b"Applicability of 18 U.S.C. \xc2\xa7 219 to Representative Members of\nFederal Advisory Committees\nRepresentative members of federal advisory committees \xe2\x80\x94 i.e., members who are chosen only to\npresent the views of a private interest\xe2\x80\x94 are not \xe2\x80\x9c public officials\xe2\x80\x9d covered by 18 U.S.C. \xc2\xa7219\n\nSeptember 15, 1999\nM e m o r a n d u m O p in io n f o r t h e D e p u t y G e n e r a l C o u n s e l\nD epa r tm en t o f t h e T reasury\n\nThis memorandum responds to your request for our opinion about the applica\xc2\xad\nbility of 18 U.S.C.A. \xc2\xa7219 (West Supp. 1999) to representative members o f fed\xc2\xad\neral advisory committees. We conclude that representative members of federal\nadvisory committees are not \xe2\x80\x9c public officials\xe2\x80\x9d covered by \xc2\xa7219. This memo\xc2\xad\nrandum supersedes our 1991 memorandum addressing the same question. See\nApplicability o f 18 U.S.C. \xc2\xa7 2 1 9 to M embers o f Federal Advisory Committees,\n\n15 Op. O.L.C. 65 (1991).\nCongress enacted the Federal Advisory Committee Act (\xe2\x80\x9c FACA\xe2\x80\x9d ), 5 U.S.C.\napp. 2 (1972), to enhance the public accountability of federal advisory committees\nand to reduce wasteful expenditures on them. See Public Citizen v. United States\nD e p \xe2\x80\x99t o f Justice, 491 U.S. 440, 459 (1989). Towards those ends, the Act provides\nthat the membership of federal advisory committees should \xe2\x80\x9c be fairly balanced\nin terms of the points of view represented and the functions to be performed by\nthe advisory committee.\xe2\x80\x9d 5 U.S.C. app. 2, \xc2\xa7 5(b)(2) & (c) (1994). In enacting\nthat provision, Congress contemplated that \xe2\x80\x9c persons or groups directly affected\nby the work of a particular advisory committee would have some representation\non the committee.\xe2\x80\x9d National Anti-Hunger Coalition v. Executive Comm., 711 F.2d\n1071, 1074 n.2 (D.C. Cir. 1983) (citing S. Rep. No. 92-1098 (1972); H.R. Rep.\nNo. 92-1017 (1972)).1\nUnder 18 U.S.C.A. \xc2\xa7 219(a), it is a criminal offense for a \xe2\x80\x9c public official\xe2\x80\x9d\nto act as an agent of a foreign principal required to register under the Foreign\nAgents Registration Act of 1938 or as a lobbyist required to register under the\nLobbying Disclosure Act of 1995. Section 219(c) defines \xe2\x80\x9c public official\xe2\x80\x9d to\ninclude, as relevant here, \xe2\x80\x98 \xe2\x80\x98an officer or employee or person acting for or on behalf\nof the United States, or any department, agency, or branch of Government thereof,\n. . . in any official function, under or by authority of any such department,\nagency, or branch of Government.\xe2\x80\x9d\nIn our 1991 memorandum, we concluded that representative members of federal\nadvisory committees \xe2\x80\x94 defined in the memorandum as members who are \xe2\x80\x9c chosen\nfor committee membership only to present the views of a private interest\xe2\x80\x9d \xe2\x80\x94 per'T h e FACA \xe2\x80\x9c confers no cognizable personal nght to an advisory committee appointment,\xe2\x80\x9d however. N ational\nAnti-Hunger Coalition, 711 F 2d at 1074 n 2\n\n213\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 23\n\nform their committee duties \xe2\x80\x9c for\xe2\x80\x9d the United States and thus are \xe2\x80\x9c public offi\xc2\xad\ncials\xe2\x80\x9d within 18 U.S.C. \xc2\xa7 219(c). See 15 Op. O.L.C. at 66. We further concluded\nthe Emoluments Clause of the Constitution, U.S. Const, art. I, \xc2\xa79, cl. 8, independ\xc2\xad\nently prohibits agents of foreign governments from serving on federal advisory\ncommittees because committee members \xe2\x80\x9c hold offices of profit or trust\xe2\x80\x9d within\nthe meaning of the Clause. See 15 Op. O.L.C. at 67-68.2\nIn later opinions, however, we receded from the position taken in the 1991\nmemorandum and recognized that \xe2\x80\x9c not every member of an advisory committee\nnecessarily occupies an \xe2\x80\x98Office o f Profit or Trust\xe2\x80\x99 under the [Emoluments]\nClause.\xe2\x80\x9d Letter from Walter Dellinger, Assistant Attorney General, Office of\nLegal Counsel, to Conrad K. Harper, Legal Adviser, Department of State (Mar.\n1, 1994).3 W e ultimately concluded that representative members of federal\nadvisory committees do not hold offices of profit or trust because they \xe2\x80\x9c owe\ntheir loyalty to outside interests and are not \xe2\x80\x98servants] of the Government.\xe2\x80\x9d \xe2\x80\x99\nA pplicability o f Emoluments Clause to \xe2\x80\x9cR epresentative\xe2\x80\x9d Members o f Advisory\nCom m ittees, 21 Op. O.L.C. 176, 177 (1997) ( \xe2\x80\x9c Esserman Letter\xe2\x80\x9d ) (quoting Office\n\nof Government Ethics Informal Opinion 82 x 22, at 330 (1989 ed.) (quoting\nMemorandum of the President, \xe2\x80\x9c Preventing Conflicts of Interest on the Part of\nSpecial Government Employees\xe2\x80\x9d (May 2, 1963)).\nFor similar reasons, we now conclude that representative members of federal\nadvisory committees are not \xe2\x80\x9c public officials\xe2\x80\x9d covered by 18 U.S.C. \xc2\xa7219. The\ndefinition of \xe2\x80\x9c public official\xe2\x80\x9d in \xc2\xa7219 is modeled on the definition of \xe2\x80\x9c public\nofficial\xe2\x80\x9d in the federal bribery statute, 18 U.S.C. \xc2\xa7201 (1994), and is identical\nin relevant respects. See 130 Cong. Rec. 1295 (1984) (remarks of Sen. Denton);\nH.R. Rep. No. 99\xe2\x80\x94797, at 22 (1986).4 In Dixson v. United States, 465 U.S. 482,\n496 (1984), the Supreme Court held that a person is a \xe2\x80\x9c public official\xe2\x80\x9d under\nthe bribery statute if \xe2\x80\x9c the person occupies a position of public trust with official\nfederal responsibilities.\xe2\x80\x9d The Court explained that \xe2\x80\x9c [t]o be a public official under\n\xc2\xa7 201(a), an individual must possess some degree of official responsibility for car\xc2\xad\nrying out a federal program or policy.\xe2\x80\x9d Id. at 499.5\nRepresentative members of advisory committees do not fit that definition. Such\nrepresentatives \xe2\x80\x9c are chosen to present the views of private organizations and\ninterests.\xe2\x80\x9d Esserman Letter, 21 Op. O.L.C. at 176. Under well established prece\xc2\xad\n2 The Em oluments Clause provides that \xe2\x80\x9c no Person holding any Office of Profit or Trust under [the United States],\nshall, without the Consent o f the Congress, accept o f any present. Emolument, Office or Title, of any kind whatever,\nfrom any King, Pnnce or foreign State \xe2\x80\x9d U.S. C onst art. I, \xc2\xa79, cl.8.\n3 We specifically determined that members o f the State Department\xe2\x80\x99s Advisory Committee on International Eco\xc2\xad\nnomic Policy did not hold offices of profit o r trust under the Emoluments Clause See The Advisory Committee\non International Economic Policy, 20 Op. O L.C 123 (1996).\n4 The term \xe2\x80\x9c public official\xe2\x80\x9d in the bribery statute includes \xe2\x80\x9c an officer o r employee or person acting for or on\nbehalf o f the United States, or any department, agency or branch o f Government thereof,. . in any official function,\nunder o r by authority o f any such department, agency or branch of Government.\xe2\x80\x9d 18 U S.C. \xc2\xa7 2 0 l(a )(l) (1994).\n5 A pplying that standard, the Court held that officers of a private, nonprofit corporation responsible for distributing\nfederal com m unity development block grants were public officials under the bnbery statute. See Dixson, 465 U.S\nat 497\n\n214\n\n\x0cApplicability o f 18 U.S.C. \xc2\xa7219 to Representative Members o f Federal Advisory Committees\n\ndents, \xe2\x80\x9c \xe2\x80\x98[o]ne who is requested to appear before a Government department or\nagency to present the views of a non-governmental organization or group which\nhe represents, or for which he is in a position to speak, does not act as a servant\nof the Government.\xe2\x80\x99 \xe2\x80\x9d Id. (quoting Office of Government Ethics Informal Opinion\n82 x 22, at 330 (1989 ed.) (quoting Memorandum of the President, \xe2\x80\x9c Preventing\nConflicts of Interest on the Part of Special Government Employees\xe2\x80\x9d (May 2,\n1963)). Indeed, \xe2\x80\x9c [t]o characterize an industry representative or the like as a Fed\xc2\xad\neral functionary is a contradiction in terms.\xe2\x80\x9d Office of Government Ethics\nInformal Opinion 82 x 22, at 333-34.\nThe structure o f 18 U.S.C. \xc2\xa7219 confirms that representative members of\nadvisory committees are not \xe2\x80\x9c public officials\xe2\x80\x9d within the statute. Although\n\xc2\xa7 219(a) makes it a criminal offense for a public official to act as an agent or\nlobbyist for a foreign government, \xc2\xa7 219(b) provides that an agent of a foreign\nprincipal may serve \xe2\x80\x9c as a special Government employee in any case in which\nthe head of the employing agency certifies that such employment is required in\nthe national interest.\xe2\x80\x9d As our 1991 memorandum recognizes, \xc2\xa7 219(b) could not\nbe used to exempt representative members of advisory committees from the\nprohibitions in \xc2\xa7 219(a), because representatives are not considered federal\nemployees, special or otherwise. See 15 Op. O.L.C. at 67; see also, e.g., Office\nof Government Ethics Informal Opinion 93 x 14, at 49 (June 24, 1993) (a rep\xc2\xad\nresentative member of an advisory committee \xe2\x80\x9c is not considered an employee\nor special Government employee for purposes of the conflict of interest statutes\xe2\x80\x9d ).\nIt would be quite anomalous, however, if an agent or lobbyist for a foreign prin\xc2\xad\ncipal could serve as a special Government employee but not as a representative,\nbecause special Government employees are generally subject to more restrictive\nstandards than are non-employees. The natural conclusion is that there is no need\nfor a statutory mechanism to exempt representatives from the prohibitions in\n\xc2\xa7 219(a) because those prohibitions simply do not apply.\nWe therefore conclude that representative members of federal advisory commit\xc2\xad\ntees are not \xe2\x80\x9c public officials\xe2\x80\x9d subject to the prohibitions in 18 U.S.C. \xc2\xa7219,\nand reject the contrary view expressed in the 1991 OLC memorandum.\nDANIEL KOFFSKY\nActing Deputy Assistant Attorney General\nOffice o f Legal Counsel\n\n215\n\n\x0c"


