Whether the Term "Federal Financial Assistance" in Section 504 of the Rehabilitation Act of 1973 Includes Federal Programs of Guarantee or Insurance

Septem ber 23, 1977

77-52 MEMORANDUM OPINION FOR THE
GENERAL COUNSEL OF THE DEPARTMENT
OF HEALTH, EDUCATION, AND WELFARE
Rehabilitation Act of 1973—Nondiscrimination
Provision

You have requested our opinion whether the term “Federal financial
assistance,” as used in section 504 of the Rehabilitation A ct of 1973, as
amended, 29 U.S.C. § 794 (Supp. V 1975) (Act), includes Federal pro­
grams o f guarantee or insurance. Section 504 provides:
No otherwise qualified handicapped individual in the United
States, as defined in section 7(6) o f this A ct [29 U.S.C. § 706(6)],
shall, solely by reason o f his handicap, be excluded from participa­
tion in, be denied the benefits of, or be subjected to discrimination
under any program o r activity receiving Federal financial assist­
ance.
W hile it is clear that the term “Federal financial assistance” encom­
passes direct Federal aid by way of grants and loans, it is unclear
w hether this term also includes indirect or contingent Federal financial
support through programs of insurance or guarantee, such as that
provided by the Federal Housing Administration.
T he legislative history o f § 504 sheds some light on the question. The
language that became § 504 first appeared as § 503 of S. 3987, 92d
Congress, 2d Session, the Vocational Rehabilitation Act of 1972
(pocket-vetoed by President Nixon). T he Senate Report accompanying
this bill twice described the provision relating to nondiscrimination
against the handicapped as requiring nondiscrimination by Federal gran­
tees and elsewhere it used the statutory term “Federal financial assist­
ance.” Sen. Rep. 92-1135, 92d Sess. 9, 49 (1972). In one instance, the
term “grants” was used in the heading and the text therein spoke in
terms o f “Federal financial assistance.” Id. 49. While far from conclu­
sive, this usage in the Senate report intimates that Congress equated
direct aid with the term “ Federal financial assistance,” thus excluding
indirect aid through programs of insurance or guarantee.
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 The nondiscrimination provision in the vetoed 1972 bill was carried
forward verbatim in §705 of H.R. 17, 93d Congress, 1st Session, also
vetoed. The provision was then included in the revised bill, which
eventually became the Act. The legislative reports and debates on these
bills shed no new light on the question.
The Act was amended in 1974. Although § 504 was not itself amend­
ed, the definition of handicapped individual in § 7(6) was amended and
made more expansive. The Senate report on the 1974 amendments,
which is the only legislative report, states that § 504 “was patterned
after and is almost identical to the antidiscrimination language o f ’ Title
VI of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000d-2000d-6 (1970
ed.) (“Title V I”), and Title IX of the Education Act Amendments of
1972, 20 U.S.C. §§ 1681-1686 (1975 Supp.) (“Title IX”). S. Rep. 93-
1297, 93d Cong., 2d Sess. 39 (1974). Here again, the report speaks of
“grants” and of “Federal financial assistance” interchangeably, thus
indicating that § 504 was directed at programs receiving direct Federal
aid. Id. 40. Additionally, in explaining why the 1974 amendments
changed the definition of “handicapped,” the Senate report provides
examples of kinds of handicapped persons who may inadvertently have
been excluded from the prior definition and examples of the kinds of
programs receiving Federal financial assistance that might continue to
discriminate against these handicapped in the absence of the amend­
ments. It is noteworthy that all of the programs enumerated receive
direct Federal aid; none receive Federal support in the form of insur­
ance or guarantees. Id. 38. This subsequent legislation and related
legislative report, declaring the intent of the previous statute, is entitled
to great weight. See, e.g., R ed Lion Broadcasting Co., Inc. v. FCC, 395
U.S. 367, 380-81 (1969).
Neither Title VI nor Title IX, the two models for § 504, prohibit
discrimination in programs receiving Federal aid through insurance or
guarantee. Indeed, each expressly excludes such programs, albeit in an
elliptical way. Section 601 of Title VI, 42 U.S.C. § 2000d (1970 ed.),
prohibits discrimination on the basis of race, color, and national origin
in the same words as § 504 prohibits such discrimination with respect to
a handicap. Section 602 of Title VI, 42 U.S.C. § 2000d-l (1970 ed.),
provides for the enforcement of the policy of § 601 by “each Federal
department and agency which is empowered to extend Federal finan­
cial assistance to any program or activity, by way of grant, loan or
contract other than contracts of insurance or guarantee . . . .” Title IX,
which forbids sex discrimination in federally assisted education pro­
grams, follows precisely the pattern of Title VI, including the express
exclusion in its enforcement section for programs of guarantee and
insurance. 20 U.S.C. § 1682 (1975 Supp.).
The Senate report, supra, stating that § 504 was modeled on Titles VI
and IX, might be used to argue the question either way. One could take
the view that because Congress in enacting those laws saw a need
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expressly to exclude insurance and guarantees, it believed those pro­
grams were otherwise within the meaning of “Federal financial assist­
ance.” 1 However, one could also hold that in modeling § 504 on Titles
VI and IX, Congress intended the reach of § 504 to be coextensive with
that of those titles, thus excluding programs of guarantee and insurance.
In our opinion, the second line of reasoning is to be preferred, and the
first is historically inaccurate. Indeed, a careful analysis of the legisla­
tive history of Title VI supports the conclusion that “Federal financial
assistance” excludes programs of insurance and guarantee.
Title VI of the Civil Rights A ct of 1964 (1964 Act) was the first
Federal statute to prohibit discrimination in programs receiving “Feder­
al financial assistance.” Section 602 of the 1964 Act, as reported out of
committee, provided for the enforcement of the policy of § 601 by
“each Federal department and agency which is to extend Federal
financial assistance to any program or activity, by way of grant, con­
tract or loan.” H.R. Rep. 88-914, 88th Cong., 1st Sess. 8 (1963).
Opponents of the 1964 Act asserted that the term “contract” was
sufficiently broad to bring federally insured or guaranteed programs
within the prohibition on discrimination. See, e.g., H.R. Rep. 88-914,
supra, 70 (minority report). In order to alleviate this fear § 602 was
amended on the floor of the House to exclude specifically contracts of
guarantee and insurance from that section. When that amendment was
being considered, Representative Celler, the floor manager of the bill
and the Chairman of the House Judiciary Committee, stated that the
bill did not include programs of guarantee and insurance and that the
express exclusion was being added solely to put to rest any erroneous
suggestions to the contrary. 110 Cong. Rec. 2490, 2500 (1964).
Senator Humphrey, the manager of the bill on the Senate side,
asserted that §601, which does not expressly exclude guarantees and
insurance from the term “ Federal financial assistance,” did not, in any
event, include them. 110 Cong. Rec. 7410-7420 (1964). Several Senators
who'opposed the bill took the contrary position.
Giving the appropriate weight to the floor statements by the manag­
ers of the bill in each House, see, United States v. American Trucking
A ss’n., Inc., 310 U.S. 534, 546-548 (1940), and disregarding the contrary
views expressed by opponents of the bill in the Senate, see, Holtzman v.

