b'Presidential Authority to Permit the Withdrawal of\nIranian Assets Now in the Federal Reserve Bank\nIn order to allow Iran to w ithdraw its assets in the Federal Reserve Bank, the President\nhas the power, under the International Em ergency Econom ic Powers Act (IEE PA ), to\nnullify existing attachm ents licensed under the Iranian Assets C ontrol Regulations.\nSince in consenting to attachm ents against the blocked Iranian assets the G overnm ent\nreserved the right to revoke its consent at any time, their nullification does not\nconstitute a compensable taking o f private property.\nT he Federal Reserve Bank may release Iranian assets which have been attached but are\nnot yet subject to a licensed final judgm ent, in reliance on the Presidents\xe2\x80\x99 action under\nthe IE E PA , without applying to the court to vacate its attachm ent orders. The\nconsiderations which ordinarily mandate compliance with court orders would not\njustify a contem pt citation w here the conduct in question has been clearly mandated by\nsupervening executive action, where com pliance would defeat the President\xe2\x80\x99s exercise\no f his em ergency pow er under the IE E PA , and where the IE E PA itself provides an\nexpress exception to contem pt liability for com pliance with an order issued under its\nauthority.\nW here Congress has immunized good faith compliance with a presidential order issued\nunder the IE E PA , the Federal Reserve Bank would not be held liable to disappointed\nattachment creditors even if the presidential orders nullifying the attachm ent orders\nwere later held unlawful. N or is there any basis, in the Constitution or otherwise, on\nwhich creditors whose attachm ents were nullified would be likely to recover against\nthe United States itself.\n\nOctober 8, 1980\nMEMORANDUM OPINION FOR THE ATTORNEY GENERAL\nThis responds to your request for our opinion whether the President\nhas authority to permit the Central Bank of Iran and the Bank Markazi\nto withdraw the blocked assets they now have on deposit with the\nFederal Reserve Bank (FRB) notwithstanding the outstanding orders of\nattachment entered against such assets. You have also asked whether it\nis necessary to approach the courts that have entered the orders of\nattachment and obtain orders of dissolution before transferring the\nfunds. We have concluded that the President has the authority under\nthe International Emergency Economic Powers Act (IEEPA), 50\nU.S.C. \xc2\xa7 1701 et seq. (Supp. I 1977), to return those assets by revoking\nthe existing licenses for attachments against them and by licensing\nwithdrawals. It is our view that such action is sufficient as a legal\nmatter to authorize the return of those assets. Moreover, it is our\nopinion that the Federal Reserve Bank, relying upon that authority,\nmay release the assets without applying to the court to vacate the\n273\n\n\x0cattachment orders. We believe it would be an abuse of discretion for a\ncourt to use the contempt power to penalize noncompliance with an\nattachment order that has been rendered unenforceable by the Presi\xc2\xad\ndent\xe2\x80\x99s order. Finally, Congress has immunized good faith compliance\nwith emergency orders issued under IEEPA; therefore, it is our opinion\nthat the Federal Reserve Bank could not be held liable to the attach\xc2\xad\nment creditors for damages even if a court should later determine that\nthe President\xe2\x80\x99s order was beyond the scope of his power under IEEPA.\nSimilarly, we have found no basis for any action for damages by the\nattachment creditors against the United States.\nI. Presidential Authority to Nullify Outstanding Attachments\nUnder IEEPA, the President has broad powers to issue orders block\xc2\xad\ning or releasing Iranian assets.1 Pursuant to that power, the President\nissued Executive Order No. 12,170 on November 14, 1979, blocking all\nproperty subject to the jurisdiction of the United States in which the\ngovernment of Iran or any of its instrumentalities had an interest.\n3 C.F.R. 457 (1979). The order also delegated to the Secretary of the\nTreasury presidential authority under IEEPA to implement the block\xc2\xad\ning order. On the same day, the Treasury Department issued the first of\nits Iranian Assets Control Regulations (IACR), which provided in part\n(31 C.F.R. \xc2\xa7 535.203(e)):\nUnless licensed or authorized pursuant to this part any\nattachment, judgment, decree, lien, execution, garnish\xc2\xad\nment, or other judicial process is null and void with\nrespect to any property in which on or since the effective\ndate there existed an interest of Iran.\nOn November 19, 1979, \xc2\xa7 535.805 was added, providing that any li\xc2\xad\ncenses or authorizations \xe2\x80\x9cmay be amended, modified or revoked at any\ntime.\xe2\x80\x9d A limited modification to the general ban on unlicensed judicial\nproceedings was made subsequently on November 23, 1979, with the\nadoption of \xc2\xa7 535.504, which authorized judicial proceedings but con\xc2\xad\ntinued the ban on judgments and payments from blocked accounts. And\nfinally, on December 18, 1979, an interpretive rule was added to clarify\nthe permissible scope of judicial action (\xc2\xa7 535.418 (1980)):\n\'T h e IE E P A \xe2\x80\x99s principal operative provision, \xc2\xa7 1702(a)(1), provides that the President may:\n(A) investigate, regulate o r prohibit\xe2\x80\x94\n(i) any transactions in foreign exchange,\n(ii) transfers of credit or paym ents betw een, by, through, or to any banking\ninstitution, to the extent that such transfers or paym ents involve any interest of any\nforeign country or a national thereof,\n(iii) the im porting or exporting of currency or securities; and\n(B) investigate, regulate, direct and com pel, nullify, void, prevent or prohibit, any\nacquisition, holding, w ithholding, use, transfer, w ithdraw al, transportation, importation\nor exportation of, or dealing in, or exercising any right, pow er, or privilege with\nrespect to, or transactions involving, any property in w hich any foreign country or a\nnational thereof has any interest. . . .\n\n274\n\n\x0cThe general authorization for judicial proceedings con\xc2\xad\ntained in \xc2\xa7 535.504(a) includes pre-judgment attachment.\nHowever, \xc2\xa7 535.504(a) does not authorize payment or de\xc2\xad\nlivery of any blocked property to any court, marshal,\nsheriff, or similar entity, and any such transfer or blocked\nproperty is prohibited without a specific license. It would\nnot be consistent with licensing policy to issue such a\nlicense.\nAll of the attachment orders entered against the Iranian assets held\nby the Federal Reserve Bank exist pursuant to Treasury\xe2\x80\x99s general\nlicense. In order to effect Iran\xe2\x80\x99s withdrawal of the assets in the FRB,\nwe believe the President has the power to nullify the licensed attach\xc2\xad\nments by revoking the existing general licenses for attachments.\nWhile there is no case law addressing the President\xe2\x80\x99s power under\nIEEPA to nullify attachments issued under a licensing scheme such as\nthe one presently in effect under the IACR, we believe that Orvis v.\nBrownell, 345 U.S. 183 (1953), provides strong support for the general\nprinciple that the President may, under IEEPA, condition his consent\nto the creation of property interests in blocked property and, by invok\xc2\xad\ning those conditions, nullify such property rights. In Orvis, claimants in\na New York court attached a credit, previously frozen by executive\norder, which had been owed to Japanese nationals by a stock associa\xc2\xad\ntion. The claimants obtained a judgment and, as required by regulation,\napplied for a federal license to permit the stock association to pay over\nthe amount in judgment. The application was denied, and the Custodian\nvested the credit and received payment from the stock association. The\njudgment creditors, asserting that they had a right to the funds, filed an\naction under \xc2\xa7 9(a) of the Trading with the Enemy Act, after the\nCustodian denied their notice of claim to those funds.\nThe Supreme Court, in rejecting the judgment creditors\xe2\x80\x99 \xc2\xa7 9(a) claim,\nnoted that the government had consented to the unlicensed attachment\nof the funds for the limited purpose of determining the rights and\nliabilities between the creditors and the enemy debtors.2 The Court\n2 Prior to the attachm ent in Orvis, Treasury had issued a general ruling that any unlicensed transfers,\nincluding attachm ents, w ere null and void. D epartm ent of Treasury Ruling No. 12, \xc2\xa7 131.12, 7 Fed.\nReg. 2991 (1942). Paragraph 4 of the ruling, however, recognized unlicensed transfers, including\nattachm ents, as valid and enforceable for the purpose of determ ining the rights and liabilities o f the\nparties to the action. One day after the issuance o f the ruling. T reasury announced its position with\nrespect to unlicensed attachm ents in an amicus curiae brief in the N ew York C ourt of Appeals, stating\nthat unlicensed attachm ents w ere desirable to clarify the rights and liabilities o f private parties. Brief\no f the United States as amicus curiae at 52, 53 Commission for Polish Relief v. Banca Nationala a\nRumaniei, 288 N.Y. 332, 43 N .E. 2d 345 (1942), quoted in Zittman v. McGrath, 341 U.S. 446, 454-57\n(1951) (Zittman I). Nine years later in Zittman 1, the C ourt relied on T reasury\xe2\x80\x99s adm inistrative practice\nand interpretation of Ruling No. 12 to deny Treasury\'s request that an attachm ent obtained in state\ncourt against blocked G erm an bank accounts be declared null and void and decided that the attach*\nment was valid betw een the private parties to the action. A ccordingly, the C ourt held that an order of\nthe Custodian vesting the \xe2\x80\x9cright, title and interest\xe2\x80\x9d of the G erm an banks placed the Custodian in the\nshoes of the G erm an banks and, therefore, subject to the attachm ent. In a com panion case, Zittman v.