b'January 26, 1977\n\n78-71 MEMORANDUM OPINION FOR THE DEPUTY\nCOUNSEL TO THE PRESIDENT\nPresidential Transition Act (3 U.S.C. \xc2\xa7 102 note)\xe2\x80\x94\nProvision of Military Aircraft and Hospital\nCorpsman to a Former President (31 U.S.C. \xc2\xa7 638)\nYou have orally asked for the opinion of this Office whether and under what\ncircumstances the President might be able to make available to former President\nFord military aircraft for his transportation and a medical corpsman to\naccompany him on such flights. Our response may be summarized as follows:\n(1) The President may direct aircraft assigned to him to transport Mr.\nFord on official transition business and may detail a medical corpsman to\naccompany him on such flights.\n(2) The President may, on a one-time basis, direct an aircraft assigned to\nhim to carry Mr. Ford on personal business or pleasure but may not detail a\nmedical corpsman to that flight.\n(3) With respect to the flights referred to in (2) the Department of Defense\n(DOD) may, at the request of the Director of the Secret Service, detail a\nmilitary aircraft and a medical corpsman should the Director conclude that\nthese are consistent with the statutory authority of the Secret Service to protect\nthe former President.\nThe question you raise presents itself in at least two different contexts. The\nfirst context would involve travel by Mr. Ford where such travel can be shown\nto be related to the transition itself. In our view, such official travel would be at\nno expense to Mr. Ford. The Presidential Transition Act of 1963, Pub. L. No.\n88-227, 78 Stat. 153, as amended, 3 U.S.C. \xc2\xa7 102 note, provides that, for 6\nmonths from the expiration of a President\xe2\x80\x99s term of office necessary services\nmay be provided by the Administrator of General Services under \xc2\xa7 4 of the Act\nto the former President, as provided by \xc2\xa7 2, \xe2\x80\x9c to promote the orderly transfer of\nthe executive power . . . .\xe2\x80\x9d Certainly travel of that nature would fall within the\nscope of these provisions. We are not aware that the Administrator has any\nauthority to utilize a military aircraft for that purpose. But it is our view that the\nPresident can order such official travel by Mr. Ford to be accomplished in\nmilitary aircraft. We have taken the position in the past that \xe2\x80\x9c in the absence of\nan expression of a contrary intent by Congress . . . the President must be\n319\n\n\x0cdeemed authorized by the Constitution to utilize the troops and equipment\nunder his command for reasonable purposes,even if they are not purely military\nin nature.\xe2\x80\x9d Memorandum, April 14, 1975, at 2-3 (hereafter April 14 Memo\xc2\xad\nrandum). Thus, aircraft placed directly at the President\xe2\x80\x99s disposal, such as the\naircraft of the military support group detailed to serve the President, can\nbe used to transport Mr. Ford on transition business, without expense to\nMr. Ford.\nThe second context in which your question might arise would involve\nsituations in which former President Ford\xe2\x80\x99s movement is of a personal, rather\nthan official, nature. In our view, as asserted in the April 14 Memorandum,\nibid., the President may direct aircraft placed at his command to be used for\nother than \xe2\x80\x9c official purposes.\xe2\x80\x9d This view is based on the authority contained in\n31 U.S.C. \xc2\xa7 638a(c)(2). That paragraph, which provides generally that\nGovernment aircraft may not be used other than \xe2\x80\x9c exclusively for official\npurposes,\xe2\x80\x9d specifically provides that \xe2\x80\x9c the limitations of this paragraph shall\nnot apply to any . . . aircraft for official use of the President . . . .\xe2\x80\x9d Thus, an\ninference may be drawn that the President is empowered to devote aircraft\nassigned to him for other than \xe2\x80\x9c official purposes.\xe2\x80\x9d\nHowever, as the April 14 Memorandum also points out, under Department of\nDefense regulations, non-Government traffic is generally carried on a reim\xc2\xad\nbursable basis by the person carried. Although certain exceptions to this general\nrequirement are carved out, transport of former Presidents on personal business\nwould not appear to fall within any of these exceptions. We believe that\ndetailing a military aircraft on a regular\xe2\x80\x94as opposed to a one-time\xe2\x80\x94basis for\nnon-Govemment purposes would both stretch the authority of the President as\nCommander-in-Chief and would not be justified by the inference drawn from\n31 U.S.C. \xc2\xa7 638a(c)(2). Furthermore, such travel on a nonreimbursable basis\ncould create a tension between the President\xe2\x80\x99s authority and DOD regulations.\nThose regulations, while they may not technically foreclose such action, might\ncreate the appearance of impropriety.\nIt appears to us that the detailing of a medical corpsman stands upon the same\nfooting. During the transition period, under his Commander-in-Chief powers,\nthe detailing of a corpsman by the President to the former President can be\naccomplished if such detailing constitutes the provision of \xe2\x80\x9c necessary serv\xc2\xad\nices\xe2\x80\x9d to further the transition under \xc2\xa7 4 of the Act. For other purposes there\nwould appear to be no authority for the detailing of a medical corpsman by the\nPresident. Unlike the President\xe2\x80\x99s use of military aircraft assigned to him, we\nare unaware of any statutory provision like 31 U.S.C. \xc2\xa7 638a(c)(2) that would\npermit, by inference, the use of a medical corpsman to accompany the former\nPresident.\nOne possibility that we have had too little time to explore fully is the extent\nto which military aircraft and a medical corpsman might be detailed for Mr.\nFord\xe2\x80\x99s use on personal business in connection with the Secret Service\nprotection afforded to him. The protection of the Secret Service is extended to a\nformer President during his lifetime, 18 U.S.C. \xc2\xa7 3056. Section 2 of Pub. L.\nNo. 90-331, 82 Stat. 170, as amended, 18 U.S.C. \xc2\xa7 3056 note, provides that all\n320\n\n\x0cFederal departments must assist the Director of the Secret Service in carrying\nout those protective functions. It would therefore seem that a determination by\nthe Director of the Secret Service that military aircraft should be used to\ntransport former President Ford in order to facilitate Secret Service protection\ncould furnish an adequate basis for the detail of available military aircraft to fly\nthe former President. It is our understanding that the Secret Service has\ndetermined in the past that in some circumstances the use of military aircraft\nactually may reduce the overall cost of Secret Service protection as compared\nwith providing the protection that would be required aboard a commercial\naircraft. It may be that the Secret Service could apply the same reasoning with\nrespect to the detailing of a medical corpsman.\nL eon U lman\n\nDeputy Assistant Attorney General\nOffice of Legal Counsel\n\n321\n\n\x0c'


b'Relationship Between Section 203(d) of the Patriot Act\nand the Mandatory Disclosure Provision of\nSection 905(a) of the Patriot Act\nThe sweeping authority to share information set forth in section 203(d) of the Patriot Act has a\nsignificant impact on the scope of the mandatory information-sharing obligation set forth in section\n905(a) of the Patriot Act. Section 905(a) requires disclosure of foreign intelligence to the Director of\nCentral Intelligence unless disclosure is otherwise prohibited by law. Because of the sweep of section 203(d), however, it is always lawful to disclose information that comes under that section in\norder to assist a federal official in the performance of his official duties. As a result, the preemptive\neffect of section 203(d) on all other non-disclosure provisions means that, absent an exception provided for by the Attorney General, foreign intelligence that would assist the Director of Central\nIntelligence in the performance of his official duties must be disclosed pursuant to section 905(a)\nbecause no other applicable law can be said to provide otherwise.\n\nSeptember 17, 2002\n\nMEMORANDUM OPINION FOR THE ASSISTANT ATTORNEY GENERAL\nOFFICE OF LEGAL POLICY\nYou have asked for our views concerning how the broad scope of the information-sharing authority set forth in section 203(d)(1) of the Uniting and\nStrengthening America By Providing Appropriate Tools Required to Intercept and\nObstruct Terrorism (USA Patriot Act) Act of 2001, Pub. L. No. 107-56, \xc2\xa7 203(d),\n115 Stat. 272, 281 (\xe2\x80\x9cPatriot Act\xe2\x80\x9d) (codified at 50 U.S.C. \xc2\xa7 403-5d) affects the\nmandatory disclosure provision contained in section 905(a) of the Patriot Act, 115\nStat. at 388-89 (codified at 50 U.S.C. \xc2\xa7 403-5b(a)(1)). Specifically, section 905(a)(2) requires mandatory disclosure to the Director of Central Intelligence\n(\xe2\x80\x9cDCI\xe2\x80\x9d) of foreign intelligence acquired in the course of a criminal investigation,\n\xe2\x80\x9c[e]xcept as otherwise provided by law.\xe2\x80\x9d 115 Stat. at 389. * Section 203(d)(1),\nhowever, states that \xe2\x80\x9cit shall be lawful\xe2\x80\x9d to disclose such information to assist a\nfederal official \xe2\x80\x9cin the performance of his official duties\xe2\x80\x9d \xe2\x80\x9c[n]otwithstanding any\nother provision of law.\xe2\x80\x9d 115 Stat. at 281.\nWe conclude that section 203(d) means what its plain terms say, i.e., that notwithstanding any other provision of law limiting disclosure of information, it is\nlawful to disclose the information described in that section for the purpose of\nassisting a federal official \xe2\x80\x9cin the performance of his official duties.\xe2\x80\x9d In turn, the\nsweeping authority to share information set forth in section 203(d) has a significant impact on the scope of the mandatory information-sharing obligation set forth\nin section 905(a). Section 905(a) requires disclosure of foreign intelligence to the\n*\nEditor\xe2\x80\x99s Note: Subsequent to the issuance of this opinion, 50 U.S.C. \xc2\xa7 403-5b(a)(1) was amended\nto refer to the Director of National Intelligence rather than the Director of Central Intelligence. See\nIntelligence Reform and Terrorism Prevention Act of 2004, Pub. L. No. 108-458, \xc2\xa7 1071(a)(1)(G), 118\nStat. 3638, 3689.