b'Waiver of the Application of Conflict of Interest Laws\nfor Members of the President\xe2\x80\x99s Commission\non Strategic Forces\nM em bers o f the P resident\xe2\x80\x99s commission on Strategic Forces are special government employees\nfor purposes o f the conflict of interest laws, based on a Departm ent of Defense determination.\nU nder 18 U.S.C. \xc2\xa7 208(a), such em ployees may not participate without a waiver in any\nparticular m atter in w hich they or th eir employers have a financial interest.\nW aivers o f the application o f \xc2\xa7 208(a) for members o f the Commission may be granted by the\nC ounsel to the President. This authority is based in part on 3 C.F.R. \xc2\xa7 100.735-32, by which\nthe President delegated to the Counsel his authority to grant waivers under 18 U.S.C.\n\xc2\xa7 208(b)(1) for \xe2\x80\x9cPresidential appointees to comm ittees, boards, commissions, or sim ilar\ngroups established by the President.\xe2\x80\x9d\nThe statutory standard for the grant o f w aivers clearly anticipates the exercise of discretion by\nthe appointing official. Factors suggested by \xc2\xa7 208(b)(1) include the nature and magnitude of\nthe em ployee\xe2\x80\x99s financial interest, the nature of the anticipated services to the government, and\nthe likelihood that integrity of those services may be compromised. Other non-statutory\nfactors m ight be considered with caution, such as the ability to reduce conflict by public\ndisclosure o f the em ployee\xe2\x80\x99s interest, the governm ent\xe2\x80\x99s need for the employee\xe2\x80\x99s services, and\nthe agency\xe2\x80\x99s general policy or practice in granting waivers.\n\nJanuary 19, 1983\nM\n\nem orandum\n\nO p in io n\n\nfor the\n\nDepa rtm en t\n\nof\n\nG\n\neneral\n\nC ounsel,\n\nD efen se\n\nYou have asked us to advise you concerning possible waivers of the applica\xc2\xad\ntion of a conflict of interest statute, 18 U.S.C. \xc2\xa7 208, for particular members of\nthe President\xe2\x80\x99s Commission on Strategic Forces. We have agreed to assist you\n(1) by identifying the appropriate official(s) to consider and, if appropriate,\napprove such waivers; and (2) by describing some of the factors that may be\nconsidered by that official in applying the waiver standard. We understand that\nyour inquiry was prompted by the case of a potential member of the Commis\xc2\xad\nsion who has an ongoing consulting arrangement with one of the primary\ncontractors for the MX missile project.\nWe understand from our discussions and the materials you have provided\nthat the Department of Defense has determined that members of this advisory\ncommittee are special government employees for purposes of the conflict of\ninterest laws. See generally 18 U.S.C. \xc2\xa7 202; Federal Personnel Manual, Ap\xc2\xad\npendix C. As you know, as special government employees, the members of this\nadvisory committee may not participate in any particular matters in which they,\n10\n\n\x0cor their employers, have a financial interest. 18 U.S.C. \xc2\xa7 208(a). This restric\xc2\xad\ntion on an individual employee\xe2\x80\x99s activities may be waived if \xe2\x80\x9cthe official\nresponsible for the appointment to [the employee\xe2\x80\x99s] position\xe2\x80\x9d determines in\nwriting that the interest of the employee \xe2\x80\x9cis not so substantial as to be deemed\nlikely to affect the integrity of the services which the government may expect\xe2\x80\x9d\nfrom the employee. 18 U.S.C. \xc2\xa7 208(b)(1). Because it is anticipated that the\nCommission will be advising the President concerning the MX missile and its\npossible basing modes, the application of \xc2\xa7 208 to this situation has been raised.\nI. Appropriate Official to Grant Waiver\nUnder 18 U.S.C. \xc2\xa7 208(b)\nAs mentioned above, \xc2\xa7 208(b) authorizes the \xe2\x80\x9cGovernment official respon\xc2\xad\nsible for the appointment [of an employee] to his position\xe2\x80\x9d to waive the\napplication of \xc2\xa7 208(a) to the employee in certain circumstances. In determin\xc2\xad\ning which officials can exercise such power, we consider two questions: (1)\nwhich official is \xe2\x80\x9cresponsible for the appointment\xe2\x80\x9d of the members of the\nCommission; and (2) has the official \xe2\x80\x9cresponsible for the appointment\xe2\x80\x9d del\xc2\xad\negated his authority under this provision to any other person(s).\nWith respect to the first question, we believe the President is the official\n\xe2\x80\x9cresponsible for the appointment\xe2\x80\x9d of the members of the Commission. Pursu\xc2\xad\nant to Executive Order No. 12400, members of the Commission are \xe2\x80\x9cappointed\nor designated by the President\xe2\x80\x9d to membership on the Commission. There is no\nprovision that any other official should be responsible for the appointment of\nany of the members to the Commission. In the process of drafting Executive\nOrder No. 12400, members of the White House Counsel\xe2\x80\x99s Office and the\nGeneral Counsel\xe2\x80\x99s Office of the Office of Management and consistently ex\xc2\xad\npressed an intent and understanding that the Commission was to be a Presiden\xc2\xad\ntial Advisory Committee, with control over the appointment and dismissal of\nmembers of the Commission to be vested solely in the President. Accordingly,\nin our view, the President is the \xe2\x80\x9cGovernment official responsible for the\nappointment [of the members] to [their] position[s]\xe2\x80\x9d within the meaning of 18\nU.S.C. \xc2\xa7 208.\nEven though the President is the appointing \xe2\x80\x9cGovernment official\xe2\x80\x9d within\nthe meaning of 18 U.S.C. \xc2\xa7 208, he may, pursuant to 3 U.S.C. \xc2\xa7 301, delegate\nhis authority with respect to \xe2\x80\x9cany function vested in the President by law\xe2\x80\x9d to\n\xe2\x80\x9cthe head of any department or agency in the executive branch, or any official\nthereof who is required to be appointed by and with the advice and consent of\nthe Senate.\xe2\x80\x9d Such delegation must be in writing and published in the Federal\nRegister. Id. In addition, the President has certain inherent authority, which is\nrecognized but not specifically enumerated in 3 U.S.C. \xc2\xa7 302, to delegate\nauthority to officials who do not meet the requirements set forth in \xc2\xa7 301. In\nExecutive Order No. 11222, Part V, as amended, the President delegated his\nauthority to grant waivers under 18 U.S.C. \xc2\xa7 208(b) with respect to many\nPresidentially appointed officers and employees, while specifically exempting\n11\n\n\x0cfrom this delegation, among other persons, \xe2\x80\x9cPresidential appointees to commit\xc2\xad\ntees, boards, commissions, or similar groups established by the President.\xe2\x80\x9d In 3\nC.F.R. \xc2\xa7 100.735-32, however, the President delegated to the Counsel to the\nPresident the authority reserved in the above provision. Although the Counsel\nto the President is not appointed by the President with the advice and consent of\nthe Senate, this delegation has existed at least since 1968 and has never, to our\nknowledge, been challenged by Congress. While we do not need to pass on that\nissue for the purpose of this memorandum, the delegation of power to the\nCounsel to the President would appear to fall within the President\xe2\x80\x99s inherent\npower to delegate, and thus, the President and the Counsel to the President\ncurrently appear to have authority to grant a waiver under 18 U.S.C. \xc2\xa7 208(b) to\nmembers of the Commission with respect to their service on the Commission.\nAn argument could be made that \xc2\xa7 4 of Executive Order No. 12400, which\ncreated the Commission, also delegates to the Secretary of Defense the\nPresident\xe2\x80\x99s authority to grant waivers under 18 U.S.C. \xc2\xa7 208. We conclude,\nhowever, that if the President wishes the Secretary of Defense to exercise the\nPresident\xe2\x80\x99s authority under \xc2\xa7 208(b), the proper course would be to execute a\nnew, more specific memorandum under 3 U.S.C. \xc2\xa7 301, specifically delegating\nsuch authority to the Secretary of Defense. Section 4 of Executive Order No.\n12400 delegates the \xe2\x80\x9cperformance\xe2\x80\x9d of the President\xe2\x80\x99s \xe2\x80\x9cfunctions\xe2\x80\x9d under the\nFederal Advisory Committee Act (FACA), as amended, 5 U.S.C. app. \xc2\xa7 1, to\nthe Secretary of Defense. The FACA, 5 U.S.C. app. \xc2\xa7 8, provides, inter alia,\nthat each agency head, in this case the Secretary of Defense, \xe2\x80\x9cshall establish\nuniform administrative guidelines and management controls for advisory com\xc2\xad\nmittees\xe2\x80\x9d and appoint an Advisory Committee Management Officer to \xe2\x80\x9cexercise\ncontrol and supervision\xe2\x80\x9d over the committee. The FACA, however, does not\nspecifically address conflict-of-interest problems related to members of advi\xc2\xad\nsory committees. Thus, granting a waiver of conflicts of interest under 18\nU.S.C. \xc2\xa7 208 may not be a \xe2\x80\x9cfunction\xe2\x80\x9d \xe2\x80\x9cperformed\xe2\x80\x9d under the Federal Advisory\nCommittee Act. In light of the fact that the President expressly reserved to\nhimself in Executive Order No. 11222, as amended, the authority to grant\nwaivers under 18 U.S.C. \xc2\xa7 208(b), it is doubtful that the delegation of authority\nin Executive Order No. 12400 is sufficiently specific to constitute a delegation\nof the Presidential waiver authority. For these reasons, if the President wishes\nthe Secretary of Defense, rather than the Counsel to the President, to assume\nthe authority to grant waivers for members of the Commission, we conclude\nthat a new memorandum of delegation should be executed. In addition, if the\nPresident wishes some other official to exercise this authority, he may execute\na memorandum delegating this to any official appointed by the President with\nthe advice and consent of the Senate. See 3 U.S.C \xc2\xa7 301.\nII. The Wanver Standard\nSection 208(b)(1) provides that waivers of the restriction of \xc2\xa7 208(a) may be\ngranted upon a written determination that the disqualifying interest of the\n12\n\n\x0cemployee is \xe2\x80\x9cnot so substantial as to be deemed likely to affect the integrity o f\nthe services which the government may expect\xe2\x80\x9d from the employee. (Emphasis\nadded.) This standard clearly anticipates the exercise of discretion and personal\njudgment by the appointing official. We have not reviewed the facts of this\nmatter in sufficient detail to make our own judgment concerning a waiver in\nthis case, nor would it be appropriate for us to do so inasmuch as the responsi\xc2\xad\nbility of the Commission will relate to matters that are beyond our knowledge\nand expertise. The discussion that follows is intended simply to direct attention\nto some of the factors which are generally used to inform such judgments.\nThe standard set forth in the statute suggests two lines of inquiry, focusing\non (1) the financial interest and (2) the services of the employee. In our view, it\nis appropriate to consider any factors that develop either of these lines of\ninquiry suggested by the statute.\nThere are numerous factors that may help to clarify the nature and magnitude\nof the employee\xe2\x80\x99s financial interest. Certainly it is helpful to quantify the dollar\namount of the interest, or its outer limits. In this case, the consulting contract\npresumably is worth $50,000, and possibly more if the contract is extended or\nadditional contracts are expected. These factors might be compared with the\npotential member\xe2\x80\x99s overall income, and with his net worth, to obtain some\nsense of the relative value of the consulting contract(s) to him.1The type of the\nfinancial interest may also be important. In this case, the financial interest\narises from an employment relationship. While employment relationships fre\xc2\xad\nquently create stronger and more personal ties than ordinary investment rela\xc2\xad\ntionships, the tenure and details of this particular relationship could be signifi\xc2\xad\ncant factors in making a waiver determination. For example, one might find it\nmore difficult to justify a \xc2\xa7 208(b) waiver if the potential member\xe2\x80\x99s contract\nactivities involve defense issues that will be before the Commission than if\nthey involve giving technical advice on completely unrelated subjects. Simi\xc2\xad\nlarly, a long or frequent association with the contractor might also counsel\nagainst a waiver in this case.\nThe employee\xe2\x80\x99s anticipated services to the government should also be exam\xc2\xad\nined. We think that, in this regard, it is appropriate to consider both the\nlikelihood that the integrity of the employee\xe2\x80\x99s services may be compromised,\nand the nature and significance of the services themselves. In this case, the\nemployee\xe2\x80\x99s services will presumably involve giving advice on a subject of\ndirect concern to a present client of his consulting firm. There appears to be\nlittle doubt that the contractor will be affected by the government\xe2\x80\x99s final\ndecision regarding the MX, but the impact of the potential member\xe2\x80\x99s advice\nthrough the advisory committee may be somewhat more remote. On the other\nhand, one might predict that the advice would be particularly influential in light\nof the potential member\xe2\x80\x99s background and stature. The potential value to the\ncontractor of the potential member\xe2\x80\x99s service on this advisory committee should\n1 Although the value o f the consulting contract in relation the potential m em ber\'s annual income and\noverall net worth may indeed be considered, it should not overshadow the significance o f the absolute value\no f the contract, which is, in our view, a far more im portant criterion in making a waiver decision.