\nContinued\n\n275\n\n\x0cheld, nonetheless, that the government\xe2\x80\x99s permission to attach the credit\nin state court proceedings created no property interest that could be\nasserted against the government because the government had reserved\nthe right to withhold licenses for judgment. The Court reasoned that\nthe government\xe2\x80\x99s initial consent to proceed with state court\nattachments\ndid not extend so far as to recognize them as effecting a\ntransfer. To so interpret it would ignore the express condi\xc2\xad\ntions on which the consent was extended. Realistically, these\nreservations deprive the assent of much substance; but\nthat should have been apparent on its face to those who\nchose to litigate. The opportunity to settle their accounts\nwith the enemy debtor was all that the permission to\nattach granted.\nId. at 187 (emphasis added).\nThree important principles emerge from a careful analysis of Orvis.\nFirst, the President has the power under IE E PA 3 to prevent the cre\xc2\xad\nation of property interests in blocked alien property. Second, this\npower includes the power to reserve the right to withdraw any consent\nhe may give to the creation of property rights or to condition the\nexercise of any property right created pursuant to his consent. Third,\nthis power to reserve the right to withdraw consent or condition the\nexercise of property rights is paramount and supersedes any rights\ncreditors may acquire under state law.\nApplication of these principles to the release of Iranian assets held by\nthe FRB leads to the conclusion that the President has the power under\nIEEPA to nullify the attachments against those assets. Treasury, as the\nPresident\xe2\x80\x99s delegee, has consented to attachments against the blocked\nIranian assets. 31 C.F.R. \xc2\xa7 535.504 and 535.418. In giving its consent,\nTreasury reserved two crucial rights. Treasury withheld its consent to\nMcGrath, 341 U.S. 471 (1951) (Zittman II), the C ourt held that the Custodian\xe2\x80\x99s order, w ithout such\n\nrestrictive language, directing that certain G erm an bank accounts previously attached by creditors be\nturned over was valid. Since the Custodian had sought only possession of the funds and, unlike\nZittman I, had not asked for a judgm ent declaring the attachm ents to be invalid, the C ourt addressed\nonly the question w hether the Custodian had the pow er to possess and adm inister those funds. The\nCourt expressly reserved the question w hether the state court judgm ents and attachm ents w ould have\nany conclusive effect on the final disposition of the accounts. Id. at 474. T hat question was decided in\nthe negative tw o years later in Orvis.\n3T he case law under the Trading w ith the Enem y A ct as amended in 1941, is fully applicable to\nour analysis o f the President\'s authority under its successor statute, IEE PA . As the legislative history\no f IE E P A notes, the \xe2\x80\x9cgrant o f authorities [in IE E P A ] basically parallels section 5(b) of the Trading\nwith the Enem y A ct.\xe2\x80\x99\xe2\x80\x99 H. R. Rep. No. 459, 95th Cong., 1st Sess. at 14-15 (1977). Indeed, because the\nblocking order in Orvis was issued prior to the 1941 am endm ents to the Trading w ith the Enem y A ct,\nwhich added inter alia the pow ers to nullify o r void any interest in alien property, it could be strongly\nargued that the President\xe2\x80\x99s pow ers to nullify or void the attachm ents against the locked assets are even\ngreater than the pow ers o f the President w hen the Orvis blocking order was issued. N ot only does the\nPresident have the pow er recognized in Orvis to condition the creation of property interests and to\nnullify said interests by invoking the stated conditions; he arguably also has the pow er to nullify or\nvoid any interest in blocked property even in the absence o f any stated conditions or reservations. The\nexercise o f that pow er, how ever, may raise a substantial \xe2\x80\x9ctakings\xe2\x80\x9d question under the Fifth\nAmendm ent.\n\n276\n\n\x0cjudgment, a reservation which Orvis regarded as permitting the govern\xc2\xad\nment to nullify any attachments vis-a-vis itself. Treasury also reserved\nthe right to revoke its consent to attach at any time. 31 C.F.R.\n\xc2\xa7 535.805.4 Thus, the government reserved not only the right to nullify\nattachments vis-a-vis the government, but also the right to nullify them\ntotally.5 This latter reservation was critical in order to ensure that the\nPresident would have maximum flexibility in negotiating with Iran for\nthe release of the hostages. Because the license to attach was subject to\nthese reservations, the attaching creditors in initiating attachments pro\xc2\xad\nceedings assumed the risk that the license to attach would be with\xc2\xad\ndrawn at any time. But, like the attachment creditors in Orvis, that risk\n\xe2\x80\x9cshould have been apparent on its face to those who chose to litigate.\xe2\x80\x9d\n345 U.S. at 187. .\nII. Judicial Dissolution of Attachment Orders\n\nWe have concluded that the President has authority under IEEPA to\nprevent the continuing assertion of interests in Iranian property through\nthe provisional remedy of attachment. The President may exercise that\nauthority by issuing an order prescribing that attachments shall create\nno interests in Iranian property. Moreover, with respect to any pending\nlitigation involving Iranian property already subject to attachment but\nnot yet subject to a licensed final judgment, the President may provide\n(1) that the plaintiff shall no longer enjoy provisional rights in the\nproperty through attachment, and (2) that the garnishee may lawfully\ntransfer the property notwithstanding the plaintiffs attempt to secure it\npending final judgment.\nWe now come to a procedural issue. If the President promulgates an\norder that (1) prevents the continued assertion of provisional rights\nthrough pending attachment orders and (2) authorizes garnishees to\ntransfer Iranian property notwithstanding attempts to secure it through\nattachment, may garnishees assume that the President\xe2\x80\x99s action, if in\xc2\xad\ntended to do so, leaves them legally free to proceed directly with any\nauthorized transfer, or must the garnishees apply first to the appropriate\ncourt or courts for orders formally vacating the attachments?\nIn ordinary circumstances, the general interest in preserving orderly\njudicial process would militate strongly in favor of the latter course.\nProcedures are provided by law for the modification or dissolution of\ncourt orders that stand in need of modification or dissolution because of\n4 In \xc2\xa7 535.503, Treasury also reserved the right lo exclude any person from ihe operation of any\nlicense or \xe2\x80\x9cto restrict the applicability [of any license] with respect to particular persons, transactions\nor property or classes thereof.\xe2\x80\x99* Thus, Treasury reserved the right not only to revoke all licenses for\nattachm ents, but also to revoke selectively particular classes of licenses, e.g.. all general licenses for\nattachm ents against blocked assests held by the Federal Reserve Bank.\n5 Because o f the reservation o f the right to revoke these attachm ents, it is clear that they can be\nrevoked under IEEPA without giving rise to a successful takings claim. See. e.g.. Bridge Co. v. United\nStates, 105 U.S. 470 (1881); United States v. Fuller. 409 U.S. 488 (1973).\n\n277\n\n\x0cchanged circumstances. Such procedures are available here. See N.Y.\nCiv. Prac. Law \xc2\xa7 6223 (McKinney 1980). Ordinarily, these procedures\nprovide an adequate means of obtaining relief from court orders that\nhave been rendered void or unenforceable by a change in law. See\ngenerally Pasadena City Board of Education v. Spangler, A ll U.S. 424\n(1976). Moreover, from a purely pragmatic standpoint, the use of these\nprocedures in the present case would avoid the two risks presented by\nthe alternative course\xe2\x80\x94namely, (1) the risk that action in defiance of an\nundissolved attachment order will be regarded as contumacious and\npunishable as contempt, and (2) the risk the courts may yet hold the\nattachments lawful and the garnishee liable civilly for any damages\nsuffered by the plaintiffs in consequence of violation of the attachment\norders.6 We will assess both of those risks below.\nA. Contempt\nOur research to date has revealed only one decision by the Supreme\nCourt dealing with the precise question presented here. See Pennsylva\xc2\xad\nnia v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421 (1855). In\nWheeling the Court was asked to decide whether certain individuals\nshould be held in contempt of an order that the Court itself had issued\nenjoining construction of a bridge over the Ohio River. Congress had\nsubsequently enacted a statute declaring that this bridge was a lawful\nstructure. The defendants, in reliance upon that Act, had proceeded\nwith construction of the bridge without first applying to the Court for\ndissolution of the outstanding injunction. On the motion for contempt,\nthe Court held that the Act of Congress was valid, that the previous\ninjunction could not be enforced in futuro, that the motion for con\xc2\xad\ntempt was addressed to the discretion of the Court, and that under all\nthe circumstances of the case the motion should be denied.\nWheeling does not hold that a court is powerless to punish defiance\nof an outstanding court order that has been rendered unenforceable by\nsubsequent legislation. Indeed, the implication of the decision is to the\ncontrary; and in that respect the decision is fully consistent with the\nsettled rule, applicable in a different context, that the contempt power\nmay be used to punish noncompliance with court orders that are erro\xc2\xad\nneous or unlawful at the time they are issued. See United States v.\nUnited Mine Workers of America, 330 U.S. 258 (1947); Walker v. City of\nBirmingham, 388 U.S. 307 (1967). The Supreme Court has deemed this\nto be a necessary rule, given the need for a means of enforcing compli\xc2\xad\nance with orderly process. The courts must be able to ensure that\naggrieved litigants will appeal erroneous orders and not resort to self\xc2\xad\n6It goes without saying that (he executive\xe2\x80\x99s belief in the legality of any given executive action in\nresponse to the hostage crisis will not in itself prevent a court from deciding that the action is or was\nunlawful. If the underlying issue is justiciable and can be brought before a court with jurisdiction to\ndecide it, there is always the risk that the court will rule against the G overnm ent.