b'The Balanced Budget Amendment\nThe lack o f any enforcement mechanism in current proposals to amend the Constitution to require\na balanced budget could result in the transfer o f power over fundamental political questions of\ntaxing and spending to the courts. T his would represent a substantial reordering of our basic con\xc2\xad\nstitutional structure.\nBefore resorting to the drastic step of am ending the Constitution, Congress should explore other reason\xc2\xad\nable alternatives, including line item veto legislation.\n\nJanuary 23, 1995\nS t a t e m e n t B e f o r e t h e J o in t E c o n o m ic C o m m it t e e\nU n it e d S t a t e s C o n g r e s s\n\nI appreciate this opportunity to present the views of the Department of Justice\non proposals to amend the Constitution to require a balanced budget, including\nSenate Joint Resolution 1 and House Joint Resolution 1. For the most part, my\ncomments will reflect the concerns that I raised on behalf of the Administration\nin testimony last year before the Senate Appropriations Committee1 and in testi\xc2\xad\nmony and statements this year before the Senate Judiciary Committee2 and the\nSubcommittee on the Constitution of the House Judiciary Committee.3 I will also\nrespond to some of the comments and suggestions made during this year\xe2\x80\x99s\nhearings in both the House and the Senate.\nAs I indicated in my earlier testimony and statements, the primary concern of\nthe Department of Justice is that the proposed amendments fail to address the\ncritical question of how they will be enforced. Were a balanced budget amendment\nto be enforced by the courts, it would restructure the balance of power among\nthe branches of government and could empower unelected judges to raise taxes\nor cut spending \xe2\x80\x94 fundamental policy decisions that judges are ill-equipped to\nmake. If the amendment proves unenforceable, it would diminish respect for the\nConstitution and for the rule of law.\nThe leading proposed balanced budget amendments all leave unanswered the\ncentral question of who will enforce the amendment\xe2\x80\x94 the courts or the Presi\xc2\xad\ndent\xe2\x80\x94 or whether it is intended to be enforceable at all. Some versions of a bal\xc2\xad\n1B alanced Budget Am endm ent\xe2\x80\x94 S.J. Res. 4 1 : Hearings Before the Senate Comm, on Appropriations, 103d Cong.\n131-48 (1994) (testimony and prepared statem ent o f Assistant Attorney General W alter Dellinger) (\xe2\x80\x9c 1994 Senate\nH earings\xe2\x80\x9d ), see also id. at 2 7-37 (testimony and prepared statement o f Attorney General Janet Reno). The version\nof the am endm ent that was at issue in the 1994 Senate Hearings, S J . Res. 41, 103d Cong. (1993) (as reported\nby the Senate Judiciary Committee), was identical, in all respects except the date on which it would take effect,\nto this y e ar\xe2\x80\x99s S.J. Res. 1, 104th Cong. (1995). S.J. Res. 1 and H.J. Res. 1, 104th Cong. (1995), are described in\nSection 1 o f this Statement.\n2 The Balanced-Budget Amendment: H earing on S J . Res. J Before the Senate Comm, on the Judiciary, 104th\nCong. 6 8 -7 9 (1996) (testimony and prepared statement o f Assistant Attorney General W alter Dellinger) ( \xe2\x80\x9c 1996\nSenate H earing\xe2\x80\x9d ).\n3 Balanced Budget Constitutional Amendment: Hearings on H J . Res. 1 Before the Subcomm. on the Constitution\no f the H ouse Comm, on the Judiciary, 104th C ong. 2 2 7 -3 4 (1995) (prepared statement o f Assistant Attorney General\nW alter Dellinger).\n\n\x0cThe Balanced Budget Amendment\n\nanced budget amendment have made efforts to restrict the authority of the courts\nto order remedies for violations of the amendment. However, even these versions\nhave failed to address whether and to what extent the President would have\nauthority to enforce the amendment through impoundment or other means, appar\xc2\xad\nently deferring this question for judicial resolution.4\nBefore resorting to the drastic step of amending the Constitution, every other\nreasonable alternative should be explored. In addition to aggressive budget cutting\nmeasures,5 such alternatives include line item veto legislation that has been intro\xc2\xad\nduced in this session of Congress. President Clinton has long supported the line\nitem veto, and the Administration has pledged to work with Congress towards\nthe development of an effective line item veto measure that can promptly be put\ninto place. The line item veto legislation currently pending before Congress would\nincrease the government\xe2\x80\x99s ability to reduce the deficit; unlike the balanced budget\namendment proposals, however, it would do so in a manner that would not disrupt\nthe basic structure of our government.