfer authority
available to executive agencies on a regular basis is provided in annual
appropriations acts and is renewed from year to year.
The Administration’s proposal to establish the DHS, as reflected in the
introduced version of H.R. 5005, the “Homeland Security Act of 2002,” provides
several different types of appropriations transfer authority for the department,
including general, transitional, and incidental transfer authority.
With regard to general transfer authority, which would be provided to the
Secretary of Homeland Security following the establishment of the department and
would cover transfers between accounts within the department’s budget, the
Administration proposed permanent authority, subject to a 5% limit on the amount
that may be transferred from any appropriation and a 15-day notice-requirement to
the House and Senate Appropriations Committees. The House Appropriations
Committee, and leaders of the Senate Appropriations Committee, strongly objected
to the proposed general transfer authority, maintaining that sufficient transfer
authority could be provided on an ongoing basis through the annual appropriations
process. As passed by the House on July 26, 2002, H.R. 5005 would have reduced
the general transfer authority limit to 2% and sunsetted the transfer authority after
two years. On November 13, the House passed a modified version of the Homeland
Security Act, H.R. 5710, which did not include any general transfer authority.
Instead, such authority was included in H.J.Res. 124 (a continuing resolution for
FY2003, also passed that day) and was limited to $640 million (including $140
million for start-up costs) and made available for two years. The Senate, which has
been considering H.R. 5005 for some time, is expected to embrace the modifications
on transfer authority reflected in the House actions on H.R. 5710 and H.J.Res. 124.

Contents
Legal Basis for the Transfer of Appropriations . . . . . . . . . . . . . . . . . . . . . . . 2
Congressional Grants of Transfer Authority . . . . . . . . . . . . . . . . . . . . . . . . . 3
Transfer Authority in Substantive Legislation . . . . . . . . . . . . . . . . . . . . 4
Transfer Authority in Annual Appropriations Acts . . . . . . . . . . . . . . . . 6
Transfer Authority for the Department of Homeland Security . . . . . . . . . . 14
General Transfer Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Transitional Transfer Authority—Prior to Agency Transfer . . . . . . . . 24
Transitional Transfer Authority—Upon Agency Transfer . . . . . . . . . . 25
Incidental Transfer Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
List of Tables
Table 1. Examples of Transfer Authority Granted to Cabinet Secretaries
in Regular Appropriations Acts for FY2002 . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 2. Summary of Initial Proposals for Appropriations Transfer Authority
for the Department of Homeland Security . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 3. Side-by-Side Comparison of Initial Appropriations Transfer
Authority Proposals: Administration, House, & Senate Governmental
Affairs Committee (Lieberman Amendment) . . . . . . . . . . . . . . . . . . . . . . . 17

Department of Homeland Security:
Appropriations Transfer Authority
In an address to the nation on June 6, 2002, President George W. Bush
requested that Congress enact legislation creating a Department of Homeland
Security (DHS). President Bush proposed legislation to accomplish this goal, the
Homeland Security Act of 2002, on June 18.1 The Administration’s proposal was
introduced by House Majority Leader Richard Armey on June 24 as H.R. 5005. In
the course of reviewing the Administration’s proposal, House and Senate committees
have developed a wide range of modifications. The House passed H.R. 5005, with
substantial amendments, on July 26; the Senate began consideration of the bill on
September 3.
Establishment of the DHS involves in large part the transfer to the new
department of existing functions carried out by many different agencies and
programs.2 Along with the authority to transfer functions, the Administration has
requested the authority to transfer the personnel, assets (including appropriations),
and other items connected with these functions. In addition to the grants of
appropriations transfer authority to deal with the transition to the new organizational
structure, the Administration has requested that the Secretary of Homeland Security
have an ongoing grant of general transfer authority over appropriations that fund the
department. The Administration argues that a general grant of transfer authority is
necessary in order for the new department to be able to develop into an effective and
efficient organization over the coming years.
The Administration’s proposals regarding appropriations transfer authority have
sparked controversy and engendered significant modifications in pending legislative
proposals.3 This report defines appropriations transfer authority and explains its legal
1The text of the Administration’s proposed legislation, together with an explanation and
related materials, is available online at [http//www.whitehouse.gov/homeland].
2For an overview of the many issues involved in creating the Department of Homeland
Security, see CRS Report RL31493, Homeland Security: Department Organization and
Management, by Harold C. Relyea. Additional Congressional Research Service products
on this topic may be found at the CRS Web site [http://www.crs.gov] by (1) searching all
products under the phrase “homeland security”; (2) clicking on the Current Legislative
Issues term “Homeland Security”; and (3) clicking on “Homeland Security Organization”
in the online CRS Electronic Briefing Book on Terrorism.
3For example, see (1) “Appropriators Criticize Bush’s Homeland Security Plan,” in
National Journal’s Congress Daily, July 2, 2002; (2) “Senators Object to Budget Flexibility,
Authority in Security Department Bill,” in BNA’s Daily Report for Executives, July 3, 2002,
page A-15; (3) “Highlights of Panels’ Input on New Security Department,” in Congressional
(continued...)

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basis, examines recent congressional practices in this area, and assesses the current
proposals regarding appropriations transfer authority for the DHS.
Legal Basis for the Transfer of Appropriations
Appropriations are provided to federal departments and agencies on the basis
of accounts. For each account within a department or agency, the purposes for which
the appropriation may be used are stated, usually with reference to the relevant
authorizing law(s). For example, the VA-HUD-Independent Agencies
Appropriations Act for FY2002 provided funds to the Agency for Toxic Substances
and Disease Registry, as follows:
For necessary expenses for the Agency for Toxic Substances and Disease
Registry (ATSDR) in carrying out activities set forth in sections 104(i),
111(c)(4), and 111(c)(14) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), as amended; section 118(f)
of the Superfund Amendments and Reauthorization Act of 1986 (SARA), as
amended; and section 3019 of the Solid Waste Disposal Act, as amended,
$78,235,000, ...4
As a general matter, appropriations may be spent only on the purposes specified.
This requirement is codified in 31 U.S.C. 1301(a), which states: “Appropriations
shall be applied only to the objects for which the appropriations were made except
as otherwise provided by law.”
Further, appropriations may not be transferred to other accounts without
statutory approval; any appropriations so transferred are subject to the same
limitations provided under the original appropriations, except as otherwise provided
by law. This requirement is stated in 31 U.S.C. 1532, which reads in part:
An amount available under law may be withdrawn from one appropriation
account and credited to another or to a working fund only when authorized by
law. Except as specifically provided by law, an amount authorized to be
withdrawn and credited is available for the same purpose and subject to the same
limitations provided by the law appropriating the amount.
According to the General Accounting Office (GAO), an unauthorized
transfer—which would violate the two statutory requirements cited above—could
result in excessive spending in the receiving account, thereby incurring a violation
of the Antideficiency Act as well.5
3(...continued)
Quarterly’s Weekly Report, July 13, 2002, page1860; and (4) “Hill Worries About Its Role
in Overseeing Security Department,” in the Washington Post, July 17, 2002, page A9.
4See P.L. 107-73 (November 26, 2001; 115 Stat. 682).
5See the discussion of “Transfer and Reprogramming” in GAO Report OGC-91-5,
Principles of Federal Appropriations Law (Washington: July 1991), second edition, volume
I, pages 2-20 through 2-28. The Antideficiency Act (31 U.S.C. 1341-13420 requires that
agencies not spend funds at a rate that would cause them to exceed their appropriations.