\n\n278\n\n\x0chelp. Nonetheless, it is our view that Wheeling does stand for the\nproposition that the usual considerations supporting the rule of compli\xc2\xad\nance do not justify a contempt citation where the conduct in question\nhas been clearly mandated or authorized by subsequent legislation.7 To\nbe sure, the rule of compliance is not suspended by any and every\nchange in circumstance, see Spangler, supra; but Wheeling suggests that\nit may be suspended by a clear and specific change in law.\nIn our opinion, the case at hand is an appealing case for application\nof the Wheeling rule. It is more appealing than was Wheeling itself. The\nbuilders of the bridge over the Ohio could have easily applied for\ndissolution of the injunction before resuming their work; yet the Court\nthought it inappropriate to hold them in contempt for boldly proceed\xc2\xad\ning in the face of the outstanding order. This result cut against the\ntraditional policy. The demand for compliance with orderly process has\ngenerally rested upon the assumption that existing procedures for the\nmodification or correction of outstanding orders will be adequate to the\nexigencies of the case, that they will fully vindicate the rights in\nquestion, and that individuals can therefore be expected to comply with\nthem without resorting to self-help. At the same time, the courts have\nrecognized that in unusual cases the usual procedures may be inad\xc2\xad\nequate; and in these cases the courts have been willing to countenance\nrefractory conduct that would be held contumacious in other contexts.\nFor example, where the rights of an individual would be wholly lost by\ncomplying with an outstanding order, his refusal to comply with it\npending appeal is not punishable as contempt. There is no justification\nfor requiring aggrieved litigants to comply with procedures that defeat\nthe right at issue. See United States v. Dickinson, 465 F.2d 496, 511-12\n(5th Cir. 1972), citing Walker v. City of Birmingham, supra, Malloy v.\nHogan, 378 U.S. 1 (1964), Gelbard v. United States, 408 U.S. 41 (1972).\nAs we have said, Congress has given the President emergency power\nto nullify these attachments and to authorize transfer of the attached\nproperty. The President may attempt to use that power to resolve the\nhostage crisis. If, however, the government and the banks, to imple\xc2\xad\nment his order, must first pursue the usual judicial procedure for modi\xc2\xad\nfication of outstanding attachments (a procedure involving motions,\narguments, further litigation, and inevitable delay), then the President\nmay be unable to use his power effectively to achieve the purpose\nauthorized by Congress. If settlement of the crisis requires expedition\nand certainty, not uncertainty and the law\xe2\x80\x99s delay, we believe it would\nbe an abuse of discretion for a court to use the contempt power to\npenalize noncompliance with an attachment order that has been ren7 We do not believe our reliance on Wheeling is undercut by the evident distinction betw een\nsupervening congressional action and supervening executive action taken under authority conferred by\na preexisting statute (IE E PA ). We believe that the assertion o f supervening pow er under IE E P A\nwould be entitled to as much respect by the judicial branch as supervening action by Congress.\n\n279\n\n\x0cdered unenforceable by lawful action under IEEPA. Continuing\ncompliance with the order, followed by a motion for dissolution, argu\xc2\xad\nment, and further litigation, would defeat the emergency power that\nCongress has sought to create.\nFinally, we observe that IEEPA itself provides that \xe2\x80\x9c[n]o person\nshall be held liable in any court for or with respect to anything done or\nomitted in good faith in connection with the administration of, or\npursuant to and in reliance on, this [Act], or any regulation, instruction,\nor direction issued under this [Act].\xe2\x80\x9d 50 U.S.C. \xc2\xa7 1702(a)(3). Without\nexpressing any view regarding the general question of the power of\nCongress to deprive the courts of a means of enforcing compliance\nwith their own process, we are of the opinion that, in the face of this\nexpression of congressional intent, the use of the contempt power to\npunish necessary and otherwise lawful action under IEEPA would be\nan abuse of discretion, and, therefore, unlikely. We have found one\nstate court case, involving the Trading with the Enemy Act and the\nFederal Reserve Bank of New York, that supports this conclusion. See\nVon Opel v. Von Opel, 154 N.Y.S. 2d 616 (Sup. Ct. 1956). We have\nfound no decision to the contrary.\nB. Civil Liability\nThe second risk of proceeding in the face of outstanding attachment\norders is the risk of civil liability. If the attached funds are released\nbefore the courts have determined that the President has power to\nnullify the attachments, the United States, the Federal Reserve Bank or\nboth will almost certainly be asked to account to the creditors for any\ndamages they sustain as a result of the release. If the courts ultimately\ndecide (1) that IEEPA does not authorize the President to nullify these\nattachments and (2) that the attachments are otherwise valid under the\nForeign Sovereign Immunities Act (FSIA), the question will arise\nwhether the courts can go further and hold either the United States or\nthe Federal Reserve Bank accountable to the attachment creditors for\nloss of the pre-judgment security.\nWe have several observations to make on this point. We shall discuss,\nfirst, the potential liability of the Federal Reserve Bank and, second,\nthe potential liability of the United States.\n1. Liability of Federal Reserve Bank\nAs a matter of practice, the Federal Reserve Bank of New York has\nnot resisted the attempts of domestic creditors to attach foreign funds\non deposit with that Bank. See, e.g., National American Corp. v. Federal\nRepublic of Nigeria, 448 F. Supp. 622 (S.D.N.Y. 1978). Whether this\npractice is necessary, we do not know. It is obviously in harmony with\nthe interests of domestic creditors, including the member banks of the\n280\n\n\x0cNew York district. As you may know, these banks elect a majority of\nthe directors of the Board of Directors of the Reserve Bank.\nUnder New York law the garnishee of a valid attachment order is\naccountable to the attachment creditor for any losses sustained by the\ncreditor as a result of release of the attached property in violation of\nthe order. See Fitchburg Yarn Co. v. Wall & Co., 361 N.Y.S.2d 170\n(App. Div. 1974). Whether this rule, or an analogous federal rule, will\nbe enforced against the garnishee of a federal attachment order issued\nby a district court in New York under Rule 64 of the Rules of Civil\nProcedure, we cannot say. We have found no case on point. We can\nsay, however, that if federal law (Rule 64) permits a third party to be\nsubjected to garnishment in the first instance, it is a small thing to\nconclude that the third party may then be held to account for any\nviolation of his duty as garnishee. The imposition of the duty implies a\nremedy for its breach. Again, we have not found a case on point; but\nwe know of no reason why, as a general proposition, the garnishee of a\nfederal attachment order issued under Rule 64 of the Rules of Civil\nProcedure cannot be subjected to civil liability for violation of the\norder.\nWhat is the rule where the garnishee is a Federal Reserve Bank?\nFederal Reserve Banks are the tools of the Federal Reserve System,\nbut they are corporate entities, they are owned by their shareholders,\nand they can \xe2\x80\x9csue and be sued.\xe2\x80\x9d The relevant statutes and the case law\ncontain no hint that they enjoy general immunity from suit or liability\nfor the wrongs they commit in the conduct of their business. Indeed,\nthe relevant jurisdictional statute assumes that they can and will be\nsubject (in federal court) to \xe2\x80\x9csuits of a civil nature at common law or in\nequity.\xe2\x80\x9d See 12 U.S.C. \xc2\xa7 632. This statute grants them a special immu\xc2\xad\nnity from prejudgment remedies in cases in which they themselves are\nparties defendant, but it does not provide them with immunity from\nexecution on final judgment. Moreover, the shareholders of Federal\nReserve Banks (the private \xe2\x80\x9cmember\xe2\x80\x9d banks of the Federal Reserve\nSystem) are, by statute, responsible \xe2\x80\x9cindividually\xe2\x80\x9d for all the \xe2\x80\x9ccontracts,\ndebts and engagements\xe2\x80\x9d of the Reserve Banks. See 12 U.S.C. \xc2\xa7 502\n(emphasis added). If a private national bank can be held civilly liable\nfor wrongful release of attached funds, we find no clear indication that\na Federal Reserve Bank can or should be accorded a different treat\xc2\xad\nment.\nWe have expressed the view that a presidential order nullifying these\nattachments would be lawful. We think the Federal Reserve Bank\ncould not incur liability to any attachment creditor for making a trans\xc2\xad\nfer that is authorized by a lawful presidential order. Moreover, there is\n\n281\n\n\x0ca serious question whether these attachments are valid in any event.8 If\nthe attachments are invalid, then as a matter of general law the gar\xc2\xad\nnishee can incur no liability to the attachment-creditors for transferring\nthe attached funds. See, e.g., United Collieries v. Martin, 248 Ky. 808, 60\nS.W. 2d 125 (1933); Smith, Thorndike & Brown Co. v. Mutual Fire Ins.\nCo., 110 Wis. 602, 86 N.W. 241 (1901); Henkel v. Bi-Metallic Bank, 13\nColo. App. 410, 58 P. 336 (1899). Finally, even if the attachments are\nvalid and even if they cannot be revoked under IEEPA, it is clear that\nthe attachment creditors will sustain actual damage from a present\ntransfer of the attached funds only if (1) their underlying claims are\ngood on the merits, (2) their claims are not extinguished by a claims\nsettlement,9 (3) their claims can be reduced to final judgment, and\n(4) the relevant law, including FSIA, would permit those judgments to\nbe paid out of the attached funds. With regard to the last point, we\nnote that the present IEEPA regulations prevent any final judgment\nfrom being paid out of this property. Our view is that the creditors will\nbe unable to demonstrate that they have been damaged by any transfer\nof the attached property unless they can show that this prohibition\nagainst the payment of final judgments could not lawfully be sustained\nin the future to bar the perfection (through execution on final judg\xc2\xad\nment) of the mere provisional interests now being asserted in this\nproperty through attachment.