\n\n13\n\n\x0calso be considered. In this regard, one may want to consider the value of the\nMX contract to the contractor in absolute dollars and as a proportion of the\ncompany\xe2\x80\x99s anticipated receipts for upcoming years.\nThere are undoubtedly numerous other factors that might be considered.\nSome of these derive more justification from common sense and other disquali\xc2\xad\nfication standards than they do from the actual text of \xc2\xa7 208(b). See, e.g.,\nDecisional Officials\xe2\x80\x99 Participation in Rulemaking Proceedings, Administrative\nConference of the United States, 1980 Report, at 51-55. See also Code of\nProfessional Responsibility, American Bar Association (in particular Canons\n4, 5 and 9). For example, public disclosure of the employee\xe2\x80\x99s interest and the\ngovernment\xe2\x80\x99s need for the services of the particular employee are factors that\ncould be compelling in some circumstances.2 We would also advise that some\ndeference be given to the agency\xe2\x80\x99s general policy or practice in granting\nwaivers under \xc2\xa7 208(b)(1). Accordingly, we are not prepared to reject all\nconsideration of factors that do not reflect directly the statutory standard. We\nmust urge, however, that non-statutory factors be used with caution and that the\nweight given to them be analyzed in light of the fact that they are not directly\narticulated in the statutory standard.\nNumerous other nonstatutory factors have been suggested for use in this\ncase. We think that many of these factors, especially when taken in their\ncombination, could confuse rather than clarify the inquiry. For example, the\nimportance of the advisory committee to the government\xe2\x80\x99s national security\ninterests is a factor that can be used convincingly either to justify or deny a\nwaiver.3 The same can be said of the temporary, short-term nature of the\nCommission\xe2\x80\x99s work. It also can be counterproductive, in our view, to focus on\nthe reputation for personal integrity of the employee. The integrity factor is\nextremely subjective. As we see it, \xc2\xa7 208 was enacted, in large part, to elimi\xc2\xad\nnate such subjective judgments from the disqualification process. Furthermore,\nwe fear that a heavy or frequent reliance upon an official judgment of the\nemployee\xe2\x80\x99s personal integrity will detract from the public acceptance of the\nwaiver process, as well as make it more difficult to deny waivers because of the\npossible negative implication o f a denial with respect to the integrity of the\nemployee. Accordingly, we must counsel against a reliance upon a subjective,\npersonal evaluation of an individual\xe2\x80\x99s reputation for integrity in considering\nthe propriety of \xc2\xa7 208(b)(1) waivers.\nIn the end, waiver decisions are committed to the judgment of the appointing\nofficial. Although the statutory standard should guide the exercise of that\ndiscretion, Congress has clearly left that ultimate decision in the hands of the\nappointing official. It is the responsibility of that official to exercise his\nconsiderable discretion soundly and in good faith, after a careful and thorough\n2 In this case, public disclosure o f the p otential m em ber\xe2\x80\x99s contractual interest would help to elim inate many\no f the potential adverse effects o f the interest.\n3 In ad dition, it should be noted that a \xe2\x80\x9cn ational interest" factor was suggested to Congress as a basis for\ngran tin g w aivers w hen \xc2\xa7 208 was enacted, but such a test was never adopted. See C onflict o f Interest\nH earings on H.R. 8140 B efore th e Senate J u d ic ia ry Comm., 87th Cong., 2d Sess. 46 (1962) (testim ony of\nR osw ell Perkins).\n\n14\n\n\x0cconsideration of all of the pertinent facts. We are not in a position to advise you\nabout the pertinent facts or about the relative weight that should be assigned to\nthe various factors discussed above. We hope this opinion will assist the\ndecision-maker in his task, but we do not intend for it to imply any judgment on\nour part concerning the proper direction of that decision.\nThe Office of Government Ethics has reviewed this opinion and has advised\nus that it agrees with the conclusions set forth above.\nRa lph W . T arr\n\nAssistant Attorney General\nOffice o f Legal Counsel\n\n15\n\n\x0c'


b'Presidential Authority to Settle the Iranian Crisis\nThe President has the constitutional and statutory authority to enter an executive agree\xc2\xad\nment with Iran which settles Am erican citizens\' claims against Iran; claimants who\nreceive less than - the stated value of their claims should not be able to recover\nadditional compensation from the United States governm ent on the theory that the\nsettlement constituted a taking under the Fifth Amendment.\nThe President may, through orders issued under the International Em ergency Economic\nPowers A ct (IEE PA ), free currently blocked Iranian assets and effect their return to\nIran, notwithstanding the existence of court orders o f attachm ent for bidding the\nremoval o f Iranian funds from the banks holding them, by revoking the existing general\nlicense for the attachm ents under the Iranian Assets Control Regulations and licensing\nIranian withdrawals from the blocked accounts. Since private banks may refuse to\nhonor withdrawal licenses after the attachm ents are revoked for fear o f liability under\nstate law to the attachm ent claimants, funds held by federal banking entities should be\nrelied on as the source o f any amounts promised to be returned forthw ith to Iran.\nForeign branches of Am erican banks are subject to orders issued under authority of the\nIE E PA and, once withdrawal licenses are issued, there should be no legal impediment\nto Iranian w ithdrawals from previously blocked accounts as long as previously licensed\nsetoffs are observed. If creditors o f Iran seek to attach these accounts through actions\nin foreign courts, it is likely that those courts would allow their own domestic\nclaimants a special priority.\nT he President may, under existing law, take several kinds o f actions to assist Iran in\neffecting the return of the form er Shah\xe2\x80\x99s assets in the United States. These actions\ninclude blocking the assets under the IE E PA to facilitate a census and prevent their\nremoval, undertaking to aid Iran in its litigation to recover the assets, informing the\ncourt o f our position on foreign sovereign immunity and act of state doctrines, or\ntaking an assignment o f its claims from Iran. H ow ever, vesting the Shah\xe2\x80\x99s assets in the\ngovernm ent would require new legislative authority and even then would give rise to a\ntakings claim for just compensation by the Shah\xe2\x80\x99s estate.\n\nSeptember 16, 1980\nMEMORANDUM OPINION FOR THE ATTORNEY GENERAL\nThis responds to your request for our views concerning the Presi\xc2\xad\ndent\xe2\x80\x99s power to settle the current crisis with Iran without the enact\xc2\xad\nment of additional legislation. We believe that the President has the\nconstitutional and statutory power necessary to enter an agreement\nwith Iran settling the principal issues now outstanding, and to imple\xc2\xad\nment that agreement in an effective fashion. In particular, we conclude\nas follows. First, the President has the constitutional and statutory\npower to enter an executive agreement with Iran that settles American\ncitizens\xe2\x80\x99 claims and returns some blocked funds to Iran. Second, to\nimplement such an agreement, the President may, under the Interna248\n\n\x0ctional Emergency Economic Powers Act (IEEPA), 50 U.S.C. \xc2\xa7 1701 et\nseq. (Supp. I 1977), license Iran to withdraw blocked funds, although\n\nthe President would first have to revoke existing licenses for attach\xc2\xad\nments against those funds. Federal entities and private banks in the\nUnited States could then safely permit withdrawals by Iran, although\nthe private banks may perceive sufficient risk of liability to disappointed\nlien claimants to refuse to recognize the validity of licenses for with\xc2\xad\ndrawals. Third, once withdrawals are licensed there will be no impedi\xc2\xad\nment to Iranian withdrawals from foreign branches of American banks,\nat least if previously licensed setoffs by those banks are left undisturbed.\nFourth, a settlement agreement may provide for the United States to\naid Iran in recovering the Shah\xe2\x80\x99s assets in the current litigation in New\nYork state court, although an immediate return of those assets would\nnot be possible. Finally, all these arrangements can be structured in a\nway that makes successful takings claims unlikely.\nI. Settlement of American Claims Against Iran by Executive Agreement\n\nA. Presidential Power\n\nThe authority of the President to enter executive agreements with\nother nations in order to settle claims has been explicitly upheld by the\nSupreme Court. United States v. Belmont, 301 U.S. 324, 330-31 (1937);\nUnited States v. Pink, 315 U.S. 203 (1942) (\xe2\x80\x9cThat the President\xe2\x80\x99s control\nof foreign relations includes the settlement of claims is indisputable.\xe2\x80\x9d\nFrankfurter, J., concurring, 315 U.S. at 240); see also Restatement\n(Second) of Foreign Relations Law \xc2\xa7 213 (1965). Belmont and Pink\nupheld the Litvinov Assignment, by which outstanding Soviet claims\nwere assigned to the United States by a simple exchange of letters\nbetween the President and the Soviet Foreign Minister. Both cases\nemphasized the Executive\xe2\x80\x99s exclusive constitutional power to recognize\nforeign governments and to normalize diplomatic relations with them,\nand viewed claims settlements as necessary incidents of the Executive\xe2\x80\x99s\nforeign relations power. See generally United States v. Curtiss-Wright\nExport Corp., 299 U.S. 304 (1936).\nAlthough the President\xe2\x80\x99s constitutional powers almost certainly suf\xc2\xad\nfice to authorize an executive agreement with Iran that would take an\nassignment of some blocked assets and return others, support may be\ndrawn as well from the President\xe2\x80\x99s statutory power under IEEPA.\nThat statute, which authorizes the current blocking of Iranian assets,\nwas drafted in explicit recognition that the blocking of assets could\nhave as a primary purpose their preservation for later claims settlement.\nH.R. Rep. No. 459, 95th Cong., 1st Sess. 17 (1977); S. Rep. No. 466,\n95th Cong., 1st Sess. 6 (1977). Thus, IEEPA\xe2\x80\x99s \xc2\xa7 1706(a)(1) authorizes\nthe continuation of controls after the underlying emergency has ended,\nwhere \xe2\x80\x9cnecessary on account of claims involving such country or its\n249\n\n\x0cnationals.\xe2\x80\x9d The need to provide a means for orderly termination of a\nblocking of assets once the emergency has passed implies presidential\npower to resolve the plethora of claims that will invariably arise.\nHistorical practice reflects the existence of presidential power to\nsettle claims. While claims settlements have often been concluded by\ntreaty or convention, historical examples abound of settlements through\nexecutive agreement. Numerous lump-sum agreements have settled\nclaims of American nationals against foreign nations. See, e.g., Claims\nSettlement Agreement, July 16, 1960, United States-Poland, 11 U.S.T.