B-133517, SEP. 30, 1957

B-133517, SEP. 30, 1957

TO THE SECRETARY OF STATE:

A LETTER DATED AUGUST 16, 1957, FROM THE ACTING ASSISTANT SECRETARY CONTROLLER OF THE DEPARTMENT OF STATE (HIS REFERENCE: L/E ( CONCERNS THE SURPLUS AGRICULTURAL COMMODITIES AGREEMENT WITH BRAZIL DATED NOVEMBER 16, 1955, CONCLUDED PURSUANT TO TITLE I OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954 (HEREINAFTER REFERRED TO AS PUBLIC LAW 480), 68 STAT. 455, AS AMENDED, 7 U.S.C. 1691-1709.

THE ACTING ASSISTANT SECRTARY-CONTROLLER SAYS THE AGREEMENT LEAVES AVAILABLE FOR REALLOCATION THE CRUZEIRO EQUIVALENT OF $3.2 MILLION AS A RESULT OF THE CANCELLATION OF PURCHASES BY THE UNITED STATES OF CERTAIN STRATEGIC MATERIALS FOR WHICH FUNDS HAD BEEN ALLOCATED PURSUANT TO PARAGRAPH 1 (A) OF ARTICLE II OF THE AGREEMENT AS AUTHORIZED UNDER SECTION 104/B) OF PUBLIC LAW 480. HE REPORTS THAT OUR EMBASSY IN RIO DE JANEIRO HAS RECOMMENDED THAT OF THE $3.2 MILLION EQUIVALENT, $1.5 MILLION BE USED FOR PAYMENT OF UNITED STATES OBLIGATIONS AS AUTHORIZED BY SECTION 104/F) OF PUBLIC LAW 480, AND THAT $1.7 MILLION BE ALLOCATED FOR THE PURPOSES PROVIDED UNDER SECTION 104/J) OF THAT LAW, AS ADDED BY THE ACT OF AUGUST 3, 1956, 70 STAT. 988, THAT IS TO ASSIST AMERICAN SPONSORED SCHOOLS IN BRAZIL.

ASSUMING THAT IT IS IN THE BEST INTEREST OF THE UNITED STATES TO DO SO, YOUR DEPARTMENT PROPOSES TO AMEND THE ABOVE REFERRED TO PUBLIC LAW 480 AGREEMENT TO PROVIDE FOR THE USE OF CURRENCIES AS RECOMMENDED BY THE EMBASSY, BUT APPARENTLY A DOUBT HAS ARISEN AS TO WHETHER SECTION 104/J) WOULD THEN PERMIT THE USE OF PUBLIC LAW 480 FUNDS, REALLOCATED BY SUCH AMENDMENT FROM SECTION 104/B) PURPOSES TO SECTION 104/J) PURPOSES, WITHOUT THE USE OF APPROPRIATED DOLLARS. THEREFORE, OUR DECISION IS REQUESTED AS TO THE LEGALITY--- IN THE INSTANT CASE AND SIMILAR CASES--- OF TRANSFERRING FUNDS IN THE MANNER DESCRIBED FROM SECTION 104 (B), AND OTHER SPECIFIED USES (EXCLUDING 104 (F) TO SUBSECTION (J) USE WITHOUT DOLLAR REIMBURSEMENT.

SECTION 104 OF PUBLIC LAW 480 PROVIDES THAT NOTWITHSTANDING SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATIONS ACT OF 1953, 66 STAT. 662, 31 U.S.C. 724, OR ANY OTHER PROVISION OF LAW, THE PRESIDENT MAY USE OR ENTER INTO AGREEMENTS WITH FRIENDLY NATIONS TO USE THE FOREIGN CURRENCIES GENERATED UNDER PUBLIC LAW 480 FOR THE FOLLOWING PURPOSES--- QUOTING FROM THE U.S.C. (7 U.S.C. 1704):

"/A) TO HELP DEVELOP NEW MARKETS FOR UNITED STATES AGRICULTURAL COMMODITIES ON A MUTUALLY BENEFITING BASIS;

"/B)TO PURCHASE OR CONTRACT TO PURCHASE STRATEGIC AND CRITICAL MATERIALS

"/C) TO PROCURE MILITARY EQUIPMENT, MATERIALS, FACILITIES, AND SERVICES FOR THE COMMON EFENSE;

"/D)FOR FINANCING THE PURCHASE OF GOODS OR SERVICES FOR OTHER FRIENDLY COUNTRIES;

"/E) FOR PROMOTING BALANCED ECONOMIC DEVELOPMENT AND TRADE AMONG NATIONS;

"/F) TO PAY UNITED STATES OBLIGATIONS ABROAD;