\n\n4 In addition to the versions being debated in the House and in the Senate this year, a number o f balanced budget\namendment proposals have been considered by the Congress during the last 20 years. Useful discussions can be\nfound not only in the most recent hearings, but also in: Balanced-Budget Amendment to the Constitution: Hearing\non S J . Res. 41 Before the Subcomm. on the Constitution o f the Senate Comm, on the Judiciary, 103d Cong. (1995);\nConstitutional Am endm ent to Balance the Budget: H earings Before the Senate Comm, on the B udget, 102d Cong.\n(1992); The Balanced Budget Amendment Volumes I & II: Hearings Before the H ouse Comm, on the Budget, 102d\nCong. (1992) ( \xe2\x80\x9c 1992 House Hearings\xe2\x80\x9d ); Proposed Constitutional Amendments to Balance the Budget: Hearings\nBefore the Subcomm. on Economic and Commercial Law o f the H ouse Comm, on the Judiciary, 101st Cong. (1991)\n( \xe2\x80\x9c 1991 House H earings\xe2\x80\x9d ); Balanced Budget Amendments: Hearing Before the Subcomm. on the Constitution o f\nthe Senate Comm, on the Judiciary, 101st Cong. (1990); Balanced Budget Amendments: H earing Before the\nSubcomm. on the Constitution o f the Senate Comm, on the Judiciary, 100th Cong. (1989); Proposed Balanced Budget\nConstitutional Amendments: Hearings Before the Subcomm. on Monopolies and Commercial Law o f the H ouse\nComm, on the Judiciary, 100th Cong. (1989) (\xe2\x80\x9c 1989 House Hearings\xe2\x80\x9d ); Balanced Budget Constitutional Amendment:\nHearing on S J . Res. IS Before the Subcomm. on the Constitution o f the Senate Comm, on the Judiciary, 99th\nCong. (1985); Proposed Balanced Budget/Tax Limitation Constitutional Amendment: Hearings on S J . Res. 5 Before\nthe Subcomm. on the Constitution o f the Senate Comm, on the Judiciary, 98th Cong. (1984); C onstitutional A m end\xc2\xad\nments Seeking to Balance the Budget and Limit Federal Spending: Hearings Before the Subcomm. on M onopolies\nand Commercial Law o f the House Comm, on the Judiciary, 97th Cong. (1983) ( \xe2\x80\x9c 1983 House H earings\xe2\x80\x9d ); Balanced\nBudget-Tax Limitation Constitutional Amendment: Hearings on S J . Res. 9, 43 & 5 8 Before the Subcomm. on the\nConstitution o f the Senate Comm, on the Judiciary, 97th Cong. (1981); Balancing the Budget: Hearing on S.J.\nRes. 5 8 Before the Subcomm. on the Constitution o f the Senate Judiciary Comm., 97th Cong. (1982); Constitutional\nAmendment to Balance the Federal Budget: Hearings on S J . Res. 126 Before the Senate Comm, on the Judiciary,\n96th Cong. (1980); Constitutional Amendments to Balance the Federal Budget: Hearings Before the Subcomm. on\nMonopolies and Commercial Law o f the House Comm, on the Judiciary, 96th Cong. (1980) ( \xe2\x80\x9c 1980 House\nH earings\xe2\x80\x9d ); Proposed Constitutional Amendment to Balance the Federal Budget: Hearings Before the Subcomm.\non the Constitution o f the Senate Comm, on the Judiciary, 96th Cong. (1980); Balancing the Budget: H earing on\nS J . Res. 55 de 93 Before the Subcomm. on Constitutional Amendments o f the Senate Comm, on the Judiciary, 94th\nCong. (1975).\n3 Under the Clinton Administration, the deficit is projected to decline for three consecutive years for the first\ntime since President Truman was in office. The drop in the deficit over the last two years was the largest twoyear drop in the history o f the United States. The Fiscal Year 1994 deficit is more than $100 billion less than\nwas projected prior to passage o f President C linton\'s economic plan.\n\n9\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nI. The Leading Proposals\nI will begin by briefly summarizing the two leading proposals that I have been\nadvised are of particular interest to your committee: Senate Joint Resolution 1\nand House Joint Resolution 1.\nSenate Joint Resolution 1 would propose a constitutional amendment mandating\nthat \xe2\x80\x9c [t]otal outlays for any fiscal year shall not exceed total receipts for that\nfiscal year, unless three-fifths o f the whole number of each House of Congress\nshall provide by law for a specific excess of outlays over receipts by a rollcall\nvote.\xe2\x80\x9d S J. Res. 1, \xc2\xa71. In addition, it would require a three-fifths rollcall vote\nof the whole number of each House for any increase on the public debt, id. \xc2\xa72;\nwould require the President to submit a balanced budget prior to each fiscal year,\nid. \xc2\xa7 3; and would require a majority rollcall vote of the whole number of each\nHouse for any bill to increase revenue, id. \xc2\xa74. Congress would be allowed to\nwaive these requirements \xe2\x80\x9c for any fiscal year in which a declaration of war is\nin effect . . . [or] for any fiscal year in which the United States is engaged in\nmilitary conflict which causes an imminent and serious military threat to national\nsecurity and is so declared by joint resolution . . . which becomes law.\xe2\x80\x9d Id. \xc2\xa75.