\n1953, T.I.A.S. No. 4545; Claims Settlement Agreement, July 19, 1948,\nUnited States-Yugoslavia, 62 Stat. 2658, T.I.A.S. No. 1803. History also\nprovides numerous examples of claims settlements through executive\nagreements that establish international arbitrations rather than provide a\nlump sum. See generally W. McClure, International Executive Agree\xc2\xad\nments 52-56 (1941). In 1935, a congressional study identified 40 arbitra\xc2\xad\ntion agreements entered into by the Executive between 1842 and 1931\nwhich were not submitted to the Senate for advice and consent. 79\nCong. Rec. 969-971 (1935).1\nB. Constitutional Takings Claims\n\nA question that has not been clearly settled is whether any right of\naction exists for claimants who allege that a settlement provides them\nwith less than what they consider to be the real value of their claims.\nAgreements have traditionally provided significantly less than the\namounts claimed.\nThe principle of international law that a sovereign may settle debts of\nnationals has a corollary\xe2\x80\x94a national has no legal claim to any particu\xc2\xad\nlar funds received in a claims settlement that extinguishes his claim. See\nBoynton v. Blaine, 139 U.S. 306 (1891); Williams v. Heard, 140 U.S. 529,\n537 (1891). The Supreme Court has held that even payments received\n\xe2\x80\x9con behalf o f\xe2\x80\x9d an American claimant do not legally belong to him, and\nthat the Executive Branch could refuse to remit payments received\nfrom a foreign government (allegedly because it suspected the claimants\nof fraud). La Abra Silver Mining Co. v. United States, 175 U.S. 423\n(1899). This supports the generally held view that an American has no\nrecourse against his government\xe2\x80\x99s settlement, except to petition Con\xc2\xad\ngress for relief. See Christensen, The United States-Rumanian Claims\nSettlement Agreement of March 30, 1960, 55 Am. J. Int\xe2\x80\x99l L. 617, 625\n(1951). No case has been found adjudicating the right to such compen\xc2\xad\nsation.\n\'W e perceive no reason to believe that passage o f the Foreign Sovereign Immunities A ct o f 1976,\n28 U.S.C. \xc2\xa7 1602 et seq., w as in any way intended to limit the established constitutional pow er of the\nPresident to settle claims, or in any way to alter the substantive law of liability. 1975 State Dept.\nDigest of U.S. Practice in Int\xe2\x80\x99l Law 353.\n\n250\n\n\x0cDissatisfied claimants have, nevertheless, raised the issue in connec\xc2\xad\ntion with previous settlements, see International Claims Settlement Act,\n\nHearings on H.R. 9063 Before the Subcommittee on Europe o f the House\nCommittee on Foreign Affairs, 90th Cong., 1st Sess. 50-55 (1967); Inter\xc2\xad\nnational Claims Settlement Act, Hearings on S. 1935 and S. 2064 Before\nthe Subcommittee on Europe of the House Committee on Foreign Affairs,\n\n89th Cong., 2d. Sess. 42, 48-49, 74-77 (1966). Scholars in the field have\nrecognized the argument without necessarily endorsing it. Henkin, For\xc2\xad\neign Affairs and the Constitution, 262-66 (1972); Oliver, Executive.\nAgreements and Emanations from the Fifth Amendment, 49 Am. J. Int\xe2\x80\x99l\nL. 362, 364 (1955); cf. Restatement, supra, Reporters\xe2\x80\x99 Note to \xc2\xa7213;\nLeigh & Atkeson, Due Process in the Emerging Foreign Relations Law of\nthe United States, 21 Bus. Law. 853, 870-77 (1966).\nTwo historic Court of Claims cases discuss the taking question. Gray\nv. United States, 21 Ct. Cl. 340 (1886), Meade v. United States, 2 Ct. Cl.\n224 (1866), affd, 76 U.S. (9 Wall.) 691. See generally W. Cowles,\nTreaties and Constitutional Law: Property Interferences and Due Proc\xc2\xad\ness of Law, 200-21 (1941). Gray concerned settlement of the French\nSpoliation claims of the early 1800\xe2\x80\x99s, relating to damage done to Ameri\xc2\xad\ncan vessels from 1793 until 1801 by the French navy. Negotiations\nbetween France and the United States led to an agreement: the United\nStates agreed to release the French from all claims by American nation\xc2\xad\nals and France agreed not to insist upon enforcement of the alliance\nbetween the two countries. The court opined that where the Govern\xc2\xad\nment extinguished the American claims in order to further its foreign\npolicy, it had taken private property for a public use and the claimants\nwere thereby entitled to compensation. We would note that in the\nnegotiation of 1800, \xe2\x80\x9cindividual\xe2\x80\x9d claims were used against \xe2\x80\x9cnational\xe2\x80\x9d\nclaims, and the setoff was of French national claims against American\nindividual claims. Responding to this, the court said:\nIt seems to us that this \xe2\x80\x9cbargain\xe2\x80\x9d . . . falls within the\nintent and meaning of the Constitution, which prohibits\nthe taking of private property for public use without just\ncompensation. We do not say that for all purposes these\nclaims were \xe2\x80\x9cproperty\xe2\x80\x9d in the ordinarily accepted and in\nthe legal sense of the word; but they were rights which\nhad value, a value inchoate, to be sure, and entirely de\xc2\xad\npendent upon adoption and enforcement by the Govern\xc2\xad\nment; but an actual money value capable of ascertainment\nthe moment the Government had adopted them and\npromised to enforce them, as it did in August, 1793, and\nconstantly thereafter. That the use to which the claims\nwere put was a public use cannot admit of a doubt, for it\nsolved the problem of strained relations with France and\nforever put out of existence the treaties of 1778, which\n251\n\n\x0cformed an insuperable obstacle to our advance in paths of\npeace to the achievement of commercial greatness.\nId. at 393. The court\xe2\x80\x99s opinion was advisory; Congress had asked the\ncourt to hear the claims and report to it. Thus, the court noted that it\nwas examining the \xe2\x80\x9cethical,\xe2\x80\x9d not \xe2\x80\x9clegal\xe2\x80\x9d rights of a citizen against his\ngovernment, id. at 406-07, although this would not change the constitu\xc2\xad\ntional analysis.\nThe Meade case involved an effort by a citizen to obtain payment\nfrom the United States government after settlement of claims with\nSpain in 1819. After the signing of a treaty between the United States\nand Spain but prior to Spain\xe2\x80\x99s ratification, Meade submitted a contract\nclaim to Spain and Spain agreed to pay a certain amount. The treaty\nestablished a claims commission; Meade presented his claim to it with\nevidence of the Spanish settlement. He was unable, however, to\nproduce documents requested by the Commission because they had\nbeen sent to Spain; he received no payment. Congress subsequently\nreferred the claim to the Court of Claims. Three members of the court\nwrote opinions. The majority held that the release and cancellation of\nMeade\xe2\x80\x99s claim against Spain was an appropriation of private property\nto public use and came within the Just Compensation Clause of the\nConstitution. 2 Ct. Cl. at 275. Nevertheless, it said Meade was entitled\nto no compensation because the Commission\xe2\x80\x99s decision not to award\ncompensation could not be reexamined by the Court of Claims. Id. at\n275-76. A concurring opinion found no compensable taking since the\nright of eminent domain had not been exercised. The dissent found a\ncompensable taking, but distinguished Meade from the general class of\nclaimants because he was a creditor armed with a settlement entered\ninto by the government of Spain rather than a claim which had not\nbeen acknowledged by a foreign power. Thus, a majority of the court\nheld that a compensable taking had occurred, yet a different majority\nheld that Meade\xe2\x80\x99s heirs were entitled to no compensation from the\ngovernment. The Supreme Court affirmed, 76 U.S. (9 Wall.) 691, but\ndid not reach the constitutional question.\nThe question now arises as to what reaction the courts would have\nto these opinions written many years ago. While the courts in recent\nyears have become increasingly sensitive to the procedural require\xc2\xad\nments imposed by the Due Process Clause, e.g., Goldberg v. Kelly, 397\nU.S. 254 (1970), they have also recognized that extensive use of regula\xc2\xad\ntory powers by the government is not necessarily a taking. Destruction\nof a monetary claim might have serious consequences for claim holders\nbut may be no more serious than the economic consequences flowing\nfrom other regulation not considered a taking. The complexity of the\nmodern world and the increased, almost pervasive regulation that is\nfound in international trade have led to the realization that losses can\narise from export controls, import controls, embargoes, and similar\n252\n\n\x0cgovernment acts. Individual contracts and profits are often sacrificed\nfor what is perceived as greater foreign policy benefits.\nThere is no set formula for deciding when the Due Process Clause\nrequires that economic injuries caused by public action be compensated\nby the government rather than remain disproportionately concentrated\non a few persons. Penn Central Transp. Co. v. City o f New York, 438\nU.S. 104, 124 (1978). Essentially ad hoc factual inquiries have been\nconsidered necessary. Id. When there is a physical invasion by the\ngovernment a taking may more easily be found than when there is a\npublic program adjusting benefits and burdens of economic life to\npromote the common good. Id. The mere fact that property, in this\ncase claims, may be reduced in value does not mean that a taking has\nnecessarily occurred. Goldblatt v. Town of Hempstead, 369 U.S. 590, 594\n(1962); cf. Miller v. Schoene, 276 U.S. 272 (1928) (upheld destruction\nwithout compensation of cedar trees to protect apple orchards from\nrust).\nThe courts are also more likely to uphold government action against\n\xe2\x80\x9ctaking\xe2\x80\x9d claims during war and emergency situations which make de\xc2\xad\nmands that \xe2\x80\x9cotherwise would be insufferable.\xe2\x80\x9d United States v. Central\nEureka Mining Co., 357 U.S. 155, 168 (1958); Bowles v. Willingham, 321\nU.S. 503, 517 (1944); United States v. Caltex, 344 U.S. 149 (1952).\nApplying the kind of balancing suggested by recent cases leads to\npersuasive arguments against the contention that a settlement for less\nthan value is a taking. In dealing with an international emergency, the\nPresident must be able to act quickly and without fear that the courts\nwill intervene for any but the most compelling reasons. Cf. Narenji v.\nCiviletti, 617 F.2d 745 (D.C. Cir. 1979).\nBecause of the delicate nature of the negotiations with Iran, it is\nimpossible for a court to review political issues and put a value on the\nextent to which foreign policy considerations may have prevailed over\nmonetary ones. In addition, because of deep government involvement\nin the crisis, (i.e., the freeze, trade controls, the World Court action) it\nwould be difficult for individuals to demonstrate what they would have\nrecovered absent government intervention.2 In sum we believe that\nclaimants who receive less than the stated value of their claims should\nnot be able to recover additional compensation from the government on\nthe theory that the settlement constituted a taking.\nII. Presidential Authority to Return Blocked Assets to Iran\nWe now consider whether the President may, through orders issued\nunder IEEPA, free the currently blocked Iranian assets and effect their\nreturn to Iran. Although the President has broad powers under IEEPA,\n2W e would note that these argum ents can also be viewed as separate grounds for defending a\nsettlement apart from the taking issue.