\n\n107\n\n227-329 VOL_26_PROOF.pdf 117\n\n10/22/12 11:13 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 26\n\nDCI unless disclosure is otherwise prohibited by law. Because of the sweep of\nsection 203(d), however, it is always lawful to disclose information that comes\nunder that section in order to assist a federal official in the performance of his\nofficial duties. As a result, the preemptive effect of section 203(d) on all other\nnon-disclosure provisions means that, absent an exception provided for by the\nAttorney General, 1 foreign intelligence that would assist the DCI in the performance of his official duties must be disclosed pursuant to section 905(a) because\nno other applicable law can be said to provide otherwise.\nI. Scope of Section 203(d)\nSection 203(d)(1) provides as follows:\nNotwithstanding any other provision of law, it shall be lawful for\nforeign intelligence or counterintelligence (as defined in section\n[401a of this title]) or foreign intelligence information obtained as\npart of a criminal investigation to be disclosed to any Federal law\nenforcement, intelligence, protective, immigration, national defense,\nor national security official in order to assist the official receiving\nthat information in the performance of his official duties. Any Federal official who receives information pursuant to this provision may\nuse that information only as necessary in the conduct of that person\xe2\x80\x99s\nofficial duties subject to any limitations on the unauthorized disclosure of such information.\n115 Stat. at 281.\nAs the Supreme Court has emphasized, \xe2\x80\x9c\xe2\x80\x98[t]he starting point in every case\ninvolving construction of a statute is the language itself.\xe2\x80\x99\xe2\x80\x9d Landreth Timber Co. v.\nLandreth, 471 U.S. 681, 685 (1985) (alteration in original) (quoting Blue Chip\nStamps v. Manor Drug Stores, 421 U.S. 723, 756 (1975) (Powell, J., concurring)).\n\xe2\x80\x9c[W]e begin with the understanding that Congress \xe2\x80\x98says in a statute what it means\nand means in a statute what it says there,\xe2\x80\x99\xe2\x80\x9d Hartford Underwriters Ins. Co. v.\nUnion Planters Bank, N.A., 530 U.S. 1, 6 (2000) (quoting Conn. Nat\xe2\x80\x99l Bank v.\nGermain, 503 U.S. 249, 254 (1992)). See also United States v. Am. Trucking\nAss\xe2\x80\x99ns, 310 U.S. 534, 543 (1940) (\xe2\x80\x9cThere is, of course, no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook\nto give expression to its wishes.\xe2\x80\x9d). The language of section 203(d)(1) states clearly\nthat \xe2\x80\x9cit shall be lawful\xe2\x80\x9d for the foreign intelligence or counterintelligence or\nforeign intelligence information that is \xe2\x80\x9cobtained as part of a criminal investigation\n1\nSection 905(a)(2) provides that the Attorney General \xe2\x80\x9cmay provide for exceptions\xe2\x80\x9d when disclosure \xe2\x80\x9cwould jeopardize an ongoing law enforcement investigation or impair other significant law\nenforcement interests.\xe2\x80\x9d 115 Stat. at 388-89.\n\n108\n\n227-329 VOL_26_PROOF.pdf 118\n\n10/22/12 11:13 AM\n\n\x0cRelationship Between Sections 203(d) and 905(a) of the Patriot Act\n\nto be disclosed to any Federal law enforcement, intelligence, protective, immigration, national defense, or national security official,\xe2\x80\x9d so long as the disclosure is\nmade \xe2\x80\x9cto assist the official receiving that information in the performance of his\nofficial duties.\xe2\x80\x9d 115 Stat. at 281. Moreover, the statute plainly states that such a\ndisclosure may lawfully be made \xe2\x80\x9c[n]otwithstanding any other provision of law.\xe2\x80\x9d\nId. (emphasis added). Therefore, the plain terms of this provision indicate that any\nforeign intelligence information and counterintelligence or foreign intelligence, as\ndefined in that section, obtained as part of a criminal investigation may be disclosed to the enumerated officials in order to assist those officials in their duties,\nregardless of any federal, state, or local law to the contrary.2\nCongress was clearly concerned with ensuring that relevant foreign intelligence\nand counterintelligence information that could assist Federal officials in preventing the sort of tragedy that took place on September 11, 2001, could be made\navailable to such officials. Section 203(d) carves out an exception to any existing\nlaws restricting the sharing of information in order to ensure that certain classes of\ninformation may be shared with such officials, and we conclude that it should be\napplied in accordance with its language, that is, without limitation by other statutory provisions that may be inconsistent with it. 3 Cf. Mapoy v. Carroll, 185 F.3d\n224, 229 (4th Cir. 1999) (\xe2\x80\x9cnotwithstanding any other provision of law\xe2\x80\x9d means that\nall other jurisdiction-granting statutes shall be of no effect); Liberty Maritime\nCorp. v. United States, 928 F.2d 413, 416 (D.C. Cir. 1991) (\xe2\x80\x9cnotwithstanding\xe2\x80\x9d\nclause read broadly to give Secretary of Transportation \xe2\x80\x9cbroadest possible discretion\xe2\x80\x9d); United States v. Fernandez, 887 F.2d 465, 468 (4th Cir. 1989) (interpreting\n\xe2\x80\x9cnotwithstanding any other provision of law\xe2\x80\x9d language in Ethics in Government\n2\nWe conclude that the plain meaning of this provision, which encompasses \xe2\x80\x9cany\xe2\x80\x9d law, includes\nstate laws within its scope. As the Supreme Court has explained, the question of federal preemption of\nstate law \xe2\x80\x9cis basically one of congressional intent.\xe2\x80\x9d Barnett Bank of Marion County, N.A. v. Nelson,\n517 U.S. 25, 30 (1996). The plain terms of section 203(d)(1) reach \xe2\x80\x9cany other provision of law,\xe2\x80\x9d and\nthere is no reason to read this broad provision to exclude state law. 115 Stat. at 281 (emphasis added).\nThis is particularly true given the type of information at issue, i.e., foreign intelligence, which is\nquintessentially a matter for the federal Government to address. Given the purposes of the Patriot Act,\nthere is every reason to believe that Congress intended this provision to apply to all foreign intelligence\ninformation obtained under the law of any jurisdiction. Giving effect to confidentiality provisions in\nstate law would impede the flow of foreign intelligence information to federal officials and would\n\xe2\x80\x9cstand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of\nCongress.\xe2\x80\x9d Hines v. Davidowitz, 312 U.S. 52, 67 (1941). In addition, other courts have viewed virtually\nidentical phrases to have the effect of preempting state laws. See Burlington N. & Santa Fe Ry. Co. v.\nConsol. Fibers, Inc., 7 F. Supp. 2d 822, 827-28 & n.2 (N.D. Tex. 1998) (holding that the phrase\n\xe2\x80\x9c[n]otwithstanding any other provision or rule of law\xe2\x80\x9d preempts state law and citing cases).\n3\nThis exemption, for example, applies to the prohibition on information disclosure imposed by the\nPrivacy Act, 5 U.S.C. \xc2\xa7 552a(b) (2000). Moreover, because section 203(d) exempts the information to\nwhich it applies from the prohibition in the Privacy Act entirely, the various exceptions to the prohibition in the Privacy Act are also not applicable. As a result, the conditions that attach to the disclosure of\ninformation pursuant to the Privacy Act exceptions do not apply to information disclosed pursuant to\nsection 203(d).\n\n109\n\n227-329 VOL_26_PROOF.pdf 119\n\n10/22/12 11:13 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 26\n\nAct to \xe2\x80\x9cnaturally mean[] that the conferral of prosecutorial powers [on the independent counsel] should not be limited by other statutes\xe2\x80\x9d); Bryant v. Civiletti, 663\nF.2d 286, 292 (D.C. Cir. 1981) (\xe2\x80\x9cnotwithstanding\xe2\x80\x9d clause indicates that other\nstatutory provisions were not intended to apply); In re Oswego Barge Corp., 664\nF.2d 327, 340 (2d Cir. 1981) (interpreting \xe2\x80\x9cnotwithstanding\xe2\x80\x9d clause to mean that\nthe remedies established by the statutory provision are not to be modified by any\npre-existing law). 4\nGiving effect to the plain terms of section 203(d) is also consistent with section 203(a)(1) 5 and (b)(1) 6 of the Patriot Act. Those provisions amended the grand\njury secrecy provisions of Rule 6(e)(3) of the Federal Rules of Criminal Procedure\nand the non-disclosure provisions of Title III of the Omnibus Crime Control and\nSafe Streets Act of 1968, 18 U.S.C. \xc2\xa7\xc2\xa7 2510 et seq. (2000), to permit sharing\xe2\x80\x94\nsubject to certain procedures\xe2\x80\x94of foreign intelligence information and counterintelligence or foreign intelligence developed in a grand jury or through a wiretap.\nWe recognize the argument that if section 203(d) is properly read to permit\nsharing of information without regard to any other law, it renders the disclosure\n\n4\nOn one occasion in the past, we construed the phrase \xe2\x80\x9cnotwithstanding any other provisions of\nFederal, State, or local law\xe2\x80\x9d to have a more limited meaning. See Memorandum for Andrew J. Pincus,\nGeneral Counsel, Department of Commerce, from Randolph D. Moss, Acting Assistant Attorney\nGeneral, Office of Legal Counsel, Re: The Effect of 8 U.S.C.A. \xc2\xa7 1373(a) on the Requirement Set Forth\nin 13 U.S.C. \xc2\xa7 9(a) That Census Officials Keep Covered Census Information Confidential (May 18,\n1999) (preempting federal officials\xe2\x80\x99 discretion to impose prohibitions on disclosure of information, but\nnot effecting the repeal of explicit federal statutory prohibitions). Our analysis in that opinion, however,\nwas entirely dependent on the particular context of the overall language of the statute in question and\nits relationship to the comprehensive regulation of confidentiality of census information set forth in title\n13 of the United States Code. That opinion has no broader application.\n5\nSection 203(a)(1) provides that disclosures otherwise prohibited by Rule 6(e) may be made \xe2\x80\x9cwhen\nthe matters involve foreign intelligence or counterintelligence (as defined in section 3 of the National\nSecurity Act of 1947 (50 U.S.C. 401a)), or foreign intelligence information (as defined in clause (iv) of\nthis subparagraph), to any Federal law enforcement, intelligence, protective, immigration, national\ndefense, or national security official in order to assist the official receiving that information in the\nperformance of his official duties.\xe2\x80\x9d 115 Stat. at 279 (amending Fed. R. Crim. P. 6(e)(3)(C)(i)(V)).