\nAdditional sections provide for implementing legislation; define receipts and out\xc2\xad\nlays in broad general terms; and provide that the amendment shall take effect\nno earlier than 2002.\nHouse Joint Resolution 1 would require Congress to \xe2\x80\x9c adopt a statement of\nreceipts and outlays for [each] fiscal year in which total outlays are not greater\nthan total receipts,\xe2\x80\x9d unless three-fifths of the whole number of each House \xe2\x80\x9c pro\xc2\xad\nvide in that statement for a specific excess of outlays over receipts by a vote\ndirected solely to that subject.\xe2\x80\x9d H.J. Res. 1, \xc2\xa7 1. Both Congress and the President\nwould be required to \xe2\x80\x9c ensure that actual outlays do not exceed the outlays set\nforth in such statement,\xe2\x80\x9d which may be amended by law, \xe2\x80\x9c provided [that] revised\noutlays are not greater than revised receipts.\xe2\x80\x9d Id. In addition, the amendment\nwould require a three-fifths vote of the whole number of each House for any\nbill to increase receipts, id. \xc2\xa72, or to increase the debt held by the public, id.\n\xc2\xa76; would require the President to submit a budget prior to each fiscal year \xe2\x80\x9c con\xc2\xad\nsistent with the provisions of this Article,\xe2\x80\x9d id. \xc2\xa73; and would require that all\nvotes taken under the amendment be rollcall votes, id. \xc2\xa7 7. Congress could waive\nthese requirements \xe2\x80\x9c for any fiscal year in which a declaration of war is in effect\xe2\x80\x9d\nor \xe2\x80\x9c for any fiscal year in which the United States faces an imminent and serious\nmilitary threat to national security and is so declared by a joint resolution, adopted\nby a majority of the whole number of each House, which becomes law.\xe2\x80\x9d Id.\n\xc2\xa74. As with S.J. Res. 1, additional sections would provide for implementing legis-\n\n10\n\n\x0cThe Balanced Budget Amendment\n\nlation; define receipts and outlays in broad general terms; and provide that the\namendment shall take effect no earlier than 2002.6\nWhile I have no doubt that you will wish to consider the relative merits of\neach of these provisions, I will not focus much further today on the differences\nbetween the two amendments. Rather, my comments will be directed to the funda\xc2\xad\nmental problems stemming from the failure of either amendment to specify an\nenforcement mechanism.\nII. How Would the Balanced Budget Amendment Be Enforced?\nThe aspect of the proposed balanced budget amendments that is of greatest con\xc2\xad\ncern to the Department of Justice is that they provide no enforcement mechanism\nand may lead to judicial involvement in the budgetary process.7 The Senate pro\xc2\xad\nposal, for example, simply declares that total outlays shall not exceed total\nexpenditures, without explaining how this state of affairs shall come about. Man\xc2\xad\ndating that Congress \xe2\x80\x9c shall adopt\xe2\x80\x9d a balanced budget will not assist Members\nof Congress to reach an agreement on how to balance the budget. While one\nMember of Congress might vote to cut military spending, another to reduce retire\xc2\xad\nment or other entitlement benefits, and a third to raise taxes, each of these meas\xc2\xad\nures may fail to gain a majority in one or the other House of Congress. Nor\ncould we be sure, if no majority could agree on a particular method of balancing\n6 Although the core structure o f the two provisions is quite similar, the House proposal does differ from the\nSenate proposal in som e significant respects, only the first o f which has been the subject of much debate thus\nfar\n(1) H J. Res. 1 would require that no bill to raise receipts may be passed except by three-fifths rollcall\nvote of the whole number o f each House o f Congress, rather than by majority rollcall vote o f the whole\nnumber o f each House o f Congress.\n(2) H J. Res. 1 seems in more explicit terms than S J . Res. 1 to contemplate granting impoundment\nauthority to the President, as \xc2\xa71 states that the President \xe2\x80\x9c shall en su re" that actual spending not exceed\nthe outlays set forth in the budget.\n(3) Even assuming that a balanced budget is passed, H J. Res. 1 does not always require the Government\nto spend no more than it takes in. Rather, it requires Congress and the President to ensure that actual\noutlays do not exceed projected outlays. Accordingly, a deficit that results from overly optimistic projections\no f revenues would not violate the amendment.\n(4) H J. Res. 1 slightly expands the class o f situations in which the provisions o f the amendment couJd\nbe waived, authorizing waiver for \xe2\x80\x9c an imminent and serious military th reat" even when no actual hostilities\nare taking place.\n(5) H J. Res. 1 does not explicitly authorize Congress to rely on estimates in passing implementing\nlegislation.