B-159759, SEPTEMBER 6, 1966, 46 COMP. GEN. 198

B-159759, SEPTEMBER 6, 1966, 46 COMP. GEN. 198

LOANS - REPAYMENT - WAIVER - APPROPRIATED V. REVOLVING FUNDS CHARGE. THE GRANT OF RELIEF UNDER THE SOUTHEAST HURRICANE DISASTER RELIEF ACT OF 1965 PROVIDING FOR PARTIAL FORGIVENESS TO REPAY PRINCIPAL OR INTEREST ON LOANS, DEPENDENT UPON SPECIAL FUNDS APPROPRIATED FOR THE PURPOSE, WHEN THE RELIEF FUNDS APPROPRIATED ARE IN A LESSER AMOUNT THAN AUTHORIZED BY THE ACT, THE SMALL BUSINESS ADMINISTRATION MAY NOT IN CARRYING OUT ITS RESPONSIBILITIES GRANT RELIEF IN AN AMOUNT THAT EXCEEDS THE FUNDS APPROPRIATED AND CHARGE THE EXCESS TO THE REVOLVING FUND ESTABLISHED UNDER 15 U.S.C. 633/C). THE AUTHORIZATION FOR APPROPRIATED FUNDS CONTAINED IN THE 1965 ACT CONTEMPLATING THAT THE ADMINISTRATION WILL MAINTAIN ITS REVOLVING FUND FOR THE LOAN PROGRAMS FOR WHICH THE FUND WAS ESTABLISHED, THE FACT THAT A LESSER AMOUNT WAS APPROPRIATED FOR THE RELIEF PROGRAM THAN AUTHORIZED DOES NOT LEAVE THE ADMINISTRATION FREE TO CHARGE THE REVOLVING FUND WITH THE AMOUNTS OF EXCESS RELIEF.

TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, SEPTEMBER 6, 1966:

WE REFER TO YOUR LETTER OF JULY 23, 1966, REQUESTING AN OPINION OF OUR OFFICE CONCERNING THE GRANTING OF RELIEF UNDER THE SOUTHEAST HURRICANE DISASTER RELIEF ACT OF 1965, APPROVED NOVEMBER 8, 1965, PUBLIC LAW 89-339, 79 STAT. 1301.

THE SOUTHEAST HURRICANE DISASTER RELIEF ACT OF 1965 IS A TEMPORARY MEASURE TO PROVIDE SPECIAL ASSISTANCE IN AREAS OF THE STATES OF FLORIDA, LOUISIANA AND MISSISSIPPI WHICH SUFFERED EXTENSIVE PROPERTY LOSS AND DAMAGE FROM HURRICANE BETSY IN 1965. THE ASSISTANCE, OR RELIEF, AUTHORIZED IS THE PARTIAL FORGIVENESS OF PRINCIPAL OR INTEREST ON LOANS MADE UNDER THE DISASTER LOAN PROGRAM ADMINISTERED BY THE SMALL BUSINESS ADMINISTRATION (15 U.S.C. 636/B/), AND THE FARMERS EMERGENCY LOAN PROGRAM ADMINISTERED BY THE FARMERS HOME ADMINISTRATION, DEPARTMENT OF AGRICULTURE (7 U.S.C. 1961-67).

