This is probably in violation of Federal Law. I know at least one of the other major SAs will search almost up until I-Day if the appointed candidate says no. They actually have a waiting list based somewhat on alternates for principals who have not yet decided. This is one of the principal reason they have deadlines for acceptance.
In addition to what Pima so accurately posted; let me add a couple things.
There are 3 ways a MOC can do nominations.
1) Competitive: Simply provides a list of 10 names and the academy chooses one off of the list. They must choose one.
2) Principal: The MOC says. "This is my #1". The academy MUST offer the appointment to that person if they are qualified. All other nominees are competitive and at the academy's discretion.
3) Ranked: The MOC prioritizes all 10 nominees. The academy MUST start at the top and take the first qualified applicant.
The remaining in ALL 3 scenarios then go into the national pool. This is the "WAITING LIST" that you are referring to. You said "Alternates for Principals". The thing is; MOST MOC's don't do a "Principal" nomination. So basically; 1 is chosen from the list and ALL others go to the national pool. "Wait List".
The original contention in the thread however was if the academy HAD TO TAKE one from the list. The answer is YES. HOWEVER; the caveat is if they choose one from the list, offer them the appointment, and the individual turns it down. Technically; the academy has done what it's by law suppose to do. If the individual turns it down, the academy DOES NOT have to choose another from that list. Many times they will. Some times the MOC will INSIST and the academy will. But; if the MOC doesn't insist that a REPLACEMENT come from their list, the academy is free to choose from the National Pool. (Wait List). This individual WILL NOT BE CHARGED to the MOC. (That IS illegal). But the academy doesn't have to fill the MOC's slot if the one that was chosen declines the appointment.
Another area that similarly happens on a regular basis is the individual who receives an EARLY appointment (Oct-Nov) with a presidential nomination. If after the MOC nominations are done, and the individual with the presidential and has already received the appointment ALSO RECEIVES A MOC NOMINATION, the academy will change that person's nomination. They still get the appointment; but the academy can/does sometimes change their nomination to the MOC's so they, the academy, can take back the presidential slot and give it to someone of THEIR choosing. Early Appointments are rare, but they do happen. Some states, like ours, keeps an eye on this. My son received an early appointment with a presidential in Oct 2007. MOC nominations hadn't even happened yet. My son, ALO, and MOCs decided that the MOC WOULDN'T give him a nomination; this way he still has the appointment with the presidential, and the state got the slot for someone else. The next year, the MOC/ALO FORGOT. We had another individual with an early appointment with presidential, but by April, the presidential slot was removed from his APPOINTMENT, and the MOC nomination was used. This way the academy could use the presidential nomination for someone they wanted, who was eligible for a presidential, but didn't receive a MOC nomination.
It's definitely a complicated game. But NO, the academy didn't/isn't do/doing anything against the law.