\n7 For other expressions o f concern about the enforceability o f similar balanced budget amendment proposals, see,\ne.g., 1996 Senate Hearing at 119-39 (testimony and prepared statement o f David Strauss, Professor o f Law, University\no f Chicago); id. at 176-89 (testimony and prepared statement o f Alan M orrison, Public Citizen Litigation Group);\nid. at 133-35 (prepared statement o f Cass Sunstein, Professor o f Law, University o f Chicago); 1994 Senate Hearings\nat 149-162 (testimony and prepared statement o f Archibald Cox, Professor o f Law, Harvard University); id. at 16276 (testimony and prepared statement o f former Attorney General Nicholas Katzenbach); id at 177-93 (testimony\nand prepared statement o f Kathleen Sullivan, Professor o f Law, Stanford University); id. at 193-207 (testimony\nand prepared statement o f Burke Marshall, Professor o f Law, Yale University); id. at 289-95 (testimony and prepared\nstatement of Norman Omstein, A merican Enterprise Institute); 1991 House Hearings at 104-06, 114 (statement of\nProfessor Henry M onoghan,Professor o f Constitutional Law, Columbia University); Letter for The Honorable Thomas\nF. Foley, Speaker o f the House o f Representatives, from Robert H. Bork (July 10, 1990), reprinted in Robert H.\nBork, A Seasoned Argum ent, Wash. Post, June 10, 1992, at A23.\n\nli\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nthe budget, that sixty percent of both Houses of Congress could agree on an unbal\xc2\xad\nanced budget. The result would be unworkable in a way that other supermajority\nrequirements are not: while a failure to override a veto or ratify a treaty simply\nleaves the status quo in place, no governmental action would be authorized without\na budget.\nEven if Congress is able to agree on a balanced budget, or a sixty percent\nmajority agrees to a particular unbalanced budget, the problems would not be\nover. If later in the fiscal year expenditures turn out to be greater than expected\n(perhaps because a recession increases claims on unemployment insurance), sixty\npercent of at least one House of the Congress may fail to agree on a resolution\nto exceed the spending limit, or a majority may fail to approve a change in the\nbudget to accommodate the increase. In that situation, all members of Congress\nmight be acting in good faith, and yet Congress would have failed to carry out\nits constitutional command under the amendment to ensure, in the case of SJ.\nRes. 1, that outlays do not exceed receipts, or, in the case of H J. Res. 1, that\nactual outlays do not exceed those set forth in the budget resolution.\nShould this occur, the President might well conclude that the constitutional com\xc2\xad\nmand that \xe2\x80\x9c [t]otal outlays shall not exceed total receipts\xe2\x80\x9d \xe2\x80\x94 to use the language\nof S J. Res. 1 for a moment\xe2\x80\x94 must take precedence over mere statutes, including\nappropriations bills, entitlement packages, and the Congressional Budget and\nImpoundment Control Act of 1974, 2 U.S.C. \xc2\xa7\xc2\xa7601-692. Although the President\nmight interpret that command to authorize him to impound funds,8 nothing in\nthe amendment guides the exercise of that power. For example, the proposal does\nnot say whether the President may select particular areas of his choosing for\nimpoundment, or whether certain areas \xe2\x80\x94 such as Social Security and other entitle\xc2\xad\nment programs \xe2\x80\x94 would be beyond the purview of his impoundment authority.9\n8 The argument for presidential action, such as impoundment, would be even stronger under H.J. Res. 1, which\nrequires the President to \xe2\x80\x9c en su re" that actual outlays do not exceed those set forth in the budget resolution However,\nbecause H.J. Res. 1 does not require that actual outlays not exceed actual revenues, any presidential enforcement\nauthority under H.J. Res. 1 would be limited to lowering spending, and would not include the authority to increase\nrevenues, for exam ple by imposing fees for the use o f certain government services.\n9 Attorney General W illiam Barr has argued that S.J. Res. 1 does not provide the President with impoundment\nauthonty. 1996 Senate Hearing at 121-39 (testimony o f Attorney General Barr). He reasoned that there would be\nno constitutional violation for the President to remedy until the last moment o f the fiscal year, because of the possi\xc2\xad\nbility that Congress would ratify the budget unbalance by a sixty percent vote. Id. at 122.