B-146749, FEB 26, 1974

B-146749, FEB 26, 1974

AID MAY ENTER INTO EXCESS RUPEE AGREEMENT WITH INDIA (EXCESS CURRENCY COUNTRY) PURSUANT TO FIRST PROVISO OF SECTION 104, PUBLIC LAW 480, EVEN THOUGH LITERAL READING OF SECOND (SO-CALLED MONDALE-POAGE) PROVISO MAKES PROCEDURE OF FIRST PROVISO INAPPLICABLE TO EXCESS CURRENCY NATIONS, SINCE MATTER IS NOT FREE FROM DOUBT AND INTENT OF SECOND PROVISO WAS APPARENTLY TO REMOVE EXCESS CURRENCY FROM RESTRICTIONS OF FIRST PROVISO AND NOT TO ELIMINATE APPLICABILITY OF ALTERNATE PROCEDURE.

TO EXCESS RUPEE AGREEMENT WITH INDIA:

THIS DECISION TO THE SECRETARY OF STATE IS IN RESPONSE TO THE REQUEST BY THE GENERAL COUNSEL OF THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID), DEPARTMENT OF STATE. HE REQUESTED OUR VIEWS CONCERNING THE LEGAL BASIS FOR A PROPOSED SETTLEMENT AGREEMENT BETWEEN THE UNITED STATES AND INDIA CONCERNING THE LARGE RUPEE BALANCES HELD BY THE UNITED STATES IN INDIA.

THE QUESTION ARISES UNDER THE FIRST AND SECOND PROVISOS OF SECTION 104 OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954 (PUBLIC LAW 480), 7 U.S.C. 1704. THESE PROVISOS WHICH IMMEDIATELY FOLLOW SUBSECTION 104(K) WERE ADDED BY SECTION 2(B) OF THE FOOD FOR PEACE ACT OF 1966, PUBLIC LAW 89-808, NOVEMBER 11, 1966.

THE FIRST PROVISO IS, IN EFFECT, A RESTATEMENT OF PRIOR LAW. THE SECOND PARAGRAPH THEREOF AUTHORIZES GRANTS OF PUBLIC LAW 480 FOREIGN CURRENCIES FOR ECONOMIC DEVELOPMENT PURPOSES UNDER SECTION 104(F) OF THAT LAW WITHOUT THE NEED FOR SPECIFIC APPROPRIATIONS, IF THE PRESIDENT DETERMINES THAT IT WOULD BE INAPPROPRIATE OR INCONSISTENT WITH THE PURPOSES OF TITLE I OF PUBLIC LAW 480 (7 U.S.C. 1701 ET. SEQ.) TO REQUIRE APPROPRIATION. THE THIRD PARAGRAPH THEREOF PROVIDES THAT NO AGREEMENT OR PROPOSAL TO GRANT ANY FOREIGN CURRENCIES OR TO USE ANY PRINCIPAL OR INTEREST FROM LOAN REPAYMENTS SHALL BE ENTERED INTO OR CARRIED OUT UNTIL THE EXPIRATION OF THIRTY DAYS (OR SIXTY DAYS WHEN CONGRESS IS NOT IN SESSION) FOLLOWING THE DATE ON WHICH SUCH AGREEMENT OR PROPOSAL IS TRANSMITTED TO THE SENATE COMMITTEE ON AGRICULTURE AND FORESTRY AND THE HOUSE COMMITTEE ON AGRICULTURE.

THE SECOND OR ULTIMATE PROVISO, ALSO KNOWN AS THE MONDALE-POAGE PROVISO, PROVIDES -

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

THE PROPOSED SETTLEMENT PROVIDES, IN PART, FOR INDIA TO PREPAY ALL OUTSTANDING RUPEE OBLIGATIONS, INCLUDING PRINCIPAL AND INTEREST, UP TO THE DATE OF SETTLEMENT. OUTSTANDING PRINCIPAL AND INTEREST WOULD NOT BE PREPAID FOR COMMERCIAL LOANS EXCEPT FOR SOME OF THE PUBLIC LAW 480 COOLEY LOANS. THE UNITED STATES WILL THEN GRANT THE MAJOR PART OF THE PUBLIC LAW 480 GENERATED RUPEES - EQUIVALENT TO ABOUT $2.2 BILLION - TO THE INDIAN GOVERNMENT FOR PROJECTS AS SPECIFIED IN THE SETTLEMENT. THE PROJECTS, WHICH ARE TO BE CHOSEN BY THE GOVERNMENT OF INDIA, ARE IN THE AREAS OF AGRICULTURE, HOUSING, FAMILY PLANNING, HEALTH, TECHNICAL EDUCATION, POWER DEVELOPMENT, AND RURAL ELECTRIFICATION. AID PROPOSES TO ENTER INTO THE SUBJECT AGREEMENT WITH INDIA UNDER THE AUTHORITY OF THE FIRST PROVISO OF SECTION 104 OF PUBLIC LAW 480.

