Fiduciary Obligations Regarding Bureau of Prisons
Commissary Fund
31 U.S.C. § 1321 and its accompanying Department of Justice regulations do not impose a fiduciary
obligation on the Bureau of Prisons to expend Commissary Fund moneys only in accordance with
the terms o f the Commissary Fund trust.
M a y 22, 1995
M e m o r a n d u m O p in io n f o r t h e A s s is t a n t A t t o r n e y G e n e r a l
C iv il D iv is io n
You have asked whether the Office of Legal Counsel continues to adhere to
the analysis of the “ Commissary fund, Federal prisons” (“ Commissary Fund” )
contained in the Memorandum for Norman Carlson, Director, Bureau of Prisons,
from Samuel A. Alito, Jr., Deputy Assistant Attorney General, Office of Legal
Counsel, Re: Disposition o f Income From Prison Vending Machines Under the
Randolph-Sheppard Act (Mar. 25, 1986) (“ Randolph-Sheppard Memorandum” ).
See Memorandum for Walter Dellinger, Assistant Attorney General, Office of
Legal Counsel, from Frank W. Hunger, Assistant Attorney General, Civil Division,
Re: Revision o f Previous Request fo r Informal Legal Opinion Concerning the
Limitations on Expenditures from the Bureau of Prisons Commissary Fund at 2
(Apr. 13, 1995).
The Randolph-Sheppard Memorandum states that because the Commissary Fund
is classified as a “ trust” account under 31 U.S.C. § 1321(a)(22), the Bureau of
Prisons (“ BOP” ) has the power to expend funds in the account only in a fiduciary
capacity. Randolph-Sheppard Memorandum at 4. Applying general principles of
trust law, it concludes that income from prison vending machines which would
otherwise accrue to the Commissary Fund is not subject to the income-sharing
provisions of section 7 of the Randolph-Sheppard Act. See Randolph-Sheppard
Act Amendments of 1974, Pub. L. No. 93-516, sec. 206, §7, 88 Stat. 1622, 1627
(codified as amended at 20 U.S.C. § 107d-3).
Because the Randolph-Sheppard Memorandum mischaracterizes the Com
missary Fund as a common law trust and suggests that, as trustee, the BOP has
a fiduciary obligation to federal prison inmates to expend Commissary Fund
income in accordance with the terms of the trust, see Randolph-Sheppard Memo
randum at 4, 10, we disavow those aspects of the opinion which analyze the Com
missary Fund under general trust law principles. Instead, for the reasons stated
below, we conclude that 31 U.S.C. §1321 and its accompanying Department of
Justice (“ DOJ” ) regulations do not impose a fiduciary obligation on the BOP
to expend Commissary Fund moneys pnly in accordance with the terms of the
Commissary Fund.
127
Opinions o f the Office o f Legal Counsel in Volume 19
Although we recognize that the trust fund analysis contained in our Randolph-
Sheppard Memorandum was based to some degree on our interpretation of a
memorandum attachment to a Letter for Honorable Elmer B. Staats, Comptroller
General of the United States, General Accounting Office, From Frank M.
Wozencraft, Assistant Attorney General, Office of Legal Counsel, Re: Set-Offs
Against Prisoners’ Trust Funds (Aug. 23, 1968) (“ Prisoners’ Trust Fund Memo
randum” ), we nonetheless reaffirm the analysis presented in the Prisoners’ Trust
Fund Memorandum. However, we limit the memorandum’s applicability solely
to those “ trust funds” established under 31 U.S.C. § 1321 that do impose fiduciary
obligations on the United States.
This memorandum does not question the Randolph-Sheppard Memorandum’s
conclusion that the income-sharing provisions of section 7 of the Randolph-
Sheppard Act do not apply to income from prison vending machines which would
otherwise accrue to the Commissary Fund, only the reasoning by which the
conclusion was reached.
I. BACKGROUND
DOJ established the prison commissary system in 1930 to sell to prison inmates
articles not regularly provided by federal prisons, such as toothpaste, soap, stamps,
arts and crafts, newspapers and magazines. Department of Justice Circular No.
2126, *Jf][9—11 (Aug. 1, 1930). At the same time, it established the Commissary
Fund in order to finance the purchase of the articles to be sold in the commissaries,
pay the salaries of commissary employees, and retain certain commissary system
profits in a capital fund for the future operation of the commissaries. Id. CH 9,
14, 15, 18.
In 1930, DOJ also established an Inmate Trust Fund at each federal prison,
wherein inmates were permitted to deposit money brought into the prison upon
arrival, money sent to them while in prison and money earned while incarcerated.
Id. TK2-4. The Inmate Trust Fund was intended to operate in conjunction with
the commissary. When purchasing articles from the commissaries, inmates were
required to have their Inmate Trust Fund accounts debited in the amount of such
articles.
In addition, DOJ created a “ Welfare Fund” in 1930, wherein “ a portion of
the [commissary] profits” could, upon “ written order of the Warden” and with
the “ approval of the Director, Bureau of Prisons,” be credited and disbursed “ for
any purpose accruing to the benefit of the inmate body, as a whole, such as amuse
ments, education, library, or general welfare work.” Id. 17-19.
DOJ adopted rules pertaining to the management, use and operation of these
activities and functions in the Circular establishing them. These rules afforded
the BOP wide-ranging authority to promote its peneological and administrative
interests. See, e.g., id. tJ[23 (“ The Warden or Superintendent of an institution may
128
Fiduciary Obligations Regarding Bureau o f Prisons Commissary Fund
deny or limit any inmate as to the privilege of purchasing from the ‘Institutional
Commissary.’ ” ); id. ‘fllO (“ Only those articles which from time to time shall
be authorized by the Director, Bureau of Prisons, may be procured through the
‘Institutional Commissary’ for the use of inmates.” ); id. *1111 (“ An approved list
of newspapers, books and magazines, for distribution through the ‘Institutional
Commissary,’ shall be issued from time to time by the Warden or Superintendent
of the institution.” ). The rules also stressed that “ [n]o inmate shall be entitled
to . . . earnings derived through operation of the ‘Institutional Commissary.’ ”
Id. 1121.
New rules, promulgated in 1932, regarding the Commissary Fund and related
accounts and functions, see Department of Justice Circular No. 2244 (Jan. 1, 1932)
(“ Circular No. 2244” ), continued to vest the BOP with wide-ranging authority.
The operating expenses and employee salaries associated with the commissaries
continued to be financed through the Commissary Fund. Id. TRI19, 34. The BOP
retained authority to determine the articles sold in the commissaries, id. %23, the
reading materials available for distribution through the commissaries, id. H25, and
the inmates permitted to exercise commissary privileges. Id. ^21. Moreover, the
BOP retained the authority to determine whether and how much of the profits
from commissary operations would be distributed to the Welfare Fund to be dis
bursed for the benefit of the inmate population as a whole. Id. <]ffll6, 41.
The amended rules continued to deny inmates any entitlement to commissary
earnings. Id. %22. In addition, the separate account for inmates’ personal funds
was also retained, although it was renamed the “ Prisoners’ Trust Fund.” Id. <]H[1,
2, 5. Further, the amended rules provided for the deposit of the Commissary Fund
and Prisoners’ Trust Fund in the United States Treasury. Id.