"/G) FOR LOANS TO PROMOTE MULTILATERAL TRADE AND ECONOMIC DEVELOPMENT * *

"/H) FOR THE FINANCING OF INTERNATIONAL EDUCATIONAL EXCHANGE ACTIVITIES UNDER THE PROGRAM AUTHORIZED BY SECTION 164/B) (2) OF THE APPENDIX TO TITLE 50. * * *

"/I) FOR FINANCING THE TRANSLATION, PUBLICATION, AND DISTRIBUTION OF BOOKS AND PERIODICALS, INCLUDING GOVERNMENT PUBLICATIONS, ABROAD * * *

"/J) FOR PROVIDING ASSISTANCE TO ACTIVITIES AND PROJECTS AUTHORIZED BY SECTION 1448 OF TITLE 22, BUT NO FOREIGN CURRENCIES WHICH ARE AVAILABLE UNDER THE TERMS OF ANY AGREEMENT FOR APPROPRIATION FOR THE GENERAL USE OF THE UNITED STATES SHALL BE USED FOR THE PURPOSES OF THIS SUBSECTION WITHOUT APPROPRIATION THEREFOR; * * *"

THE FIRST PROVISO OF SECTION 104 MAKES SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATIONS ACT OF 1953 APPLICABLE TO ALL FOREIGN CURRENCIES USED FOR GRANTS UNDER SECTIONS 104 (D) AND (E) AND FOR PAYMENTS OF UNITED STATES OBLIGATIONS INVOLVING GRANTS UNDER SECTION 104/F) AND TO NOT LESS THAN TEN PERCENTUM OF THE FOREIGN CURRENCIES WHICH ACCRUE UNDER TITLE 1. THE SECOND PROVISO OF SECTION 104 AUTHORIZES THE PRESIDENT TO WAIVE THE APPLICABILITY OF SECTION 1415 IN ANY CASE WHERE HE DETERMINES THAT THE APPLICATION OF THAT SECTION WOULD BE INAPPROPRIATE OR INCONSISTENT WITH THE PURPOSES OF TITLE 1 OF PUBLIC LAW 480.

YOUR DEPARTMENT TAKES THE POSITION THAT:

"* * * THE FIRST CLAUSE OF 104 (J) AUTHORIZES THE INCLUSION OF A NEWLY- NEGOTIATED P.L. 480 AGREEMENT, OR IN AN AMENDMENT OF AN EXISTING P.L. 480 AGREEMENT, OF A PROVISION FOR THE USE OF FUNDS TO ASSIST AMERICAN SPONSORED SCHOOLS ABROAD AS DESCRIBED IN SECTION 203 OF THE ACT CITED THEREIN. WHEN SUCH A SPECIFIC USE IS PROVIDED FOR IN THE P.L. 480 AGREEMENT, THE CONDITION IMPOSED IN THE SECOND CLAUSE OF SECTION 104/J) (REQUIRING APPROPRIATIONS WHEN USING CURRENCIES AVAILABLE FOR THE "GENERAL USE OF THE UNITED STATES") IS NOT APPLICABLE. THIS SECOND CLAUSE WOULD APPEAR TO APPLY ONLY WHEN THERE ARE USED FOR SUBSECTION (J) PURPOSES CURRENCIES WHICH ARE AVAILABLE UNDER THE TERMS OF THE P.L. 480 AGREEMENT FOR THE GENERAL USE OF THE UNITED STATES, NAMELY, THOSE CURRENCIES SET ASIDE FOR PAYMENT OF ANY AND ALL UNITED STATES OBLIGATIONS ABROAD AS PROVIDED IN SUBSECTION (F). THIS INTERPRETATION SEEKS TO GIVE MEANING TO THE WORDS "GENERAL USE OF THE UNITED STATES" AS USED IN THE STATUTE. ALL SUBSECTIONS OTHER THAN (F) PROVIDE FOR SPECIFIC USES.

"CONSEQUENTLY, IT WOULD APPEAR TO FOLLOW THAT IF THE AGREEMENT IS AMENDED TO REALLOCATE UNUSED FUNDS INITIALLY ALLOCATED FOR THE SPECIFIC USE OF PURCHASING STRATEGIC AND CRITICAL MATERIAL (SECTION 104 (B) (, THOSE FUNDS REALLOCATED TO (J) WOULD NOT BE SUBJECT TO APPROPRIATIONS.'

