B-131822, MAY 31, 1957

B-131822: May 31, 1957

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WITHOUT REGARD TO WHETHER DOLLARS ARE AVAILABLE UNDER THAT SECTION. IT IS PROPOSED TO SUBSEQUENTLY DISCHARGE SUCH OBLIGATION WITH THE USE OF LOCAL CURRENCY UNDER SECTION 104 (F) OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954. THE LETTER IS IN PART AS FOLLOWS: "AS A CONSEQUENCE OF THE HUNGARIAN UPRISING OF LAST FALL. THE BULK OF THESE REFUGEES DO NOT WISH TO REMAIN AND BE INTEGRATED IN YUGOSLAVIA AND THUS THEY HAVE CONSTITUTED A BURDEN ON THE YUGOSLAV ECONOMY. ESTIMATED COSTS THROUGH MAY 15 ARE EXPECTED TO TOTAL APPROXIMATELY SIX MILLION DOLLARS. " AND STATES THAT PROGRAMS OF ASSISTING REFUGEES AND PROVIDING FOR THEIR CARE AND MAINTENANCE ARE OPERATED UNDER THE AUTHORITY OF THE MUTUAL SECURITY ACT OF 1954.

B-131822, MAY 31, 1957

TO THE SECRETARY OF STATE:

ON MAY 13, 1957, THE ASSISTANT SECRETARY-CONTROLLER OF THE DEPARTMENT OF STATE, REQUESTED OUR DECISION AS TO THE LEGALITY OF USING THE SUBSTANTIVE AUTHORITY OF SECTION 405/D) OF THE MUTUAL SECURITY ACT OF 1954, AS AMENDED, 22 U.S.C. 1925/D), WITHOUT REGARD TO WHETHER DOLLARS ARE AVAILABLE UNDER THAT SECTION, IN ORDER TO INCUR AN OBLIGATION FOR THE CARE, MAINTENANCE, AND RESETTLEMENT OF HUNGARIAN REFUGEES IN YUGOSLAVIA. IT IS PROPOSED TO SUBSEQUENTLY DISCHARGE SUCH OBLIGATION WITH THE USE OF LOCAL CURRENCY UNDER SECTION 104 (F) OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954, 68 STAT. 454, 457, 7 U.S.C. 1704/F), WITHOUT DOLLAR REIMBURSEMENT AND ON THE BASIS OF A WAIVER OF THE REQUIREMENTS OF SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 66 STAT. 662, 31 U.S.C. 724.

THE LETTER IS IN PART AS FOLLOWS:

"AS A CONSEQUENCE OF THE HUNGARIAN UPRISING OF LAST FALL, SOME 18,000 HUNGARIAN REFUGEES FLED TO AND RECEIVED ASYLUM IN YUGOSLAVIA. THE BULK OF THESE REFUGEES DO NOT WISH TO REMAIN AND BE INTEGRATED IN YUGOSLAVIA AND THUS THEY HAVE CONSTITUTED A BURDEN ON THE YUGOSLAV ECONOMY. THE YUGOSLAV GOVERNMENT HAS INFORMED US THAT IT HAS ALREADY EXPENDED THE LOCAL CURRENCY (DINAR) EQUIVALENT OF OVER TWO MILLION DOLLARS FOR THE CARE AND MAINTENANCE OF THESE REFUGEES. ESTIMATED COSTS THROUGH MAY 15 ARE EXPECTED TO TOTAL APPROXIMATELY SIX MILLION DOLLARS.

"IT HAS BEEN DETERMINED AS A MATTER OF NATIONAL POLICY THAT IT WOULD BE HIGHLY DESIRABLE FROM A POLITICAL AND HUMANITARIAN POINT OF VIEW FOR THIS GOVERNMENT TO ASSIST IN THE CARE AND MAINTENANCE OF HUNGARIAN REFUGEES IN YUGOSLAVIA AND IN THEIR RESETTLEMENT IN COUNTRIES OF SECOND ASYLUM. HAS ALSO BEEN DETERMINED AS A MATTER OF POLICY TO MAXIMIZE THE USE OF FOREIGN CURRENCIES IN ORDER TO REDUCE THE NEED FOR DOLLAR EXPENDITURES.'