\n6\nSection 203(b) provides that:\n\nAny investigative or law enforcement officer, or attorney for the Government, who by\nany means authorized by this chapter, has obtained knowledge of the contents of any\nwire, oral, or electronic communication, or evidence derived therefrom, may disclose\nsuch contents to any other Federal law enforcement, intelligence, protective, immigration, national defense, or national security official to the extent that such contents\ninclude foreign intelligence or counterintelligence (as defined in section 3 of the\nNational Security Act of 1947 (50 U.S.C. 401a)), or foreign intelligence information\n(as defined in subsection (19) of section 2510 of this title), to assist the official who is\nto receive that information in the performance of his official duties. Any Federal official who receives information pursuant to this provision may use that information only\nas necessary in the conduct of that person\xe2\x80\x99s official duties subject to any limitations on\nthe unauthorized disclosure of such information.\n115 Stat. at 280 (codified at 18 U.S.C. \xc2\xa7 2517(6)).\n\n110\n\n227-329 VOL_26_PROOF.pdf 120\n\n10/22/12 11:13 AM\n\n\x0cRelationship Between Sections 203(d) and 905(a) of the Patriot Act\n\nauthorizations contained in subsections (a) and (b) superfluous, and simultaneously renders the disclosure restrictions contained in those subsections ineffective.\nSuch a reading of the statute should, of course, be avoided. See Ratzlaf v. United\nStates, 510 U.S. 135, 140-41 (1994) (cardinal rule of statutory construction is that\nsignificance and effect be accorded every word of a statute if possible). We conclude, however, that any such difficulty is more apparent than real and is easily\ndispelled by the standard canon of statutory construction that the more specific\ngoverns the general. Simpson v. United States, 435 U.S. 6, 15 (1978). Subsections\n(a) and (b) deal with specific and sensitive non-disclosure provisions in other laws.\nIn amending those non-disclosure provisions, Congress has not simply duplicated\nthe information-sharing authorization contained in section 203(d), but also has\nincluded additional requirements and safeguards, thereby justifying inclusion of\nseparate subsections. 115 Stat. at 278-80. Subsection (a) amends Rule 6(e)(3)(C)\nto contain a subsection (iii), which provides that the attorney for the government\nwho makes a disclosure under Rule 6(e)(3)(C)(i)(V) is required to \xe2\x80\x9cfile under seal\na notice with the court stating the fact that such information was disclosed and the\ndepartments, agencies, or entities to which the disclosure was made.\xe2\x80\x9d 115 Stat. at\n279. Similarly, subsection (b) permits Title III information to be disclosed only by\n\xe2\x80\x9c[a]ny investigative or law enforcement officer, or attorney for the Government,\nwho by any means authorized by this chapter, has obtained knowledge of the\ncontents of any wire, oral, or electronic communication, or evidence derived\ntherefrom.\xe2\x80\x9d 115 Stat. at 280 (emphasis added).\nThese specific disclosure provisions, which were enacted as part of the same\nsection as the more general provision in section 203(d), should apply instead of the\nmore general provision, see Simpson, 435 U.S. at 15, and thus they have effect\nindependent of the more general provision. Subsections (a) and (b) were included\nin the Patriot Act to address the particular issues of disclosure in the Rule 6(e) and\nTitle III contexts. Section 203(d) was designed as a sweeping catch-all to ensure\nthat disclosures would not be blocked under any other statutory scheme. It does\nnot matter that Congress perhaps could have made the interrelationship between\nthe provisions more apparent. That is particularly so given the complexity of the\nPatriot Act and the short time within which it was drafted and enacted in response\nto the September 11, 2001 attacks. 7 As one court has recently explained, \xe2\x80\x9cstatutes\nare not drafted with mathematical precision, and should be construed with some\ninsight into Congress\xe2\x80\x99 purpose at the time of enactment.\xe2\x80\x9d In re Chateaugay Corp.,\n89 F.3d 942, 953 (2d Cir. 1996). See also United States v. Coatoam, 245 F.3d 553,\n559 (6th Cir. 2001) (noting that the confusion arising as a result of Congress\ninadvertently enacting a second subsection was \xe2\x80\x9cnot surprising given the length\nand breadth of the Crime Control Act\xe2\x80\x9d).\n\n7\n\nThe statute was enacted on October 26, 2001. 115 Stat. 272.\n\n111\n\n227-329 VOL_26_PROOF.pdf 121\n\n10/22/12 11:13 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 26\n\nII. Impact of Section 203(d) on the Disclosures Required by\nSection 905(a)\nSection 905(a)(2) provides as follows:\nExcept as otherwise provided by law and subject to paragraph (2) [of\n50 U.S.C. \xc2\xa7 403-5b(a) (as added by section 905(a)(2))], the Attorney\nGeneral, or the head of any other department or agency of the Federal Government with law enforcement responsibilities, shall expeditiously disclose to the Director of Central Intelligence . . . foreign\nintelligence acquired by an element of the Department of Justice or\nan element of such department or agency, as the case may be, in the\ncourse of a criminal investigation.\n115 Stat. at 389 (emphasis added). This provision also requires the Attorney\nGeneral to \xe2\x80\x9cdevelop procedures for the administration of this section, including the\ndisclosure of foreign intelligence by elements of the Department of Justice, and\nelements of other departments and agencies of the Federal Government.\xe2\x80\x9d Id.\nSection 905(a)(2) thus mandates disclosure of foreign intelligence acquired in the\ncourse of a criminal investigation, but Congress has qualified this mandate by\nmaking the disclosure requirement subject to other existing provisions of law that\nmight limit disclosure\xe2\x80\x94that is, it directed disclosure \xe2\x80\x9cexcept as otherwise provided by law.\xe2\x80\x9d 8 Section 203(d), in contrast, sets forth a permissive grant of authority\nthat is not restricted by other provisions of law: section 203(d) makes it lawful to\nshare information \xe2\x80\x9c[n]otwithstanding any other provision of law.\xe2\x80\x9d 115 Stat. at 281.\nIt might be argued, therefore, that the different language used in sections 905(a)\nand 203(d) reflects Congress\xe2\x80\x99s intent that very different standards, with very\ndifferent results on the scope of information shared, would apply to the mandatory\ndisclosure contained in section 905(a) and the permissive disclosure contained in\nsection 203(d). In crafting mandatory disclosure under section 905(a), the argument would go, Congress sought to preserve all existing restrictions on disclosure\nof information. In section 203(d), by contrast, Congress authorized sweeping\ndisclosure authority without regard to other laws in order to permit unfettered\ndisclosure by federal officials when those officials thought it appropriate. Such a\nreading, however, ignores the manner in which the plain terms of the two provi-\n\n8\nThe mandatory disclosure requirement is limited by paragraph (2) of 50 U.S.C. \xc2\xa7 403-5b(a) (as\nadded by section 905(a)(2) of the Patriot Act) that the Attorney General \xe2\x80\x9cmay provide for exceptions to\nthe applicability of paragraph (1) [of 50 U.S.C. \xc2\xa7 403-5b(a)] for one or more classes of foreign\nintelligence, or foreign intelligence with respect to one or more targets or matters, if the Attorney\nGeneral determines that disclosure of such foreign intelligence under that paragraph would jeopardize\nan ongoing law enforcement investigation or impair other significant law enforcement interests.\xe2\x80\x9d 115\nStat. at 389.\n\n112\n\n227-329 VOL_26_PROOF.pdf 122\n\n10/22/12 11:13 AM\n\n\x0cRelationship Between Sections 203(d) and 905(a) of the Patriot Act\n\nsions interact. Due to the scope of section 203(d), which permits sharing any\ninformation that falls within its scope regardless of other statutory restrictions, it is\nnever unlawful to disclose foreign intelligence to a federal official when it will\nassist him in the performance of his official duties. As a result, no other law that\nwould otherwise provide an exception to section 905(a) applies to section 905(a)\ninformation that also falls within the scope of section 203(d).\nThe question then arises how to read these two statutory provisions in a way\nthat gives meaning to both. Because section 905(a) mandates disclosure \xe2\x80\x9cexcept as\notherwise provided by law,\xe2\x80\x9d yet section 203(d) authorizes disclosure \xe2\x80\x9cnotwithstanding any other provision of law,\xe2\x80\x9d a superficial reading of these provisions\nmight lead one to conclude that section 203(d)\xe2\x80\x99s authorization to disclose information \xe2\x80\x9cnotwithstanding any other provision of law\xe2\x80\x9d renders meaningless section\n905(a)\xe2\x80\x99s mandate that disclosure be made \xe2\x80\x9cexcept as otherwise provided by law.\xe2\x80\x9d\nWe do not believe that to be the case, however. First, while section 905(a) generally requires the automatic disclosure of any and all foreign intelligence acquired in\nthe course of a criminal investigation, section 203(d) permits disclosure of such\ninformation only when it is determined that the disclosure will be made \xe2\x80\x9cin order\nto assist the official receiving that information in the performance of his official\nduties.\xe2\x80\x9d Moreover, section 203(d)(1) further restricts any subsequent use of such\ninformation by anyone who receives it pursuant to that section by providing that\n\xe2\x80\x9c[a]ny Federal official who receives information pursuant to this provision may\nuse that information only as necessary in the conduct of that person\xe2\x80\x99s official\nduties subject to any limitations on the unauthorized disclosure of such information.\xe2\x80\x9d 115 Stat. at 281. Second, the \xe2\x80\x9c[e]xcept as otherwise provided by law\xe2\x80\x9d\nlanguage of section 905(a) preserves the specific limitations and requirements set\nforth in section 203(a) and (b).\nIn short, when the two statutory provisions are read together, the following is\nthe result: There is no mandatory obligation under section 905(a) to disclose\nforeign intelligence generally when disclosure is prohibited by another law.\nNevertheless, despite any restrictions on disclosure imposed in other laws, because\nforeign intelligence may be disclosed to the DCI (or any other federal official)\nunder the authority of section 203(d) when disclosure of such information to the\nDCI (or other official) would assist him in the performance of his official duties,\nthere is no law that has the effect of prohibiting the disclosure of information that\nfalls within the scope of section 203(d). Therefore, absent an exception provided\nfor by the Attorney General, information described in section 203(d) that will\nassist the DCI in the performance of his duties must be disclosed to the DCI\npursuant to section 905(a), subject to the requirements of section 203(a) and (b).\nPATRICK F. PHILBIN\nDeputy Assistant Attorney General\nOffice of Legal Counsel\n\n113\n\n227-329 VOL_26_PROOF.pdf 123\n\n10/22/12 11:13 AM\n\n\x0c'