\nW hile this is one way to read the amendment, it is certainly not the only one. Suppose that the President is\nfaced with clear evidence that the budget w ill be far out o f balance and that Congress will not reach a consensus\non either a sixty percent vote o r on a way to balance the budget. Suppose further that the President expresses\nto C ongress his great concern that the Constitution will be violated and the need for congressional action, but that\nnone is forthcom ing. I am by no means convinced that the language o f section 1 bars a President in these cir\xc2\xad\ncum stances from ignoring the clear evidence that a constitutional violation is imminent and that only he can prevent\nit. Nothing in the amendm ent necessarily requires that the President wait until the last moment o f the fiscal year\nto take action to avoid the constitutional violation (by which time such action might well be futile). Indeed, as\nSolicitor G eneral Fried has suggested, section 1 may impose a duty on the President to impound funds to ensure\nthat the Constitution is not violated. See 1994 Senate Hearings at 82 (testimony o f Charles Fried, Professor o f Law,\nHarvard University) ( \xe2\x80\x9c I would think [the President\xe2\x80\x99s] claim to impound would be very strong. Not only his claim,\nbut he could argue with considerable plausibility his duty to do so .").\n\n12\n\n\x0cThe Balanced Budget Amendment\n\nBecause the amendment lacks any specific mechanism for achieving a balanced\nbudget, this amendment, once part of the Constitution, may be read to authorize,\nor even to mandate, judicial involvement in the budgeting process. When con\xc2\xad\nfronted with litigants claiming to have been harmed by the government\xe2\x80\x99s failure\nto comply with the amendment, or by impoundment undertaken by the President\nto enforce the amendment, courts may well feel compelled to intervene. This\nwould be a substantial distortion of our constitutional system. If some judicial\nor executive enforcement mechanism is not inferred, then the amendment would\nconstitute an empty promise in the very charter of our government. Either of these\nalternatives would work a fundamental alteration in the nature of our constitutional\nsystem.\nA. Judicial Enforcement\nThe proposal appears to contemplate a significant expansion of judicial\nauthority: state and federal judges may be required to make fundamental decisions\nabout taxing and spending in order to enforce the amendment. These are decisions\nthat judges lack the institutional capacity to make in any remotely satisfactory\nmanner.10 As former Solicitor General and federal judge Robert Bork declared\nin opposing a balanced budget constitutional amendment:\nThe result . . . would likely be hundreds, if not thousands, of law\xc2\xad\nsuits around the country, many of them on inconsistent theories and\nproviding inconsistent results. By the time the Supreme Court\nstraightened the whole matter out, the budget in question would\nbe at least four years out of date and lawsuits involving the next\nthree fiscal years would be slowly climbing toward the Supreme\nCourt.11\nAnother distinguished former Solicitor General, Professor Charles Fried of Har\xc2\xad\nvard Law School, observed in testifying against S J. Res. 41 last February that\nneither the political question doctrine nor limitations on standing would nec\xc2\xad\nl0For expressions o f this view, see, e.g., 1996 Senate Hearing at 121-39 (testimony and prepared statements\no f former Attorney General William Ban*); id. at 176-89 (testimony and prepared statement o f A lan Morrison, Public\nCitizen Litigation Group); id. at 119-39 (testimony and prepared statement of David Strauss, Professor o f Law,\nUniversity o f Chicago); id. at 133-35 (prepared statement o f Cass Sunstein, Professor o f Law, University of C hicago);\n1994 Senate Hearings at 291-92 (testimony o f Norman Omstein, American Enterprise Institute); id. at 152-53, 156\xe2\x80\x94\n57 (testimony and prepared statement o f Archibald Cox, Professor o f Law, Harvard University); id. at 183, 186\xe2\x80\x94\n87 (testimony and prepared statement o f Kathleen Sullivan, Professor o f Law, Stanford University); 1983 House\nHearings at 340-45 (testimony and prepared statement o f Phillip B. Kurland, Professor of Law, University o f C hi\xc2\xad\ncago); id. at 542-50 (testimony and prepared statement o f Archibald Cox, Chairman, Common C ause).\n\xe2\x80\xa2\xe2\x80\x98 Robert H. Bork, On Constitutional Economics, Am. Ent. Inst. J. on G ov\xe2\x80\x99t and S oc\xe2\x80\x99y 14, 18 (Sept.-O ct. 1983),\nreprinted in 1989 House Hearings at 645, 649.\n\n13\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nessarily preclude litigation that would ensnare the judiciary in the thicket of budg\xc2\xad\netary politics.12\nThe Supreme Court has explained that \xe2\x80\x9c the political question doctrine . . . is\ndesigned to restrain the Judiciary from inappropriate interference in the business\nof the other branches of Government.\xe2\x80\x9d 13 On its face, such a statement would\nseem to constrain the courts\xe2\x80\x99 review of a balanced budget amendment. The most\nrecent decisions of the Supreme Court, however, suggest that the Court is prepared\n(wisely or unwisely) to resolve questions that might once have been considered\n\xe2\x80\x9c political.