YOUR DEPARTMENT'S LETTER REFERS TO SECTION 2 OF THE MUTUAL SECURITY ACT OF 1954, AS AMENDED, ENTITLED "STATEMENT OF POLICY," AND STATES THAT PROGRAMS OF ASSISTING REFUGEES AND PROVIDING FOR THEIR CARE AND MAINTENANCE ARE OPERATED UNDER THE AUTHORITY OF THE MUTUAL SECURITY ACT OF 1954, AS AMENDED; ALSO, THAT SECTION 405/D) OF THE ACT IS THE SECTION BEING RELIED UPON TO CREATE THE OBLIGATION IN THE INSTANT CASE. INASMUCH AS SPECIFIC SECTIONS (401 AND 405) OF THE ACT PERTAIN TO REFUGEES, THE GENERAL POLICY PROVISIONS OF THE ACT REFERRED TO IN YOUR DEPARTMENT'S LETTER MAY NOT BE CONSIDERED AS AUTHORIZING PROGRAMS PROVIDING FOR THE CARE, MAINTENANCE, AND ASSISTANCE OF REFUGEES.

SECTION 104/F) OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954 (HEREINAFTER REFERRED TO AS PUBLIC LAW 480), PROVIDES THAT THE PRESIDENT MAY USE OR ENTER INTO AGREEMENTS WITH FRIENDLY NATIONS TO USE THE FOREIGN CURRENCIES WHICH ACCRUE UNDER THE ACT "TO PAY UNITED STATES OBLIGATIONS ABROAD.' WHILE, GENERALLY, UNDER SECTION 104 FOREIGN CURRENCIES MAY BE USED WITHOUT REGARD TO SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT OF 1953, THE FIRST PROVISO OF SECTION 104 MAKES SECTION 1415 APPLICABLE TO ALL FOREIGN CURRENCIES USED FOR PAYMENTS OF UNITED STATES OBLIGATIONS INVOLVING GRANTS UNDER SECTION 104 (F). SECTION 1415 OF THE 1953 ACT IN EFFECT PROHIBITS THE USE OF FOREIGN CURRENCIES UNLESS THEY ARE APPROPRIATED IN ANNUAL APPROPRIATION ACTS AND AUTHORIZES SUCH APPROPRIATIONS. PURSUANT TO SECTION 1415 THERE WAS ENACTED INTO LAW SECTION 209, GENERAL GOVERNMENT MATTERS APPROPRIATION ACT, 1957, PUBLIC LAW 578, 70 STAT. 276, 281, WHICH PROVIDES THAT FOREIGN CURRENCIES MAY BE USED IN FISCAL YEAR 1957 FOR PURPOSES FOR WHICH APPROPRIATED FUNDS ARE AVAILABLE, BUT REQUIRES REIMBURSEMENT THEREFOR TO THE TREASURY FROM APPLICABLE APPROPRIATIONS. HOWEVER, THE SECOND PROVISO OF SECTION 104 OF PUBLIC LAW 480 AUTHORIZES THE PRESIDENT TO WAIVE THE APPLICABILITY OF SECTION 1415 AS TO, AMONG OTHERS, SUBSECTION (F) OF SECTION 104.

ASSUMING THAT THE APPLICABILITY OF SECTION 1415 IS WAIVED AS TO SECTION 104 (F) OF PUBLIC LAW 480, YOUR DEPARTMENT PROPOSES TO USE THE SUBSTANTIVE AUTHORITY OF THE MUTUAL SECURITY ACT OF 1954, AS AMENDED, IN ORDER TO INCUR AN OBLIGATION IN THE ASSISTANCE OF HUNGARIAN REFUGEES IN YUGOSLAVIA AND TO DISCHARGE SUCH OBLIGATIONS BY THE USE OF YUGOSLAV DINARS, UNDER SECTION 104/F). WE ARE ADVISED THAT THE LEGAL ADVISER OF YOUR DEPARTMENT HAS DOUBTS REGARDING YOUR AUTHORITY TO ENTER INTO THIS TRANSACTION. QUESTIONS YOUR DEPARTMENT'S AUTHORITY TO CREATE AN OBLIGATION OF THE UNITED STATES FOR THE CARE OF REFUGEES, IF DOLLARS ARE NOT AVAILABLE FOR SUCH PURPOSE UNDER SECTION 405 (D) OF THE MUTUAL SECURITY ACT.