b'Applicability of the Compact Clause to Use of Multiple State\nEntities Under the Water Resources Planning Act\nA g re e m e n ts b etw een \' th e fed eral g o v e rn m e n t an d a sta te are n ot su b ject to congressional\nco n sen t u n d er th e C o m p a c t C lause, U .S . C o n st. A rt. I, \xc2\xa7 10, cl. 3; n o r are all a g re e \xc2\xad\nm en ts b etw een o r am o n g sta te s so su b je ct, but o n ly those w h ic h e n c ro a c h upon o r\nin terfere w ith th e a u th o rity o f th e federal g o v ern m en t.\nS tates m ay en g ag e c o o p e ra tiv e ly in a b ro ad ran g e o f p lan n in g a ctiv ities u n d er th e W ater\nR e so u rces P lan n in g A c t w ith o u t o b ta in in g co n g ressio n al co n sen t, so long as th ey\nim pose n o legal ob lig atio n o r disab ility on g o v e rn m e n ta l o r p riv a te parties.\nC o n g ress has g iv en a d v a n c e co n sen t to p lan n in g activ ities o f the sta tu to ry riv er basin\nco m m issions, but not to th o se o f in te ra g e n c y co m m ittees o r m ultiple sta te entities.\n\nDecember 30, 1980\nMEM ORANDUM OPINION FOR TH E ACTING DIRECTOR,\nU N ITED STATES W ATER RESOURCES COUNCIL\nThis responds to your request for our opinion regarding the constitu\xc2\xad\ntionality, under the Compact Clause,* of using federal-state interagency\ncommittees or multiple state entities as sponsors for the preparation of\nRegional Water Resource Management Plans. For the reasons stated\nbelow, we conclude that there is a broad, although not unlimited, range\nof planning activity that can be undertaken without the consent of\nCongress. Consent is required only when two or more states agree\namong themselves to impose some legal obligation or disability on state\nor federal governments or private parties.\nI.\n\nPursuant to the Water Resources Planning Act, 42 U.S.C. \xc2\xa7 1962,\nyour agency coordinates and funds the development of comprehensive\nRegional Water Resource Management Plans (plans). The Act author\xc2\xad\nizes establishment of river basin commissions, comprised of members\nfrom state, interstate, federal, and international agencies. The Commis\xc2\xad\nsions enter funding contracts with your agency to act as plan sponsors.\nThey develop the various plan elements, submit draft plans to a wide\nvariety of interested parties for comment, and prepare final plans re\xe2\x80\xa2 N o t e : T h e C om pact Clause, U.S. C onst. A rt. I, \xc2\xa7 10, cl. 3, provides that \xe2\x80\x9c (n]o State shall, w ithout\nthe consent o f C ongress . . . e n te r into any A greem ent o r C om pact w ith another State, or w ith a\nforeign pow er. . . ." Ed.\n\n828\n\n\x0cfleeting the comments received. They approve final plans on a consen\xc2\xad\nsus basis, i.e., with all members either voting affirmatively or abstaining,\nand transmit approved plans to your agency and participating states.\nYour agency reviews the plans 1 and forwards them to the Office of\nManagement and Budget, which reviews the plans and transmits them\nto Congress.\nExisting plans are not legally binding on the participants or private\nparties. At the state level, a plan is implemented when individual states\ndetermine to follow its recommendations in budget and other matters.\nOur understanding is that states usually do abide by plan provisions,\nespecially since they participate in plan development and exercise veto\nauthority during the approval process, but that individual states do\nfrom time to time refuse to follow a given plan in some respects. At the\nfederal level, implementation occurs by application of your agency\xe2\x80\x99s\nConsistency Policy, which requires the Army Corps of Engineers, the\nDepartment of Agriculture, and the Department of the Interior to\ninform the Office of Management and Budget of those particulars in\nwhich certain of their programs and projects are inconsistent with\napproved plans and to provide reasons satisfactory to the President for\nany inconsistency.2 The strictures the Consistency Policy imposes on\nthe federal government result from your agency\xe2\x80\x99s voluntary action.\nTo date, river basin commissions have been established for areas\ncovering only about half of the Nation. You have sought to remedy\nthis deficiency, in part, by contracting with agencies established by\ninterstate compact. More recently, you have begun exploring the possi\xc2\xad\nbility of contracting with interagency committees or other multiple\nstate entities to sponsor plans for regions of the United States not\npresently covered by commissions or compact agencies. Interagency\ncommittees are comprised of state and federal agencies; they help\ncoordinate government programs but possess few, if any, other\npowers.3 Other multiple state entities could assume a variety of forms.4\nInterested governmental agencies could take the leadership role. Alter\xc2\xad\nnatively, the states could coordinate their efforts, with either a state or\nfederal agency joining together to establish an interstate nonprofit cor\xc2\xad\nporation along the lines of a council of governments.\n\n1 See W ater Resources C ouncil, R eview o f Regional W ater R esource M anagem ent Plans (1980).\n2 See W ater Resources C ouncil, Policy Statem ent No. 4: T h e U tilization o f C om prehensive R e\xc2\xad\ngional W ater R esource M anagem ent Plans (1978).\n3 A t least three interagency com m ittees are presently operating: the A rkansas-W hite-R ed Basins\nInteragency Com m ittee, the Pacific Southw est Interagency C om m ittee, and the Southeast Basins\nInteragency Com m ittee. W ater R esources C ouncil, Im proving the Planning and M anagem ent o f the\nN ation\xe2\x80\x99s W ater R esources 53-54 (1980).\n4 See R eport to the W ater R esources C ouncil, Potential In terstate Institutional Entities for W ater\nR esource Planning 12 (1980).\n\n829\n\n\x0cII.\n\nThe comprehensive planning process can aptly be described as an\nexercise in \xe2\x80\x9ccooperative federalism.\xe2\x80\x9d 5 Each step involves complex\nrelationships between the federal government and the states and among\nthe states inter se. In determining whether congressional consent is\nrequired under the Compact Clause, it is necessary to examine closely\nthe nature and legal impact of the various agreements involved in the\nplanning process.\nWe believe that agreements between the federal government and a\nstate or states need not be submitted for congressional consent. The\nstates, which possess all powers of government not withdrawn from\nthem by the Constitution or delegated by the Constitution to the federal\ngovernment,6 are not barred by the Compact Clause from entering into\nindividual or joint agreements with the United States. To the contrary,\nthe Compact Clause, by prohibiting unconsented agreements with other\nstates or with foreign powers, at least by negative implication contem\xc2\xad\nplates that federal-state agreements need not be submitted for consent.\nThe Framers may well have omitted federal-state agreements because\nthey believed that in such cases the party negotiating on behalf of the\nUnited States could protect the federal interest.7 It would also run\ncounter to the fundamental constitutional principle of separation of\npowers to give either house of Congress the equivalent of a veto over\nagreements concluded by an executive branch agency. 43 Op. A tt\xe2\x80\x99y\nGen. No. 25 (1980).** Because the Compact Clause is inapplicable to\nfederal-state agreements, your agency need not obtain consent for its\nfunding contracts with regional sponsors, or for any other obligations,\nsuch as the Consistency Policy, which might be included as express or\nimplied terms of such contracts.\nThe planning process also involves agreements among the states inter\nse. Not all such agreements are subject to the Compact Clause, but only\nthose \xe2\x80\x9ctending to the increase of political power in the States, which\nmay encroach upon or interfere with the just supremacy of the United\nStates.\xe2\x80\x9d Virginia v. Tennessee, 148 U.S. 503, 519 (1893).8 Interstate\nagreements interfere with federal power in this sense if: (1) they involve\na subject matter which the Congress is competent to regulate, see\n5\nC f G rad , Federal-State Compact: A New Experiment in Cooperative Federalism. 63 Colum. L. Rev.\n825 (1963).\n8 U.S. C onst. A m end. X.\n7 T h e records o f the C onstitutional C onvention furnish no light on the meaning o r purposes o f the\nC om pact Clause. F o r discussions o f the historical meaning o f the C lause\'s terms, see generally F rank\xc2\xad\nfurter & Landis, The Compact Clause o f the Constitution: A Study o f Interstate Adjustments, 34 Yale L.J.\n685 (1925); C om m ent, What Did the Framers o f the Federal Constitution Mean by "Agreements or\nCompacts?" 3 U- Chi. L. Rev. 453 (1936).\n\xe2\x80\xa2 \xe2\x80\xa2 N o t e : T h e cited A tto rn ey G en eral\xe2\x80\x99s opinion is reprinted* in this volum e at p. 30 supra. Ed.\n8 Accord. United States Steel Corp. v. Multistate Tax Commission. 434 U.S. 452, 467-71 (1978); New\nHampshire v. Maine. 426 U.S. 363, 369 (1976); Stearns v. Minnesota. 179 U.S. 223, 246 (1900); Louisiana\nv. Texas, 176 U.S. 1. 17 (1900); Wharton v. Wise. 153 U.S. 155, 169-171 (1894).\n\n830\n\n\x0cWharton v. Wise, 153 U.S. 155, 171 (1894); and (2) they purport to\nimpose some legal obligation or disability, see United States Steel Corp.\nv. Multistate Tax Commission, 434 U.S. 452, 467-71 (1978).\nThese principles permit the states to engage in a broad range of\nplanning activities without obtaining congressional consent. Although\nwater resources planning is undoubtedly within congressional power\nunder the Commerce Clause, see Kaiser Aetna v. United States, 444 U.S.