\nIn all, there are so many contingencies standing in the way of\ngarnishee liability in this case that it is difficult to make a realistic\nassessment of the actual risk. At the same time, given the amount of\nmoney in question, it is obvious that any risk of liability militates\nstrongly in favor of a conservative approach to the transfer question, all\nother things being equal. This brings us to our final point.\nCongress knew that any significant presidential action under IEEPA\nwould upset existing legal relations, and give rise to claims and counter\xc2\xad\n8 Invoking a creative legal theory in his interpretation of FSIA , Judge D uffy has recently held that\nthese attachm ents are not barred by FSIA and are otherw ise valid. We disagree w ith the holding.\nFSIA provides that the assets of a foreign governm ent are immune from prejudgm ent attachm ent\nunless the foreign governm ent explicitly waives its immunity. 28 U.S.C. \xc2\xa7 1610(d). This statutory\nimm unity is subject to existing international agreem ents. 28 U.S.C. \xc2\xa7 1609. O ne district court has held\nthat w hile there has been no explicit w aiver o f imm unity by Iran, the T reaty o f Amity betw een Iran\nand the United States, w hich pre-dated FSIA , w aived immunity from attachm ent w ith respect to\nm ilitary property. Behring International, Inc. v. Imperial Iranian Air Force, 475 F. Supp. 383 (D .N .J.\n1979). FSIA provides that the assets of a foreign central bank are immune from attachm ent and\nexecution unless the bank or its parent foreign governm ent explicitly waives immunity. 28 U.S.C.\n\xc2\xa7 1611(b)(1). As yet, there are no published opinions addressing the immunity of foreign central banks\nfrom attachm ent under FSIA . T w o district courts have held, how ever, that FSIA renders the assets of\nthe governm ent o f Iran immune from attachm ent because Iran has not w aived immunity from\nattachm ent. See Reading & Bates Corp. v. National Iranian Oil, 478 F. Supp. 724 (S.D.N.Y. 1979) and\nE-Systems, Inc. v. Islamic Republic o f Iran, 491 F. Supp. 1294, (N .D . Tex. 1980).\n9 W e do not think that the acquisition o f a provisional interest in foreign property through\nattachm ent immunizes the underlying claim from the governm ent\'s pow er to settle that claim as part\no f an overall claims settlement. T he provisional interest is only as good as the underlying claim. It dies\nif the claim dies. T he pow er o f the governm ent to extinguish claims through settlement is clear. See\nM em orandum for the A ttorney G eneral dated Septem ber 16, 1980, \xe2\x80\x9c Presidential A uthority to Settle\nthe Iranian Crisis" [p. 248, supra\\\n\n282\n\n\x0cclaims among persons subject to the presidential order. Recognizing\nthat these persons might be reluctant to rely on the order for fear of\nliability, Congress took care to preserve in IEEPA the exculpatory\nprovision that had long been present in the Trading with the Enemy\nAct. We have referred to that provision above.\nWe know of no reason why this provision cannot be read for what it\nsays. In our opinion, it would exculpate a garnishee (a mere stake\xc2\xad\nholder) who has relied in good faith upon a lawful presidential order\nauthorizing release of attached funds under IEEPA. Would the excul\xc2\xad\npation be effective if the presidential action were ultimately held to be\nunlawful? The whole purpose of this provision is to resolve legal\ndoubts and to encourage persons to rely upon emergency presidential\naction under IEEPA wherever they can do so in good faith. That\npurpose would be wholly frustrated if the provision were read to\nexpose compliant individuals to liability for presidential mistakes. If\nindividual liability were to depend in the end on the legality of what\nthe President has done, no one with significant exposure would comply\nwillingly with any presidential order until all the legal questions pre\xc2\xad\nsented by the action had been definitively resolved. In our opinion,\nCongress has undertaken to prevent that impasse. Congress has immu\xc2\xad\nnized good faith compliance with emergency orders under IEEPA\nwhether the orders are mistaken or not. We have found one district\ncourt opinion, Garvan v. Marconi Wireless Tele. Co., 275 F. 486 (D.N.J.\n1921), that supports this conclusion.\n2. Liability of the United States\nEither IEEPA authorizes nullification of these attachments, or it does\nnot. If it authorizes nullification, there is a possibility that the United\nStates may incur a constitutional liability as a result of nullification, i.e.,\na liability imposed by the Fifth Amendment, which requires the United\nStates to pay compensation when it \xe2\x80\x9ctakes\xe2\x80\x9d private property for public\nuse. That liability would provide a basis for an action by the creditors\nagainst the United States in the Court of Claims. We have expressed\nthe view, however, that nullification of these attachments under\nIEEPA will not constitute a taking of private property in the Fifth\nAmendment sense.\nParadoxically, if IEEPA does not authorize nullification, the risk of\nconstitutional liability is even smaller. As a general proposition, unau\xc2\xad\nthorized executive action that destroys or harms private interests in\nproperty does not subject the United States to liability for a taking\nunder the Fifth Amendment. See, e.g., Hooe v. United States, 218 U.S.\n322 (1910); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579\n(1952); 42 Op. Att\xe2\x80\x99y Gen. 441, 445-46. To be sure, unauthorized action\nmay be tortious, and it may subject the executive officer himself to\n283\n\n\x0cindividual liability; 10 but it generally does not give rise to a constitu\xc2\xad\ntional claim against the government itself.\nIs there any other basis for liability? The Federal Tort Claims Act is\na possibility. It makes the United States liable for \xe2\x80\x9ctort claims\xe2\x80\x9d arising\nfrom the wrongful acts or omissions of officers and employees of the\nUnited States in certain circumstances. See 28 U.S.C. \xc2\xa7 2674. But Con\xc2\xad\ngress has expressly excepted from the provisions of that Act \xe2\x80\x9c[a]ny\nclaim based upon an act or omission of an employee of the Govern\xc2\xad\nment, exercising due care, in the execution of a statute or regulation,\nwhether or not such statute or regulation be valid, or based upon the\nexercise or performance of the failure to exercise or perform a discre\xc2\xad\ntionary function or duty on the part of a federal agency or employee of\nthe government, whether or not the discretion involved be abused.\xe2\x80\x9d 28\nU.S.C. \xc2\xa7 2680(a). In our opinion, this express exception to the Tort\nClaims Act would be fully applicable in the case presented here,\nwhether or not the President\xe2\x80\x99s action is ultimately approved by the\ncourts.11\nAside from the question of tort claims, we think it very doubtful that\nany other statute\xe2\x80\x94IEEPA itself, Rule 64, the organic legislation estab\xc2\xad\nlishing the Federal Reserve Bank, etc.\xe2\x80\x94can be construed to grant a\nright of action against the United States in these circumstances. Such a\ngrant must be made with specificity. See United States v. Testan, 424\nU.S. 392, 400 (1976). Absent a contract or a claim for the return of\nmoney paid by the claimant to the government, there can be no private\nright to money damages in a suit against the United States unless, a\nfederal statute \xe2\x80\x9ccan fairly be interpreted as mandating compensation by\nthe Federal Government for the damage sustained.\xe2\x80\x9d Id. at 400, citing\nEastport S.S. Corp. v. United States, 372 F.2d 1002-09 (Ct. Cl. 1967).\nWe know of no federal statute that specifically grants a right of action\nagainst the United States for wrongful release of attached funds by a\nFederal Reserve Bank or \xe2\x80\x9cmandates\xe2\x80\x9d compensation by the United\nStates for the damages sustained by the attachment creditors.\nFinally, there is at least a theoretical possibility of liability based on\ncontract. It is clear, of course, that the United States can be held to\naccount in a Court of Claims for damages resulting from a breach of an\nexpress contract and a contract implied in fact. Over the years, creative\nlawyers have been able to exploit this potential liability by arguing\n10 W e believe that in this case, how ever, the executive officer would be relieved of liability by the\nexculpatory provision in IEE PA .\n11 T he Federal T ort Claims A ct has always contained a separate, express exception for claims\narising out of the adm inistration o f the T rading w ith the Enem y A ct. See 28 U.S.C. \xc2\xa7 2680(e). When\nCongress created IE E P A , lifting it from the Trading w ith the Enem y A ct, it neglected to amend this\nprovision to include IE E P A within the term s of the traditional exception. We think this was an\ninnocent oversight. W e find nothing in the relevant legislative history that suggests that Congress\nintended to subject the United States to liability for the mistakes made by officers and agencies o f the\nUnited States in the adm inistration o f IE E P A w hile preserving sovereign immunity w ith respect to\nmistakes made under the identical provisions o f the T rading w ith the Enem y A ct. In any case, the\ngeneral exception contained in 28 U.S.C. \xc2\xa7 2680(a) applies to action under IE E P A , in our view.\n\n284\n\n\x0cwhere all else fails that their claims rest upon implied \xe2\x80\x9cpromises\xe2\x80\x9d of\none kind or another. We do not know what express or implied repre\xc2\xad\nsentations the Federal Reserve Bank or the organs of the government\nmay have made to the creditors in the present case, or what consider\xc2\xad\nation the creditors may have advanced in return; but we do know that\nthe government has formally and expressly represented from the very\nstart, in the blocking regulations themselves, that the authorization for\nthese attachments may be withdrawn, and the government has ex\xc2\xad\npressly declined to provide assurance that the attached funds will ever\nbe available to satisfy any final judgments. It seems to us that -these\nformal representations leave relatively little room for a successful claim\nthat the government has somehow promised to keep these funds secure\nfor the creditors\xe2\x80\x99 benefit. We do not know all the facts, but. we see little\nrisk of a successful contract claim against the government itself.\nJohn M . H arm on\n\nAssistant Attorney General\nOffice of Legal Counsel\n\n285\n\n\x0c'