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In the example of the Agency for Toxic Substances and Disease Registry
(ATSDR) provided above, the agency could spend its appropriation of $78 million
for FY2002 solely for the activities set forth in the specified sections of CERCLA of
1980, SARA of 1986, and the Solid Waste Disposal Act, but not for activities set
forth in other sections of those laws or that otherwise are unrelated. Further, other
agencies could not transfer funds from their accounts to the ATSDR account, nor
could ATSDR transfer funds from its account to other agencies, without explicit
statutory authority to do so.
After an appropriations measure has been enacted into law, it sometimes
becomes necessary to reallocate appropriations between accounts or within accounts.
A reallocation of enacted appropriations from one account to another is referred to
as a transfer, while a reallocation within an account from one program, project, or
activity to another is called as a reprogramming.
A transfer, which involves a complete change in the purpose for which an
enacted appropriation will be used, requires statutory authority in order to comply
with the requirements of 31 U.S.C. 1301(a) and 1531. On the other hand, a
reprogramming, which shifts funds within an account from one program to another,
related one, does not require legislative action by Congress. As a matter of practice,
participants in the federal budget process from time to time use these terms
interchangeably and a careful review of the context may be necessary to determine
in particular instances whether a transfer or a reprogramming is being discussed.
Transfer authority has been provided in law to executive officials since the
earliest days of Congress.6 Reprogramming practices, by contrast, developed in the
mid-1950s (although they were preceded for some time by comparable practices that
used different names, such as “adjustments”).7 The use of both transfers and
reprogrammings has become a routine part of the modern federal budget process.8
Congressional Grants of Transfer Authority
Congress has granted transfer authority to the executive branch in two types of
measures—in substantive legislation, under the jurisdiction of House and Senate
legislative committees, and in annual appropriations acts, under the jurisdiction of
the House and Senate Appropriations Committees.
6Louis Fisher examines the history of appropriations transfer from the late 18th Century
through the modern era in Chapter 5 (Transfers Between Accounts) of Presidential
Spending Power (Princeton: Princeton University Press, 1975), pages 99-122.
Reprogramming is addressed in Chapter 4 (Reprogramming of Funds), pages 75-98.
7Fisher, ibid., pages 76-77.
8Recent congressional practices regarding transfers and reprogrammings is discussed briefly
in The Federal Budget: Politics, Policy, Process, by Allen Schick (Washington: Brookings
Institution Press, 2000), pages 247-251. For an example of executive documentation for a
recent reprogramming request on a controversial matter (aircraft leasing by the Air Force),
see the remarks of Senators McCain, Levin, and others, and inserted documentation, on
pages S7794-7799 in the Congressional Record of August 1, 2002.

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Transfer Authority in Substantive Legislation. With regard to
substantive legislation, the leading examples of appropriations transfer authority
provided to the executive branch arguably pertain to reorganization. Authority to
transfer funds within an agency or between agencies in order to effectuate an
approved transfer of functions is provided in 31 U.S.C. 1531(a), which states:
The balance of an appropriation available and necessary to finance or
discharge a function or activity transferred or assigned under law within an
executive agency or from one executive agency to another may be transferred to
and used—
(1) by the organizational unit or agency to which the function or activity
was transferred or assigned; and
(2) for a purpose for which the appropriation was originally available.9
Subsections 1531(b) and (c) set forth procedures for implementing
appropriations transfers in connection with such reorganizations.
Several different types of appropriations transfer authority also have been
included in substantive legislation creating various departments. The Department of
Education Organization Act of 1979,10 for example, contained five provisions related
to the issue of transfer authority.
First, Section 501(a) of the act transferred to the new department the funds,
together with the personnel, property, records, and other relevant items, associated
with the functions being transferred under the act. The subsection stated:
Except as otherwise provided in this Act, the personnel employed in
connection with, and the assets, liabilities, contracts, property, records, and
unexpended balance of appropriations, authorizations, allocations, and other
funds employed, held, used, arising from, available to, or to be made available
in connection with the functions and offices, or portions thereof transferred by
this Act, subject to section 202 of the Budget and Accounting Procedures Act of
1950, shall be transferred to the Secretary for appropriate allocation.
Unexpended funds transferred pursuant to this subsection shall only be used for
the purposes for which the funds were originally authorized and appropriated.11
A second provision, Section 504(a), also provided the Director of the Office of
Management and Budget (OMB) with the authority to make “determinations”
regarding the transfer of functions under the act, and to make “additional incidental
dispositions” of funds and related items in connection with the transfers of functions.
The section stated:
The Director of the Office of Management and Budget, at such time or
times as the Director shall provide, is authorized and directed to make such
determinations as may be necessary with regard to the functions, offices, or
931 U.S.C. 1531 originated as Section 202 of the Budget and Accounting Procedures Act of
1950 (P.L. 81-874; 64 Stat. 832-845).
10P.L. 96-88; October 17, 1979; 93 Stat. 668-696; 20 U.S.C. 3411 et. seq.
1193 Stat. 689; 20 USC 3501.

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portions thereof transferred by this Act, and to make such additional incidental
dispositions of personnel, assets, liabilities, grants, contracts, property, records,
and unexpended balances of appropriations, authorizations, allocations, and other
funds held, used, arising from, available to, or to be made available in connection
with such functions, offices, or portions thereof, as may be necessary to carry out
the provisions of this Act. The Director shall provide for the termination of the
affairs of all entities terminated by this Act and for such further measures and
dispositions as may be necessary to effectuate the purposes of this Act.12
A third provision, Section 511, effectively transferred certain other funds to the
Secretary to facilitate the transition to the new organizational structure. The section
stated:
With the consent of the appropriate department or agency head concerned,
the Secretary is authorized to utilize the services of such officers, employees, and
other personnel of the departments and agencies from which functions or offices
have been transferred to the Secretary or the Department, and funds appropriated
to such functions or offices for such period of time as may reasonably be needed
to facilitate the orderly implementation of this Act.13
With respect to the ongoing operations of the new department, a general
authorization pertaining to the transfer of funds was set forth in Section 424 of the
act, which stated:
The Secretary may, when authorized in an appropriation Act in any fiscal
year, transfer funds from one appropriation to another within the Department,
except that no appropriation for any fiscal year shall be either increased or
decreased pursuant to this section by more than 5 percent and no such transfer
shall result in increasing any such appropriation above the amount authorized to
be appropriated therefor.14
Section 424 anticipated the need for the department secretary to make transfers
in the future in the course of conducting the department’s ongoing operations. On
its face, however, the section did not provide authority to transfer funds. Instead, it
authorized the inclusion of such authority in subsequent annual appropriations acts,
with each transfer subject to a 5-percent limitation as to amount and a bar against
exceeding the authorized levels set in substantive law. The secretary, therefore,
would only be able to transfer funds as the authority to do so was included in annual
appropriations acts.
Finally, Section 423 authorized the transfer of funds and other assets as part of
the establishment of a working capital fund for the department.15
1293 Stat. 690; 20 U.S.C. 3502.
1393 Stat. 695; 20 U.S.C. 3510.
1493 Stat. 688; 20 U.S.C. 3484.
1593 Stat. 687-688; 20 U.S.C. 3483.