OF PARTICULAR SIGNIFICANCE HEREIN ARE SECTIONS 3 AND 6 OF THE 1965 ACT WHICH PROVIDE---

SEC. 3. IN THE ADMINISTRATION OF THE DISASTER LOAN PROGRAM UNDER SECTION 7/B) (1) OF THE SMALL BUSINESS ACT, AS AMENDED (15 U.S.C. 636/B/), IN THE CASE OF PROPERTY LOSS OR DAMAGE IN THE STATES OF FLORIDA, LOUISIANA, AND MISSISSIPPI RESULTING FROM HURRICANE BETSY, THE SMALL BUSINESS ADMINISTRATION, TO THE EXTENT SUCH LOSS OR DAMAGE IS NOT COMPENSATED FOR BY INSURANCE OR OTHERWISE, (1) SHALL AT THE BORROWER'S OPTION ON THAT PART OF ANY LOAN IN EXCESS OF $500, (A) CANCEL UP TO $1,800 OF THE LOAN, OR (B) WAIVE INTEREST DUE ON THE LOAN IN A TOTAL AMOUNT OF NOT MORE THAN $1,800 OVER A PERIOD NOT TO EXCEED THREE YEARS; AND (2) MAY LEND TO A PRIVATELY OWNED SCHOOL, COLLEGE, OR UNIVERSITY WITHOUT REGARD TO WHETHER THE REQUIRED FINANCIAL ASSISTANCE IS OTHERWISE AVAILABLE FROM PRIVATE SOURCES, AND MAY WAIVE INTEREST PAYMENTS AND DEFER PRINCIPAL PAYMENTS ON SUCH A LOAN FOR THE FIRST THREE YEARS OF THE TERM OF THE LOAN.

SEC. 6. THERE IS HEREBY AUTHORIZED TO BE APPROPRIATED NOT TO EXCEED $70,000,000 TO CARRY OUT THIS ACT, AND SUCH SUMS SHALL REMAIN AVAILABLE UNTIL EXPENDED.

RELATED TO THE LEGISLATION UNDER CONSIDERATION IS THE SUPPLEMENTAL APPROPRIATION ACT, 1966, APPROVED OCTOBER 31, 1965, PUBLIC LAW 89-309, 79 STAT. 1133. THIS ACT, WHICH WAS CONCURRENTLY CONSIDERED WITH THE SOUTHEAST HURRICANE DISASTER RELIEF ACT ALTHOUGH ENACTED 8 DAYS EARLIER, CONTAINS AN APPROPRIATION---

FOR EXPENSES NECESSARY TO ENABLE THE PRESIDENT TO CARRY OUT THE PROVISIONS OF THE SOUTHEAST HURRICANE RELIEF ACT OF 1965, SUCH AMOUNT AS MAY BE NECESSARY BUT NOT TO EXCEED $35,000,000, TO REMAIN AVAILABLE UNTIL EXPENDED: PROVIDED, THAT THIS PARAGRAPH SHALL BE EFFECTIVE ONLY UPON THE ENACTMENT INTO LAW OF AUTHORIZING LEGISLATION.

IN YOUR LETTER YOU EXPRESS THE BELIEF THAT THE LANGUAGE OF SECTION 3 OF THE RELIEF ACT, EXCEPT AS TO PRIVATELY OWNED SCHOOLS, CONFERS ON EACH RECIPIENT OF A DISASTER LOAN RESULTING FROM HURRICANE BETSY A RIGHT TO A PARTIAL LOAN CANCELLATION OR INTEREST WAIVER UP TO $1,800, WHICH RIGHT BY ITS VERY NATURE, THE FORGIVENESS OF AN OBLIGATION, DOES NOT REQUIRE SPECIAL APPROPRIATIONS. AND AS FUNDS FOR THE DISASTER LOANS ARE DERIVED FROM A REVOLVING FUND ESTABLISHED UNDER SECTION 4 (C) OF THE SMALL BUSINESS ACT, AS AMENDED (15 U.S.C. 633/C/), YOU REQUEST OUR OPINION WHETHER THE SMALL BUSINESS ADMINISTRATION MAY CONTINUE TO GRANT FORGIVENESS UNDER THE SOUTHEAST DISASTER RELIEF ACT EVEN THOUGH SUCH FORGIVENESS EXCEEDS THE APPROPRIATIONS, THE EXCESS AMOUNTS TO BE CHARGED TO THE REVOLVING FUND OF THE SMALL BUSINESS ADMINISTRATION.

