Justice Dept. Strips Oversight Authority from Pandemic Aid Watchdog

Chris Gaetano
Published Date:
May 3, 2021

The Office of the Special Inspector General for Pandemic Recovery (SIGPR), an agency established under the CARES Act, which has been attempting to investigate fraud in the Paycheck Protection Program (PPP), among other things, is facing a significant narrowing of its jurisdiction that critics believe will lead to less oversight of the landmark programs, Accounting Today reported.

The move follows a decision by the Justice Department’s Office of Legal Counsel that Congress never intended for the SIGPR to oversee the PPP. The SIGPR's argument that it had jurisdiction over the program hinged on how one interprets the phrase "this Act" in Title IV and V of the CARES Act. The SIGPR asserted that "this Act" refers to both the PPP and the Coronavirus Relief Fund (CRF). Specifically, the section says that the SIGPR shall: "conduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments made by the Secretary of the Treasury under any program established by the Secretary under this Act, and the management by the Secretary of any program established under this Act." 

The SIGPR said that "this Act" refers to the entire section that encompasses both the PPP and the CRF (via the Coronavirus Economic Stabilization Act). But the Justice Department asserted that "this Act" refers only to the CRF. The Justice Department referred to Section 3 of the CARES Act, which states "“[e]xcept as expressly provided otherwise, any reference to ‘this Act’ contained in any division of this Act shall be treated as referring only to the provisions of that division.” The SIGPR argued that this means there is a default rule that, unless expressly provided otherwise, references to “this Act” in the CARES Act mean the entirety of the pertinent division—i.e., all of either Division A or Division B.

But the Justice Department said that Section 3 more narrowly establishes a default rule that references to “this Act” refer to no more than, but not necessarily all of, the pertinent division. The use of the term "only" in this respect is more consistent with this narrower interpretation, according to the Justice Department's interpretation. It raised a hypothetical where there was a provision that stated “any reference to the ‘Kansas City area’ shall be treated as referring only to the jurisdictions of the State of Kansas.” This excludes any jurisdiction of Missouri, but this doesn't necessarily mean that it includes every jurisdiction within the state of Kansas regardless of distance to Kansas City. The scope of the “Kansas City area” within Kansas instead would be determined by other features of the statute’s text, structure, and purpose.

"Similarly, section 3’s requirement that references to 'this Act be treated as referring 'only to the provisions of that division' clearly excludes from the meaning of 'this Act' provisions outside the pertinent division, but it does not necessarily define 'this Act' to mean all of the provisions of the pertinent division," said the Justice Department.

Further, the decision said the department has not located any legislative or drafting history suggesting that Congress intended for the SIGPR to have broader oversight authority than the Congressional Oversight Commission.

The inspector general who leads the agency, Brian Miller, said that the decision will ultimately mean less oversight and more fraud, and he concluded that "things are not working well." He called on Congress to amend the law to give him explicit jurisdiction over the Payroll Support Program and the Coronavirus Relief Fund.

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