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With some differences, these transfer provisions largely parallel those included
in the Department of Energy Organization Act of 197716, enacted 2 years earlier.
Transfer Authority in Annual Appropriations Acts. Most appropriations
transfer authority available to executive agencies on a regular basis is provided in
annual appropriations acts and is renewed from year to year.
Congress may respond to the need to provide transfer authority in annual
appropriations acts in several ways. First, the President may request, or Congress
may initiate on its own, appropriations legislation authorizing a specific transfer after
the affected appropriations already have been enacted. For example, a provision in
the Consolidated Appropriations Act for FY2001 transferred funds from an Air Force
account in the Defense Department, that had been enacted several months earlier, to
a program in the Interior Department:
Sec. 311. Of the funds made available in the Department of Defense
Appropriations Act, 2001 (Public Law 106-259), the Secretary of the Air Force
shall transfer $5,000,000 of the funds provided for “Operation and Maintenance,
Air Force” to the Secretary of the Interior for maintenance, protection, or
preservation of the land and interests in land described in section 3 of the
Minuteman Missile National Historic Site Establishment Act of 1999 (Public
Law 106-115; 113 Stat. 1540): Provided, That the transfer authority provided
in this section is in addition to any other transfer authority available to the
Department of Defense for fiscal year 2001.17
Second, a specific transfer may be anticipated and provided for in advance. For
example, the Defense Appropriations Act for FY2002 provided advance authority to
transfer funds for a specific program from one set of Defense Department accounts
to other accounts:
Sec. 8015. Funds appropriated in title III of this Act for the Department of
Defense Pilot Mentor-Protege Program may be transferred to any other
appropriation contained in this Act solely for the purpose of implementing a
Mentor-Protege Program developmental assistance agreement pursuant to section
831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law
101-510; 10 U.S.C. 2301 note), as amended, under the authority of this provision
or any other transfer authority contained in this Act.18
16P.L. 95-91; August 4, 1977; 91 Stat. 565-613; 42 U.S.C. 7131 et. seq. The following
sections of P.L. 95-91 pertained to appropriations transfer authority: Section 653, dealing
with transfers to set up a working capital fund; Section 659, regarding ongoing transfer
authority, subject to approval in annual appropriations acts; Section 701(a), dealing with
transfers upon establishment of the department; and Section 704, dealing with “incidental”
transfers by the OMB director.
17See Section 311 (114 Stat. 2763A-182) in Division A of H.R. 5666, the Miscellaneous
Appropriations Act for FY2001, as enacted into law by cross-reference by Section 1(a)(4)
of P.L. 106-554, the Consolidated Appropriations Act for FY2001.
18See Section 8015 of the Defense Appropriations Act for FY2002 (P.L. 107-117; January
10, 2002; 115 Stat. 2250).

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Finally, the need for a general grant of transfer authority may be anticipated and
provided for in advance, with specific transfers being determined thereunder at a later
time. For example, the Department of Justice Appropriations Act for FY2002
provided advance authority to transfer funds generally between department accounts,
subject to percentage limitations and other restrictions:
Sec. 107. Not to exceed 5 percent of any appropriation made available for
the current fiscal year for the Department of Justice in this Act may be
transferred between such appropriations, but no such appropriation, except as
otherwise specifically provided, shall be increased by more than 10 percent by
any such transfers: Provided, That any transfer pursuant to this section shall be
treated as a reprogramming of funds under section 605 of this Act and shall not
be available for obligation except in compliance with the procedures set forth in
that section.19
House and Senate rules generally require that appropriations first be authorized
in substantive law. Some programs are authorized on a permanent basis and the
substantive law usually authorizes the appropriation of “such sums as may be
necessary”; other programs are authorized on a recurring basis with authorizations
of appropriations set at specific levels for each fiscal year covered by the legislation.
In the case of annual or biennial authorization measures, most notably for defense
programs, the legislation sometimes provides for the transfer of “authorizations” in
a manner similar to the way annual appropriations acts often provide for the transfer
of appropriations, with comparable limitations. For example, Section 1001 of the
National Defense Authorization Act for Fiscal Year 2002 (P.L. 107-107; December
28, 2001; 115 Stat. 1201) states:
(a) Authority To Transfer Authorizations.—(1) Upon determination by the
Secretary of Defense that such action is necessary in the national interest, the
Secretary may transfer amounts of authorizations made available to the
Department of Defense in this division for fiscal year 2002 between any such
authorizations for that fiscal year (or any subdivisions thereof). Amounts of
authorizations so transferred shall be merged with and be available for the same
purposes as the authorization to which transferred.
(2) The total amount of authorizations that the Secretary may transfer under
the authority of this section may not exceed $2,000,000,000.
(b) Limitations.—The authority provided by this section to transfer
authorizations—
(1) may only be used to provide authority for items that have a higher
priority than the items from which authority is transferred; and
(2) may not be used to provide authority for an item that has been
denied authorization by Congress.
(c) Effect on Authorization Amounts.—A transfer made from one account
to another under the authority of this section shall be deemed to increase the
amount authorized for the account to which the amount is transferred by an
amount equal to the amount transferred.
(d) Notice to Congress.—The Secretary shall promptly notify Congress of
each transfer made under subsection (a).
19See Section 107 of the Department of Justice Appropriations Act (115 Stat. 765) in the
Commerce-Justice-State Appropriations Act for FY2002 (P.L. 107-77; November 28, 2001).