\n164, 173 (1979); United States v. Appalachian Electric Power Co., 311\nU.S. 377, 426-27 (1940), many aspects of the planning process do not\nimpose a legal detriment on state or federal governments or private\nparties. The states may agree, without congressional consent, to create,\nfund, and participate in a regional sponsor empowered to prepare and\nadopt a plan, so long as each state is free to accept or reject a plan or\nany of its provisions and has the unfettered power to withdraw from\nthe regional sponsor. See United States Steel Corp. v. Multistate Tax\nCommission, 434 U.S. at 473-78. Furthermore, nothing prevents the\nstates, acting independently, from adopting a plan as legally binding\nwithin their own territories. The test is whether the state action is truly\nindependent or whether it is made instead in return for reciprocal\naction by other states. Congressional consent would be required, how\xc2\xad\never, for any plan calling for joint construction or operation of any\nfacility. Similarly, consent would be required if the regional sponsor\npossessed any legally effective authority, regulatory or otherwise, to\nensure the plan\xe2\x80\x99s implementation by state or federal governments or\nprivate parties.\nThe Weeks Act, 16 U.S.C. \xc2\xa7552, grants advance congressional con\xc2\xad\nsent to interstate compacts, not in conflict with federal law, whose\npurpose is \xe2\x80\x9cconserving the forests and the water supply of the States\nentering into such agreement or compact.\xe2\x80\x9d Although broad in scope,\nthe Weeks Act does not amount to a congressional abandonment of its\nduty to review all interstate compacts.9 Congress may delegate its\nlawmaking authority so long as it provides some articulated standard to\nguide agency action. By analogy, so long as it defines the category with\nsome specificity, Congress should be able to determine that a given\ntype of interstate compact poses so little threat to federal interests that\nadvance categorical consent may be granted. The Weeks Act consents\nto the preparation and implementation of a forests and water supply\nelement as an initial stage of the comprehensive planning process. But it\ndoes not consent to broader plans designed for other purposes, such as\nregulating navigation, controlling floods, conserving fish and wildlife,\nabating water pollution, and enhancing water-related recreation.10\n9 But see M uys, Interstate Compacts and Regional Water Resources Planning and Management,\n6 N atural Resources L aw yer 153, 174 (1973).\n10 See W ater Resources C ouncil. Im proving the Planning and M anagem ent o f the N ation\'s W ater\nR esources 30 (1980).\n\n831\n\n\x0cThe Water Resources Planning Act, we believe, grants advance\ncongressional consent to plans drawn up by river basin commissions,\nsince in authorizing creation of these agencies Congress was careful to\nprotect federal interests.11 But the Act does not similarly protect fed\xc2\xad\neral interests when plans are sponsored by interagency committees or\nmultiple state entities.12 Indeed, the Act nowhere specifically mentions\nthe possibility of such agencies acting as plan sponsors.13 Although it\nappears that federal participants in some of these agencies might ade\xc2\xad\nquately protect federal interests in a given case, it is highly doubtful\nthat Congress consented in advance to all agreements made by regional\nsponsors, other than river basin commissions, in which the federal\ninterests happen to be represented \xe2\x80\x9cadequately.\xe2\x80\x9d\nIII.\n\nMuch can be accomplished without congressional consent. A multi\xc2\xad\nple state entity or an interagency committee may be formed, funded,\nand authorized to sponsor a plan, so long as participating states retain\nunfettered discretion to withdraw from the arrangement. The regional\nsponsor may promulgate a plan, so long as it is merely advisory in\nnature and there is nothing to stop individual states from independently\nadopting the plan as legally binding within their territories. A forest\nand water conservation element could be prepared that imposes legal\nstrictures on the affected states or private parties. The federal govern\xc2\xad\nment may choose to impose strictures on itself. Indeed, there is no legal\nobstacle to the development of plans which would require congres\xc2\xad\nsional consent when implemented. All that is required is that consent to\nsuch plans be obtained at some time before they become effective in\nways which impair or threaten to impair a federal interest.\nL a r r y L . S im m s\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n11 T itle II o f the A ct, 42 U.S.C. \xc2\xa7 1962b, creates a detailed schem e for allocating state and federal\npow er w ithin a river basin commission. R iver basin commissions are established by the President, at\nthe request o f a state o r your agency, but only w ith the co n cu rrence o f at least one-half o f the affected\nstates. \xc2\xa7 201(a). T h e chairm an o f a river basin commission is a federal representative chosen by the\nPresident, \xc2\xa7 202(a), w hile the vice chairm an is chosen by the states. \xc2\xa7 203(b). T h e m em bers include\nrepresentatives from states, federal departm ents o r agencies, com pact agencies, and international\ncommissions. \xc2\xa7 202(b)-(c). R iver basin commissions o perate on a consensus basis, thus giving both\nfederal and state representatives veto p o w er o v e r agency action. \xc2\xa7 203(d). Finally, w ith respect to\nplans prepared by river basin commissions, the A ct sets forth a detailed procedure for com m ent by\naffected parties, review by your agency, and transm ittal to the President and the Congress. \xc2\xa7204(3).\n12 W ith respect to com pact commissions, the original congressional consent to the interstate com \xc2\xad\npact should extend to the com prehensive planning process so long as the original com pact granted the\ncom pact com m ission p o w er to engage in this type o f planning.\n13 You have not asked us to examine the statu to ry bases for your agency\xe2\x80\x99s authority to designate\nbodies o th e r than riv er basin commissions as regional sponsors, or for its pow er to subject plans\nprepared by these bodies to the review procedures ordinarily given river basin commission plans.\n\n832\n\n\x0c'


b'Congressional Power to Provide for the Vesting of Iranian\nDeposits in Foreign Branches of United States Banks\nCongress has the pow er under Article I, \xc2\xa7 8 of the Constitution to authorize the peace\xc2\xad\ntime vesting of assets of a foreign governm ent in the control of foreign branches of\nAm erican-owned and incorporated banks, at least insofar as such pow er may be\nenforced by courts of the United States.\nThe Just Compensation Clause o f the Fifth Amendment does not prohibit the United\nStates from effecting uncompensated seizures o f the assets of foreign nations.\nWhile United States courts will ordinarily make every effort to construe statutes to\naccord with our treaty obligations and general international law principles, Congress\nmay, by clearly expressing its intent to do so, legislate in derogation of international\nlaw or contrary to prior treaty obligations. Therefore, a United States court would\nlikely enforce a vesting order directed at overseas deposits of a foreign governm ent\nthat was clearly authorized by Congress notwithstanding contrary treaties or principles\nof international law.\nCongress could provide for the seizure in this country o f Iran\xe2\x80\x99s overseas deposits by\npermitting vesting orders to be served against the New York office of the banks\ninvolved; however, foreign courts may refuse to give effect to what would appear to\nbe the United States\xe2\x80\x99 uncompensated extraterritorial appropriation of non-enemy assets\nin any suit brought by Iran to recover its deposits.\n\nSeptember 16, 1980\nMEMORANDUM OPINION FOR THE ATTORNEY GENERAL\nThis memorandum considers Congress\xe2\x80\x99 power to provide for the\nvesting by the United States of currently blocked Iranian U.S. dollar\ndeposits 1 in the foreign branches of United States banks. We analyze,\nfirst, Congress\xe2\x80\x99 power per se to authorize such a seizure, and second,\nthe problems that Congress would face in providing for the vesting of\nthe Iranian deposits in a feasible and effective manner. We believe\nCongress has the power to authorize this vesting, but that the vesting\nof Iran\xe2\x80\x99s deposits might ultimately subject the United States to liability\nunder the Fifth Amendment for compensating the banks if they are\nsuccessfully sued by Iran in foreign courts.\n1 F or convenience, we refer in this mem orandum to the governm ent of Iran, its instrumentalities\nand controlled entities, and the Central Bank of Iran, collectively, as "Iran," and the interest o f the\ngovernm ent of Iran in the deposits o f any of these entities as "Iran\'s deposits." Unless otherw ise\nspecified, we intend the term "Iran\'s deposits" to refer to Iran\xe2\x80\x99s U.S. dollar deposits in the foreign\nbranches of U.S. banks.\n\n265\n\n\x0cI.\nIn response to events in Iran, the President, on November 14, 1979,\nissued Executive Order No. 12,170, 3 C.F.R. 457 (1979), declaring a\nnational emergency and ordering the blocking of:\nall property and interests in property of the Government\nof Iran, its instrumentalities and controlled entities and the\nCentral Bank of Iran which are or become subject to the\njurisdiction of the United States or which are in or come\nwithin the possession or control of persons subject to the\njurisdiction of the United States.\nWithin hours of the President\xe2\x80\x99s order, the Department of the Treasury\nissued implementing regulations, the Iranian Assets Control Regula\xc2\xad\ntions, 44 Fed. Reg. 65,956 (1979), to be codified at 31 C.F.R. \xc2\xa7 535,\nblocking the transfer to Iran of any property covered by Executive\nOrder No. 12,170. These assets include deposits of dollars in the foreign\nbranches of U.S. banks, principally in London and Paris.