UNDER SECTION 104/J) OF PUBLIC LAW 480, FOREIGN CURRENCIES ACCRUING UNDER TITLE 1 WHICH ARE AVAILABLE FOR THE GENERAL USE OF THE UNITED STATES (AS DISTINGUISHED FROM A SPECIFIC USE) UNDER THE TERMS OF ANY AGREEMENT MAY NOT BE USED FOR SUBSECTION (J) PURPOSES WITHOUT APPROPRIATION THEREFOR. IT APPEARS THAT UNDER THAT SECTION FOREIGN CURRENCIES, WHICH UNDER THE TERMS OF THE AGREEMENT ARE AVAILABLE IN A SPECIFIC AMOUNT FOR A SECTION 104/B) OR OTHER SPECIFIC USE (BUT WHICH ARE NOT THEREUNDER AVAILABLE FOR THE GENERAL USE OF THE UNITED STATES) MAY, IF THE AGREEMENT IS AMENDED TO SO PROVIDE, BE TRANSFERRED AND USED FOR THE PURPOSES OF SECTION 104 (J) WITHOUT APPROPRIATION THEREFOR. HOWEVER, ALTHOUGH ALL SUBSECTIONS OF SECTION 104 OTHER THAN SUBSECTION (F) PROVIDE FOR SPECIFIC USES, WE UNDERSTAND THAT IN MOST OF THE AGREEMENTS, THE FOREIGN CURRENCIES FOR UNITED STATES USE ARE PROVIDED FOR IN A LUMP SUM TO AFFORD GREATER FLEXIBILITY IN USING THESE CURRENCIES. SEE PAGES 6-12, HOUSE DOCUMENT 212, 85TH CONGRESS, 1ST SESSION ENTITLED ,SIXTH SEMIANNUAL REPORT ON ACTIVITIES UNDER PUBLIC LAW 480, 83D CONGRESS, AS AMENDED.' FOR EXAMPLE, WE UNDERSTAND THAT GENERALLY THE AGREEMENTS PROVIDE THAT A TOTAL SPECIFIED AMOUNT OF LOCAL CURRENCY PROCEEDS MAY BE USED FOR THE PURPOSES OF SECTIONS 104/A), (B), (F), (H), AND (I), AND IN SOME INSTANCES (D). WE ALSO UNDERSTAND THAT SUBSEQUENT TO ENTERING THE AGREEMENTS, THE BUREAU OF THE BUDGET--- PURSUANT TO EXECUTIVE ORDER NO. 10560, DATED SEPTEMBER 9, 1954 (19 F.R. 5927), AS AMENDED BY EXECUTIVE ORDER NO. 10575, DATED NOVEMBER 6, 1954 (19 F.R. 7249/--- ALLOCATES, FROM THE LUMP SUM, THE AMOUNTS TO BE USED FOR THE PURPOSES OF EACH OF THE SUBSECTIONS SET FORTH IN THE PARTICULAR AGREEMENT. THUS, IT IS CLEAR, AS TO ANY AGREEMENT IN WHICH A SUBSECTION (F) USE IS COMBINED WITH OTHER USES, AND AS TO ANY AGREEMENT WHERE THE FOREIGN CURRENCIES FOR UNITED STATES USE ARE PROVIDED FOR IN A LUMP SUM TO AFFORD FLEXIBILITY IN USING THESE CURRENCIES, THAT THE FOREIGN CURRENCIES ARE MADE AVAILABLE BY THE AGREEMENT "FOR THE GENERAL USE OF THE UNITED STATES.' THIS IS SO, SINCE ALL SUCH CURRENCIES COULD BE ALLOCATED BY THE BUREAU OF THE BUDGET AND USED FOR THE PURPOSES OF SUBSECTION (F). HENCE, WHILE THE BUREAU OF THE BUDGET MAY SUBSEQUENTLY ALLOT SUCH CURRENCIES FOR SPECIFIC USES, UNDER THE TERMS OF THE AGREEMENT SUCH CURRENCIES ARE AVAILABLE, IN EFFECT, FOR THE GENERAL USE OF THE UNITED STATES (THAT IS, TO PAY UNITED STATES OBLIGATIONS ABROAD), SINCE THEY MAY BE SO ALLOCATED BY THE BUREAU OF THE BUDGET.

IN VIEW OF THE FOREGOING WE CONCLUDE THAT FUNDS MAY BE TRANSFERRED IN THE MANNER DESCRIBED FROM SECTION 104/B) AND OTHER SPECIFIED USES (EXCLUDING 104 (F) ( TO SUBSECTION (J) USE WITHOUT APPROPRIATION THEREFOR, PROVIDED THAT UNDER THE TERMS OF THE AGREEMENT THE AMOUNTS FOR SECTION 104 (B) AND OTHER SPECIFIED USES (EXCLUDING 104 (F) ( ARE NOT AVAILABLE FOR THE GENERAL USE OF THE UNITED STATES BY REASON OF COMBINATION OF FUNDS FOR SUCH SPECIFIED USES WITH SUBSECTION 104/F) FUNDS OR OTHERWISE.