b'Emergency Authority of the Secretary of Health and Human\nServices Under 42 U.S.C. \xc2\xa7 243(c)(2)\nU n d e r \xc2\xa7 311 o f th e P ublic H ealth S e rv ice A c t, 42 U .S .C . \xc2\xa7 243(c)(2), w h ic h au th o rizes the\nS e c re ta ry o f H ealth and H u m an S ervices, at the request o f th e a p p ro p ria te sta te o r\nlo cal a u th o rity , to ex ten d te m p o ra ry assistance to states and localities in m eeting health\nem erg en cies, th e P ublic H e a lth S e rv ice m ay p ro v id e relo catio n assistance to residents\nliv in g n ear th e L o v e C anal for a p erio d not to exceed 45 days, for p u rp o ses o f assessing\nan d d ealin g w ith th e h ealth e m e rg e n c y in th a t area.\n\nMay 17, 1980\nM EM ORANDUM OPINION FOR T H E ASSISTANT TO TH E\nPR ESID EN T FOR IN TER G O V ER N M EN TA L A FFAIRS\nThis responds to your request for our opinion whether the Secretary\nof Health and Human Services is authorized by 42 U.S.C. \xc2\xa7 243(c)(2) to\nassist state and local authorities in temporarily relocating certain resi\xc2\xad\ndents who now live near the Love Canal in Niagara Falls, New York,\nto cities removed from health hazards of the Canal.* In our opinion,\nthis section does give the Secretary that authority.\nThe section in question was enacted in 1967 as an addition to \xc2\xa7 311 of\nthe Public Health Service Act. Partnership for Health Amendments of\n1967, Pub. L. No. 90-174, \xc2\xa74, 81 Stat. 533, 536 (1967). As enacted, the\nstatute provided:\nThe Secretary may enter into agreements providing for\ncooperative planning between Public Health Service med\xc2\xad\nical facilities and community health facilities to cope with\nhealth problems resulting from disasters and for participa\xc2\xad\ntion by Public Health Service medical facilities in carry\xc2\xad\ning out such planning. He may also, at the request o f the\nappropriate State or local authority, extend temporary (not in\nexcess o f forty-five days) assistance to States or localities in\n\xe2\x80\xa2 N o t e : L ove C anal, an uncom pleted excavation originally designed to link the N iagara R iver and\nLake O ntario, was used as a chem ical dum psite betw een 1920 and 19S3. D uring the 1970\'s, homes\nbo rd erin g th e landfill began to smell o f chem icals, and residents o f the area w ere found to be suffering\nunusually high rates o f cancer, birth defects, and o th e r illnesses. In 1978, an investigation by the N ew\nY ork State D epartm ents o f H ealth and E nvironm ental C onservation led to the discovery that the\nlandfill was leaking dangerous chem ical com pounds, and the area w as declared by the State to be \xe2\x80\x9can\nextrem ely serious th reat to health and w elfare.\xe2\x80\x9d O n M ay 21, 1980, President C arter signed an\nem ergency o rd e r authorizing federal assistance in the tem porary relocation o f the 710 families w ho\nhad rem ained in the area. Ed.\n\n638\n\n\x0cmeeting health emergencies o f such a nature as to warrant\nFederal assistance. The Secretary may require such reim\xc2\xad\n\nbursement of the United States for aid (other than plan\xc2\xad\nning) under the preceding sentences of this subsection as\nhe may determine to be reasonable under the circum\xc2\xad\nstances. Any reimbursement so paid shall be credited to\nthe applicable appropriation of the Public Health Service\nfor the year in which such reimbursement is received.\nId. (Emphasis added). In 1976, the section was amended to authorize\n\nthe Secretary to develop and implement a plan to use resources of the\nPublic Health Service and other agencies under the Secretary\xe2\x80\x99s jurisdic\xc2\xad\ntion to control epidemics and to meet other health emergencies. Na\xc2\xad\ntional Consumer Health Information and Health Promotion Act of\n1976, Pub. L. No. 94-317, \xc2\xa7 202(b), 90 Stat. 695, 703 (1976). The 1976\namendment divided \xc2\xa7 243(c) into two parts. Section 243(c)(1) author\xc2\xad\nized the development and implementation of plans to meet emergencies\nor problems resulting from disasters or epidemics. Section 243(c)(2),\nwhich sets forth the Secretary\xe2\x80\x99s authority to extend assistance to states\nor localities in meeting health emergencies, is the section which grants\nthe authority about which you have inquired. This section now\nprovides:\nThe Secretary may, at the request of the appropriate\nState or local authority, extend temporary (not in excess\nof forty-five days) assistance to States or localities in\nmeeting health emergencies of such a nature as to warrant\nFederal assistance. The Secretary may require such reim\xc2\xad\nbursement of the United States for assistance provided\nunder this paragraph as he may determine to be reason\xc2\xad\nable under the circumstances. Any reimbursement so paid\nshall be credited to the applicable appropriation for the\nService for the year in which such reimbursement is re\xc2\xad\nceived.\nId. The 1976 amendment did not substantively change the Secretary\xe2\x80\x99s\n\nauthority respecting temporary health emergency assistance to states or\nlocalities.\nTo determine the scope of the Secretary\xe2\x80\x99s authority under this sec\xc2\xad\ntion, we have reviewed the legislative history of both the 1967 and the\n1976 Acts. This review yielded little guidance as to the meaning of the\noperative phrases in the statute, such as the 45-day limitation on assist\xc2\xad\nance. There is also little indication of the legislative intent as to what\nmay satisfy the requirement of a request from \xe2\x80\x9cthe appropriate State or\nlocal authority\xe2\x80\x9d or as to what type of health emergency was contem\xc2\xad\nplated. We found nothing in this review to indicate that the Secretary\n639\n\n\x0cmay not extend federal assistance for relocating Love Canal residents to\ntemporary housing.1\nThe 1967 amendment, which added the section authorizing the Secre\xc2\xad\ntary to act in health emergencies, was part of a lengthy bill which\nmodified the Public Health Service Act. The House Committee on\nInterstate and Foreign Commerce explained the new section as follows:\nThis section adds a new subsection (c) to section 311 of\nthe Public Health Service Act. Under this proposed new\nsubsection, the Secretary would be authorized to enter\ninto agreements providing for cooperative planning be\xc2\xad\ntween public health medical facilities and community\nhealth facilities to cope with health problems resulting\nfrom disasters, and for participation by Public Health\nService medical facilities in carrying out such planning.\nHe could also, at the request o f appropriate State or local\nauthority, extend temporary (not in excess o f 45 days) assist\xc2\xad\nance to States or localities in meeting health emergencies o f\nsuch a nature as to warrant Federal assistance. He could\n\nalso require such reimbursement of the United States for\naid (other than planning) received under this subsection as\nhe determines to be reasonable under the circumstances.\nAny such reimbursement would be credited to the appli\xc2\xad\ncable appropriation of the Public Health Service.2\nH.R. Rep. No. 538, 90th Cong., 1st Sess. 38 (1967) (emphasis added).\nThe reference to the new section in the Senate report indicates that the\nCongress intended the section to grant broad authority to the Secretary\nso that the Public Health Service could play an active role in delivering\ndisaster assistance services. In explaining this expanded role, the com\xc2\xad\nmittee wrote:\nUnder present statutory authority, the Public Health\nService may provide emergency care and treatment in its\nhospitals and outpatient facilities to persons who are not\nlegal beneficiaries of the Service, but the Service does not\nhave clear authority to provide such emergency care or\ntreatment outside of its own facilities. If Public Health\nService hospitals are to be responsible members of the\nmedical communities in which they are located, they must\nbe able to play a more active role in meeting such com\xc2\xad\nmunity emergency health needs as arise in the case of\nfloods, fires, and other disasters. The proposed new au\xc2\xad\n1 T h e re are no judicial decisions o r regulations interpreting this section.\n\n2 T h e S ecretary must determ ine w h e th er to require reim bursem ent from the state or locality. In\n1967, it was suggested to the com m ittee that the reim bursem ent be m andatory, but this suggestion was\nnot follow ed. See H .R . Rep. No. 538, 90th C ong., 1st Sess. 49 (1967).\n\n640\n\n\x0cthority would not create any direct Federal obligation to\nprovide such emergency assistance, but it would authorize\nPublic Health Service medical facilities to cooperate with\nother community agencies in the development and execu\xc2\xad\ntion of disaster assistance services.\nS. Rep. No. 724, 90th Cong., 1st Sess. 13 (1967). Although this refer\xc2\xad\nence could be read to suggest that the section authorizes only emer\xc2\xad\ngency assistance in the form of assistance by Public Health Service\nfacilities, we do not believe the section properly should be construed so\nnarrowly. In its section-by-section analysis, the committee noted that\n\xc2\xa7 4 authorized agreements for cooperative planning between public\nhealth medical facilities and community health facilities and that the\nSecretary could also extend temporary assistance to meet health emer\xc2\xad\ngencies. There is no limitation on the type of temporary assistance that\nmay be provided. See S. Rep. No. 724, 90th Cong., 1st Sess. 25 (1967).3\nMost of the discussion on the floor focused on other, more contro\xc2\xad\nversial sections of the bill. The few comments on \xc2\xa7 4 simply refer to the\nstrengthened role of the Public Health Service in assisting states and\nlocalities to cope with health emergencies and disasters. See, e.g., 113\nCong. Rec. 26,016 (1967) (Statement of Mr. Donohue). Hearings on the\nbill were held by the Senate Committee on Labor and Public Welfare.