terms, is therefore more plausibly interpreted as expressing an intention that the authority to issue regulations should not be limited to the four specific situations. In view of the foregoing, I do not find it necessary to consider whether the power to issue regulations in aid of the enforcement of section 306 (a) might also be derived from section 2 of the act of February 2, 1903, c. 349, 32 Stat. 791, 21 U.S.C. 111. Similarly, I do not find it necessary to resolve the dispute as to the extent to which your Department has or has not consistently followed the interpretation of the statute that it here proposes. There is no indication of any detrimental reliance either by Congress or by private interests on that interpretation, and in view of all the circumstances here presented the dispute as to past interpretations does not seem to me material. In expressing the opinion that you are not legally bound to interpret the words, "importation * * *** from," so as to ban all transits through infected countries, I of course express no opinion on the various factual and scientific judgments that must also be made in reaching an appropriate interpretation of those words to be embodied in regulations establishing the conditions under which transits will not be deemed to preclude importation of products to which the statute applies. Such judgments must be made in the first instance by your Department. Sincerely, NICHOLAS DEB. KATZENBACH. FEDERAL NATIONAL MORTGAGE ASSOCIATION Participation certificates issued and guaranteed by the Federal National Mortgage Association under section 302 (c) of the Federal National Mortgage Association Charter Act, as amended (August 2, 1954, c. 649, 68 Stat. 612; 12 U.S.C. 1717(c)), give rise to general obligations of the United States. The holders of participation certificates guaranteed by the Federal National Mortgage Association may reach beyond the assets of the Association to the United States for payment, if necessary. September 30, 1966. THE SECRETARY OF THE TREASURY. MY DEAR MR. SECRETARY: This is in response to your letter of September 2, 1966, forwarding a memorandum of law of your General Counsel and requesting my views on the question discussed in the memorandum, i.e., whether the guaranties by the Federal National Mortgage Association (FNMA) of the participation certificates it markets from time to time give rise to general obligations of the United States. These guaranties are authorized by section 302 (c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717 (c)), which empowers FNMA to act as a trustee for the purpose of issuing participations in certain securities in which the United States has "a financial interest" and "to guarantee any participations *** [so issued], whether evidence of property rights or debt." I am in agreement with the conclusion of your General Counsel that 42 Op. A.G. 21, the culmination of a series of opinions beginning in 1953, is in point here. As stated in that opinion, a guaranty authorized by Congress is "an obligation fully binding on the United States despite the absence of statutory language expressly pledging its 'faith' or 'credit' to the redemption of the guaranty and despite the possibility that a future appropriation might be necessary to carry out such redemption." Thus, the holders of participations guaranteed by FNMA hold valid general obligations of the United States and are in a position to reach beyond the assets of FNMA to the United States for payment, if necessary. I am aware that the legislative history of the Participation Sales Act of 1966 (May 24, 1966, P.L. 89-429, 80 Stat. 164), which amended section 302 (c) of the FNMA Charter Act, discloses contrary statements asserting that FNMA's guaranties of participations are not backed by the full faith and credit of the United States.* However, these statements were based largely on the inclusion in previously issued participation certificates of language required to be inserted in FNMA debt obligations authorized by section 306(b) (August 2, 154, c. 649, 68 Stat. 618). This language, which is to the effect that such obligations "are not guaranteed by the United States and do not constitute a debt or obligation of the United States," is not required in the certificates issued to represent participations sold under section 302(c). Moreover, the language is not appropriate in these certificates because, as already noted, the provision of section 302 (c) granting FNMA authority to "guarantee any participations" that it sells has the effect, under the holding of 42 Op. A.G. No. 1 and its precursors, of creating a debt or obligation of the United States. Since these opinions were not brought to the attention of the witnesses and committee members during the cited hearings, it appears that the persons making the statements I have referred to did not take them into account. Indeed, it seems clear that the statements constituted merely a description of that familiar law and practice which pertain only to the debt obligations of FNMA. It should be noted also that the Participation Sales Act of 1966 added a requirement to section 302 (c) that the agencies transferring portfolios in trust to FNMA "shall guarantee to the trustee timely payment thereof." Aside from the effect of the provision authorizing FNMA "to guarantee any participations," this new provision is enough to create *See Hearings of Senate Banking and Currency Committee on H.R. 14544 and S. 3283, 89th Cong., 2d sess., p. 33; S. Rept. No. 1140, 89th Cong., 2d sess., p. 3; Hearings of House Banking and Currency Committee on H.R. 14544, 89th Cong., 2d sess., p. 49; Hearings of House Rules Committee on H.R. 14544 and S. 2499, 89th Cong., 2d sess., pp. 20-23, 40-41, 56–58, 68–69. a general obligation of the United States in favor of FNMA, as trustee, and thus of the holders of its participation certificates, as beneficiaries. The failure to refer to the series of opinions of the Attorneys General mentioned above no doubt prevented an appreciation of this result during the hearings. In sum, I concur in the view of your General Counsel that FNMA's guaranty of a participation certificate brings into being a general obligation of the United States backed by its full faith and credit. Sincerely, NICHOLAS DEB. KATZENBACH. |