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Congress has sometimes protected its prerogatives with regard to agency
reprogramming by establishing rules for the practice in statute or committee report
language. (See example of such reprogramming rules, taken from a recent
appropriations act.) In some instances, statutory reprogramming rules are cross-
referenced in appropriations transfer language as a further restriction on the use of
the transfer authority.
Example of Statutory Reprogramming Rules Sometimes Applied
to Transfer Authority by Cross-Reference
Sec. 605. (a) None of the funds provided under this Act, or provided under
previous appropriations Acts to the agencies funded by this Act that remain
available for obligation or expenditure in fiscal year 2002, or provided from any
accounts in the Treasury of the United States derived by the collection of fees
available to the agencies funded by this Act, shall be available for obligation or
expenditure through a reprogramming of funds which (1) creates new programs;
(2) eliminates a program, project, or activity; (3) increases funds or personnel by
any means for any project or activity for which funds have been denied or
restricted; (4) relocates an office or employees; (5) reorganizes offices, programs,
or activities; or (6) contracts out or privatizes any functions or activities presently
performed by Federal employees; unless the Appropriations Committees of both
Houses of Congress are notified 15 days in advance of such reprogramming of
funds.
(b) None of the funds provided under this Act, or provided under previous
appropriations Acts to the agencies funded by this Act that remain available for
obligation or expenditure in fiscal year 2002, or provided from any accounts in the
Treasury of the United States derived by the collection of fees available to the
agencies funded by this Act, shall be available for obligation or expenditure for
activities, programs, or projects through a reprogramming of funds in excess of
$500,000 or 10 percent, whichever is less, that (1) augments existing programs,
projects, or activities; (2) reduces by 10 percent funding for any existing program,
project, or activity, or numbers of personnel by 10 percent as approved by
Congress; or (3) results from any general savings from a reduction in personnel
which would result in a change in existing programs, activities, or projects as
approved by Congress; unless the Appropriations Committees of both Houses of
Congress are notified 15 days in advance of such reprogramming of funds.
Source: Section 605 of the Commerce-Justice-State Appropriations Act for
FY2002 (P.L. 107-77; November 28, 2001; 115 Stat. 798-799).
During the appropriations cycle for FY2002, provisions granting transfer
authority to cabinet secretaries were included in most of the regular appropriations
acts. Although transfer authority may be found in any component of an
appropriations act, most grants of transfer authority are found toward the beginning
of the “General Provisions” section of the act.
Table 1 lists general grants of anticipatory transfer authority to the heads of nine
Cabinet departments provided in regular appropriations acts for FY2002. In some
instances, especially in the case of the Defense Department, the department secretary

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was granted other types of appropriations transfer authority as well. In five other
cases, involving the Departments of Energy, Housing and Urban Development,
Interior, Transportation, and Veterans’ Affairs, general grants of anticipatory transfer
authority were not readily identifiable, although other forms of transfer authority
usually were provided.
As the excerpted text from the appropriations acts provided in Table 1 shows,
the general grants of anticipatory transfer authority varied in their design.
Limitations on the amount that could be transferred from a donor account were
expressed as a percentage in some cases, and as a fixed dollar amount in another.
The percentages varied from one percent, to two percent, to five percent. In addition,
the total amount that could be transferred to a receiving account usually was limited
to a percentage ranging from two percent to 10 percent.
In addition, further restrictions were placed on the use of transferred funds, such
as requiring for the Defense Department that they be used only for “higher priority”
items and in no case for items previously denied by Congress. Some of the
restrictions were keyed to statutory rules regulating the use of reprogrammings.
Finally, the transferred authority either required prior notification to, or the prior
approval of, the House and Senate Appropriations Committees.

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Table 1. Examples of Transfer Authority Granted to Cabinet Secretaries
in Regular Appropriations Acts for FY2002
Department
Regular appropriations act
Legislative text
Agriculture
Agriculture Appropriations Act
The Secretary of Agriculture may transfer unobligated balances of
P.L. 107-76, Section 704
funds appropriated by this Act or other available unobligated balances
(November 28, 2001)
of the Department of Agriculture to the Working Capital Fund for the
115 Stat. 732
acquisition of plant and capital equipment necessary for the delivery
of financial, administrative, and information technology services of
primary benefit to the agencies of the Department of Agriculture:
Provided, That none of the funds made available by this Act or any
other Act shall be transferred to the Working Capital Fund without the
prior approval of the agency administrator: Provided further, That
none of the funds transferred to the Working Capital Fund pursuant to
this section shall be available for obligation without the prior approval
of the Committees on Appropriations of both Houses of Congress.
Commerce
Commerce-Justice-State
Not to exceed 5 percent of any appropriation made available for the
Appropriations Act
current fiscal year for the Department of Commerce in this Act may be
P.L. 107-77, Section 204
transferred between such appropriations, but no such appropriation
(November 28, 2001)
shall be increased by more than 10 percent by any such transfers:
115 Stat. 778
Provided, That any transfer pursuant to this section shall be treated as
a reprogramming of funds under section 605 of this Act and shall not
be available for obligation or expenditure except in compliance with
the procedures set forth in that section.

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Department
Regular appropriations act
Legislative text
Defense
Defense Appropriations Act
Upon determination by the Secretary of Defense that such action is
P.L. 107-117, Section 8005
necessary in the national interest, he may, with the approval of the
(January 10, 2002)
Office of Management and Budget, transfer not to exceed
115 Stat. 2247-2248
$2,000,000,000 of working capital funds of the Department of Defense
or funds made available in this Act to the Department of Defense for
military functions (except military construction) between such
appropriations or funds or any subdivision thereof, to be merged with
and to be available for the same purposes, and for the same time
period, as the appropriation or fund to which transferred: Provided,
That such authority to transfer may not be used unless for higher
priority items, based on unforeseen military requirements, than those
for which originally appropriated and in no case where the item for
which funds are requested has been denied by the Congress: Provided
further, That the Secretary of Defense shall notify the Congress
promptly of all transfers made pursuant to this authority or any other
authority in this Act: Provided further, That no part of the funds in this
Act shall be available to prepare or present a request to the Committees
on Appropriations for reprogramming of funds, unless for higher
priority items, based on unforeseen military requirements, than those
for which originally appropriated and in no case where the item for
which reprogramming is requested has been denied by the Congress:
Provided further, That a request for multiple reprogrammings of funds
using authority provided in this section must be made prior to May 1,
2002.
Education
Labor-HHS-Education
Not to exceed 1 percent of any discretionary funds (pursuant to the
Appropriations Act
Balanced Budget and Emergency Deficit Control Act of 1985, as
P.L. 107-116, Section 304
amended) which are appropriated for the Department of Education in
(January 10, 2002)
this Act may be transferred between appropriations, but no such
115 Stat. 2208
appropriation shall be increased by more than 3 percent by any such
transfer: Provided, That the Appropriations Committees of both
Houses of Congress are notified at least 15 days in advance of any
transfer.

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Department
Regular appropriations act
Legislative text
Health and
Labor-HHS-Education
Not to exceed 1 percent of any discretionary funds (pursuant to the
Human
Appropriations Act
Balanced Budget and Emergency Deficit Control Act of 1985, as
Services
P.L. 107-116, Section 207
amended) which are appropriated for the current fiscal year for the
(January 10, 2002)
Department of Health and Human Services in this Act may be
115 Stat. 2199
transferred between appropriations, but no such appropriation shall be
increased by more than 3 percent by any such transfer: Provided, That
an appropriation may be increased by up to an additional 2 percent
subject to approval by the House and Senate Committees on
Appropriations: Provided further, That the Appropriations
Committees of both Houses of Congress are notified at least 15 days
in advance of any transfer.
Justice
Commerce-Justice-State
Not to exceed 5 percent of any appropriation made available for the
Appropriations Act
current fiscal year for the Department of Justice in this Act may be
P.L. 107-77, Section 107
transferred between such appropriations, but no such appropriation,
(November 28, 2001)
except as otherwise specifically provided, shall be increased by more
115 Stat. 765
than 10 percent by any such transfers: Provided, That any transfer
pursuant to this section shall be treated as a reprogramming of funds
under section 605 of this Act and shall not be available for obligation
except in compliance with the procedures set forth in that section.
Labor
Labor-HHS-Education
Not to exceed 1 percent of any discretionary funds (pursuant to the
Appropriations Act
Balanced Budget and Emergency Deficit Control Act of 1985, as
P.L. 107-116, Section 102
amended) which are appropriated for the current fiscal year for the
(January 10, 2002)
Department of Labor in this Act may be transferred between
115 Stat. 2185
appropriations, but no such appropriation shall be increased by more
than 3 percent by any such transfer: Provided, That the Appropriations
Committees of both Houses of Congress are notified at least 15 days
in advance of any transfer.

