Authority of the Chrysler Corporation Loan Guarantee Board
                    to Issue Guarantees

T he C hrysler C orporation Loan G uarantee Board has the authority, under § 4(a) o f the
   C hrysler C orporation Loan G uarantee A ct, 15 U.S.C. § 1863(a), to issue loan guaran­
   tees even though C ongress has not appropriated funds in advance to m ake payments
   under the guarantees in the event o f a default.

T he A ttorney G eneral concurs in the C om ptroller G eneral’s opinion (Comp. Op. File B-
   197380 (A pril 10, 1980)) that the Board has the authority until D ecem ber 31, 1983, to
   issue loan guarantees in the am ount up to S I.5 billion o f contingent liability for loan
   principal outstanding at any one time and additional am ounts for loan interest.

                                                                           April 23, 1980

T   he   S ecretary   of th e   T   reasury


                              This is in response to your letter of April
M y D e a r M r. S e c r e ta r y :
 16, 1980, requesting my opinion on the authority of the Chrysler Cor­
poration Loan Guarantee Board, of which you are chairman, to issue
guarantees under the Chrysler Corporation Loan Guarantee Act of
 1979 (Act), 15 U.S.C. § 1861 et seq. You ask whether the Board may
issue guarantees even though Congress has not appropriated funds in
advance to make payments under the guarantees in the event of a
default. You also enclosed an opinion o f the Comptroller General,
construing the Chrysler guarantee appropriation act, and asked me to
indicate whether I concur in his conclusions.
   Section 4(a) of the Act, 15 U.S.C. § 1863(a), authorizes the Board to
guarantee the payment of principal and interest on loans to Chrysler
Corporation. Under § 8(a) of the Act, 15 U.S.C. § 1867(a), loan guaran­
tees extended by the Board may not at any one time exceed $1.5 billion
in the aggregate principal amount outstanding. The Board’s guarantee
authority is further limited by § 15(b) of the Act, 15 U.S.C. § 1874(b),
which provides:
          Notwithstanding any other provision of this Act, the au­
          thority of the Board to make any loan guarantee under
          this Act shall be limited to the extent such amounts are
          provided in advance in appropriation acts.



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Almost contemporaneously with the passage of the A ct,1 Congress
enacted an appropriation act providing:
      That the following sum is appropriated, out of any money
      in the Treasury not otherwise appropriated, for the fiscal
       year ending September 30, 1980:
                    D EPA R TM EN T O F T H E TREASURY
                  BUREAU O F G O V ER N M EN T FIN A N C IA L
                               OPERA TIO NS
               CHRYSLER CORPORATION LOAN G U A R A N TEE
                                PROGRAM
                 For necessary administrative expenses as authorized by
              the Chrysler Corporation Loan Guarantee Act of 1979,
              $1,518,000. Total loan commitments and loan guarantees
              may be extended in the amount of $1,500,000,000 of con­
              tingent liability for loan principal and for such additional
              sums as may be necessary for interest payments, and com­
              mitment is hereby made to make such appropriations as
              may become necessary to carry out such loan guarantees.
P.L. No. 96-183, 93 Stat. 1319 (1980). The question presented here is
whether the appropriation-in-advance condition in § 15(b) of the Act is
satisfied by the appropriation act.
   Chrysler’s prospective underwriters have questioned whether
§ 15(b)’s condition that amounts be provided in advance in appropria­
tion acts could be construed to require that funds be appropriated in
advance to make payments under the guarantees in the event of a
default, a condition that is not satisfied by the appropriation act. Such a
construction is supported by Congress’ use of words in § 15(b)—“Lim­
ited to the extent such amounts are provided in advance in appropria­
tion acts”—which are almost identical to those in § 401(a) of the Con­
gressional Budget Act of 1974, 31 U.S.C. 1351(a); § 401(a) requires that
bills providing “new spending authority” contain provisions limiting
such authority “to such extent or in such amounts as are provided in
appropriation acts.” 2 The legislative history of that Act reveals that
§ 401(a) was intended to require the appropriation of funds.3 Nonethe­

     ’ T h e C h ry s le r C o r p o ra tio n L o a n G u a r a n te e A c t w as e n a c te d on J a n u a ry 7, 1980: th e a p p ro p ria tio n
a c t, P .L . N o . 9 6 -1 8 3 , 93 S tat. 1319 (1980), w as e n a c te d J a n u a ry 2. 1980.
     2 S e c tio n 401(a) is n o t c o n tro llin g h e re b e c a u se it ex p ressly e x e m p ts c o n tr a c ts o f g u a ra n te e s fro m its
c o v e ra g e , b u t th e sim ilarity in th e la n g u a g e c o u ld b e v ie w e d as a n in d ic a tio n th a t th e s ta tu te s be
c o n s tru e d p a ri passu. C f N orthcross v. M em p h is B oard o f E d u c a tio n , 412 U .S. 427, 428 (1973).
     3 T h e H o u se R e p o rt states:
          T h e bill [C o n g ressio n al B u d g et A c t o f           1974] in c o rp o ra te s b a c k d o o r sp e n d in g in to th e
          C o n g re s s io n a l b u d g e t p ro cess. U n d e r      n e w p ro c e d u re s, b a c k d o o r s p e n d in g (s u c h a s
          c o n tr a c t a u th o rity , lo a n a u th o rity , a n d    m a n d a to ry o r o p e n -e n d e d e n title m e n ts ) c o u ld
          n o t ta k e e ffec t until, fu n d s were provided           th ro u g h th e a p p ro p ria tio n s p ro cess.
H . R ep . N o . 9 3 -6 5 8 , 9 3 rd C o n g ., 1st Sess. 17, reprinted in [1974] U .S. C o d e C o n g . & A d . N e w s 3462.
3463 (em p h asis su p p lie d ).