THE ENTITLEMENT TO FORGIVENESS WHICH SECTION 3 OF THE 1965 RELIEF ACT APPEARS TO CONFER ON A RECIPIENT OF A DISASTER LOAN RESULTING FROM HURRICANE BETSY IS AT BEST AN INCHOATE RIGHT. THE AMOUNT OF THE RELIEF TO BE GRANTED WITHIN THE STATUTORY LIMITS IS A MATTER OF ADMINISTRATIVE DISCRETION. THIS ASPECT OF THE RELIEF PROVIDED WAS RECOGNIZED BY THE EXECUTIVE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION AT THE TIME OF THE HEARINGS ON THE BILL SUBSEQUENTLY ENACTED AS THE SOUTHEAST HURRICANE DISASTER RELIEF ACT OF 1965. SEE, HEARINGS BEFORE THE HOUSE COMMITTEE ON PUBLIC WORKS, H.R. 11539 AND SIMILAR BILLS, 89TH CONG; 1ST SESS. 45-55. ANY DOUBT AS TO THE EXISTENCE OF ADMINISTRATIVE DISCRETION IN THE GRANTING OF RELIEF IS REMOVED BY THE COMMITTEE REPORTS ON THE PROPOSED LEGISLATION---

* * * IT IS INTENDED THAT THE OPERATION OF SECTIONS 3 AND 4 OF H.R. 11539 IS NOT TO BE MANDATORY INSOFAR AS THE ADMINISTRATION OF THESE TWO SECTIONS IS CONCERNED. RATHER DISCRETION IS TO BE AFFORDED TO THE ADMINISTRATION IN THE AMOUNT OF THE LOAN TO BE CANCELED OR THE INTEREST TO BE WAIVED, OR THE PERIOD OF WAIVER.

H. REPT. NO. 1164, 89TH CONG; 1ST SESS. 3. SEE, ALSO, S. REPT. NO. 917, 89TH CONG; 1ST SESS. 3.

WE VIEW THE APPROPRIATION AUTHORIZATION OF SECTION 6 OF THE RELIEF ACT AS PRESCRIBING THE MEANS OF ACCOMPLISHING THE RELIEF, AND THE LIMITATION THEREON, WHICH THE SMALL BUSINESS ADMINISTRATION IS EMPOWERED TO GRANT BY VIRTUE OF SECTION 3 OF THE 1965 ACT. THE FACT THAT AN APPROPRIATION OF FUNDS MAY NOT OTHERWISE BE CONSIDERED NECESSARY IN THE GRANTING OF RELIEF FROM AN OBLIGATION IS NOT GERMANE; SECTION 6 CANNOT BE IGNORED. EXPLAINING SECTION 6 THE REPORTS OF THE SENATE COMMITTEE AND THE HOUSE COMMITTEE ON PUBLIC WORKS STATED: "SECTION 6 AUTHORIZES THE APPROPRIATION OF $70 MILLION TO CARRY OUT THIS ACT* * *"; AND BOTH WENT ON TO STATE:

THE LOAN AMOUNTS CANCELLED AND THE AMOUNTS OF INTEREST WAIVED SHALL BE CHARGED AGAINST THE APPROPRIATIONS PROVIDED PRUSUANT TO THIS AUTHORIZATION.

THE OBVIOUS OBJECTIVE OF THE AUTHORIZATION OF APPROPRIATIONS FOR USE IN CARRYING OUT THE RELIEF PROVIDED BY THE 1965 ACT IS, IN THE CASE OF THE SMALL BUSINESS ADMINISTRATION, THE MAINTENANCE OF ITS REVOLVING FUND FOR THE LOAN PROGRAMS FOR WHICH THE FUND WAS ESTABLISHED. WE FIND NOTHING TO WARRANT THE RATHER STRAINED CONCLUSION THAT THE CONGRESS IN AUTHORIZING "NOT TO EXCEED $70,000,000 TO CARRY OUT THIS ACT" MERELY EXPRESSED THE EXTENT TO WHICH IT WAS INTERESTED IN REIMBURSING THE REVOLVING FUND, LEAVING THE SMALL BUSINESS ADMINISTRATION OTHERWISE FREE TO CHARGE THE FUND WITH THE AMOUNTS OF EXCESS RELIEF.

ACCORDINGLY, YOU ARE ADVISED WE ARE OF THE OPINION THAT THE SMALL BUSINESS ADMINISTRATION MAY NOT GRANT RELIEF UNDER THE SOUTHEAST DISASTER RELIEF ACT IN THE ABSENCE OF APPROPRIATED OR ALLOTTED FUNDS FOR THE PURPOSE.