This memorandum responds to your request for our opinion regarding the statutory authority for the Commodity Credit Corporation’s (CCC) Noncommer­ cial Risk Assurance Program (GSM-101) and Export Credit Guarantee Program (GSM -102).1 The question of statutory authority has arisen in the course of a determination by your Office whether guarantees issued pursuant to these pro­ grams are supported by the full faith and credit of the United States.2 We find ample, clear statutory authority for these export guarantee programs. Your determination regarding full faith and credit may properly rely on this finding. ‘ T h e D e p a r tm e n t o f A g r ic u ltu r e ’s re g u la tio n s g o v e rn in g th e s e tw o p ro g ra m s a p p e a r at 7 C .F R §§ 1487-1487 15 and 7 C .F R §§ 1 4 9 3 -I4 9 3 .1 5 -(1 9 8 1 ), respectively. 2 Since 1973, it has been the policy o f the D epartm ent o f Justice to decline to issue formal opinions as to “ full faith and c re d it” m atters unless there is draw n into question a serious issue o f law EUiot L R ichardson, A ttorney G eneral, M em orandum for H eads o f the Executive D epartm ents and C ounsel to the P resident (O ct 10, 1973) It has long been the position o f the A ttorney G en eral, however, that: [T]here is no o rd er o f solem nity o f valid general obligations o f the U nited States and . no legal

priority is affo rd ed general obligations contracted pursuant to an express pledge of faith or cred it over those not so accom panied. It is enough to create an obligation of the U nited States if an agency or officer is validly authorized to incur such an obligation on its b eh a lf and validly exercises that pow er 41 O p A tt'y G en. 40 3 , 405 (1959). S e e a tso A l O p A tt’y G e n 417 (1 96 9); 42 O p A tt’y G en. 341, 344 (1967); 42 Op. A tt’y G en. 323 (1966); 42 Op. A tt’y G en. 305, 308 (1965), 42 O p. A tt’y G en. 2 1 , 23—4 (1961). See generally Perry Uniled Stales, 294 U S 330, 3*53-54 (1935); Lynch v United Slates, 292 U .S . 571, 580 (1934) In an opinion h old ing that the Sm all B usiness A dm inistration had authority to guarantee the sale of certain debentures ow ned by it, the A ttorney G eneral stated. [T]he thresh o ld q uestion concerning the effect o f the proposed SB A guaranties is not w hether the

statutory language expressly alludes to the “ faith” o r “ cred it” of the U nited S tates, but w h ether the statutory sch em e authorizes the guaranties here proposed I f there is statutory authority for the gu aran ties, ab sen t specific language to the contrary such guaranties w ould constitute obligations of the U nited S tates as fully backed by its faith and cred it as w ould be the case were those term s actually used Letter from John N M itchell. A ttorney G en eral, to T hom as S. K leppe, A dm inistrator, Sm all B usiness A dm inistra­ tio n , at 3 - 4 (A pr 1 4 ,1 9 7 1 ) Sim ilarly, in this case, a guaran tee by the C C C w ill be backed by the full faith and credit of the U nited States if, and only if, the guarantee was issued pursuant to statutory authority.

I. The GSM—1011 and GSM-102 Programs3

The purpose of the GSM-101 and GSM -102 programs is to promote United States exports of agricultural commodities and products by shifting some of the risks usually associated with export transactions from the American exporter to *2 the CCC. These risks, which include embargoes on imports, freezing of foreign exchange, and similar acts o f state, as well as revolutions, wars, economic collapse, and other noncommercial incidents, all operate as a barrier to United States agricultural exports.

The GSM -101 and GSM-102 programs are similar in structure and operation. Both programs seek to encourage U.S. agricultural exports at levels above those which would exist without the guarantees.4 Under the programs, CCC promises to reimburse the exporter, or the financing institution that is the exporter’s assignee, for a portion of the exporter’s accounts receivable in the event of nonpayment by the importer’s bank that issued the irrevocable letter of credit pertaining to the export sale. In return, the exporter or assignee must assign to CCC all rights in the defaulted payment.5 The total amount that CCC will guarantee, and the portion o f the accounts receivable for which CCC will reimburse the exporter or assignee, is determined by CCC in advance for each country. Typically, the Corporation guarantees 98 percent of the principal amount and 8 percent per annum interest.