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Department
Regular appropriations act
Legislative text
State
Commerce-Justice-State
Not to exceed 5 percent of any appropriation made available for the
Appropriations Act
current fiscal year for the Department of State in this Act may be
P.L. 107-77, Section 402
transferred between such appropriations, but no such appropriation,
(November 28, 2001)
except as otherwise specifically provided, shall be increased by more
115 Stat. 789
than 10 percent by any such transfers: Provided, That not to exceed 5
percent of any appropriation made available for the current fiscal year
for the Broadcasting Board of Governors in this Act may be transferred
between such appropriations, but no such appropriation, except as
otherwise specifically provided, shall be increased by more than 10
percent by any such transfers: Provided further, That any transfer
pursuant to this section shall be treated as a reprogramming of funds
under section 605 of this Act and shall not be available for obligation
or expenditure except in compliance with the procedures set forth in
that section.
Treasury
Treasury-Postal Service
Sec. 113. Not to exceed 2 percent of any appropriations in this Act
Appropriations Act
made available to the Federal Law Enforcement Training Center,
P.L. 107-67, Sections 113-115
Financial Crimes Enforcement Network, Bureau of Alcohol, Tobacco
(November 12, 2001)
and Firearms, United States Customs Service, Interagency Crime and
115 Stat. 524
Drug Enforcement, and United States Secret Service may be
transferred between such appropriations upon the advance approval of
the Committees on Appropriations. No transfer may increase or
decrease any such appropriation by more than 2 percent.
Sec. 114. Not to exceed 2 percent of any appropriations in this Act
made available to the Departmental Offices, Office of Inspector
General, Treasury Inspector General for Tax Administration, Financial
Management Service, and Bureau of the Public Debt, may be
transferred between such appropriations upon the advance approval of
the Committees on Appropriations. No transfer may increase or
decrease any such appropriation by more than 2 percent.
Sec. 115. Not to exceed 2 percent of any appropriation made
available in this Act to the Internal Revenue Service may be transferred
to the Treasury Inspector General for Tax Administration's
appropriation upon the advance approval of the Committees on
Appropriations. No transfer may increase or decrease any such
appropriation by more than 2 percent.

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Transfer Authority for the Department of Homeland Security
The Administration’s proposal to establish the DHS, as reflected in the
introduced version of H.R. 5005, provides several different types of appropriations
transfer authority for the department, including (1) general transfer authority; (2)
transitional transfer authority prior to agency transfer; (3) transitional transfer
authority upon agency transfer; and (4) incidental transfer authority.
The House’s initial response to the Administration’s recommendations was
reflected in H.R. 5005, as reported on July 24, 2002, by the House Select Committee
on Homeland Security.20 In addition, the bill was referred for comment to various
standing committees of the House, including the House Appropriations Committee.21
As reported by the House Select Committee, H.R. 5005 did not reflect all of the
recommendations made by the other House committees.
On July 26, the House passed H.R. 5005 by a vote of 295-132, after adopting
various amendments on July 25 and 26. Armey amendment #21, an en bloc
manager’s amendment, was adopted on July 26 by a vote of 222-204; it encompassed
some of the amendments requested by several House committees, including the
Appropriations Committee, and various technical amendments.22
Initially, the leading proposal in the Senate was embodied in Lieberman
amendment S.Amdt. 4471.23 The amendment originally took the form of a substitute
to S. 2452, the National Homeland Security and Combating Terrorism Act of 2002,
a bill that had been reported earlier by the Senate Governmental Affairs Committee.24
Senator Joseph Lieberman, chairman of the committee, proposed the substitute on
July 19, which was marked up in business meetings of the committee on July 24 and
25 and authorized to be offered by him as a floor amendment during consideration
20H.Rept. 107-609, pt. 1 (July 24, 2002). The select committee is chaired by the majority
leader, Representative Richard Armey. Representative Nancy Pelosi serves as the ranking
minority member. The select committee maintains a Web site at [http://hsc.house.gov].
21The views of the House Appropriations Committee regarding transfer authority in H.R.
5005, “Recommendations to the Select Committee on Homeland Security” (July 11, 2002),
are available at [http://www.house.gov/appropriations/news/107_2/03homeland.htm]. In
addition, Representatives C.W. Bill Young and David R. Obey, the chairman and ranking
minority member of the Appropriations Committee, respectively, presented testimony before
the House Select Committee, available at [http://hsc.house.gov/docs/0717/list.asp].
22See pages H5817-5829 in the Congressional Record of July 26, 2002, for the text of the
amendment and its consideration; the vote on the amendment may be found on pages
H5837-5838.
23The initial Lieberman amendment was #4467 (see the Congressional Record of August 1,
2002, no. 108–part II, at pages S7967-8003). The Lieberman amendment was resubmitted
with modification as S.Amdt. 4471in the Congressional Record of September 3, 2002, no.
109, at pages S8100-8137. Senator Leiberman’s statement on the amendment, together with
other explanatory materials, is found in the Congressional Record of September 4, 2002, no.
110, at pages S8155-8180.
24The Senate Governmental Affairs Committee reported S. 2452 on June 24, 2002 (S.Rept.
107-175).

CRS-15
of homeland security legislation. On August 1, the Senate agreed by unanimous
consent to move to proceed to consider H.R. 5005, in lieu of S. 2452, on September
3. The Senate agreed to the motion by a vote of 94-0 on September 3 and began
consideration of H.R. 5005 that day.
On November 13, the House passed (by a vote of 299-121) a modified version
of the Homeland Security Act, H.R. 5710, which did not include any general transfer
authority but which did include transitional and incidental transfer authority. Under
a compromise plan, general transfer authority instead was included in H.J.Res. 124,
a continuing resolution for FY2003, which the House also passed on November 13
(by a vote of 270-143).
The Senate is scheduled to bring its consideration of H.R. 5005 to a close soon
and to then reconcile its differences with the House so that the Homeland Security
Act can be presented to the President before sine die adjournment of the Congress.
With regard to appropriations transfer authority, the Senate is expected to embrace
the modifications reflected in House passage of H.R. 5710 and H.J.Res. 124 on
November 13.
The initial proposals regarding appropriations transfer authority, as proposed by
the Administration, the House (in H.R. 5005), and the Senate Governmental Affairs
Committee (in S.Amdt. 4471), are discussed below according to the type of transfer
authority involved.25 In addition, the modified House position regarding general
transfer authority, as reflected in its passage of H.R. 5710 and H.J.Res. 124, is
discussed. Table 2 summarizes the initial transfer authority proposals, while Table
3 provides a side-by-side comparison of the legislative text for these proposals.
25In addition to the types of transfer authority identified here, the proposals also include
transfer authority for specific entities that are not to be part of DHS. For example, H.R.
5005, as passed by the House, transfers assets and related items from the Immigration and
Naturalization Service to the new Bureau of Citizenship and Immigration Services.