\nAs with the floor debates, the few comments on \xc2\xa7 4 at the hearings\nsummarily referred to the section as a clarification and strengthening of\nexisting authority for assistance to states and localities. See, e.g., Partner\xc2\xad\nship For Health Amendments o f 1967: Hearings on S. 1131 and H.R. 6418\nBefore the Subcomm. on Health o f the Sen. Comm, on Labor and Public\nWelfare, 90th Cong., 1st Sess. 62 (1967).\n\nThe 1976 amendment, as stated earlier, did not substantively modify\nthe Secretary\xe2\x80\x99s authority to assist during emergencies. The amendment\nto \xc2\xa7 4 appeared in the House bill. The committee simply paraphrased\nthe existing provision in its report, without shedding any light on the\nmeaning of the section. H.R. Rep. No. 1007, 94th Cong., 2d Sess. 30\n(1976).\nThe plain language of the statute authorizes the Secretary to provide\nthe assistance at the request of the appropriate state or local authority.\nThis request is a prerequisite to the provision of any assistance. The\nSecretary must determine whether the authority requesting the aid is\nthe appropriate authority.4 The Secretary must determine whether the\ncircumstance is a health emergency of such a nature as to warrant\n3 A conference com m ittee was convened to resolve differences on o ther portions o f the bill. T h e\nconference report does not discuss this section. H .R. Rep. No. 974, 90th C ong., 1st Sess. (1967).\n4 A lthoug h the A ct states that "the" state o r local authority may make the request, w e d o not think\nthis m eans that there is only one official so authorized. In the absence o f regulations, the Secretary\nmust determ ine in each circum stance w h eth er the request com es from an appropriate authority.\n\n641\n\n\x0cfederal assistance.5 Once the Secretary makes this determination, tem\xc2\xad\nporary federal assistance may be provided for a period of 45 days. The\nlegislative sources cited above do not reveal the purpose of the 45-day\nlimitation. Because the purpose of the section is to authorize temporary\nassistance to states and localities, it may be inferred that the provision\nwas added to prevent prolonged federal involvement. Financial com\xc2\xad\nmitments may not be made beyond the 45-day period. If the financial\ncommitments are made within the 45-day period, and if they are in\xc2\xad\ntended to provide \xe2\x80\x9ctemporary\xe2\x80\x9d aid, we believe the section allows the\nbenefits of the commitments to extend beyond the 45 days.\nFinally, based upon our review of the statute and its legislative\nhistory, as discussed above, at least in the circumstances as you have\ndescribed them in the case, the Public Health Service is authorized to\nprovide temporary relocation assistance. Any removal of families, and\ntheir temporary relocation in other housing, will be for purposes\nclosely related to assessing and dealing with the health emergency.\nCongress intended to confer on the Secretary of Health and Human\nServices authority broad enough to respond as contemplated here.\nL a r r y A. H am m ond\n\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n8 W e h ave been advised by th e G eneral C ounsel\'s O ffice o f the D epartm ent o f H ealth and H um an\nServices that a standard internal operating pro ced u re requires that the Surgeon G eneral determ ine that\nthere is indeed a \xe2\x80\x9c health em ergency.*\xe2\x80\x99 T h e statu te itself does not require this procedure, and the\nprocess is not set forth in the Public H ealth S ervice\'s regulations.\n\n642\n\n\x0c'


b"February 9, 1978\n\n78-8\n\nMEMORANDUM FOR THE GENERAL\nCOUNSEL, NATIONAL ENDOWMENT FOR\nTHE HUMANITIES\nArts and Artifacts Indemnity Act (20 U.S.C.\n\xc2\xa7 972)\xe2\x80\x94 Statutory Limits\xe2\x80\x94 Dresden Exhibit\n\nThis responds to your request for our opinion concerning a disputed\ninterpretation o f the Arts and Artifacts Indemnity Act, 20 U .S.C . \xc2\xa7\xc2\xa7 971-977\n(1975 Supp.).\nThe Act provides for indemnification by the United States against loss or\ndamage to certain works o f art, artifacts, printed materials, and audio and video\nrecorded materials made available for exhibit in the United States. Indemnifica\xc2\xad\ntion agreements under the Act are negotiated and entered into by the Federal\nCouncil on the Arts and Humanities on behalf of.the United States. 20 U .S.C .\n\xc2\xa7 972. Limits on the amounts of indemnity are set forth in 20 U .S.C.\n\xc2\xa7 974(b)-(d), which reads as follows:\n(b) The aggregate o f loss or damage covered by indemnity\nagreements made under this chapter shall not exceed $250,000,000 at\nany one time.\n(c) No indemnity agreement for a single exhibition shall cover loss\nor damage in excess o f $50,000,000.\n(d) Coverage under this chapter shall only extend to loss or\ndamage in excess o f the first $15,000 of loss or damage resulting\nfrom a single exhibition.\nThe Council proposes to indemnify a planned East German exhibit called\n\xe2\x80\x9c The Splendor o f D resden\xe2\x80\x9d as follows: the first $50 million of loss or damage\nto the objects in the exhibit is to be covered by indemnification; however, only\none-third of the total value of the porcelains and one-fourth o f the total value of\nthe panel paintings in the exhibit are to be included. The total value o f the\nporcelains and the panel paintings is well below the $50 million statutory limit.\nThe Council intends that the applicants, the National Gallery of Art and others,\nsupplement the indemnification agreement with commercial insurance that\nwould cover:\n34\n\n\x0ca. Claims for loss or damage over and above $50 million, to a\nlimit o f $18 million;\nb. Claims for loss or damage to porcelains in excess of one-third\nof the aggregate value thereof; and\nc. Claims for loss or damage to panel paintings in excess of\none-fourth o f the aggregate value thereof.\nAs we understand it, you believe that the Council lacks the statutory\nauthority to enter into the agreement as it now stands. You state that the\nporcelains and the panel paintings, if indemnified, must be covered for their\nfull values.1 In explaining the proposed agreement to illustrate your contention,\nyou argue that if the porcelains had a value of $3 million and all were\ndestroyed, the indemnity to be paid by the United States would be limited to $1\nmillion. In challenging the C ouncil\xe2\x80\x99s authority, you assert that Congress\nintended that the agreements, within the range of statutory indemnification\nlimits, must cover the full value of the items indemnified. Therefore, if the\nCouncil should adhere to its current offer to indemnify the porcelains for only\n$1 million, it could only include porcelains valued at $1 million. The result\nwould be that the applicants for indemnity would be obligated to secure\ninsurance on the remaining $2 million. Premiums on such a policy would be\nsubstantially higher than under the Council\xe2\x80\x99s proposal because the commercial\ninsurance carrier would be responsible for the full value o f the unindemnified\nporcelains, whereas in the Council\xe2\x80\x99s proposal the insurer would only be liable\nfor damages in excess of $1 million. Thus, the insurer would have a $1 million\nbuffer before its liability for loss attached.\nThe language o f the Act does not expressly deal with this problem, and as we\nunderstand it, you do not contend otherwise. However, an argument can be\nmade that 20 U .S.C . \xc2\xa7 974(a) (1975 Supp.) supports your position. The\nprovision states that:\nUpon receipt of an application meeting the requirements of\nsubsections (a) and (b) of section 973 of this title, the Council shall\nreview the estimated value of the items for which coverage by an\nindemnity agreement is sought. I f the Council agrees with such\nestimated value, fo r the purposes o f this chapter, the Council shall,\nafter approval of the application as provided in subsection (c) of\nsection 973 o f this title, make an indemnity agreement. [Emphasis\nadded.]\nArguably, based on the above language, when the Council agrees with the\nestimated value of particular items, the indemnification must be in the amount\nof that value. However, in our opinion, a fair reading o f the provision indicates\nthat its purpose was merely to specify the procedures required before an\nagreement could be made. The emphasized language only provides that the\n\n'Since these two classes o f item s are together valued at approxim ately $5 m illion, there is no\nproblem with the statutory $50 m illion limit per exhibition.\n\n35\n\n\x0cCouncil and the applicant, among other things, must agree on the value of the\ncovered items before the Council can enter into an indemnity agreement.\nYou find support for your view in the A ct\xe2\x80\x99s legislative history. The specific\nlanguage upon which you rely appears in S. Rept. No. 94-289, 94th C ong., 1st\nsess. 4 (1975), which reads as follows:\nThe amount o f the indemnity agreement is set by the Federal\nCouncil on the Arts and the Humanities after reviewing the value of\nthe items as set by the owner thereof. If the Council disagrees with\nthe value set by the ow ner, and the owner disagrees with the value set\nby the Council, no indemnity agreement shall be issued. It is\ncontemplated that the Council shall make liberal use of consultants,\nboth with regard to the valuation and estimation of the article to be\ncovered, and with regard to the packaging, transportation, and\nexhibition of that article.\nNowhere in the legislation is there found a definition o f loss. It is\nunderstood that a loss under the indemnity agreement covers partial\ndamage to covered articles as well as loss or complete destruction.