\xe2\x80\x9d For example, in United States v. Munoz-Flores}4 the Court adju\xc2\xad\ndicated a claim that an assessment was unconstitutional because Congress had\nfailed to comply with the Origination Clause, which mandates that \xe2\x80\x9c [a]ll Bills\nfor raising Revenue shall originate in the House of Representatives.\xe2\x80\x9d U.S. Const,\nart. I, \xc2\xa77, cl. 1. The Court rejected the argument that this issue was a nonjusticiable political question. And in 1992, the Court held that congressional selection\nof a method for apportionment of congressional elections is not a \xe2\x80\x9c political ques\xc2\xad\ntion\xe2\x80\x9d and is therefore subject to judicial review.15 Indeed, some of the legislative\nhistory surrounding previous versions of the balanced budget amendment suggests\nthat at least limited judicial review is contemplated.16 Accordingly, we cannot\nbe at all sure that courts would refuse to hear claims on political question grounds.\nMoreover, it is possible that courts would hold that either taxpayers or Members\nof Congress would have standing to adjudicate various aspects of the budget\nprocess under a balanced budget amendment.17 Even if taxpayers and Members\n12 1994 Senate H earings at 82-83, 86-87 (testimony and prepared statement of Professor Charles Fried). Although\nProfessor Fried concluded that the specter o f judicial enforcement might be minimized by careful drafting, he nonethe\xc2\xad\nless opposed the proposed amendment as \xe2\x80\x9c profoundly undem ocratic" because it would shift power to a minority\no f Congress. I d at 85.\n13 U nited States v. M unoz-Flores, 495 U .S. 385, 394 (1990); see also B aker v. Carr, 369 U.S. 186, 217 (1962)\n( \xe2\x80\x9c Prom inent on the surface o f any case held to involve a political question is . . . a lack o f judicially discoverable\nand manageable standards for resolving it; o r the impossibility o f deciding without an initial policy determination\no f a kind clearly for nonjudicial discretion; o r the impossibility of a c ourt\'s undertaking independent resolution\nwithout expressing lack o f the respect due coordinate branches o f governm ent.\xe2\x80\x9d ).\n14 495 U.S. 385(1990).\n15 D epartm ent o f Com merce v. Montana, 503 U.S. 442 (1992).\n16 See, e.g., 140 Cong. Rec. 3026-47 (1994) (containing debate over amendment to S.J. Res. 41 limiting judicial\nreview , indicating that Senators considered th at, at least in the absence o f such an amendment, judicial involvement\nw as contem plated); 138 Cong. Rec. 17,320 (1992) (statement o f Sen. Lautenberg, noting that \xe2\x80\x9c the sponsor o f the\nleading proposal for a balanced budget amendment has said that if the President and the Congress could not agree\non a balanced budget, a district court could enforce the am endm ent through a tax increase"), 1992 House Hearings,\nVol. II at 461, 4 6 5 -6 6 (statement o f Rep. Stenholm , sponsor o f a leading H ouse proposal, to the effect that judicial\nreview would be available should Congress and the President fail to meet their constitutional duties).\n17 In Flast v. Cohen, 392 U.S. 83 (1968), the Supreme C ourt held that a taxpayer may challenge congressional\naction under the Taxing and Spending C lause that violates a limitation on the exercise o f that power. Although\nlater cases have narrow ed the doctrine of taxpayer standing, see, e.g., Valley Forge Christian College v. Americans\nU nited fo r Separation o f Church and State, Inc., 454 U.S. 464 (1982), the reasoning o f Flast might well permit\na taxpayer to bring suit seeking to prohibit outlays in excess o f receipts, or outlays in excess o f the "statem ent\no f o u tla y s" adopted prior to the fiscal year in question, since the amendment expressly limits the congressional\ntaxing and spending powers. Taxpayers also might challenge any increase in receipts, including the repeal of tax\nloopholes, where the special procedural requirements o f the amendment, such as the three-fifths voting requirement\no f section 2, w ere not followed.\n\n14\n\n\x0cThe Balanced Budget Amendment\n\nof Congress18 were not granted standing, the amendment could lead to litigation\nby recipients whose benefits, mandated by law, were curtailed by the President\nin reliance upon the amendment, in the event that he determines that he is com\xc2\xad\npelled to enforce the amendment by impounding funds.19 In addition, a criminal\ndefendant, prosecuted or sentenced under an omnibus crime bill that improved\ntax enforcement or authorized fines or forfeitures, could argue that the bill\n\xe2\x80\x9c increase[d] revenues\xe2\x80\x9d within the meaning of Section 4.20 Surely such a defend\xc2\xad\nant would have standing to challenge the failure of the Congress to enact the\nentire bill\xe2\x80\x94 not just the revenue-raising provisions \xe2\x80\x94 by the