CRS-16
Table 2. Summary of Initial Proposals for
Appropriations Transfer Authority
for the Department of Homeland Security
House
SGA Committee
Administration
(H.R. 5005)
(S.Amdt. 4471)
General Transfer Authority
Permanent authority for
2-year authority for
None.
Secretary, subject to 5%
Secretary, subject to 2%
limit in any fiscal year and
limit in any fiscal year and
15 days’ notice to Appro-
15 days’ notice to Appro-
priations Committees.
priations Committees.
Transitional Transfer Authority—Prior to Agency Transfer
Authority for Secretary,
Authority for Secretary,
None; however, officials
subject to 5% limit and 15
subject to 2% limit for
of agencies or functions to
days’ notice to Appro-
DHS administrative
be transferred are
priations Committees and
expenses and 3% limit for
authorized to provide
without regard to original
other, original purposes
“assistance, including the
purposes.
and 15 days’ notice to
use of personnel and
Appropriations
assets” to the Secretary
Committees.
until the transfer occurs.
Transitional Transfer Authority—Upon Agency Transfer
Automatic transfer of
Automatic transfer of
Automatic transfer of
assets to Secretary, subject
assets to Secretary, subject
assets to Secretary, subject
to OMB director approval
to OMB director approval,
to OMB director approval,
and without regard to
but limited to original
but limited to original
original purposes.
purposes.
purposes.
Incidental Transfer Authority
Authority for OMB
None.
Same as administration
director, in consultation
proposal.
with Secretary, to make
incidental dispositions of
assets and other items.

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Table 3. Side-by-Side Comparison of Initial Appropriations Transfer Authority Proposals:
Administration, House, & Senate Governmental Affairs Committee (Lieberman Amendment)
Administration proposal
Senate Governmental Affairs
(H.R. 5005, as introduced
House
Committee proposal
by request)
(H.R. 5005, as passed)
(S.Amdt. 4471)
General Transfer Authority
Transfer of Appropriations.—Except
(1) In General.—Except as otherwise
[none]
as otherwise specifically provided by
specifically provided by law, not to
law, not to exceed five percent of any
exceed two percent of any
appropriation available to the
appropriation available to the
Secretary in any fiscal year may be
Secretary in any fiscal year may be
t r a n s f e r r e d b e t w e e n s u c h
t r a n s f e r r e d b e t w e e n s u c h
appropriations, except that not less
appropriations, except that not less
than fifteen days’ notice shall be given
than 15 days’ notice shall be given to
to the Committees on Appropriations
the Committees on Appropriations of
of the Senate and House of
t h e S e n a t e a n d H o u s e o f
Representatives before any such
Representatives before any such
transfer is made.
transfer is made.
[Section 733(b)]
(2) Expiration of Authority.—The
authority under paragraph (1) shall
expire 2 years after the date of
enactment of this Act.
[Section 764(b)]

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Administration proposal
Senate Governmental Affairs
(H.R. 5005, as introduced
House
Committee proposal
by request)
(H.R. 5005, as passed)
(S.Amdt. 4471)
Transitional Transfer Authority—Prior to Agency Transfer
Transfer of Funds.—Until the transfer
Transfer of Funds.—Until the transfer
[none]
of an agency to the Department, the
of an agency to the Department, the
President is authorized to transfer to
President is authorized to transfer to
[Although explicit transitional transfer
the Secretary not to exceed five
the Secretary to fund the purposes
authority is not provided, Section
percent of the unobligated balance of
authorized in this Act—
183(a) states:
any appropriation available to such
(1) for administrative expenses related
Provision of As s i s t an ce by
agency, to fund the purposes
to the establishment of the Department
Officials.—Until an agency is
authorized in this Act, except that not
of Homeland Security, not to exceed
transferred to the Department, any
less than 15 days’ notice shall be
two percent of the unobligated balance
official having authority over, or
given to the Committees on
of any appropriation enacted prior to
functions relating to, the agency
Appropriations of the Senate and
October 1, 2002, available to such
immediately before the effective date
House of Representatives before any
agency; and
of this division shall provide to the
such funds transfer is made.
(2) for purposes for which the funds
Secretary such assistance, including
[Section 803(c)]
were appropriated, not to exceed three
the use of personnel and assets, as the
percent of the unobligated balance of
Secretary may reasonably request in
any appropriation available to such
preparing for the transfer and
agency;
integration of the agency into the
except that not less than 15 days’
Department.]
notice shall be given to the
Committees on Appropriations of the
House of Representatives and the
Senate before any such funds transfer
is made.
[Section 811(c)]

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Administration proposal
Senate Governmental Affairs
(H.R. 5005, as introduced
House
Committee proposal
by request)
(H.R. 5005, as passed)
(S.Amdt. 4471)
Transitional Transfer Authority—Upon Agency Transfer
Transfer of Personnel, Assets,
Transfer of Personnel, Assets,
Except as otherwise provided in this
Liabilities, and Functions.—Upon the
Obligations, and Functions.—Upon
title, the personnel employed in
transfer of an agency to the
the transfer of an agency to the
connection with, and the assets,
Department—
Department—
liabilities, contracts, property, records,
(1) the personnel, assets, and liabilities
(1) the personnel, assets, and
and unex pended balance of
held by or available in connection
obligations held by or available in
appropriations, authorizations,
with the agency shall be transferred to
connection with the agency shall be
allocations, and other funds employed,
the Secretary for appropriate
transferred to the Secretary for
held, used, arising from, available to,
allocation, subject to the approval of
appropriate allocation, subject to the
or to be made available in connection
the Director of the Office of
approval of the Director of the Office
with the agencies transferred under
Management and Budget and
of Management and Budget and in
this title, shall be transferred to the
notwithstanding the provisions of
accordance with the provisions of
Secretary for appropriate allocation,
section 1531(a)(2) of title 31, United
section 1531(a)(2) of title 31, United
subject to the approval of the Director
States Code; and
States Code; and
of the Office of Management and
(2) the Secretary shall have all
(2) the Secretary shall have all
Budget and to section 1531 of title 31,
functions relating to the agency that
functions relating to the agency that
United States Code. Unexpended
any other official could by law
any other official could by law
funds transferred under this subsection
exercise in relation to the agency
exercise in relation to the agency
shall be used only for the purposes for
immediately before such transfer, and
immediately before such transfer, and
which the funds were originally
shall have in addition all functions
shall have in addition all functions
authorized and appropriated.
vested in the Secretary by this Act or
vested in the Secretary by this Act or
[Section 186]
other law.
other law.
[Section 803(e)]
Paragraph (1) shall not apply to
(continued)
appropriations transferred pursuant to
section 763(b).
[Section 811(e)]