\nWhether Congress has the legislative power per se to provide for the\nUnited States to \xe2\x80\x9cvest\xe2\x80\x9d or seize these blocked overseas deposits de\xc2\xad\npends on three elements: congressional power to legislate concerning\nthe subject matter; Congress\xe2\x80\x99 power to regulate the behavior of the\nforeign branches of U.S. banks; and the absence of any constitutional\nprohibition against this vesting. If these elements obtain, then Congress\nwould have authority to provide for the vesting of Iran\xe2\x80\x99s deposits, at\nleast as that authority can be recognized and would be enforced by\nU.S. courts.\nWe do not think a serious question exists as to Congress\xe2\x80\x99 constitu\xc2\xad\ntional power to legislate with respect to the assets of a foreign govern\xc2\xad\nment in the control of U.S. persons. The constitutionality of the only\nlegislative vesting authority now extant\xe2\x80\x94war-time vesting authority\nunder the Trading with the Enemy Act (TWEA), 50 U.S.C. App. \xc2\xa7 1 et\nseq.\xe2\x80\x94has been upheld as part of Congress\xe2\x80\x99 powers with respect to the\nconduct of war, Stoehr v. Wallace, 255 U.S. 239 (1921), and we are\naware of no judicial decision that specifies a particular source of con\xc2\xad\ngressional power to authorize the vesting of non-enemy assets in peace\xc2\xad\ntime. The United States has, however, apparently without judicial chal\xc2\xad\nlenge, vested a steel mill belonging to Czechoslovakia, a country with\nwhich we were not at war, in order to settle claims against that\ncountry. International Claims Settlement Act of 1949, 22 U.S.C.\n\xc2\xa7\xc2\xa7 1642-1642p. In addition, Congress has provided authority since 1933\nthat would permit at least the freezing of foreign non-enemy assets in\nnational emergencies other than war, e.g., International Emergency\nEconomic Powers Act (IEEPA), 50 U.S.C. \xc2\xa7 1701-1706 (Supp. I 1977).\nSuch legislation\xe2\x80\x94which would seemingly have to rest on legislative\nsubject-matter authority sufficient to encompass legislation authorizing\n266\n\n\x0cthe seizure of those same assets\xe2\x80\x94has been upheld in the courts. See\nNielsen v. Secretary of the Treasury, 424 F.2d 833 (D.C. Cir. 1970), and\nSordino v. Federal Reserve Bank of New York, 361 F.2d 106 (2d Cir.),\ncert, denied, 385 U.S. 898 (1966), both dealing with the Cuban Assets\n\nControl Regulations, 31 C.F.R. \xc2\xa7 515 (1979).2 We infer from this his\xc2\xad\ntory that Congress\xe2\x80\x99 power to regulate commerce with foreign nationals,\nU.S. Const., Art. I, \xc2\xa7 8, cl. 3, alone or together with Congress\xe2\x80\x99 other\nArticle I, \xc2\xa7 8 powers, would provide it with power sufficient to legis\xc2\xad\nlate concerning the vesting by the United States in peacetime of Iranian\nassets in the possession or control of U.S. persons.\nIn addition, insofar as vesting would constitute legislative control of\nthe activities of the overseas branches of U.S. banks, the overseas\nlocation of these branches is not a bar to legislation. The United States\nhas authority to exercise jurisdiction over its nationals abroad. Blackmer\nv. United States, 284 U.S. 421 (1932) (upholding contempt against U.S.\ncitizen residing in France for failure to respond to D.C. Supreme Court\nsupoena); Cook v. Tait, 265 U.S. 47 (1924) (upholding tax levied against\nnon-resident U.S. citizen for income from property located outside the\nUnited States). Although international law principles are unsettled for\ndetermining the nationality of corporations, the generally accepted U.S.\nrule is that corporations have the nationality of the states that create\nthem. See Craig, Application o f the Trading with the Enemy Act to\nForeign Corporations Owned by Americans: Reflections on Fruehauf v.\nMassardy, 83 Harv. L. Rev. 579, 589-92 (1970) (hereafter Craig). Were\nCongress to express its intent specifically to treat as \xe2\x80\x9cUnited States\npersons\xe2\x80\x9d American-owned and incorporated foreign branches of U.S.\nbanks, its determination would be upheld in the courts. As the Supreme\nCourt has stated in related context, such a branch bank:\nis not a separate entity in the sense that it is insulated\nfrom [its head office\xe2\x80\x99s] managerial prerogatives. [The New\nYork head office] has actual, practical control over its\nbranches; it is organized under a federal statute, 12 U.S.C.\n\xc2\xa7 24, which authorizes it \xe2\x80\x9cTo sue and be sued, complain\nand defend, in any court of law and equity, as fully as\nnatural persons\xe2\x80\x9d\xe2\x80\x94as one entity, not branch by branch.\nThe branch bank\xe2\x80\x99s affairs are, therefore, as much within\n2 In 1964, Congress amended the International Claims Settlement Act of 1949 to authorize the\nvesting of Cuban assets frozen under the Cuban Assets C ontrol Regulations. Pub. L. No. 88-666, 78\nStat. 1110. Congress,, how ever, repealed this vesting authority, w hich had not been em ployed, the\nfollowing year, Pub. L. No. 89-262, 79 Stat. 988 (1965), because the Johnson A dm inistration urged\nthat the vesting and sale o f Cuban property would jeopardize our encouragem ent of foreign invest\xc2\xad\nment in the United States and the protections afforded by other nations to U.S. assets abroad. S. Rep.\nNo. 701, 89th Cong., 1st Sess. 3 (1965). T he State D epartm ent had, in fact, opposed the passage of\nvesting authority in the first place, but, although this D epartm ent deferred to State regarding support\nfor the bill, this Office specifically opposed any language in the signing statement casting doubt on the\nconstitutionality of the law.\n\n267\n\n\x0cthe reach of the in personam order entered by the District\nCourt as are those of the head office.\nUnited States v. First National City Bank [Citibank], 379 U.S. 378, 384\n(1965). In the Citibank case, the Supreme Court upheld the district\ncourt\xe2\x80\x99s authority, in a suit by the United States to enforce a tax lien\nagainst an Uruguayan corporation, to issue a preliminary injunction\nagainst the head office of Citibank ordering it not to transfer to the\ncorporation any corporate assets on deposit with the Montevideo\nbranch of Citibank. The same result would follow under judicial deci\xc2\xad\nsions enforcing subpoenas against U.S. banks for the production of\nrecords in the hands of foreign branches. United States v. First National\nCity Bank, 396 F.2d 897 (2d Cir. 1968); First National City Bank o f New\nYork v. Internal Revenue Service, 271 F.2d 616 (2d Cir. 1959).\nFinally, we note that the Constitution does not prohibit the uncom\xc2\xad\npensated seizure of the assets of foreign governments. The Fifth\nAmendment provides that no \xe2\x80\x9cprivate property [shall] be taken for\npublic use, without just compensation.\xe2\x80\x9d On its face, the textual refer\xc2\xad\nence to private property excludes foreign governments from the protec\xc2\xad\ntion of the Just Compensation Clause. The role of the Constitution in\ndomestic law buttresses this reading. Constitutional protections limit the\npower of the United States to act upon persons who are subject to its\nlegal authority by virtue of their citizenship or presence in this country.\nThe United States, however, asserts its powers with respect to foreign\nnations not by virtue of its domestic political authority, but because, as\na sovereign nation among equals, it enjoys powers and privileges under\ninternational law. Conversely, the rights of foreign states in this coun\xc2\xad\ntry depend not on constitutional protections, but on treaties, interna\xc2\xad\ntional custom, and such privileges as this nation extends under princi\xc2\xad\nples of comity. C f Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398\n(1964).\nIt may be argued that the peacetime seizure by the United States of\nIranian assets would violate particular treaties or general principles of\ninternational law. It should be noted, however, that, even under such\ncircumstances, Congress\xe2\x80\x99 express determination to authorize peacetime\nvesting would be enforceable in U.S. courts. Although our courts will\nordinarily make every effort to construe statutes to accord with our\ntreaty obligations and general international law principles, McCulloch v.\nSociedad Nacional de Marineros de Honduras, 372 U.S. 10, 21-2 (1963);\nLauritzen v. Larsen, 345 U.S. 571, 578 (1953), Congress may, by clearly\nexpressing its intent to do so, legislate in derogation of international law\nor contrary to prior treaty obligations. Rainey v. United States, 232 U.S.\n310 (1914); Whitney v. Robertson, 124 U.S. 190 (1888). In sum, insofar as\nsuch power may be enforced by U.S. courts, we conclude that Con\xc2\xad\ngress does have the power to authorize the vesting of Iranian dollar\ndeposits in the foreign branches of U.S. banks.\n268\n\n\x0cII.\nShould Congress attempt to draft legislation authorizing the seizure\nof the Iranian deposits, it would face additional critical questions in\nattempting to provide for a feasible and effective vesting procedure.\nWhether vesting could be made feasible, in short, depends upon\nwhether vesting could be effected by the Executive with the sole\nassistance of United States courts, or whether the assent of the courts\nof those nations in which Iran\xe2\x80\x99s deposits are located would also be\nrequired to secure transfers of title. Iran probably will seek injunctive\nrelief in foreign courts to prevent the seizure of Iranian assets, and the\nbanks, in any event, might seek declaratory judgments abroad authoriz\xc2\xad\ning their compliance with the vesting orders. Such suits would, of\ncourse, involve jurisdictional conflicts of the first order, and foreign\ncourts might well refuse to give effect to what, from their point of\nview, would appear to be the United States\xe2\x80\x99 uncompensated ex\xc2\xad\ntraterritorial expropriation of non-enemy assets, in possible disregard of\ngeneral principles of international law. The United States Supreme\nCourt has already expressed this country\xe2\x80\x99s judicial policy of not giving\neffect to foreign government\xe2\x80\x99s uncompensated expropriations of assets\nlocated in the United States. Alfred Dunhill of London, Inc. v. Republic\nof Cuba, 425 U.S. 682, 686-87 (1976). Cf. Fruehaufv. Massardy, (1968)\nD.S. Jur. 147, (1965) J.C.P. II 14,274bis (Cour d\xe2\x80\x99appel, Paris), discussed\nin Craig, supra.