\n\n253\n\n\x0cto issue orders blocking or releasing these assets,3 difficulties arise\nbecause the banks holding the Iranian accounts are presently subject to\na variety of court orders, principally attachments and preliminary in\xc2\xad\njunctions, that forbid removal of the funds.4\nThe President\xe2\x80\x99s action would presumably be to revoke the existing\ngeneral license for the attachments and to license Iranian withdrawals\nfrom the blocked accounts. (Simply to lift the freeze would probably\nallow the attachments to vest, preventing removal of the funds indefi\xc2\xad\nnitely.) Our conclusion is that the President has ample authority under\nIEEPA to revoke licenses for attachments and to license withdrawals\nof blocked funds.\nOn November 14, 1979, Executive Order No. 12,170 blocked Iranian\ngovernment assets and the Treasury Department issued the first of its\nIranian Assets Control Regulations (IACR), which provided in part:\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.\n31 C.F.R. \xc2\xa7 535.203(c). And on November 19, 1979, \xc2\xa7 535.805 was\nadded, providing that any licenses \xe2\x80\x9cmay be amended, modified or\nrevoked at any time.\xe2\x80\x9d A limited modification to the general ban on\nunlicensed judicial proceedings was made subsequently on1November\n23, 1979, with the adoption of \xc2\xa7 535.504, which authorized judicial\nproceedings, but continued the ban on judgments and payments from\nblocked accounts. And finally, on December 18, 1979, an interpretive\nrule was added to clarify the permissible scope of judicial action:\nThe 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 of blocked\nproperty is prohibited without a specific license. It would\n3T he IE E P A \xe2\x80\x99s principal operative provision, \xc2\xa7 1702(a)(1), provides that the President may:\n(A) investigate, regulate or prohibit \xe2\x80\x94\n(i) any transactions in foreign exchange,\n(ii) transfers o f credit or paym ents between, by, through, or to any banking\ninstitution, to the extent that such transfers or payments involve any interest\nof any foreign 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, im portation\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 o r a\nnational thereof has any interest.\n4F or convenience, w e will refer to these orders generically as attachm ents, since that is the nature\no f most of them.\n\n254\n\n\x0cnot be consistent with licensing policy to issue such a\nlicense.\n31 C.F.R. \xc2\xa7 535.418. Thus, the current situation is that the great major\xc2\xad\nity of attachments and similar court orders exist pursuant to Treasury\xe2\x80\x99s\ngeneral license; there are, however, scattered instances of process that\nwas perfected before last November 14th. We understand that these\npre-blocking attachments affect only a small portion of the Iranian\nassets. Because these attachments have priority to the licensing pro\xc2\xad\ngram, it may not be possible to revoke them simply by amending the\nIACR. See Propper v. Clark, 337 U.S. 472 (1949). These attachments\nmay, however, be destroyed by an exercise of the President\xe2\x80\x99s constitu\xc2\xad\ntional power to settle claims.5\nAgainst this background, we turn to the effect of the major Supreme\nCourt cases in the field. In Zittman v. McGrath, 341 U.S. 446 (1951)\n(Zittman 1), claimants attached New York bank accounts of German\nbanks, which had previously been frozen by executive order. After the\nwar, the Alien Property Custodian issued orders vesting the accounts in\nhimself, but the banks refused to release them because of the stillpending attachments. The Custodian sought a declaratory judgment\nthat the claimants had no interest in the assets, and lost. The Supreme\nCourt noted that after the attachments had taken effect, the government\nissued a ruling which it argued should be applied retroactively, desig\xc2\xad\nnating attachments as prohibited transfers. Without deciding whether\nsuch a rule could have retroactive effect in other circumstances, the\nCourt refused to apply it to these attachments because to do so would\nbe inconsistent with the government\xe2\x80\x99s earlier position regarding attach\xc2\xad\nments. Treasury had represented in similar litigation that it did not wish\nto interfere with court proceedings, including attachments, because it\nwas desirable to obtain adjudications of disputed rights to assets subject\nto the need for a license for any transfer of them. Treasury had thus\nencouraged litigation to go forward to conclusion, with the reservation\nthat the value of interests so adjudicated might range from worthless to\nfull value, depending on whether a transfer application met the govern\xc2\xad\nment\xe2\x80\x99s purposes in administering the freeze program.\nThe Court accordingly concluded that the Custodian had\nput himself in the shoes of the German banks. As against\nthe German debtors, the attachments and the judgments\nthey secure are valid under New York law, and cannot be\ncancelled or annulled under a Vesting Order by which\nthe Custodian takes over only the right, title, and interest\nof those debtors in the accounts.\n5O ur preceding analysis, concluding that the President may enter agreem ents resulting in final\nsettlements o f the claims o f A m erican citizens, makes it clear that an incident of such a settlement\nwould be the voiding o f attachm ents and other inchoate interests relating to those claims. United States\nv. The Schooner Peggy. 5 U.S. (1 C ranch) 103 (1801).\n\n255\n\n\x0c341 U.S. at 463-64. At the same time, the Court recognized that the\nCustodian could take possession of the assets for administration under\nthe Act. This disposition left the ultimate status of the state law liens\nfor later determination.\nIn a companion case, Zittman v. McGrath, 341 U.S. 471 (1951)\n(Zittman IT), the Court granted the Custodian possession of attached\naccounts, for administration under the Act. The Court distinguished\nZittman I as involving the Custodian\xe2\x80\x99s attempt to assert that the freez\xc2\xad\ning program \xe2\x80\x9cprecluded attaching creditors from obtaining any interest\nin the blocked property good as against the debtors,\xe2\x80\x9d whereas here\nonly possession was sought, without prejudice to the attaching credi\xc2\xad\ntors\xe2\x80\x99 rights.\nSubsequently, in Orvis v. Brownell, 345 U.S. 183 (1953), the Court\nconsidered a closely similar set of facts, but with one crucial legal\ndifference. Again, claimants obtained attachments and judgments, valid\nin New York law, against previously blocked assets. This time, how\xc2\xad\never, the Court interpreted a similar prohibition of "transfers\xe2\x80\x9d to fore\xc2\xad\nstall attachment from creating any rights against the Custodian. The\nconsequence was to deny the claimants a special priority in particular\nproperty, leaving them with general debt claims, to which the state\ncourt determinations would presumably be relevant.\nThe present program licenses attachments and litigation, but stops\nshort of permitting judgments. The evident purpose is to allow initial\nsorting out of claims and preservation of evidence in contemplation of\nlater use in some federal distribution system, much as was the function\nof litigation in the Zittman cases and in Orvis. The government has so\ncharacterized it in court:\n535.504 specifically grants a license for initiating judicial\nproceedings, while withholding a license for a \xe2\x80\x9cjudgment\nor of any decree or order of similar or analogous effect.\xe2\x80\x9d\nThis distinction serves several important purposes and is\nvitally related to the President\xe2\x80\x99s (and his delegee\xe2\x80\x99s) pur\xc2\xad\npose to protect those with lawful claims against Iran\nwhile preserving the President\xe2\x80\x99s flexibility to adopt an\napproach to satisfy claims in an orderly and equitable\nfashion. Permitting claims to go forward permits claim\xc2\xad\nants to avoid problems of statute of limitations, and may\nprovide a vehicle for preserving critical evidence neces\xc2\xad\nsary to establish claims, whether they are finally resolved\nthrough subsequent licensing of judgments, resolution\nthrough an administrative claims process, or otherwise.\nSimilarly, permitting the filing of suits puts Iran on notice\nof claims for which it may be held liable and thus serves\nto promote efforts to secure satisfactory protection of\nclaimants\xe2\x80\x99 interest. At the same time withholding license\n256\n\n\x0cfor judgments helps assure that the President maintains\nthe flexibility to determine an orderly method of resolving\nlegitimate claims that assures equity among claimants and\nprovides maximum protection for creditors consistent\nwith the President\xe2\x80\x99s on-going efforts to secure the hos\xc2\xad\ntages\xe2\x80\x99 release.\nThe approach works no unfairness on the litigants. The\nUnited States\xe2\x80\x99 consent to permit the litigation to go for\xc2\xad\nward, expressed in the general license granted by 535.504,\nhas always been expressly conditioned on the withholding\nof a license for judgments. To interpret the regulation to\npermit creation or extinguishing of interests in property\nthrough, e.g., summary judgment on liability or on mo\xc2\xad\ntions to dismiss with prejudice \xe2\x80\x9cwould ignore the express\nconditions on which the consent was extended.\xe2\x80\x9d Orvis v.\nBrownell, 345 U.S. 183, 187 (1953). See also Propper v.\nClark, 337 U.S. 472, 485 (1949), where the Court recog\xc2\xad\nnized that the United States might permit litigation to go\nforward under the TWEA, while limiting the rights ob\xc2\xad\ntainable through litigation.\nMemorandum in Support of United States Request that the Court Defer\nRuling on the Pending Motions, Charles T. Main International, Inc., v.\nKhuzestan Water and Power Authority, No. 79-2034C, D. Mass. Identical\nmotions are being filed in other cases.\nThus, in the Iranian Assets Control Regulations, the government has\nreserved full rights to revoke the licensed attachments.6 Although fed\xc2\xad\neral entities holding blocked funds can be expected to honor with\xc2\xad\ndrawal licenses after the attachments are revoked, private banks may\nrefuse to do so, fearing liability to the attachment claimants. The\nclaimants could sue the banks for wrongfully releasing the funds, argu\xc2\xad\ning that under Zittman I, the government is not in a position to\nabnegate all their state law rights against their debtors, and that under\nNew York law, a wrongful release of attached property makes the\nbanks liable for an accounting. See Fitchburg Yarn Co. v. Wall & Co., 46\nA.D. 2d 763, 361 N.Y.S. 2d 170 (1974). Against such an argument the\nexculpatory provision of IEEPA, \xc2\xa7 1702(a)(3), appears to provide a\ncomplete defense. It provides:\nCompliance with any regulation, instruction, or direc\xc2\xad\ntion issued under this chapter shall to the extent thereof\nbe a full acquittance, and discharge for all purposes of the\nobligation of the person making the same. No person shall\nbe held liable in any court for or with respect to anything\n6 Because of the reservation of the right to revoke these attachm ents, it is clear that they can be\nrevoked under IEE PA w ithout 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\n257\n\n\x0cdone or omitted in good faith in connection with the\nadministration of or pursuant to and in reliance on, this\nchapter, or any regulation, instruction, or direction issued\nunder this chapter.\nThis provision appears to be a complete barrier to state law liability for\nrelease of blocked funds pursuant to presidential directive. Neverthe\xc2\xad\nless, the presence of its predecessor does not seem to have assuaged the\nbanks\xe2\x80\x99 concerns in the cases described above. Because this provision\ndoes not appear to have been litigated, firm conclusions about its scope\nare difficult. Moreover, there appears to be no conclusive legislative\nhistory indicating that it is meant to bar state law liabilities of all kinds.