CRS-20
Administration proposal
Senate Governmental Affairs
(H.R. 5005, as introduced
House
Committee proposal
by request)
(H.R. 5005, as passed)
(S.Amdt. 4471)
Transitional Transfer Authority—Upon Agency Transfer (continued)
( a ) A p p l i c a b i l i t y o f T h i s
Section.—Notwithstanding any other
provision of this Act of any other law,
this section shall apply to the use of
any funds, disposal of property, and
acceptance, use, and disposal of gifts,
or donations of services or property,
of, for, or by the Department,
including any agencies, entities, or
other organizations transferred to the
Department under this Act, the Office,
and the National Combating Terrorism
Strategy Panel.
( b ) U s e o f T r a n s f e r r e d
Funds.—Except as may be provided in
an appropriations Act in accordance
with subsection (d), balances of
appropriations and any other funds or
assets transferred under this Act—
(1) shall be available only for the
purposes for which they were
originally available;
(2) shall remain subject to the same
conditions and limitations provided by
the law originally appropriating or
otherwise making available the
amount, including limitations and
notification requirements related to the
reprogramming of appropriated funds;
and

CRS-21
Administration proposal
Senate Governmental Affairs
(H.R. 5005, as introduced
House
Committee proposal
by request)
(H.R. 5005, as passed)
(S.Amdt. 4471)
Transitional Transfer Authority—Upon Agency Transfer (continued)
(3) shall not be used to fund any new
position established under this Act.
( c ) N o t i f i c a t i o n R e g a r d i n g
Transfers.—The President shall notify
Congress not less than 15 days before
any transfer of appropriations
balances, other funds, or assets under
this Act.
(d) Additional Uses of Funds During
Transition.—Subject to subsection (c),
amounts transferred to, or otherwise
made available to, the Department
may be used during the transition
period for purposes in addition to
those for which they were originally
available (including by transfer among
accounts of the Department), but only
to the extent such transfer or use is
specifically permitted in advance in an
appropriations Act and only under the
conditions and for the purposes
specified in such appropriations Act.
[Section 189(a)-(d)]

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Administration proposal
Senate Governmental Affairs
(H.R. 5005, as introduced
House
Committee proposal
by request)
(H.R. 5005, as passed)
(S.Amdt. 4471)
Incidental Transfer Authority
The Director of the Office of
[none]
Incidental Transfers.—The Director of
Management and Budget, in
the Office of Management and
consultation with the Secretary, is
Budget, in consultation with the
authorized and directed to make such
Secretary, shall make such additional
additional incidental dispositions of
incidental dispositions of personnel,
personnel, assets, and liabilities held,
assets, and liabilities held, used,
used, arising from, available, or to be
arising from, available, or to be made
made available, in connection with the
available, in connection with the
functions transferred by this Act, as he
functions transferred by this title, as
may deem necessary to accomplish the
the Director determines necessary to
purposes of this Act.
accomplish the purposes of this title.
[Section 806]
[Section 184(a)]

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General Transfer Authority. General transfer authority refers to
appropriations transfer authority provided to the Secretary of Homeland Security
following establishment of the department. Such authority would cover transfers
between accounts within the department’s budget and would be used to provide
ongoing flexibility in departmental operations and activities.
Section 733(a) of the Administration’s proposal authorizes the secretary to
reorganize functions and organizational units within the department, subject to
certain constraints. Section 733(b) of the proposal grants the secretary the authority
to transfer up to five percent from one appropriation to another in any fiscal year, also
subject to certain constraints. According to the Administration’s explanation
accompanying the proposed legislation, the grants of reorganizational authority and
appropriations transfer authority provided in Section 733(a) and (b) are important
elements in the overall proposal:
These authorities are critical to the successful establishment and organization of
a new department. They allow the Secretary to fulfill the purpose of the bill by
bringing together the many different functions and organizational units that will
be consolidated in the new department and having them work together in new
ways, and with new priorities. Similar reorganization authority was granted in
the acts creating the Department of Energy and the Department of Education.26
The authority granted to the secretary under this proposal would be permanent
and ongoing; Congress would not be required to provide and renew it in annual
legislation. Constraints on the secretary’s transfer authority include (1) a limit of 5%
on the amount that may be transferred in any fiscal year from one appropriation to
others; (2) a 15-day prior-notice requirement to the House and Senate Appropriations
Committees before a transfer may be made; and (3) the precedence of any other
constraints specifically provided by law over the five-percent limitation and prior-
notice requirement.
In the House, H.R. 5005, as reported by the Select Committee, did not reflect
the recommendations of the House Appropriations Committee on this matter. In
response to the various transfer authorities recommended in the Administration’s
proposal, the Appropriations Committee noted:
The Committee believes that the enactment of H.R. 5005, as introduced,
would constitute a major erosion of the separation of powers as established in the
United States Constitution, abrogating the central role of the Congress—the
direction and oversight of public expenditures. The bill would provide the
Secretary of the Department of Homeland Security with extraordinary and
unprecedented powers that would in effect be both legislative and executive in
nature and undermine the fundamental precept of the founding fathers, “checks
and balances.”27
26The Administration’s explanation of the Homeland Security Act of 2002 is available on
the White House Website at [http://www.whitehouse.gov/deptofhomeland/analysis/index.
html].
27House Appropriations Committee Recommendations, ibid., page 41

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With regard specifically to the request for general transfer authority, the
Appropriations Committee proposed that Section 733(b) be deleted. Instead, the
committee recommended that traditional procedures be followed:
[t]he Committee strongly believes that whether and in what amounts to
grant sweeping transfer authority and the restrictions that should apply are
matters that should and can be addressed through the annual appropriations
process, rather than through a permanent blanket of general authority.28
The Appropriations Committee also noted that while general transfer authority
provided in the organization act for the Department of Energy in 1977 and the
Department of Education in 1979 was “authorized,” it did not allow appropriations
to be transferred except as provided subsequently in annual appropriations acts.
Notwithstanding the objections stated by the Appropriations Committee, the
House included general transfer authority in H.R. 5005 upon passage (Section
764(b)), but reduced the limitation on transfer amounts from 5% to 2% and sunsetted
the authority after 2 years from the date of enactment.
The Senate Governmental Affairs Committee proposal (Lieberman amendment
#4467) does not provide any general transfer authority.
The modified House proposal, H.R. 5710, does not include any general transfer
authority, but it does include transitional and incidental transfer authority. Under a
compromise plan, general transfer authority instead is included in H.J.Res. 124, a
continuing resolution for FY2003, which the House also passed on November 13 (by
a vote of 270-143). The general transfer authority provided in the continuing
resolution is limited to $640 million, which includes $500 million from
appropriations for FY2003-2004 and another $140 million for start-up costs from
appropriations first provided for FY2002 and earlier years. The entire $640 million
in transfer authority also is subject to a 2% limit on the amount that can be
transferred from any single appropriation and other restrictions, such as the
requirement for 15 days’ notice to the Appropriations Committees before a transfer
can be made.
Transitional Transfer Authority—Prior to Agency Transfer. During
the transition phase to the new organizational structure, two types of appropriations
transfer authority may apply. The first type entails transfers made by the President
from existing agencies to the secretary of the new department and would apply “until
the transfer of an agency to the department.” Both the Administration and House
proposals (in H.R. 5005) provide for such transfer authority, but no such authority
is provided in the Senate Governmental Affairs Committee proposal.
The Administration’s provision, Section 803(c), authorizes transfers, subject to
a 5% limit on the amount that may be transferred and a 15-day prior-notice
requirement to the House and Senate Appropriations Committees before a transfer
may be made. In addition, Section 803(c) does not require that the use of transferred
28House Appropriations Committee Recommendations, ibid., page 8.