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less, I conclude on the basis of strong countervailing evidence in the
legislative history of the Chrysler Corporation Loan Guarantee Act
that § 15(b) was not intended to require the appropriation of funds, but
rather Congress’ approval through the appropriations process of the
amount of loans that may be guaranteed by the Board.
   The Senate version of § 15(b) reported by the Senate Committee on
Banking, Housing and Urban Affairs provided:
      Notwithstanding any other provisions of this Act, com­
      mitments to guarantee loans under the Act shall not
      exceed such limitations on such commitments as are pro­
      vided in general provisions of appropriation acts.
125 Cong. Rec. S19019 (daily ed. December 18, 1979). The Senate
Report explains the intent of the provision:
      The intent of this language is to require that the limita­
      tions on loan guarantee authority under this Act be ap­
      proved in appropriation Acts without making any implica­
      tion that this action should be construed as conferring
      budget authority.
S. Rep. No. 93-463, 96th Cong., 1st Sess. 39 (1979).
   Section 15(b) was later amended on the floor of the Senate at the
request of Senator Proxmire, the chairman of the Senate Committee on
Banking, Housing and Urban Affairs, to conform to the provision in the
House bill. Explaining that the Senate Appropriations Committee’s staff
had requested the amendment, Senator Proxmire revealed that the staff
was concerned that the Senate version of § 15(b) could be construed to
permit the issuance of guarantees without first obtaining approval
through the appropriation process:
      It certainly was the intention of the Banking Committee
      not to go around the Appropriations Committee and not
      to move into their jurisdiction or provide that there
      would be a commitment or a guarantee before the Appro­
      priations Committee had an opportunity to pass on it. All
      this [amendment] does as I say, is to make it conform to
      our intention, make it conform also to the language in the
      House bill.
125 Cong. Rec. S I9018 (daily ed. December 18, 1979) (remarks of
Senator Proxmire).
  Urging the adoption of the amendment, Senator Proxmire stated:
      This is not a substantive amendment, and I am sure the
      Senator [Riegle] will agree when he looks at it. It cer­
      tainly is in the form of a technical correction. It does not
      change in any way the intention which was indicated by
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              the committee and, as I say, it is the same as the House
              language.
Id. at S 19019.
   It is clear from Senator Proxmire’s remarks and the Senate Report
that the purpose of § 15(b) was to ensure that no guarantees would be
issued without first obtaining the approval of Congress through the '
appropriation process of the total amount that could be guaranteed.4
This approval was obtained upon the passage of the appropriation act
which permitted the Board to issue the full amount of guarantees
authorized under the A ct.5
   For the above reasons, I conclude that the Board is empowered
pursuant to § 15(b) of the Chrysler Corporation Loan Guarantee Act
and P.L. No. 96-183 to issue guarantees even though Congress has not
appropriated funds in advance to make payments under the guarantees
in the event of a default. I also fully concur in the Comptroller G ener­
al’s opinion including his conclusion that the Board has the authoriiy
until December 31, 1983, to issue loan guarantees in the amount up to
$1.5 billion of contingent liability for loan principal outstanding at any
one time and additional amounts for loan interest. Comp. Op., File B-
197380 (April 10, 1980).

                                                                           Sincerely,
                                                                           B e n ja m in          R.    C iv ile tti




     4     S e n a to r M uskie, c h a irm a n o f th e S e n a te B u d g et C o m m itte e , a lso in d ic a te d o n th e flo o r o f th e
S e n a te th a t u n d e r th e A c t C o n g re s s c o u ld c h o o s e in th e a p p ro p ria tio n p ro c e s s to lim it th e le v el o f
g u a ra n te e s ra th e r th a n a p p ro p ria te fu n d s to c o v e r po ssib le fu tu re defau lts. S e e 125 C o n g . R ec . S 19188
(d aily ed . D e c e m b e r 19, 1979). B ecau se th e g u a ra n te e s w o u ld re p re s e n t a c o n tin g e n t liab ility r a th e r
th a n a c u r re n t o u tla y , h e u rg e d th e S e n a te to c h o o s e th e fo rm e r d u rin g th e a p p ro p r ia tio n p ro c e s s to
a v o id in c lu d in g th e SI.5 billion g u a ra n te e a u th o rity in th e c u rre n t b u d g e t. Id.
     h C o n firm in g th a t su c h a p p ro v a l w as su fficien t to satisfy th e c o n d itio n o f § 15(b), th e H o u se R e p o rt
a c c o m p a n y in g th e a p p ro p ria tio n ac t stated :
          T h is u rg e n t a p p ro p ria tio n bill p ro v id e s th e n e c e ssa ry a u th o rity fo r th e F e d e ra l G o v ­
          ern m e n t to e n te r in to g u a ra n te e d loan a g re e m e n ts in an a m o u n t n o t to e x c e e d SI.5
          billion for th e loan p rin c ip al.
H. R ep. N o. 9 6 -7 1 9 , 9 6 th C o n g ., 1st Sess. 1 (1979).
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