\nTherefore, because a presidential directive is arguably ineffectual to\ndestroy the attachments for all purposes, the banks may not be willing\nto rely on it.7 Their exposure is great; faced with a choice of disobeying\na government order (which could subject them to a civil penalty of\n$10,000 and criminal penalties that may be unlikely in a case of unclear\nlegalities), or releasing billions of dollars for which they may later be\nasked to account, the banks may insist on legislation granting them\nmore specific protection than does the present statute before they will\nrelease the blocked funds.\nTherefore, funds held by federal entities should be relied on as the\nsource of any amounts promised to be returned forthwith to Iran,\nbecause the disposition of the Iranian funds held by private banks, at\nleast in the United States, will surely be the subject of litigation.\nIII. Funds Blocked in Foreign Branches of American Banks\nThe possibility that licenses will be issued for Iranian withdrawals\nfrom foreign branches of American banks raises the question of the\npermissible extraterritorial effect of domestic regulation. First, the\nUnited States has authority to exercise jurisdiction over its nationals\nabroad. Blackmer v. United States, 284 U.S. 421 (1932) (upholding\ncontempt against U.S. citizen residing in France for failure to respond\nto D.C. Supreme Court subpoena); Cook v. Tait, 265 U.S. 47 (1924)\n(upholding tax levied against non-resident U.S. citizen for income from\nproperty located outside the United States). Although international law\n7 N or do the Iranian Assets C ontrol Regulations conclusively determ ine the effects o f a possible\nrevocation o f the existing licenses for judicial proceedings on the rights of private parties inter se.\nA lthough \xc2\xa7 535.805 provides that licenses \xe2\x80\x9cmay be amended, modified, or revoked at any tim e,\'\xe2\x80\x99 other\nambiguous provisions suggest that private rights, if not public ones, may have accrued in the\nmeantime. See \xc2\xa7 535.203(c), w hich states that \xe2\x80\x9c unless otherw ise provided," licenses render transactions\nenforceable \xe2\x80\x9c to the same extent\xe2\x80\x9d as they would be absent IEE PA . See also \xc2\xa7 535.502(c), providing that\nunless otherw ise specified, licenses do not create interests in property w hich \xe2\x80\x9cw ould not otherwise\nexist under ordinary principles o f law ,\xe2\x80\x9d and \xc2\xa7 535.402, stating that revocation of licenses, \xe2\x80\x9c unless\notherw ise specifically provided,\xe2\x80\x9d do not affect the validity o f prior actions. T he reservation in these\nregulations of pow er to specify special conditions, how ever, may provide a sufficient warning to\nattachm ent lienors that their interests may be negated entirely. Revocation orders should attem pt to\ndestroy the attachm ents for all purposes, relying on the special conditions power.\n\n258\n\n\x0cprinciples are unsettled for determining the nationality of corporations,\nthe generally accepted U.S. rule is that corporations have the national\xc2\xad\nity of the states that create them. See Craig, Application of the Trading\n\nwith the Enemy Act to Foreign Corporations Owned by Americans: Reflec\xc2\xad\ntions on Fruehauf v. Massardy, 83 Harv. L. Rev. 579, 589-92 (1970).\n\nAmerican-owned and incorporated foreign branches of U.S. banks\nthus appear to be \xe2\x80\x9csubject to the jurisdiction of the United States,\xe2\x80\x9d\nwithin the meaning of IEEPA. And the government has steadfastly\nmaintained to date that the initial blocking orders applied to Iranian\nfunds in these banks. As the Supreme Court has stated in a related\ncontext, 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\nthe 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 a 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 of New\nYork v. Internal Revenue Service, 271 F.2d 616 (2d Cir. 1959).\nThus under domestic law IEEPA orders are effective with respect to\nforeign branches of American banks. These banks have already been\nlicensed to set off amounts owed them by Iran against these accounts.\nOnce withdrawal licenses are issued, there should be no legal impedi\xc2\xad\nment to Iranian withdrawal of the remaining balances of the accounts.8\n8It is possible that after w ithdraw al licenses are issued, creditors o f Iran will attem pt to attach some\nof these accounts through actions in foreign courts. Such an eventuality could raise jurisdictional\nconflicts. In an analogous context, the United States Supreme C ourt has assented to an executive\npolicy of denying foreign claimants resort to form erly blocked assets, at least unless their claims\nrelated to transactions in this country. United States v. Pink, supra. International law principles of\ncom ity suggest that foreign courts w ould therefore allow their ow n dom estic claimants a special\npriority in adjudicating rights to Iranian funds found there.\n\n259\n\n\x0cIV. Returning the Shah\xe2\x80\x99s Assets to Iran\nWe now consider what action the President may take to assist or\neffect the return of the Shah\xe2\x80\x99s assets in the United States to Iran. Such\nan action might take one of a number of forms: vesting the assets in the\ngovernment for administration in accordance with an international set\xc2\xad\ntlement; blocking the assets under IEEPA to facilitate a census and to\nprevent their removal; or undertaking to aid Iran in its present litigation\nto recover the assets, either by informing the court of our position on\nsovereign immunity and act of state doctrines, or by taking an assign\xc2\xad\nment of the claim from Iran. We conclude that the first of these\nalternatives, vesting the assets, would require legislation and even then\nwould , give rise to a takings claim for just compensation. The others\ncan be performed under present law, are likely to achieve the govern\xc2\xad\nment\xe2\x80\x99s purposes, and would, we believe, be likely to survive constitu\xc2\xad\ntional challenge by the Shah\xe2\x80\x99s estate.\nThe question of vesting authority presents special problems. When\nthe IEEPA was enacted in 1977, the President\xe2\x80\x99s authority to vest assets\nwas confined to wartime. 50 U.S.C. App. \xc2\xa7 5(b) (Supp. I 1977). New\nlegislation could attempt to authorize the President to vest the Shah\xe2\x80\x99s\nassets and to administer them in accordance with settlement of the\nhostage crisis. However, vesting the private property of a non-enemy\nalien national without compensation would appear to violate the Fifth\nAmendment.9 In Russian Volunteer Fleet v. United States, 282 U.S. 481\n(1931), the Supreme Court unanimously construed a statute to permit\nsuits by non-enemy aliens for the value of ship construction contracts\nthat the United States requisitioned under the statute (which provided\nfor just compensation suits in cases of expropriation, but did not specify\nwho would be entitled to sue). The petitioner, a Russian corporation,\nwas the assignee of two construction contracts that were requisitioned,\nalong with the ships built under them. The Government argued that\nCongress did not intend to protect corporations organized under the\nlaws of a government that the United States did not recognize. The\nCourt declined to adopt that statutory construction on the ground that\nsuch a construction would \xe2\x80\x9craise a grave question as to the constitu\xc2\xad\ntional validity of the Act,\xe2\x80\x9d (282 U.S. at 492), and instead held that:\nThe petitioner was an alien friend, and as such was enti\xc2\xad\ntled to the protection of the Fifth Amendment of the\nFederal Constitution. Exerting by its authorized agent the\npower of eminent domain in taking the petitioner\xe2\x80\x99s prop\xc2\xad\nerty, the United States became bound to pay just compen\xc2\xad\nsation. And this obligation was to pay to the petitioner\n9A foreign nation, how ever, unlike a foreign national, does not have rights under the Fifth\nAmendm ent.\n\n260\n\n\x0cthe equivalent of the full value of the property contempo\xc2\xad\nraneously with the taking.\n282 U.S. at 489 (citations omitted).\nThe Supreme Court has, in subsequent cases, repeatedly indicated its\ncontinuing approval of the Russian Volunteer Fleet holding. See, e.g.,\nGuessefeldt v. McGrath, 342 U.S. 308, 318 (1952). In Clark v. Uebersee\nFinanz-Korporation, 332 U.S. 480 (1947), the Court held that Congress\xe2\x80\x99\namendment of the Trading with the Enemy Act (TWEA) in 1941 to\npermit the seizure of any foreign asset was not intended to preclude\nnon-enemy aliens from claiming their interests in such assets:\nIt is not easy for us to assume that Congress treated all\nnon-enemy nations, including our recent allies, in such a\nharsh manner, leaving them only with such remedy as\nthey might have under the Fifth Amendment.\n332 U.S. at 487-8. See also Becker Steel Co. v. Cummings, 296 U.S. 74,\n79 (1935).10\nThe President\xe2\x80\x99s authority to block the Shah\xe2\x80\x99s assets under present\nlaw, in contrast to vesting them, does not seem open to serious ques\xc2\xad\ntion. The IEEPA authorizes the President to block transfers of \xe2\x80\x9cany\nproperty in which any foreign country or a national thereof has any\ninterest,\xe2\x80\x9d 50 U.S.C. \xc2\xa7 1702(a)(1). The application of this language in the\npredecessor TWEA to the assets of foreign nationals was firmly estab\xc2\xad\nlished by the time of the IEEPA\xe2\x80\x99s enactment and has repeatedly sur\xc2\xad\nvived constitutional challenge. E.g., Sordino, supra, upholding the\nblocking of assets of Cuban nationals. Still, an executive order blocking\nproperty of the Shah\xe2\x80\x99s estate in the United States would be unique in\nsingling out the assets of one individual. Nevertheless, there seems\nample justification for such an order in the prominent place in the\ncurrent emergency of Iran\xe2\x80\x99s claim that assets in the Shah\xe2\x80\x99s estate are\nactually converted Iranian government assets.\nIndeed, there is an argument that the Shah\xe2\x80\x99s assets in this country are\npresently blocked by Executive Order No. 12,170. That order blocks\n\xe2\x80\x9call property and interests in property\xe2\x80\x9d of the government of Iran, and\nimplementing regulations define \xe2\x80\x9cinterests\xe2\x80\x9d and \xe2\x80\x9cproperty\xe2\x80\x9d in the\nbroadest possible terms, including indirect and contingent interests.\n31 C.F.R. \xc2\xa7\xc2\xa7 535.311-12. Therefore, perhaps the assets claimed in Iran\xe2\x80\x99s\nsuit against the Shah in New York state court are subject to the\nblocking order. (Certainly any assets for which Iran obtained a judg\xc2\xad\nment thereupon would be blocked.) However, an interpretation of the\n,0T he only authority to the contrary is Judge Friendly\'s dictum in Sordino v. Federal Reserve Bank\no f New York, 361 F.2d 106, 113 (2d Cir. 1966), cert, denied. 385 U.S. 898. to the effect that the right of\n\na state to protect its nationals abroad might com prehend expropriation o f property o f nationals o f an\noffending nation for com pensatory purposes. Sordino involved blocked assets, not vested ones; this\ndictum has broad and quite harsh implications. We believe it to be inconsistent w ith the Suprem e\nC ourt cases discussed in text.\n\n261\n\n\x0cblocking order that applied it to assets claimed by Iran in litigation\nwould grant that nation a power to block assets in this country by\nasserting claims to them. In view of the implications of such an in\xc2\xad\nterpretation, we believe that it was not intended by the order or the\nregulations, and that a separate executive order blocking assets owned\nby the Shah\xe2\x80\x99s estate would be necessary. The Treasury Department\ncould then proceed to perform a census of the assets in the normal\nmanner.