CRS-25
appropriations be limited to their original purposes. The House’s provision, Section
811(c), is the same, except that transfers “for administrative expenses related to the
establishment of the Department of Homeland Security” are limited to 2%, and
transfers “for purposes for which the funds were appropriated” are limited to 3%.
The House Appropriations Committee also strongly opposed this provision and
recommended that it be deleted. The committee observed:
... The amounts transferred [pursuant to Section 803(c)] would then be
available to finance any of the purposes of the new department, without regard
to the purposes for which they were originally appropriated. In other words, the
new department could start its operations with initial funding of $1 billion or
more, provided not through an appropriation for that purpose, but rather through
a five percent surcharge against appropriations made for agencies such as the
Coast Guard, the Customs Service, and the Federal Emergency Management
Agency. Again, no Congressional approval is required.
Although explicit transitional transfer authority is not provided in the Senate
Governmental Affairs Committee proposal, Section 183(a) directs officials of
agencies or functions to be transferred to provide “assistance, including the use of
personnel and assets” to the secretary during the period immediately before the
transfer occurs. Section 183(a) is roughly comparable in effect to Section 511 of the
Department of Education Organization Act of 1979, discussed previously.
Although the modified House proposal, H.R. 5710, does not include this type
of transitional transfer authority, Section 1511(a) does include the same directive for
agency officials to provide “assistance” that is found in Section 183(a) of the Senate
Governmental Affairs Committee proposal.
Transitional Transfer Authority—Upon Agency Transfer. A second
type of transfer authority used during the transition phase to the new organizational
structure automatically transfers the assets and related items of any agency to the
secretary of the new department upon the agency’s transfer. All three of the initial
proposals provide for such transfer authority, with individual transfers subject to the
approval of the OMB director. However, the Administration proposal (Section
803(e)), unlike the House proposal (in H.R. 5005) and Senate Governmental Affairs
Committee proposal (Section 811(e) and Section 186, respectively), does not limit
the use of transferred funds to their original purposes.
The House Appropriations Committee recommended that this grant of
transitional transfer authority be modified in part to restore the requirement that the
use of transferred funds be limited to their original purposes; the House Select
Committee, and eventually the House itself, accepted the Appropriations
Committee’s recommendation. The full modification recommended by the
Appropriations Committee (which was not accepted by the House Select Committee
or the full House), also would have required that transferred funds be subject to the
original conditions and limitations accompanying their use, that the President notify
Congress at least 15 days before making any transfers, and that the use of funds for
other than their original purposes be approved in advance in appropriations acts. The
full modification, including two new subsections, reads as follows:

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(e) Use of Transferred Funds.—Except as may be provided in an
appropriation Act pursuant to subsection (g), balances of appropriations and any
other funds transferred pursuant to this Act shall—
(1) be available only for the purposes for which they were originally
available; and
(2) remain subject to the same conditions and limitations provided by the
law originally appropriating or otherwise making available the amount, including
limitations and notification requirements related to the reprogramming of
appropriated funds.
(f) Notification Regarding Transfers.—The President shall notify Congress
at least 15 days in advance of any transfer of appropriations balances or other
funds pursuant to this Act.
(g) Additional Uses of Funds During Transition.—During the transition
period and provided that the Committees on Appropriations are notified at least
15 days in advance, amounts transferred to or otherwise made available to the
Department may be used for purposes in addition to those for which they were
originally available (including by transfer among accounts of the Department),
but only to the extent such transfer or use is specifically permitted in advance in
an appropriation Act and only under the conditions and for the purposes
specified in such appropriation Act.29
During the meetings of the Senate Governmental Affairs Committee on July 24
and 25, when the Lieberman amendment was under consideration, a new provision
(Section 189) was added dealing with transitional appropriations transfer authority.
Section 189 incorporates, but also expands upon, the language that had been
recommended by the House Appropriations Committee. In expanded form, the
section also bars the use of transferred appropriations to fund any new position.
Further, the section includes other provisions that (1) require the DHS secretary, in
disposing of property, to comply with section 204 of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C. 485) and deposit the proceeds
therefrom into the Treasury in accordance with 31 U.S.C. 3302(b); (2) require that
gifts may only be accepted or used as provided for in annual appropriations acts; and
(3) require the President to submit a detailed budget request for DHS in his FY2004
budget.
The modified House proposal, H.R. 5710, provides in Section 1511(d) for the
automatic transfer of appropriations to the new department, subject to the approval
of the OMB director and the restriction that appropriations be used only for their
original purposes. In addition, Section 873 of the bill incorporates the requirements
pertaining to the disposal of surplus property, the use of gifts, and the President’s
detailed budget request for DHS in his FY2004 budget discussed above.
Incidental Transfer Authority. Under this authority, the OMB director, in
consultation with the Secretary of Homeland Security, is directed to make “additional
incidental dispositions” of personnel and assets connected with functions transferred
under the measures. Apart from the requirement for consultation with the secretary,
the only limitation on the OMB director’s authority is that the dispositions be
“incidental” and deemed necessary by the director to accomplish the purposes of the
legislation. The term “incidental” is not defined in the legislation. As previously
29House Appropriations Committee Recommendations, ibid., page 2

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mentioned, comparable provisions were included in the organization acts for the
Departments of Energy and Education.
Nearly identical sections providing incidental transfer authority are provided in
Section 806 of the Administration proposal and Section 184(a) of the Senate
Governmental Affairs Committee proposal. Similar language also had been included
in Section 814 of H.R. 5005, as reported by the House Select Committee, but the
House Appropriations Committee recommended that the provision be deleted.
Consequently, Section 814 was stricken from H.R. 5005 by the House on July 26; the
language striking the provision was included in Armey amendment #21, the en bloc
manager’s amendment.
The modified House proposal, H.R. 5710, restores incidental transfer authority
to the OMB director in Section 1516.