WE FIRST SHOULD LIKE TO SAY WE ARE OF THE VIEW THAT THE FOREIGN CURRENCIES MADE AVAILABLE BY SECTION 104/F) OF PUBLIC LAW 480 TO PAY UNITED STATES OBLIGATIONS ABROAD MAY BE USED TO PAY ONLY LEGAL OBLIGATIONS OF THE UNITED STATES ABROAD THAT WOULD ORDINARILY OTHERWISE BE PAID IN DOLLARS. THIS CONCLUSION IS BORNE OUT BY THE STATEMENT APPEARING ON PAGE 2 OF HOUSE REPORT NO. 2380, 84TH CONGRESS, 2D SESSION, IN CONNECTION WITH PUBLIC LAW 962, WHICH AMENDED PUBLIC LAW 480. THAT REPORT STATES IN CONNECTION WITH THE FOREIGN CURRENCIES RECEIVED FROM SALES UNDER PUBLIC LAW 480 THAT:

"ABOUT 31.4 PERCENT OF THIS TOTAL WILL BE USED FOR PURPOSE DIRECTLY BENEFICIAL TO THE UNITED STATES INCLUDING THE PAYMENT OF OUR OBLIGATIONS THAT WOULD OTHERWISE BE PAID IN DOLLARS, THE PURCHASE OF STRATEGIC MATERIALS, FINANCING OF AGRICULTURAL MARKET DEVELOPMENT PROGRAMS ABROAD *

(SEE ALSO, PAGES 3 AND 4, SENATE REPORT NO. 2290, 84TH CONGRESS, 2D SESSION) THERE IS NOTHING FURTHER IN THE LEGISLATIVE HISTORY OF THE SECTION INDICATING THAT IT WAS THE INTENT OF THE CONGRESS THAT THE WORD "OBLIGATIONS" AS USED IN SECTION 104/F) WAS INTENDED TO HAVE A MEANING OTHER THAN PROPER LEGAL OBLIGATIONS.

YOUR DEPARTMENT CITES AS AUTHORITY TO CREATE AN OBLIGATION FOR THE ASSISTANCE OF HUNGARIAN REFUGEES UNDER THE MUTUAL SECURITY ACT OF 1954, AS AMENDED, SECTION 405/D) (22 U.S.C. 1925/D) WHICH PROVIDES:

"THERE IS AUTHORIZED TO BE APPROPRIATED * * * FOR THE FISCAL YEAR 1957 NOT TO EXCEED $7,000,000 FOR CONTINUATION OF ACTIVITIES, INCLUDING CARE, TRAINING, AND RESETTLEMENT, WHICH HAVE BEEN UNDERTAKEN FOR SELECTED ESCAPEES UNDER SECTION 1921 OF THIS TITLE.'