\nAn order blocking the Shah\xe2\x80\x99s assets would presumably be prepara\xc2\xad\ntory to an effort to have the Government participate in Iran\xe2\x80\x99s suit\nagainst the Shah in either of two ways. First, we could simply urge the\ncourt to reach the merits of the conversion claims, by filing a Sugges\xc2\xad\ntion of Interest that presents the Executive\xe2\x80\x99s position that the doctrines\nof sovereign immunity and act of state should not bar the court\xe2\x80\x99s\ndetermination of the merits. Second, the Government could urge the\ncourt to treat the merits as foreclosed in Iran\xe2\x80\x99s favor, so that the only\nremaining issue would be to identify particular assets as belonging to\nthe Shah\xe2\x80\x99s estate. We would do this by presenting a Suggestion of\nInterest urging that under the act of state doctrine, Iranian government\ndeterminations that the Shah did convert government assets must be\nrespected by our courts. Indeed, we could take an assignment of the\nIranian claims and pursue them before the court. We will analyze these\npossibilities in the order presented.\nIn the absence of a Suggestion of Interest of the United States that\nalters the court\xe2\x80\x99s approach to sovereign immunity and act of state\ndoctrines, it may fail to reach the merits of Iran\xe2\x80\x99s case. The complaint\nalleges that the Shah was the de facto ruler and head of state of Iran\nfrom 1941 until January 1979. The acts complained of are alleged to\nhave taken place in Iran during the period that the Shah was the ruling\nmonarch, and therefore would ordinarily constitute acts of state.\nAn argument can also be made that the Shah\xe2\x80\x99s estate enjoys sover\xc2\xad\neign immunity from suit.11 The 1976 Foreign Sovereign Immunities\nAct, 28 U.S.C. \xc2\xa7 1602 et seq., does not expressly address the privileges\nand immunities of heads of state, but talks only in terms of \xe2\x80\x9cforeign\nstates.\xe2\x80\x9d Nevertheless, Restatement (Second) of the Foreign Relations\nLaw of the United States, \xc2\xa766 (1965), states that the immunity of a\nforeign state recognized in \xc2\xa7 65 extends to \xe2\x80\x9cits head of state and any\nperson designated by him as a member of his official party.\xe2\x80\x9d Thus, it is\narguable that a former head of state enjoys the immunities of a \xe2\x80\x9cforeign\nstate\xe2\x80\x9d as codified in the A ct.12 Alternatively, if the Act were construed\n11 In Hatch v. Baez, 14 N.Y. (7 Hun) 596 (1876), the court held that the acts while in office of a\nform er head of stale w ere immune from judicial scrutiny in a suit brought by a private claim ant, not\nhis form er governm ent. The court\'s decision is phrased in terms suggestive of both act of state and\nsovereign immunity doctrines.\n,2Section 1605(a)(5) preserves the immunity o f foreign states from suit with respect to\xe2\x80\x94\nConiinued\n\n262\n\n\x0cnot to apply to heads of state, the Shah might be entitled to immunity\nunder generally recognized doctrines of customary international law.\nSee 1 Oppenheim\xe2\x80\x99s International Law 676 ff. (Lauterpacht ed., 1953).\nSince either act of state or sovereign immunity doctrines may defeat\nIran\xe2\x80\x99s claims against the Shah if applied in this case, it is important to\nconsider whether the present Iranian government may waive the appli\xc2\xad\ncation of these doctrines to the acts of its predecessor. We have found\nno authority on point. As an a priori matter, it seems that Iran might be\nable to waive the doctrines.13 Both doctrines exist for the benefit of the\nstate in question, not for the individuals who lead it. Therefore it seems\nincongruous to apply the doctrines to defeat a claim by a state for its\nown assets converted by a former monarch. Since the question of the\nwaivability of these defenses by a present government against a former\nhead of state is an open one, a Suggestion of Interest indicating that the\nExecutive favors reaching the merits might be especially persuasive in\ncourt, although it is unlikely to prove conclusive.14\nA more conclusive impact on the merits might follow an Iranian\ndecree nationalizing the Shah\xe2\x80\x99s assets, and either a Suggestion of Inter\xc2\xad\nest by the United States, urging that it be honored, or a full-scale\nassignment of the Iranian claims to the United States pursuant to an\nexecutive agreement. Such an assignment should allow our government\nto recover the assets, under United States v. Belmont, 301 U.S. 324\n(1937), which held that a foreign country\xe2\x80\x99s expropriation decree di\xc2\xad\nrected at that country\xe2\x80\x99s corporations must be deemed by a U.S. court\nto have validly vested title to the expropriated assets in the foreign\ngovernment. The United States sued in Belmont to recover funds that a\nRussian corporation, prior to nationalization, had deposited with a New\nYork banker. The United States claimed these funds under the Litvinov\nAssignment. The Court held that our recognition of the U.S.S.R.\nimpliedly recognized as valid that nation\xe2\x80\x99s expropriation decrees, and\nthat the U.S. claim for the expropriated assets did not constitute a\ntaking of private property under the Fifth Amendment:\nThe public policy of the United States relied upon as a\nbar to the action is that declared by the Constitution,\nnamely, that private property shall not be taken without\n(A) any claim based upon (he exercise or perform ance or the failure to exercise or\nperform a discretionary function regardless of w hether the discretion be abused, or\n(B) any claim arising out of malicious prosecution, abuse of process, libel, slander,\nm isrepresentation, deceit, or interference w ith contract rights.\nT he tortious and wrongful acts alleged in the com plaint w ould probably fall within the above\nprovisions of the Act.\n13 Analogy may be taken to the pattern of diplomatic immunities and their waiver. Under the\nVienna C onvention on D iplomatic Relations, the sending state may waive a diplom at\xe2\x80\x99s immunity (art.\n32). Absent waiver, how ever, immunity for the exercise o f official functions subsists after the diplo\xc2\xad\nmat\'s appointm ent has term inated (art. 39.2).\n14The effect in New York courts o f Suggestions of Interest by the United States regarding these\nissues is discussed at length in our m emorandum of January 2, 1980, to the A cting Associate A ttorney\nG eneral [p: 160 supra].\n\n263\n\n\x0cjust compensation. But the answer is that our Constitu\xc2\xad\ntion, laws and policies have no extraterritorial operation,\nunless in respect of our own citizens. What another\ncountry has done in the way of taking over property of\nits nationals, and especially of its corporations, is not a\nmatter for judicial consideration here. Such nationals must\nlook to their own government for any redress to which\nthey may be entitled.\n301 U.S. at 332 (citation omitted). No suggestion appears in Belmont\nthat the constitutionality of the United States government\xe2\x80\x99s \xe2\x80\x9ctaking\xe2\x80\x9d\ndepended at all on the payment of compensation to Russian nationals\nby this government or by that of the U.S.S.R. See also United States v.\nPink, 315 U.S. 203 (1942). Thus it appears that an assignment can avoid\nthe constitutional perils of vesting\xe2\x80\x94the Russian Volunteer Fleet case\nwas cited with approval in Belmont.\nJohn M . H arm on\n\nAssistant Attorney General\nOffice o f Legal Counsel\n\n264\n\n\x0c'


b'Proposal That the President Accept\nHonorary Irish Citizenship\nAcceptance by the President of honorary Irish citizenship would fall within the spirit, if not the letter,\nof the Emoluments Clause of the Constitution.\nThe procedure which has developed under the constitutional provision and its implementing statute\nwould permit the President to participate in the formal ceremonies, accept the written evidence of\nthe award and have it deposited with the Department of State, subject to the subsequent consent of\nCongress.\nEven if Congress does not enact consenting legislation, the President could probably have the\ndocument conferring honorary Irish citizenship delivered to him by the Department of State after he\nleaves the White House.\n\nMay 10, 1963\n\nMEMORANDUM OPINION FOR THE SPECIAL ASSISTANT TO THE PRESIDENT*\nThe Attorney General has asked me to respond to your memorandum of April\n17, 1963, with respect to the legal aspects of the proposal that the President accept\n\xe2\x80\x9chonorary Irish citizenship.\xe2\x80\x9d For the reasons set forth hereafter, I believe that\nacceptance by the President of honorary Irish citizenship would fall within the\nspirit, if not the letter, of Article I, Section 9, Clause 8, of the Constitution which\nrequires that an individual who holds an office of profit or trust under the United\nStates must obtain the consent of Congress in order to accept \xe2\x80\x9cany present,\nEmolument, Office, or Title, of any kind whatever, from any King, Prince or\nforeign State.\xe2\x80\x9d Nevertheless, the procedure which has developed under the\nconstitutional provision and under section 3 of the Act of January 3, 1881 (ch. 32,\n21 Stat. 603, 604 (codified at 5 U.S.C. \xc2\xa7 115)), a statute which implements the\nprovision, would permit the President to participate in the formal ceremonies,\naccept the written evidence of the award and have it deposited with the Department of State, subject to the subsequent consent of Congress. Moreover, even if\nCongress should thereafter fail to enact consenting legislation, the President could\nprobably have the document conferring honorary Irish citizenship delivered to him\nby the Department of State after he leaves the White House.\nAt the outset, it should be emphasized that what would be conferred upon the\nPresident would not be Irish citizenship but merely honorary Irish citizenship.\nYour memorandum of April 17, 1963 indicated that it was originally the intention\nthat the grant be conferred pursuant to section 12 of the Irish Nationality and\nCitizenship Act, 1956. That act provides that \xe2\x80\x9cIrish citizenship\xe2\x80\x9d may be granted to\nindividuals or the children or grandchildren of individuals who have \xe2\x80\x9cdone signal\n\n*\nEditor\xe2\x80\x99s Note: The Special Assistant to whom this memorandum was addressed was McGeorge\nBundy, National Security Adviser to the President.\n\n278\n\n\x0cProposal That the President Accept Honorary Irish Citizenship\n\nhonour or rendered distinguished service to\xe2\x80\x9d Ireland, but it makes it clear that once\nthe grant is made the individual \xe2\x80\x9cshall . . . be an Irish citizen.\xe2\x80\x9d Id. \xc2\xa7 12. Accordingly, action pursuant to this statute would impose upon the President whatever duties\nand obligations are ordinarily attached to Irish citizenship and would raise the\nserious problems attendant upon an undertaking by a President of fealty to another\nnation.\nAs a result of discussion of this problem with the Irish Ambassador, the Government of Ireland has drafted a special act, a copy of which is attached. The act\nwould provide that \xe2\x80\x9c[t]he President [of Ireland] may by warrant confer on John\nFitzgerald Kennedy, President of the United States of America, the title of honour\nof Honorary Citizen of Ireland.\xe2\x80\x9d In an Aide-M\xc3\xa9moire of April 30, 1963, which is\nalso attached, the Irish ambassador states:\nThe Attorney General of Ireland has given opinion that the Bill as\ndrafted would not confer citizenship with its attendant duties and obligations but only a title of honor.\nI agree. In fact, the Department of Justice took a similar position when honorary United States citizenship was conferred upon Sir Winston Churchill. H.R. Rep.\nNo. 88-57 (1963). Consequently, the problems which might have arisen as a result\nof dual citizenship are no longer presented.