1 It could also be argued that the failure to include an exclusionary provision in the Act
reflected a congressional intent to include programs of guarantee and insurance. This
argument, however, assumes to o much in an obscure area.
The usual pattern o f antidiscrimination legislation has been to model such legislation
upon the Title VI o f the 1964 Act and to include in the enforcement provisions an
express exemption for programs of insurance and guarantee. See, in addition to Titles VI
and IX, 42 U.S.C. §§6101-07 (Supp. V 1975) (age discrimination); 20 U.S.C. §1684
(blindness). Because no enforcement provisions were included in the 1973 Act, no express
exemption was included. Thus, giving any weight at all to the failure to include an
enforcement provision (and its customary attendant: an exclusion for insurance and
guarantees), must also lead to the conclusion that Congress did not intend to authorize
and direct the Federal agencies concerned to enforce § 504. Were such to be the case,
this inquiry would be moot.

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Schlesinger, 414 U.S. 1304, 1312-13 n. 13 (Marshall, Circuit Justice,
1973), it appears that the better view is that the term “Federal financial
assistance” as used in the 1964 A ct did not include programs of guaran­
tee and insurance. Because the same words were used in § 504, the
reasonable assumption is that these words were meant to have the same
meaning in both acts, thus excluding programs of guarantee and insur­
ance from § 504.
In conclusion, it is our opinion that the term “Federal financial
assistance” in § 504 does not include programs of insurance or guaran­
tee. In addition to the analysis above, this conclusion is supported by
the absence of any reason to think that Congress intended to extend the
prohibition against discrimination of the handicapped beyond that of
the existing antidiscrimination legislation with respect to race, color,
national origin, sex, age, and blindness.
Jo h n M. H arm on
Assistant Attorney General
Office o f Legal Counsel

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