constitutionally\nrequired means of a majority rollcall vote of the whole number of each House\nof Congress. Budget bills that include enforcement provisions could prove simi\xc2\xad\nlarly, vulnerable.21\nAll told, then, the standing and political question cases decided to date do not\ndefinitively resolve whether and to what extent courts would become involved\nin enforcing a balanced budget amendment. In any event, the addition of the\namendment to the Constitution might alter the analysis: a litigant could argue that,\neven if the traditional political question and standing doctrines would in the past\nhave given courts reason to pause before they injected themselves into budget\nmatters, the adoption of an amendment constitutionalizing budget matters now\nmandates judicial involvement. I cannot be confident that a court would reject\nsuch an argument, since the proposed amendment does not specifically bar judicial\nenforcement of its requirements.22\n18 Some have also suggested that a Member o f Congress who voted against an unbalanced budget would have\nstanding to sue to prevent its adoption. There is some case support for such a view. See, e.g.. Coleman v. M iller,\n307 U.S. 433, 438 (1939) (finding that Kansas state senators had standing to protest lack o f effect o f votes for\nratification o f proposed Child Labor Amendment, which ratification had been rescinded by subsequent act o f the\nlegislature); Kennedy v. Sampson, 511 F.2d 430 (D.C. Cir. 1974) (holding that legislators have standing to challenge\nconstitutionality o f pocket veto). But see Harrington v. Bush, 553 F.2d 190 (D.C. Cir. 1977) (holding that legislators\ndo not have standing to challenge executive failure to act in compliance with statute). At the least, this case law\nsuggests that there is som e possibility that a court would accord legislators standing to challenge a congressional\nfailure to comply with the terms o f the balanced budget amendment, while proponents o f the amendment may well\nbe right that according legislators standing would be unwise, they cannot, in the face of these cases, confidently\nassert that such a view would never be adopted by the courts\n19 See 1994 Senate Hearings at 82 (testimony o f Charles Fried, Professor o f Law, Harvard University) ( \xe2\x80\x9c [A]\nbeneficiary o f impounded funds surely could . . . enlist the aid of the co urts."), see also 1996 Senate Hearing\nat 119-39 (testimony and prepared statement o f David Strauss, Professor o f Law, University of Chicago).\n20The argument would be strengthened by the broad definition o f "re c eip ts" in Section 7, to include " a ll receipts\no f the United States except those derived from borrowing."\n21A similar argument could be made on the basis o f section 2 o f H.J. Res. 1, which requires that a "b ill to\nincrease receipts" m ust be passed by three-fifths rollcall vote o f the whole number o f each House o f Congress.\nA criminal defendant might argue that a crime bill that included increased resources for prosecution o f income\ntax evasion, for exam ple, was a " b ill to increase tax revenues" within the meaning o f this provision.\n22 Indeed, the Court has at times indicated that it may have a duty to become involved in cases challenging\nclear constitutional violations, however "p o litical" they might appear to be. See. e.g., U nited States v. Munoz-Flores,\n495 U.S. 385, 391 (1990) (rejecting claim that Origination Clause raised a political question, because "this Court\nhas the duty to review the constitutionality o f congressional enactm ents"), cf. Bruneau v. Edwards, 517 So.2d 818,\n824 (La. Ct. App. 1987) (refusal o f state court to stay out o f question arising under balanced budget amendment\non political question grounds) ("D efendants contend there exist no justiciable issues in this case because the courts\nshould not \xe2\x80\x98step in and substitute their judgment for that o f the legislative and executive branches\' in the budget\nContinued\n\n15\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nDuring my testimony before the Senate Judiciary Committee on January 5,\n1995, Senators Brown and Simon suggested that the states\xe2\x80\x99 experience with bal\xc2\xad\nanced budget amendments did not support the argument that there is a serious\nrisk that courts will become involved in enforcing such an amendment at the fed\xc2\xad\neral level. As I responded in a letter to Senator Hatch dated January 9, 1995,\nit appears that there has not been a significant amount of litigation in the states\ninterpreting their balanced budget provisions, and I agree with Senators Brown\nand Simon that this is a factor that weighs against the argument that there would\nbe an avalanche of litigation under a federal balanced budget amendment.