\nShould a claim of loss be filed under the indemnity agreement\nwhere there is a complete loss\xe2\x80\x94 where the item has been totally\ndestroyed\xe2\x80\x94 the total amount shall be paid.\nAlmost identical language was used in H. Rept. No. 94-680, 94th C ong., 1st\nsess. 8 (1975).\nThe Department o f State and the National Gallery of Art both disagree with\nyour position. They are o f the opinion that the Council does have the authority\nto enter into the proposed agreement. The Department of State\xe2\x80\x99s argument,\nreferring to the excerpt from the committee reports, is as follows:\nWe note your reliance on certain language appearing in the\nCommittee Reports on this legislation as a basis for a different\nconclusion. This language, we believe, just as it does not debar\ninsuring, say, an 80 million dollar exhibit but limiting the amount of\nrecovery to 50 million dollars, likewise does not, in our view, debar\ninsuring three million dollars in value of porcelain objects but\nlimiting the amount o f recovery funder the indemnity agreement] to\none million dollars. We consider that the language in the Reports is to\nbe read along the lines put forward by Mr. Amory, General Counsel\no f the National Gallery o f Art, nam ely, that if the Council agrees to\ncover the full value of objects, then o f course if the objects are\ncompletely lost or destroyed, the total value should be paid. On the\nother hand, if the Council agrees to cover a three million dollar group\no f objects but limits itself to one million dollars in payments if the\nobjects are completely lost or destroyed, the one million dollars\nwould be the limit o f liability. In our view Congress, by the wording\nof the Reports, did not mean to preclude this result. (January 25,\n1978)\n36\n\n\x0cWe concur. The excerpt, as we see it, does not suggest that when the\nGovernment enters into an indemnification agreement it must do so for the full\nvalue of the covered items. Its last paragraph states that:\nShould a claim o f loss be file d under the indemnity agreement\nwhere there is a complete loss\xe2\x80\x94 where the item has been totally\ndestroyed\xe2\x80\x94 the total amount shall be paid . . . . [Emphasis added.]\nThis statement assumes that full payment for any total loss would be made\npursuant to the terms of the agreement when it so provided. It cannot be\nreasonably inferred from this that the amount of indemnification must always\nequal the value of the covered items.\nThe Department of State and the National Gallery, in asserting that the\nCouncil is empowered to enter into the proposed agreement, cite 20 U .S.C.\n\xc2\xa7 971(a)(2) (1975 Supp.) as authority. That section provides that the Council is\nauthorized to make indemnification agreements\non such terms and conditions as the Council shall prescribe, by\nregulation, in order to achieve the purposes of this chapter and,\nconsistent with such purposes, to protect the financial interest of the\nUnited States.\nPursuant to this provision the Council may set the terms and conditions of\nindemnification agreements. In the hearing on the Act, Senator Pell, one of its\nsponsors, stated:\nAs I see this legislation functioning, the Federal Government would,\nfor this purpose, become an agency under the Federal Government,\nwith the authority to hire personnel. I would expect that the staff itself\nwould be a very small one, whose initial function would simply be to\nissue the regulations necessary for implementation of the program.\nThe legislation has been broadly drafted to give the agency as wide a\nscope as possible within which to issue those regulations.2 [Emphasis\nadded.]\nIt would appear that, pursuant to \xc2\xa7 971(a)(2), the Council could, in the face\nof an unacceptable risk, refuse any indemnity coverage o f certain items. Such a\nprecaution would seem to be warranted in light of the Council\xe2\x80\x99s statutory duty\n\xe2\x80\x9c to protect the financial interest o f the United States.\xe2\x80\x9d Since the Council may\nrefuse indemnification, or indemnify for the full value of covered items, it\nfollows that its evaluation o f the risks of a particular situation can justify an\nintermediate position under a limited indemnification agreement. Section\n971(a)(2) provides that the Council is authorized to set such terms and\nconditions in indemnification agreements so as to achieve the purposes o f the\nAct. The Council\xe2\x80\x99s proposal would result in substantially lower insurance\npremiums than under your interpretation. The Senate and House Reports\xe2\x80\x99\n\n2A rts and A rtifacts Indem nity A ct: Joint H earing on S. 1800 Before the Special Subcom m ittee on\nA rts and H um anities o f the Senate Com m ittee on L abor and Public W elfare, and the Select\nSubcom m ittee on Education o f the H ouse Com m ittee on Education a n d Labor, 94th C o n g ., 1st\nsess. 36 (1975).\n\n37\n\n\x0cprimary theme is that the high cost o f insurance unduly impedes the desirable\npractice o f loaning and receiving artistic treasures. The Act was intended to\nmeet this problem. Thus, the Council\xe2\x80\x99s proposal would further the A ct\xe2\x80\x99s policy\no f alleviating the problems caused by high insurance rates. In addition, as the\nDepartment of State indicates, the Council\xe2\x80\x99s approach of indemnifying in\ncertain cases for less than the value o f the covered items\n. . . protects the 250 million dollar limitation on the obligational\nauthority from depletion and permits the stretching o f the 250 million\ndollar limitation to cover more foreign exhibits.\nFor these reasons we believe that the Council\xe2\x80\x99s authority to make the\ndisputed agreement is included in its broad powers under the Act.\nFinally, we think it noteworthy that the proposed agreement entails no\nrealistic possibility o f loss to any concerned party. The lender of the covered\nitems receives the same degree o f protection as it would under your proposal.\nThe Council and the applicants would actually benefit. The Council can\nencourage the exhibition o f valuable items, while limiting the exposure of the\nUnited States to an amount less than the item s\xe2\x80\x99 full value; and, the applicants\xe2\x80\x99\ninsurance costs would be reduced, thus enhancing the possibility that further\nexhibitions would result. M oreover, the public would also benefit by such a\nresult.\nFor the foregoing reasons it is our opinion that the Council is empowered to\nenter into the proposed indemnification agreement.\nL eon U lm an\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n38\n\n\x0c"


b'Presidential Authority to Direct the Chairman of the\nCouncil of Economic Advisers Not to Comply\nWith a Congressional Subpoena Seeking\nTestimony About Private Activities\nAlthough there has been a practical construction, extending back to the earliest days of this Republic,\nof the respective powers of the Congress and the Executive, under which the President may order his\nsubordinates in the Executive Branch to withhold information from the Congress when he deems\nsuch action to be in the public interest, it is difficult to justify application of this principle with\nrespect to a congressional subpoena seeking an official\xe2\x80\x99s testimony regarding his private activities\nprior to the time of his close official connection with the President.\n\nFebruary 19, 1952\n\nMEMORANDUM OPINION FOR THE ATTORNEY GENERAL\nThe question has been raised as to whether Mr. Leon R. Keyserling, Chairman\nof the Council of Economic Advisers, could be directed by the President not to\nappear and testify, in response to a subpoena issued by a subcommittee of a\ncommittee of the Senate, with respect to his political views and his expressions of\nthese views, through a period of time beginning several years before he was made\na member of the President\xe2\x80\x99s immediate official family after the enactment of the\nEmployment Act of 1946, Pub. L. No. 79-304, \xc2\xa7 4, 60 Stat. 23, 24, codified at 15\nU.S.C. \xc2\xa7 1023, which established the Council in the Executive Office of the\nPresident.\nThere are in general two theories on which such a refusal might be justified.\nMost frequently, support is found in the power of the President to hold information\nconfidential in the public interest. Another theory that has been suggested is that\nthe official subpoenaed cannot be spared from his conduct of the public business.\nThe latter ground would seem to be the most difficult to justify in the present\ncase. The only cited instance of its recognition that has been found occurred in\n1806, in a case where the Secretary of State, the Secretary of War, and the\nSecretary of the Navy had been summoned to appear in the United States Circuit\nCourt in New York. Declining to honor the subpoena, they wrote to the judges\npresiding at the trial that, in view of the state of public affairs, the President was\nunable to dispense with their services at that moment, and that it was uncertain\nwhether they would at any subsequent time be able to absent themselves from\ntheir official duties. In order not to prejudice the court in the exercise of its\nfunctions, however, they signified their willingness to give testimony by deposition. United States v. Smith, 27 F. Cas. 1192, 1194 (C.C.D.N.Y. 1806) (No.\n16,342). Conceivably, the assertion could be made that the President is unable to\nspare Mr. Keyserling at any time, now or in the indefinite future, to appear before\na congressional subcommittee, but it is questionable whether such a statement\n\n142\n\n\x0cPresidential Authority to Direct Non-Compliance With Congressional Subpoena\n\nwould be accepted without serious reservations, either by the public or by a court\nsitting in judgment on a possible prosecution for contempt of Congress.\nA more frequently used basis for the refusal of an official close to the President\nto obey a congressional subpoena exists in the well-established practice of the\nPresidents in their discretion to hold information of various types to be confidential in the public interest, and to decline to permit its divulgence outside of the\nExecutive Branch of the government.