\nA strong argument can be made, however, that Congress can law\xc2\xad\nfully provide for the seizure in this country of the overseas deposits by\npermitting the vesting orders to be served against the head offices of\nthe banks involved, which are located in New York. Foreign branches\nof U.S. banks and the U.S. head offices of those banks may, of course,\nbe treated as separate entities under state law. Sokoloff v. National City\nBank of New York, 239 N.Y. 158, 145 N.E. 917 (1924). Congress,\nhowever, may provide that national banks and their foreign branches\nshall be treated as unified entities for purposes of federal law. See the\nCitibank cases, discussed supra. That the New York head offices of the\nbanks holding Iran\xe2\x80\x99s overseas deposits have actual control of those\ndeposits is strongly suggested by the arrangements through which such\ndeposits are made and controlled.\nFirst, although individual deposits may have differed in their details,\nthe deposits in question typically did not involve any transfer of cur\xc2\xad\nrency overseas to any foreign branch of a U.S. bank. The only transfers\nof funds occurred in New York when funds owed to Iran or being held\nfor Iran by banks other than Iran\xe2\x80\x99s depository bank were transferred to\nthe head office of the depository bank in New York. Upon such\ntransfer, the head office would direct one of its overseas branches to\ncredit Iran with a deposit in the overseas branch equal to the amount of\nthe transfer. The head office, in turn, would credit the transferred funds\n269\n\n\x0cto a \xe2\x80\x9ccover account\xe2\x80\x9d in the name of its foreign branch to secure the\nforeign branch\xe2\x80\x99s obligation to repay Iran on demand overseas for the\namount on deposit.3 An advantage of this scheme for Iran appears to\nhave been that it enabled Iran to keep funds on deposit in interestbearing checking accounts abroad, which would not have been possible\nin the United States, while at the same time keeping the funds available\nto a New York bank to finance Iran\xe2\x80\x99s transactions here.\nFurther, it appears, at least in certain instances, that head office banks\nin New York could draw, in New York, on Iran\xe2\x80\x99s foreign branch\ndeposits for the benefit of Iran. We understand that, for example, if\ndirections from Bank Markazi or the National Iranian Oil Company to\nChase Manhattan\xe2\x80\x99s head office to make particular payments resulted in\nan overdraft, the head office\xe2\x80\x94without further notice or its depositor\xe2\x80\x99s\nfurther consent\xe2\x80\x94could cover the overdraft by withdrawing funds from\nthe depositor\xe2\x80\x99s London account. It is even possible in theory that, in\nsome cases, Iran and its banks agreed that the deposits in toto would be\nrepayable to Iran on demand in New York.\nThese facts would readily justify a decision by Congress to treat\nIran\xe2\x80\x99s overseas deposits in the foreign branches of U.S. banks as being\nwithin the control of, and therefore \xe2\x80\x9cpresent\xe2\x80\x9d in, the U.S. offices of\nthose banks as well. It is the ordinary rule that a debt follows the\ndebtor and, insofar as a national bank and its foreign branches are all\none entity, that bank, as a debtor to its depositors, is present both here\nand overseas. The Supreme Court expressly recognized the possibility\nof dual-situs debts in Cities Service Co. v. McGrath, 342 U.S. 330 (1952).\nIn that case, the Court unanimously upheld, under the Trading with the\nEnemy Act, the vesting of two gold debentures issued by Cities Service\nCompany, a U.S. corporation, although one debenture was located\noutside the United States. The Supreme Court said:\n[T]he obligor . . . is within the United States and the\nobligation of which the debenture is evidence can be\neffectively dealt with through the exercise of jurisdiction\nover that petitioner.\n342 U.S. at 334. In our judgment, the exercise of jurisdiction over\nnational banks in the United States to seize debts to Iran that are\nevidenced by bank records abroad would present a precisely analogous\ncase, and would equally \xe2\x80\x9ctransgressf ] no constitutional limitation[ ]\non [Congress\xe2\x80\x99] jurisdiction.\xe2\x80\x9d Id.\nThe seizure in the United States of Iran\xe2\x80\x99s overseas bank deposits\nwould, of course, not forestall attempts by Iran in foreign courts to\nrecover its deposits. Although this country\xe2\x80\x99s ability to provide the\n3A lthough no reported judicial decision is definitive on this point, it appears from those cases\ninvolving \xe2\x80\x9ccover accounts\'* such as these that the original depositor has no ow nership interest in the\ncover accounts. If so, it w ould not be useful for the United States to seize the cover accounts. See\nSchrager-Singer v. Attorney General o f the United States, 271 F.2d 841 (D C. Cir. 1959).\n\n270\n\n\x0cbanks with a complete defense to such actions would be enhanced if\nIran\xe2\x80\x99s deposits were seized within U.S. territory, we understand that\nthe legal disputes would be heated. At least three core issues would be\ninvolved in any overseas suits that Iran would bring to recover its\ndeposits:\n1. Whether the foreign situs nations should excuse performance\nof the branch banks\xe2\x80\x99 obligations because elements of perform\xc2\xad\nance would be required in the United States and U.S. law will\nhave rendered those elements impossible to perform;\n2. Whether the foreign courts should recognize the validity of\nU.S. vesting as consistent with their nations\xe2\x80\x99 public policy both\nspecifically with respect to Iran and generally with respect to\ncommonly accepted principles of international law; and\n3. Whether the foreign courts should recognize the validity of\nU.S. vesting as a matter of comity.\nIn arguing for the validity of its vesting, the United States would likely\nassert the United States\xe2\x80\x99 predominant interest in the operation of the\nbranch banks, the involvement of paramount U.S. foreign policy and\nnational security concerns, foreign condemnation of the Iranians\xe2\x80\x99 ac\xc2\xad\ntions, the hardship that foreign enforcement of the banks\xe2\x80\x99 obligations\nwould pose for the banks and for the international monetary system,\nand the acceptability of reprisal under international law. The most\nserious doubts exist, however, as to whether these arguments would\nprevail in a foreign forum. Foreign courts might well view the banks\xe2\x80\x99\nobligations as wholly performable abroad. They might perceive that\ntheir own nations\xe2\x80\x99 interests are significantly at stake in being able to\nassure foreign depositors the security of their deposits. The courts\nmight fear that the U.S. vesting itself would destabilize the world\nmonetary system, and would recognize that the United States would\nnot likely give effect to other nations\xe2\x80\x99 extraterritorial seizures of prop\xc2\xad\nerty in the United States. How foreign courts would reconcile these\ncompeting considerations in suits by Iran is at best uncertain.\nIn this connection, we think you should be aware that seven of the\nnine Justices deciding Cities Service Co. v. McGrath, supra, conditioned\ntheir judgment regarding the constitutionality of this country\xe2\x80\x99s seizure\nhere of the overseas gold debentures on the obligor\xe2\x80\x99s implicit right\nunder the Fifth Amendment to recoup from the United States the\nextent of any liability imposed abroad in connection with the seized\nobligation.4 342 U.S. at 333-36. We believe the same result would likely\nobtain if Iran were to succeed, subsequent to our vesting, in a foreign\nsuit against the banks for the recovery of Iran\xe2\x80\x99s deposits. The banks\nwould be able to involve sympathetically the Supreme Court\xe2\x80\x99s recogni\xc2\xad\n4The remaining tw o Justices would have reserved the question. 342 U.S. at 336.\n\n271\n\n\x0ction that the \xe2\x80\x9cFifth Amendment\xe2\x80\x99s guarantee . . . [is] designed to bar\ngovernment from forcing some people alone to bear public burdens\nwhich, in all fairness and justice, should be borne by the public as a\nwhole.\xe2\x80\x9d Armstrong v. United States, 364 U.S. 40, 49 (1960).\nJohn M . H arm on\n\nAssistant Attorney General\nOffice o f Legal Counsel\n\n272\n\n\x0c'


b'Clarification of Prior Opinion Regarding Borrowing\nby Bank Examiners\n\n18 U .S.C . \xc2\xa7 213, w hich prohibits federal bank exam iners from borrow ing from Federal Reserve m em \xc2\xad\nb e r banks or o th er entities subject to exam ination by them , does not prohibit such exam iners from\nreceiving loans o r credit from affiliates o f covered banks m erely because such affiliates are under\n\xe2\x80\x9ccom m on co n tro l\xe2\x80\x9d with the bank or because the covered bank and the affiliate have a com m on\nm ajority o f corporate officers or directors.\n\nAn ex am in er w ould be prohibited from borrow ing from such an affiliated entity, w here the affiliate is\nserving as a conduit o r \xe2\x80\x9cfront\xe2\x80\x9d for the im plem entation o f a loan that is actually extended due to the\ndirection, instigation, or influence of the affiliated m em ber bank or person connected therewith\n\nDecember 20, 1993\nM e m o r a n d u m O p in io n f o r t h e G e n e r a l C o u n s e l\nBo a r d o f G o v ern o r s\nFed er a l R eserv e S y ste m\n\nThis responds to your request that we clarify an aspect of an opinion previously\nissued by this Office respecting 18 U.S.C. \xc2\xa7 213, which prohibits a bank examiner\nfrom borrowing from any Federal Reserve member bank or other covered entity\nthat he examines, or any person connected therewith. See Federal Reserve Board\nPolicy on Bank Examiner Borrowing , 6 Op. O.L.C. 509 (1982) (\xe2\x80\x9c 1982 Opinion\xe2\x80\x9d).\nSpecifically, you have asked us whether footnote 8 from that opinion should be\nconstrued to mean that 18 U.S.C. \xc2\xa7 213 prohibits bank examiners from receiving\nloans or credit from affiliates of member banks that they have examined in all cases\nwhere such affiliates are under \xe2\x80\x9ccommon control\xe2\x80\x9d with the bank, or where the two\nentities have a common majority o f corporate officers or directors. We conclude\nthat such a construction is not required by the statute, except where the affiliated\nbank is serving as a conduit or \xe2\x80\x9cfront\xe2\x80\x9d for the implementation of a loan that is actu\xc2\xad\nally being extended due to the direction, instigation, or influence of the member\nbank or person connected therewith.