II. Statutory Authority for the Programs*

15 U .S.C . § 714b7 sets out the general powers of the CCC. These include the power to “ determine the character of and the necessity for its obligations and expenditures and the manner in which they shall be incurred, allowed, and paid.” C C C h as th e req u isite au thority [to sell its drafts].” T h e m em orandum em phasized that C C C lacked specific statu to ry au thority to sell secu rities or assets, and opined th a t th e “ n ecessary and appropriate" pow ers clause found C o ffm a n , D ep u ty G en eral C ounsel, D ep artm en t of A griculture (D ec. 3 , 1973). In that correspondence, Leon in its c h a rte r m ay not be used as authority to s e ll securities an d pledge the full faith and cred it o f the U nited States. Cf. to sell “ tim e d ra fts.” T h e m o st decisive d iffe re n ce is that th e program s at issue in the cu rren t m atter d o not involve c e ase d issu in g new G S M -1 0 1 risk assu rance agreem ents. an y sale o f assets o w n ed b y C C C , or any g u aran tees fo r su ch sale. T h e re is, in other w ords, no issue regarding au thority to se ll g o v ern m en t obligations b a c k e d by the full faith and cred it o f the N ation. Rathei; the question here co n c e rn s C C C au tho rity to guarantee e x p o rt cred it sales o f A m erican agricultural exports. , Inc. v. Bergland. 44 6 F. Supp. 4 5 7 , 4 7 2 -7 3 (D . K an . 1978), affd. 602 F.2d 9 2 9 (10th Cir. Hiatt Grain & Feed ex p o rt cre d it sales p ro g ram . Mr. Ulman s tated that “ although we w ant to cooperate, w e are not yet persuaded that cert, denied, 15 U .S .C . § 714b(m ). 1979), 4 4 4 U .S . 1073 (1980). U lm a n , D e p u ty A ssista n t A ttorney General, expressed do u b t regarding C C C ’s authority to sell “ tim e d rafts” which m em o ran d u m attached to y o u r letter to m e dated N ovem ber 2 0 , 1981. n o n co m m ercial n s k s , w h ile G S M -102 c o v e rs all risks. Compare 1 C .F .R . §§ 1 4 8 7 .2 0 0 ban k in g p ractice s, o r a lack o f adequate inform ation. C C C now relies exclusively on the G S M -1 0 2 p rogram and has m ay b e d ifficult fo r the ex p o rter or assignee to assess because o f lack o f fam iliarity w ith foreign legal system s or C .F .R . § 14 9 3.4 (a). U n d er the G SM -102 p ro g ra m , CC C relieves exporters o r assignees o f com m ercial risks w hich and it in ten d ed to draw ag a in st ce rta in bank ob lig atio n s it po ssessed . T he bank obligations w ere obtained u n d er a CC C ^[7] with 1487.4(a), 4 T h e m a jo r d iffe re n ce betw een the tw o program s is that G S M -1 0 1 is lim ited to protecting o n ly against ^[5] T h e p resen t q u estio n relates to programs m a terially d iffe re n t from the A griculture D epartm ent's proposal in 1973 7 C .F .R . §§ 1 4 8 7 .2 -4 ; 1487.9(d); 1 493.2; 1493.4; 1493.8(b)(3)(iv). 6 A q u e stio n related to th is o n e was prev io u sly addressed in a letter and m em orandum from this O ffice to Claude 7 It h as b ee n h eld th at § 7 1 4 b — among o th e r grants o f autho rity to th e C C C — m ust b e broadly interpreted. 3 T h e fo llo w in g d escrip tio n o f these p ro g ram s is based on discussions w ith m em bers of yo ur O ffice, and upon a 15U.S.C. § 714b(j). In addition, the CCC is vested with “ such powers as may be necessary or appropriate for the exercise of the powers specifically vested in the Corporation, and all such incidental powers as are customary in corporations generally[.]” 15 U.S.C. § 714b(m). Finally, 15 U.S.C. § 714c provides:

the Corporation is authorized to use its general powers only to—

* * * * * (f) Export or cause to be exported, or aid in the development of foreign markets for, agricultural commodities.

Commenting upon § 714c, the Senate Report on the CCC charter act states:

It is believed that there should be available to American agri­ culture an agency with the flexible authority vested in the Corpo­ ration by this section. . . . * * * * *

Subsection (f) authorizes the Corporation to export or cause to be exported, or aid in the development of foreign markets for, *3 agricultural commodities. It is essential to the agricultural econo­ my of the United States that it maintain and expand its markets abroad for agricultural commodities. This subsection empowers the Corporation to carry out operations to this end S. Rep. No. 1022, 80th Cong., 2d Sess. 12-13, reprinted in 1948 U.S. Code Cong. Serv. 2138, 2151.

The Department of Agriculture interprets these statutes as providing sound authority for the GSM—101 and GSM-102 programs. 43 Fed. Reg. 4033 (1978); 45 Fed. Reg. 64898 (1980). An agency’s interpretation of a statute it is charged with implementing is entitled to substantial deference. See generally Red Lion Broadcasting Co. v. FCC, 395 U.S. 367,381 (1969); Udall v. Tollman, 380 U.S. 1, 16 (1965); Lenkin D istrict c f Columbia, 461 F.2d 1215, 1227 (D.C. Cir. 1972).

Regardless of any deference due the Agriculture Department’s interpretation, there is no doubt that the GSM-101 and GSM -102 programs are a valid exercise of the CCC’s general power to “ determine the character of and the necessity for its obligations . . . and the mannerin which they shall be incurred[.]” 15U.S.C. § 7 14b(j)- That general power has been exercised in this instance for the purpose of promoting exports of United States agricultural commodities. 7 C.F.R. §§ 1487.1(a), 1493.1(a). This purpose is explicitly authorized by 15 U.S.C. § 714c(f). We therefore find support for these programs in the plain meaning of these provisions. Furthermore, the broad language of the CCC charter act and its legislative history both indicate that a variety of programs may—indeed should— be developed by the CCC to assist in promoting American agricultural exports. GSM-101 and GSM -102 are just such programs, and therefore are within the ambit of authority provided the CCC in § 714. T h e o d o r e B . O l s o n

Assistant Attorney General Office c f Legal Counsel