\nInstances of the practice may be adduced as far back as the administration of\nGeorge Washington. In 1796, for example, President Washington declined to\ncomply with a request of the House of Representatives to furnish it with a copy of\nthe instructions to ministers of the United States who had initiated a treaty with\nGreat Britain.\nIn 1803, in his famous opinion in Marbury v. Madison, Chief Justice Marshall\nrecognized the right of Attorney General Levi Lincoln, who had been Secretary of\nState as of the time of the transactions in question, to refrain from disclosing to the\ncourt information which had been communicated to him in confidence. 5 U.S.\n(1 Cranch) 137, 143\xe2\x80\x9344 (1803). In so doing, the Chief Justice recognized that\n\xe2\x80\x9c[t]he intimate political relation, subsisting between the president of the United\nStates and the heads of departments, necessarily renders any legal investigation of\nthe acts of one of those high officers peculiarly irksome, as well as delicate; and\nexcites some hesitation with respect to the propriety of entering into such investigation.\xe2\x80\x9d Id. at 169; see also Appeal of Hartranft, 85 Pa. 433, 443\xe2\x80\x9350 (1877).\nThere are more recent instances as well of the refusal of an official of the Executive Branch to appear and testify before courts or congressional committees in\nresponse to direction or subpoena.\nIn 1905, Attorney General Moody advised the Secretary of Commerce and\nLabor, who had been subpoenaed by a state court to appear and testify before it,\nthat he was not legally bound to obey the subpoena. Executive Departments\xe2\x80\x94\nOfficial Records\xe2\x80\x94Testimony, 25 Op. Att\xe2\x80\x99y Gen. 326 (1905).\nIn 1909, President Theodore Roosevelt instructed his Attorney General not to\nrespond to that portion of a Senate resolution which directed the latter to inform\nthe Senate as to why legal proceedings had not been instituted against the United\nStates Steel Corporation. In a strongly worded message to the Senate, the President declared that \xe2\x80\x9cI have instructed the Attorney-General not to respond to that\nportion of the resolution which calls for a statement of his reasons for nonaction. I\nhave done so because I do not conceive it to be within the authority of the Senate\nto give directions of this character to the head of an executive department, or to\ndemand from him reasons for his action. Heads of the executive departments are\nsubject to the Constitution, and to the laws passed by the Congress in pursuance of\nthe Constitution, and to the directions of the President of the United States, but to\nno other direction whatever.\xe2\x80\x9d 43 Cong. Rec. 528 (1909).\n\n143\n\n\x0cSupplemental Opinions of the Office of Legal Counsel in Volume 1\n\nIn 1944, the Director of the Federal Bureau of Investigation refused to answer\ncertain questions put to him by a congressional committee, and further declined to\nshow the committee a copy of the President\xe2\x80\x99s directive to him on which his refusal\nwas based. Study and Investigation of the Federal Communications Commission:\nHearings Before the Select Committee to Investigate the Federal Communications\nCommission, 70th Cong. pt. 2, at 2334, 2337 (1944). In the same investigation, a\ncongressional request for the appearance of several Army and Navy officers was\nrefused. Id. pt. 1, at 14, 21, 67\xe2\x80\x9368 (1943).\nIn 1948, the Secretary of Commerce refused to obey a House Resolution directing him to supply certain information relating to the loyalty of the head of a\nBureau in that Department. H.R. Doc. No. 80-625 (1948).\nThese instances, and many others, are evidence of a practical construction,\nextending back to the earliest days of this Republic, of the respective powers in\nthis field of the Congress and the Executive, under which the President may order\nhis subordinates in the Executive Branch to withhold information from the\nCongress when he deems such action to be in the public interest.\nIt is difficult, however, to justify the application of the principle with respect to\ninformation relating, as I understand it, mainly to Mr. Keyserling\xe2\x80\x99s private\nactivities prior to the time of his close official connection with the President.\nIn order to support application of the principle in this instance, it might be\nasserted that, because of Mr. Keyserling\xe2\x80\x99s current close official association with\nthe President, the risk of his disclosing confidential official information would be\npresent even though the questions themselves were directed to Mr. Keyserling\xe2\x80\x99s\nactivities before the time of his intimate association with the President. Alternatively, it might be urged that if the President feels, on whatever grounds seem to\nhim to be persuasive, that revelation of the information sought by the committee\nwould be prejudicial to the public interest even though the information itself is not\nin the category of public documents or \xe2\x80\x9cofficial\xe2\x80\x9d information, he would be\njustified in directing Mr. Keyserling not to appear before a congressional subcommittee for the purpose of supplying such information while Mr. Keyserling is\nin his immediate official service. Such a position would represent an extension of\nthe presidential prerogative beyond any precedent with which I am acquainted,\nand I am unable to predict whether or not it would command sufficient support to\nbe sustained if the question were forced to litigation in a contempt prosecution.\nIt should be pointed out that, if the President should decide to direct Mr. Keyserling not to obey the subpoena, the refusal itself need not necessarily state the\ntheory of justification on which the President is relying. In 1948, for example, in\nreply to subpoenas served personally upon John R. Steelman, one of the assistants\nto the President, directing him on two separate occasions to appear before a House\nsubcommittee, Mr. Steelman did not appear but returned the subpoenas to the\nchairman of the subcommittee with a letter stating, among other things, that \xe2\x80\x9cin\neach instance the President directed me, in view of my duties as his assistant, not\n\n144\n\n\x0cPresidential Authority to Direct Non-Compliance With Congressional Subpoena\n\nto appear before your subcommittee.\xe2\x80\x9d H.R. Rep. No. 80-1595, at 3 (1948). The\ntheory underlying a refusal, however, would seem to be largely determinative of\nthe degree to which public opinion receives the refusal with favor, and must of\ncourse be depended upon for a successful defense against a prosecution for\ncontempt of Congress.\nEven if the course of refusal to appear is decided upon, it is suggested that it\nmight be wise for the President to demonstrate his desire to cooperate with the\nsubcommittee in any appropriate inquiry which it might make, by authorizing Mr.\nKeyserling to submit to the subcommittee for its use a statement of affirmance or\ndenial of specific allegations that have been made, together with such additional\nremarks as might be considered appropriate. It would appear that such a statement\nshould meet the needs of the subcommittee. Nevertheless, the President might also\nmake it known that he has further authorized Mr. Keyserling to transmit to the\nsubcommittee, if that body after receiving and considering his statement should\nwish to ask him additional specific questions, such additional relevant information\nin his possession as may properly be disclosed. Such a course should succeed in\npreserving the confidential nature of information that ought not to be disclosed in\nthe public interest, while at the same time lending every assistance to the committee in its work. For use in drafting such a letter to the subcommittee, if it is the\ndecision of the President to follow that course, a suggested form which such a\nletter might take is attached.\nIn addition to the question of Mr. Keyserling\xe2\x80\x99s position in this matter, there has\nalso been raised the question of the status of his wife, as to her obligation to obey a\nsimilar senatorial subpoena to appear and testify on the same alleged activities of\nMr. Keyserling, and possibly of herself. I understand that Mrs. Keyserling is\nemployed as an economist at the Department of Commerce.\nAs an employee of the federal government, it would appear that in general Mrs.\nKeyserling is equally subject with any other federal employee to a congressional\nsubpoena. To justify her refusal to appear, it would seem necessary flatly to assert\nthat her husband\xe2\x80\x99s position is such that the President cannot permit any federal\nemployee to disclose the information requested. I know of no precedent for such\naction. On the other hand, there has been no previous instance, as far as I am\naware, where the question has been raised.\nJOSEPH C. DUGGAN\nAssistant Attorney General\nExecutive Adjudicative Division\n\n145\n\n\x0cSupplemental Opinions of the Office of Legal Counsel in Volume 1\n\nATTACHMENT\nMy dear Mr. Chairman:\nI am returning herewith the subpoena issued under date of __________, 1952,\nby the Subcommittee on Internal Security of the Senate Committee on the\nJudiciary, and signed by you as Chairman of that Subcommittee, directing me to\nappear before it on __________, 1952, to testify concerning certain alleged\nassociations or conversations attributed to me. The President has directed me, in\nview of my duties as Chairman of the Council of Economic Advisers, not to\nappear before the Subcommittee for that purpose.\nHowever, in view of the President\xe2\x80\x99s desire not to interfere with or impede\nappropriate inquiries of the Subcommittee, he has permitted me to transmit for the\nuse of the Subcommittee the accompanying statement relating to certain specific\nallegations which have been reported in the newspapers. In my opinion, the\nstatement speaks for itself and is complete. Should the Subcommittee, however,\nafter receiving and considering this statement, desire any further specific information from me, I shall be glad to transmit to it in response to specific questions\nsuch additional relevant information as I may have which may appropriately be\ndisclosed.\nSincerely,\n__________\n\n146\n\n\x0c'