\nI. BACKGROUND\nThe criminal statute giving rise to the issue presented is 18 U.S.C. \xc2\xa7 213, which\nprovides as follows:1\n1\nA lso p e rtin en t is 18 U S C \xc2\xa7 212, w hich prohibits \xe2\x80\x9co fficer[s], d ire c to rs ] or em ployee[s]" o f Federal\nR eserve m em b er banks and certain olher co v ered institutions (e g , banks insured by the Federal D eposit\nInsurance C o rp o ratio n ) that are subject to ex am in atio n by federal exam iners from m aking or granting any\nloans o r g ratu ities to any ex am in er who is a u th o rized to exam ine the covered bank or institution\n\n168\n\n\x0cC larification o f P rior Opinion R egarding B orrow ing by B ank E xam iners\n\nWhoever, being an examiner or assistant examiner of [a federal\nbanking agency], accepts a loan or gratuity from any bank, branch,\nagency, corporation, association or organization examined by him\nor from any person connected herewith, shall be fined . . . or im\xc2\xad\nprisoned . . . .\n(emphasis added).\nIn a memorandum prepared for the Federal Deposit Insurance Corporation\n(\xe2\x80\x9cFDIC\xe2\x80\x9d) in 1980, this Office opined as follows concerning certain proposed\namendments to FDIC regulations that would permit FDIC examiners to make use\nof a limited amount of credit extended via credit cards by banks that are affiliates\nof banks that they examine:\n[T]his exposition of the background of 18 U.S.C. \xc2\xa7 213 establishes\nthat its phrase \xe2\x80\x9cfrom any person connected therewith\xe2\x80\x9d includes only\nindividuals and, insofar as the examiners of your agency are con\xc2\xad\ncerned, is limited to an officer, director or employee of an insured\nState nonmember bank. Accordingly, we see no legal objection to\nthe FDIC\xe2\x80\x99s amending its regulations to allow an examiner to receive\ncredit from a national or State member bank even though it is an af\xc2\xad\nfiliate of an insured State nonmember bank.\nMemorandum for Hoyle L. Robinson, Executive Secretary, FDIC, from Leon Ulman,\nDeputy Assistant Attorney General, Office of Legal Counsel, Re: Proposed Amend\xc2\xad\nments to Regulations o f Federal Deposit Insurance Corporation Relating to Bank\nLoans to Examiners - 18 U.S.C. \xc2\xa7\xc2\xa7 212-213 at 4 (July 10, 1980) (\xe2\x80\x9c 1980 Opinion\xe2\x80\x9d).\n\nIn response to a request made by the Federal Reserve Board in 1982, this Office\nissued a further opinion that a policy allowing examiners to obtain loans or credit\ncards from affiliates of member banks and bank holding companies they are\nauthorized to examine would not violate 18 U.S.C. \xc2\xa7 213. Referring back to the\n1980 opinion prepared for the FDIC, the 1982 Opinion stated:\nOur review of the legislative history of \xc2\xa7 213 indicated that Con\xc2\xad\ngress intended to do no more than bar a bank examiner from ac\xc2\xad\ncepting a loan from a bank, or an individual connected with a bank\nhe was responsible for examining; its prohibition was not intended\nto extend to loans from affiliated institutions however tenuous their\nrelationship with the bank subject to examination. We have reex\xc2\xad\namined that position, and we believe it to be the correct interpreta\xc2\xad\ntion of \xc2\xa7 213.\n6 Op. O.L.C. at 511.\nHowever, the 1982 Opinion also contained the following footnote, which occa\xc2\xad\nsions the concern giving rise to your inquiry:\n169\n\n\x0cOpinions o f the O ffice o f L egal Counsel\n\nWe do not suggest that \xc2\xa7\xc2\xa7 212 and 213 would permit an examiner\nto borrow or accept credit from an affiliate in a case where the rela\xc2\xad\ntionship between the institution being examined and the affiliated\nlending institution is such as to suggest common control, or where\nthe two entities have a common majority of officers or directors. In\nsuch a case, a loan from an affiliate might be tantamount to a loan\nfrom the bank being examined, thus giving rise to the very conflict\nof interest which \xc2\xa7\xc2\xa7212 and 213 were intended to prevent.\nId. at 511 n.8.\n\nYou have stated that this footnote is inconsistent with the general conclusion of\nthe 1982 Opinion and suggested that the interpretation it expresses would restrict\nborrowing by Federal Reserve examiners in a manner not required by the statute\nitself. Pointing out that such a construction would impose unfair restrictions on\ncovered examiners in their efforts to obtain credit card accounts, mortgages, and\nother commonplace forms of credit, you have asked us to clarify the uncertainty\ncreated by the language of the questioned footnote.\nII. ANALYSIS\nThe analysis in both the 1980 and 1982 Opinions adequately establishes that (1)\nthe phrase \xe2\x80\x9cfrom any person connected herewith\xe2\x80\x9d used in 18 U.S.C. \xc2\xa7 213 is lim\xc2\xad\nited to natural persons and does not encompass corporations or other legal entities\naffiliated with a member bank; and (2) as a general rule, that phrase does not ex\xc2\xad\ntend \xc2\xa7 213\xe2\x80\x99s prohibition to loans extended by corporate affiliates of covered banks\nto examiners with authority to examine such banks.\nThe uncertainty created by footnote 8 in the 1982 Opinion stems from its at\xc2\xad\ntempt to convey that, where an examiner accepts a loan from an entity that has a\nvery close relationship with a covered bank, there is some potential for \xe2\x80\x9csham\xe2\x80\x9d\ntransactions concealing the reality of a loan that was actually extended at the insti\xc2\xad\ngation or direction of the covered bank. As you point out, however, footnote 8\nmay also be read to suggest that \xc2\xa7\xc2\xa7212 and 213 implicitly prohibit examiners from\nborrowing or accepting credit from an affiliate of a member bank whenever their\nrelationship \xe2\x80\x9cis such as to suggest common control, or where the two entities have\na common majority of officers or directors.\xe2\x80\x9d 6 Op. O.L.C. at 511 n.8. We do not\nbelieve that such a construction is warranted and, to the extent that footnote 8 im\xc2\xad\nplies such a construction, it does not reflect the legal opinion of this Office.2\n\n2\nAs y o u r letter req u estin g th is opinion p o in ts out, many \xe2\x80\x9c affiliates" of m em ber banks are by definition\nunder \xe2\x80\x9cco m m o n c o n tro l\xe2\x80\x9d w ith such banks. S e e 12 U.S C \xc2\xa7 1 8 4 1(k). T herefore, an interpretation that any\naffiliate that is un d er \xe2\x80\x9cco m m o n control\xe2\x80\x9d with a m em ber bank is p e r se subject to \xc2\xa7 2 13\xe2\x80\x99s prohibition is d iffi\xc2\xad\ncult to reco n cile w ith the 1982 O pin io n \xe2\x80\x99s m ain conclusion that \xc2\xa7 213 does not generally prohibit exam iners\no f covered banks from receiv in g loans or cre d it from affiliates o f those banks\n\n170\n\n\x0cC larification o f P rior Opinion R egarding B orrow ing by Bank E xam iners\n\nTo resolve any further uncertainty on this issue, it is not the opinion of this Of\xc2\xad\nfice that examiners are prohibited from borrowing from an affiliate of a covered\nbank solely because that affiliate is under common control with the covered bank\nor because it shares a common majority of officers or board members with it.3 As\nlong as the affiliate extending credit to the examiner is not extending that credit\ndue to the direction, instigation, or influence of the covered bank, the transaction\nis not subject to the prohibition of 18 U.S.C. \xc2\xa7\xc2\xa7212 and 213.4 We believe that the\nprohibitions of \xc2\xa7\xc2\xa7 212 and 213 would apply, however, in a case where an affiliate\nof a covered bank extended a loan to an examiner of that bank on behalf o f that\nbank, or acted as a conduit to disguise the true source of a loan to the examiner that\nhas been authorized or instigated by the covered bank. See United States v. Bris\xc2\xad\ntol, 473 F.2d 439, 442 (5th Cir. 1973) (\xe2\x80\x9c[A] construction of [\xc2\xa7 213] which would\nallow a bank officer to circumvent [\xc2\xa7 213\xe2\x80\x99s] intent simply by channeling a loan\nthrough a controlled shell corporation is untenable.\xe2\x80\x9d) (emphasis added).\nThe key issue in these cases is whether the affiliated bank is acting as an alter\nego, agent, or conduit for a member bank or a covered \xe2\x80\x9cperson\xe2\x80\x9d in circumstances\nwhere it is actually the latter that has authorized, caused, or brought about a loan or\nother extension of credit to the examiner. In such instances, we believe that \xc2\xa7\xc2\xa7 212\nand 213 would apply to the transaction \xe2\x80\x94 not because the affiliate is under com\xc2\xad\nmon control or management with the member bank, but because the transaction is\nin reality a loan or extension of credit initiated by the member bank rather than by\nthe affiliate. See United States v. Bristol, 473 F.2d at 442. However, where the\naffiliate has independently authorized the loan or extension of credit to the exam\xc2\xad\niner, and the transaction does not result from the direction, control, or influence of\nthe covered bank or other covered \xe2\x80\x9cperson,\xe2\x80\x9d the transaction is not subject to the\nprohibitions of the statute even though the affiliate is under common control, or has\nan overlapping majority of officers or directors, with the member bank.\nWALTER DELLINGER\nAssistant Attorney General\nOffice o f Legal Counsel\n\n\xe2\x80\x99 C f U nited States v. Sclw en h u l, 576 F 2d 1010, 1020 (3d C ir 1978), c e rt denied. 4 39 U S 964 (1978),\nw here the court held that the fact that tw o financial institutions had overlapping officers \xe2\x80\x9c is not en o u g h to\nprovide a basis for concluding that the corporations were id en tical" for purposes o f establishing the coverage\nof conflict o f interest laws respecting certain prohibited bank loans\n4\nT his c o n clu sio n is fortified by the restrictive in terpretation o f \xc2\xa7 2 1 3 \xe2\x80\x99s coverage applied by co u rts in\nrelated co n tex ts See, e g , U nited States v. N apier, 861 F 2d 547, 549 (9th C ir 1988) ( \xe2\x80\x9cStrict re a d in g \xe2\x80\x9d\napplied to \xc2\xa7 213 in holding that a state C o m m issio n er o f Financial Institutions could not be treated as a\ncovered \xe2\x80\x9cexam iner,\'* notw ithstanding g o v ern m en t\xe2\x80\x99s argum ent that the com m issioner was the functional\nequivalent o f an ex am in er and that a narrow reading o f the term w ould \xe2\x80\x9ce v isc e ra te d \xe2\x80\x9d the statute ) In so\nholding, the N a p ier court rejected the g o v e rn m e n t\'s argum ent that the \xe2\x80\x9cgeneral statutory purposes\xe2\x80\x997 und erly \xc2\xad\ning the statute ju stifie d a more expansive interpretation Id at 548-49\n\n171\n\n\x0c'