THE ISSUE PRESENTED FOR DECISION AS TO WHETHER ASSISTANCE UNDER THE AUTHORITY OF THE FIRST PROVISO MAY BE FURNISHED, ARISES BY VIRTUE OF LANGUAGE IN THE MONDALE-POAGE PROVISO STATING, IN PERTINENT PART, THAT PARAGRAPHS (2), (3), AND (4) OF THE FIRST PROVISO "SHALL NOT APPLY" TO THE EXPENDITURE OF FOREIGN CURRENCIES OR CREDITS IN EXCESS CURRENCY NATIONS. A LITERAL READING OF THE STATUTORY LANGUAGE MAKES THE FIRST PROVISO UNAVAILABLE AS AUTHORITY FOR THE ENTERING INTO THE SUBJECT OR SIMILAR AGREEMENTS WHICH INVOLVE THE GRANT OF EXCESS CURRENCY (HERE, RUPEES) TO AN EXCESS CURRENCY NATION (HERE, INDIA). THERE IS SOME SUPPORT IN THE LEGISLATIVE HISTORY FOR THIS LITERAL INTERPRETATION AND FOR THE PROPOSITION THAT THE CONGRESS WISHED TO EXERCISE A DEGREE OF CONTROL - SUCH AS THAT CONTAINED IN THE MONDALE-POAGE PROVISO - OVER THE USES MADE OF UNITED STATES-OWNED EXCESS CURRENCY BY RECIPIENT COUNTRIES.

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

ALTHOUGH THE PROVISIONS AND PROCEDURES OF THE FIRST PROVISO ARE MORE RESTRICTIVE AND MORE DIFFICULT TO COMPLY WITH THAN THOSE OF THE MONDALE POAGE PROVISO, THE EXECUTIVE BRANCH HAS DECIDED TO ENTER INTO THE INSTANT AGREEMENT PURSUANT TO THE AUTHORITY OF THE FIRST PROVISO. IN THE INSTANT SITUATION, THE PRESIDENT HAS DETERMINED THAT THE APPROPRIATION OF THESE FUNDS WOULD BE INAPPROPRIATE OR INCONSISTENT WITH THE PURPOSES OF PUBLIC LAW 480 AS REQUIRED BY PARAGRAPH (2) AND THE AGREEMENT HAS BEEN SUBMITTED TO THE SENATE COMMITTEE ON AGRICULTURE AND FORESTRY AND THE HOUSE COMMITTEE ON AGRICULTURE AS REQUIRED BY PARAGRAPH (3) OF THE PENULTIMATE PROVISO WITHOUT, INSOFAR AS WE ARE AWARE, ANY OBJECTION TO THE AGREEMENT BEING RAISED. MOREOVER, THE DEPARTMENT OF STATE ADVISES THAT IT HAS MET AND CONSULTED, BOTH FORMALLY AND INFORMALLY, WITH THE NEAR EAST AND SOUTH ASIA SUBCOMMITTEE OF THE HOUSE FOREIGN AFFAIRS COMMITTEE, THE SENATE FOREIGN RELATIONS COMMITTEE, THE HOUSE AGRICULTURE COMMITTEE AND THE SENATE AGRICULTURE AND FORESTRY COMMITTEE, AS WELL AS WITH OTHER INTERESTED MEMBERS OF CONGRESS, WITH RESPECT TO THE FULL SCOPE OF THE PROPOSED AGREEMENT.

ACCORDINGLY, AND WHILE THE MATTER IS NOT ENTIRELY FREE FROM DOUBT, INASMUCH AS THE PROVISIONS AND PROCEDURES SET FORTH IN THE FIRST PROVISO HAVE BEEN FULLY COMPLIED WITH, THIS OFFICE WILL NOT OBJECT TO AID'S ENTERING INTO THE PROPOSED AGREEMENT UNDER THE AUTHORITY OF THE SECOND AND THIRD PARAGRAPHS OF SUCH PROVISO, RATHER THAN THE MONDALE POAGE PROVISO, IF THE COGNIZANT CONGRESSIONAL COMMITTEES INTERPOSE NO OBJECTION THERETO. HOWEVER, DUE TO THE UNCERTAINTY CAUSED BY THE LANGUAGE OF THE MONDALE- POAGE PROVISO THAT THE SUBJECT PARAGRAPHS OF THE PENULTIMATE PROVISO "SHALL NOT APPLY" IN EXCESS CURRENCY NATIONS, WE BELIEVE CONGRESSIONAL CLARIFICATION AS TO THE INTENT OF THE MONDALE POAGE PROVISO SHOULD BE OBTAINED BEFORE AID ENTERS INTO ANY SIMILAR AGREEMENTS.