\nHowever, the question still remains whether acceptance comes within the letter\nor spirit of Article I, Section 9, Clause 8, which provides:\nNo Title of Nobility shall be granted by the United States: And no\nPerson holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument,\nOffice, or Title, of any kind whatever, from any King, Prince, or foreign State.\nThis clause was adopted unanimously at the constitutional convention as a means\nof preserving the independence of foreign ministers and other officers of the\nUnited States from external influences. 3 Papers of James Madison 1408 (1841).\nIt is virtually copied from a similar provision in Article VI of the Article of\nConfederation. The constitutional provision has been interpreted as being \xe2\x80\x9cparticularly directed against every kind of influence by foreign governments upon\nofficers of the United States, based on our historic policies as a nation.\xe2\x80\x9d Gifts from\nForeign Prince, 24 Op. Att\xe2\x80\x99y Gen. 116, 117 (1902) (emphasis in original); see\nalso 2 Joseph Story, Commentaries on the Constitution of the United States \xc2\xa7 1352\n(Thomas M. Cooley ed., 4th ed. 1873).\nIt will be noted that the proposed Irish statute describes what would be conferred upon the President as a \xe2\x80\x9ctitle of honour.\xe2\x80\x9d As such, it could be argued that\nwhat would be conferred falls within the literal language of the constitutional\nprovision. Ambassador Kiernan has advised us that the bill could be redrafted to\n\n279\n\n\x0cSupplemental Opinions of the Office of Legal Counsel in Volume 1\n\nomit the reference to a \xe2\x80\x9ctitle of honour.\xe2\x80\x9d However, I do not believe that the legal\nproblem would be significantly modified if this should be done. The spirit of the\nprovision clearly extends to any type of obligation to foreign countries, and the\ndesignation of what is conferred appears to be of little relevance.\nMoreover, in analyzing Public Law 88-6 and Proclamation 3525 of April 9,\n1963, which operated to confer honorary citizenship of the United States upon Sir\nWinston Churchill, this Department took the view that what would be conferred\nupon him would be \xe2\x80\x9csimilar in effect to . . . a medal or decoration.\xe2\x80\x9d H.R. Rep. No.\n88-57, at 4 (letter of Deputy Attorney General Katzenbach). The House Committee on the Judiciary stated that it \xe2\x80\x9csubscribes to the interpretation of the import of\nthis legislation as outlined in the report rendered by the Department of Justice.\xe2\x80\x9d Id.\nat 5. And medals and decorations have always been regarded as coming within the\nconstitutional provision,1 although it has never been precisely articulated whether\none of these constitutes a \xe2\x80\x9cpresent, Emolument, Office, or Title.\xe2\x80\x9d Thus, section 3\nof the Act of January 31, 1881 provides:\n[A]ny present, decoration, or other thing, which shall be conferred or\npresented by any foreign government to any officer of the United\nStates, civil, naval, or military, shall be tendered through the\nDepartment of State, and not to the individual in person, but such\npresent, decoration, or other thing shall not be delivered by the\nDepartment of State unless so authorized by act of Congress.\n5 U.S.C. \xc2\xa7 115. The constitutional provision requires the consent of Congress to\nthe acceptance of the enumerated honors and presents \xe2\x80\x9cof any kind whatever.\xe2\x80\x9d\nSince the statute is intended to implement this provision, the phrase \xe2\x80\x9cother thing\xe2\x80\x9d\nshould probably be construed in a similarly inclusive manner. Accordingly, it\ncould be reasonably contended that a warrant or other documentary evidence of\nhonorary Irish citizenship that may be presented to the President is an \xe2\x80\x9cother\nthing\xe2\x80\x9d within the meaning of the statute.\nLiterally read, the statute precludes direct tender of a present or mark of honor\nto an officer of the United States; the tender is to be through the Department of\nState. However, on the ground that it avoids offense to other countries, a custom\nhas developed under which officers of the United States may accept foreign\nhonors tendered to them and subsequently have them deposited in the Department\n\n1\nSee, e.g., Message of President Andrew Jackson to the Senate and House of Representatives, dated January 19, 1830, in 3 Compilation of the Messages and Papers of the Presidents 1029, 1030\n(James D. Richardson ed., 1897), stating that the Constitution prevented him from accepting a medal\ntendered to him by the Republic of Colombia, and that he was placing it at the disposal of Congress.\nCongress did not grant its consent to acceptance. The House Committee on Foreign Affairs merely\nrecommended that the medal be deposited with the Department of State. H.R. Rep. No. 21-170 (Feb. 9,\n1830). See also 5 U.S.C. \xc2\xa7 114 (prohibiting an officer of the United States from wearing a decoration\nwithout the consent of Congress).\n\n280\n\n\x0cProposal That the President Accept Honorary Irish Citizenship\n\nof State. This procedure has been treated as substantial compliance with the\nstatute. If Congress subsequently enacts legislation consenting to acceptance (see,\ne.g., Act of Aug. 3, 1956, Priv. L. No. 84-850, 70 Stat. A171), delivery is made to\nthe recipient.2 Therefore, if the President should accept the tender of honorary Irish\ncitizenship, it would be appropriate for him to include in his acceptance remarks a\nstatement that he is thereupon placing the warrant in the hands of the United States\nAmbassador to Ireland in accordance with United States law. If the President\nhandled the matter in this way, it would be difficult for anyone to contend that his\naction was inconsistent with the constitutional provision or the statute.3 In order to\nminimize possible congressional criticism in that regard, it might also be appropriate to advise the Chairmen of the House and Senate Foreign Relations Committees\nin advance that this procedure will be followed.\nTwo final points might be made. First, some Presidents have treated presents\nwhich they have received as gifts to the United States, rather than as personal gifts.\nThey have therefore taken the view that acceptance is not subject to the constitutional provision. This view was apparently followed by President Lincoln, who\nreceived a \xe2\x80\x9cDiploma\xe2\x80\x9d from the Republic of San Marino declaring that \xe2\x80\x9cthe\nPresident pro tempore of the United States of America\xe2\x80\x9d was a citizen of that\nRepublic. Although Lincoln wrote the Regent Captains of San Marino thanking its\nCouncil for the honor that it had \xe2\x80\x9cconferred upon me\xe2\x80\x9d (4 The Collected Works of\nAbraham Lincoln 360 (Roy P. Basler ed., 1953)), he had the document deposited\nwith the Department of State and it is now in the National Archives. The \xe2\x80\x9cDiploma\xe2\x80\x9d was conferred on the President of the United States \xe2\x80\x9cpro tempore,\xe2\x80\x9d and it\nindicates that the action to authorize its issuance was taken while Buchanan was\nstill President. The circumstances thus appear to have differed markedly from\nthose here involved. It seems clear that Ireland proposes to confer honorary\ncitizenship on President Kennedy personally, not on him as the President of the\nUnited States for the time being.\nSecond, we are informed that it is the practice of the Protocol Office of the\nState Department, the custodian of gifts and other marks of honor deposited\n2\nUnder 5 U.S.C. \xc2\xa7 115a, the Secretary of State is directed to submit to each alternate Congress a\nlist of retired personnel for whom the Department of State is holding decorations, medals or other\nmarks of honor pursuant to 5 U.S.C. \xc2\xa7 115. In a memorandum to department and agency heads, dated\nApril 13, 1954, President Eisenhower directed that lists submitted to Congress pursuant to 5 U.S.C.\n\xc2\xa7 115a be limited to retired personnel. Of course this direction has not prevented Congress from\ngranting the required consent to incumbent officers. 70 Stat. A171.\n3\nAs a legal matter, the consent of Congress can be obtained either in advance or following receipt\nof anything covered by Article I, Section 9, Clause 8. We have, however, been able to locate only one\nstatute in which it was clear that the consent had been granted in advance, Pub. Res. 34-3, 11 Stat. 152\n(Aug. 30, 1856), and this did not involve a President. On the other hand, in the only instance in which\nwe have been able to discover a grant of consent to a President, it followed receipt. Pub. Res. 54-39, 29\nStat. 759 (Apr. 2, 1896) (authorizing delivery to Benjamin Harrison of medals presented to him by\nBrazil and Spain during his term as President). The Harrison precedent would strengthen the view that\nthe procedure suggested above is consistent with constitutional practice.\n\n281\n\n\x0cSupplemental Opinions of the Office of Legal Counsel in Volume 1\n\npursuant to the 1881 Act, to deliver to a former officer who has severed any\nofficial relationship with the United States, upon his request and without referral\nto Congress, a gift or other mark of honor tendered to him during his incumbency\nand deposited under the Act. Accordingly, even if Congress should not act in this\nmatter, the President could probably obtain the warrant when he no longer holds\noffice.4\nI assume that the President will independently appraise the policy considerations involved in acceptance of the foreign honor here involved. In this regard, he\nmay wish to know that President Wilson refused all foreign decorations while in\noffice.5 On the other hand, it is clear that this attitude does not represent an\nestablished policy of the presidency, as evidenced by the incidents, referred to\nabove, involving Presidents Jackson, Lincoln and Benjamin Harrison.\nNORBERT A. SCHLEI\nAssistant Attorney General\nOffice of Legal Counsel\n\n4\nWhile a former President is entitled to a monetary allowance of $25,000 per year (Pub. L. No. 85745, 72 Stat. 838 (codified at 3 U.S.C. \xc2\xa7 102 note (1958)), he could hardly be considered to hold an\n\xe2\x80\x9cOffice\xe2\x80\x9d within the meaning of the constitutional prohibition.\n5\nEdith Bolling Wilson, My Memoir 343 (1st ed. 1938).\n\n282\n\n\x0cProposal That the President Accept Honorary Irish Citizenship\n\nATTACHMENT 1\nPresident Kennedy Bill, 1963\nArrangement of Sections\nSection\n1. Conferring of title of honour on President Kennedy.\n2. Short title.\nDraft of Bill\nAn Act to enable the title of honour of Honorary Citizen of Ireland to be conferred\non John Fitzgerald Kennedy, President of the United States of America.\nBE IT ENACTED by the Oireachtas as follows:\nConferring of title of\nhonour on President\nKennedy.\n\n1. The President may by warrant confer on John\nFitzgerald Kennedy, President of the United States of\nAmerica, the title of honour of Honorary Citizen of\nIreland.\n\nShort title.\n\n2. This Act may be cited as the President Kennedy Act,\n1963.\n\n283\n\n\x0cSupplemental Opinions of the Office of Legal Counsel in Volume 1\n\nATTACHMENT 2\nAide-M\xc3\xa9moire\nThe Government of Ireland is prepared to promote special legislation to enable\nthe title of Honorary Citizen of Ireland to be conferred on President Kennedy,\ninstead of pursuing the idea of offering citizenship as a token of honor under\nSection 12 of the Irish Nationality and Citizenship Act, 1956. A draft bill has been\nprepared with this objective in mind. The text of the bill is conveyed herewith.\nThe Attorney General of Ireland has given opinion that the Bill as drafted\nwould not confer citizenship with its attendant duties and obligations but only a\ntitle of honor.\nAn informal intimation is requested as to whether the title of honor of Honorary\nCitizen of Ireland, as contemplated in the draft bill, would be acceptable to\nPresident Kennedy.\nApril 10, 1963\n\n284\n\n\x0c'