PURSUANT TO THE AUTHORITY IN SECTION 405/D) THERE WAS APPROPRIATED BY THE MUTUAL SECURITY APPROPRIATION ACT, 1957, 70 STAT. 734, $6,000,000, FOR THE PURPOSES SET FORTH IN SUCH SECTION. IT SHOULD BE NOTED THAT SECTION 405/D) AUTHORIZED TO BE APPROPRIATED NOT TO EXCEED $7,000,000 FOR THE FISCAL YEAR 1957 BUT THAT ONLY $6,000,000 WAS APPROPRIATED. IN THE ABSENCE OF THE CITED APPROPRIATION PROVISION OR OTHER STATUTORY LANGUAGE APPROPRIATING OR MAKING FUNDS AVAILABLE TO CARRY OUT THE PURPOSES OF SECTION 405 (D) OF THE MUTUAL SECURITY ACT, AS AMENDED, YOUR DEPARTMENT WOULD HAVE NO AUTHORITY THEREUNDER TO CREATE AN OBLIGATION OF THE UNITED STATES IN VIEW OF SECTION 3679 REVISED STATUTES, AS AMENDED, 31 U.S.C. 665/A). THIS CODE PROVISION FORBIDS GOVERNMENT OFFICERS TO MAKE OR AUTHORIZE AN EXPENDITURE FROM OR CREATE AN OBLIGATION UNDER ANY APPROPRIATION IN EXCESS OF THE AMOUNT AVAILABLE THEREIN. UNDER THE ABOVE CITED PROVISIONS OF LAW NO MORE THAN $6,000,000 MAY BE OBLIGATED OR EXPENDED IN FISCAL YEAR 1957 FOR THE PURPOSES SET FORTH IN SECTION 405 (D). ONCE THAT SUM IS OBLIGATED OR EXPENDED NO FURTHER OBLIGATIONS MAY BE INCURRED UNDER THE AUTHORITY OF SECTION 405/D) IN THE ABSENCE OF ADDITIONAL APPROPRIATIONS THEREFOR.

WHILE YOUR DEPARTMENT'S LETTER STATES THAT THE FINDING IN OUR "REPORT ON STUDY OF OBLIGATED BASES AND RELATED ADMINISTRATIVE PRACTICES, FOREIGN OPERATIONS ADMINISTRATION," PERMITS A BROADER CONCEPT OF WHAT CONSTITUTES A LEGAL OBLIGATION OF THE UNITED STATES THAN WOULD APPEAR TO HAVE BEEN INDICATED BY YOUR DEPARTMENT'S LEGAL ADVISER, THAT REPORT WAS NOT PRIMARILY CONCERNED WITH THE AUTHORITY TO OBLIGATE FUNDS AS IN THE INSTANT CASE. THERE WAS INVOLVED IN THE REPORT GENERALLY THE QUESTION OF THE VALIDITY OF BILATERAL AGREEMENTS AS OBLIGATING DOCUMENTS FOR THE PURPOSES OF SECTION 1311/A) OF THE SUPPLEMENTAL APPROPRIATION ACT, 1955, 68 STAT. 830. HENCE, IT DOES NOT APPEAR THAT THIS REPORT WOULD BE PERTINENT TO THE QUESTION INVOLVED IN THE INSTANT CASE.

IN VIEW OF WHAT HAS BEEN STATED ABOVE, WE CANNOT AGREE WITH THE CONTENTION SET FORTH IN YOUR DEPARTMENT'S LETTER THAT IN THE INSTANT CASE AN AGREEMENT IN THE FORM OF AN INTERCHANGE OF NOTES BETWEEN THE UNITED STATES GOVERNMENT AND THE YUGOSLAV GOVERNMENT COULD CONSTITUTE A VALID BASIS FOR A LEGAL OBLIGATION OF THE UNITED STATES GOVERNMENT UNDER SECTION 405/D) OF THE MUTUAL SECURITY ACT OF 1954, AS AMENDED, AND, THEREFORE, BE PAYABLE WITHIN THE PURVIEW OF SECTION 104/F) OF PUBLIC LAW 480, IN THE ABSENCE OF FURTHER APPROPRIATIONS FOR THE PURPOSES OF SECTION 405/D). ACCORDINGLY, YOU ARE ADVISED THAT YOUR DEPARTMENT MAY NOT USE THE SUBSTANTIVE AUTHORITY OF SECTION 405/D) OF THE MUTUAL SECURITY ACT WITHOUT REGARD TO WHETHER DOLLARS ARE AVAILABLE UNDER THAT SECTION, IN ORDER TO INCUR AN OBLIGATION FOR THE CARE, MAINTENANCE, AND RESETTLEMENT OF HUNGARIAN REFUGEES IN YUGOSLAVIA AND SUBSEQUENTLY DISCHARGE SUCH OBLIGATION WITH THE USE OF LOCAL CURRENCY UNDER SECTION 104 (F) OF PUBLIC LAW 480, WITHOUT DOLLAR REIMBURSEMENT AND ON THE BASIS OF A WAIVER OF THE REQUIREMENTS OF SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT OF 1953.