\nI am less certain than they, however, that the states\xe2\x80\x99 experience suggests we\nshould be sanguine about the potential role of the courts in enforcing a federal\nbalanced budget amendment.23 While the states have not seen large numbers of\nsuits, there have in fact been some cases in which courts have injected themselves\ninto the state budget process. See, e.g., Chiles v. Children A, B, C, D, E, and\nF , 589 So.2d 260 (Fla. 1991) (invalidating Governor\xe2\x80\x99s restructuring of appropria\xc2\xad\ntions for failure to comply with constitutional requirements; foster children plain\xc2\xad\ntiffs had standing as taxpayers); Town o f Brookline v. Governor, 553 N.E.2d 1277\n(Mass. 1990) (holding that court had power to review authority of Governor to\nimpound funds); Bruneau v. Edwards, 517 So.2d 818, 824 (La. Ct. App. 1987)\n(affirming judicial power to review legislators\xe2\x80\x99 challenge to constitutionality of\nGovernor\xe2\x80\x99s revision of budget); Michigan Ass\xe2\x80\x99n o f Counties v. Department o f\nManagement and Budget, 345 N.W.2d 584 (Mich. 1984) (reviewing Governor\xe2\x80\x99s\npower to reduce funds sent to local governments under a balanced budget provi\xc2\xad\nsion in the state constitution); Wein v. New York, 347 N.E.2d 586 (N.Y. 1976)\n(finding that taxpayers had standing to seek a declaratory judgment that the\nissuance of anticipation notes to New York City violated the state constitutional\nbalanced budget requirement; the court held that the state could grant the notes\nso long as they would be paid by the end of the fiscal year).24\nprocess. W e disagree. The determination o f w hether the Legislature has acted within, rather than outside, its constitu\xc2\xad\ntional authority must rest with the judicial branch o f governm ent.\xe2\x80\x9d ).\n23 Nor does the experience o f the states prove that balanced budget amendments always produce balanced budgets.\nEven proponents o f the balanced budget amendment have acknowledged that almost all o f the states at times fail\nto balance their budgets and stand in violation o f their constitutions. See, e.g., David Lubecky, Comment: The Pro\xc2\xad\np osed Federal Balanced B udget Amendment: The Lesson from State Experience, 55 U. Cin. L. Rev. 563, 57273 (1986). So we cannot conclude that, w h ile Congress and the President would feel obligated to comply with\nthe amendment, they would always succeed in doing so. Furthermore, the states, unlike the federal government,\nseparate their capital and operating budgets. Thus, under federal accounting rules, states would be deemed to be\nrunning unbalanced budgets. In addition, m any states have been accused o f using gimmicks to evade the strictures\no f their constitutional provisions. Finally, the states are not responsible for national defense, for most future public\ninvestment planning, or for monetary policy. As a result, the strictures that a balanced budget amendment places\non the states does not interfere with the ability o f the nation to set responsible public policy in these crucial areas.\n24 See also 1994 Senate H earings at 86 (statem ent o f form er Solicitor General Charles Fried) (opining that, while\n\xe2\x80\x9c the greatest part o f [state] litigation has d ealt with the validity o f debt instruments issued to supplement budgets\nthat would otherwise have been out of balance,\xe2\x80\x9d \xe2\x80\x9c [t]here is no reason to believe that litigation under a federal\nbalanced budget would be so confined\xe2\x80\x9d ), id. at 279, 2 83-87 (prepared statement o f Louis Fisher, Congressional\nR esearch Service) (analyzing state cases), Lubecky, supra note 23.\n\n16\n\n\x0cThe Balanced Budget Amendment\n\nIn addition, there are reasons to doubt that the state experience is a good pre\xc2\xad\ndictor of what federal courts would do. I should note one factor that would suggest\nthat there would be less federal litigation over a balanced budget amendment than\nthe states have experienced. Many state court systems readily accept cases that\nfederal courts would reject as nonjusticiable and routinely issue advisory opinions.\nThus, some barriers that ought to limit federal court involvement are not present\nin all of the states.\nOther factors, however, suggest a greater potential for litigation under a federal\nbalanced budget amendment. Compliance with the federal balanced budget amend\xc2\xad\nment likely would prove more difficult than compliance with state balanced budget\namendments. Since the credit markets place strong external pressures on states\nto balance their budgets \xe2\x80\x94 pressure that they do not have the power to place on\nthe federal government\xe2\x80\x94 state officials have less freedom to violate constitutional\nbalanced budget requirements. In addition, the responsibilities of the federal\ngovernment over national defense and macroeconomic policy will bring compli\xc2\xad\nance with the amendment up against far more powerful pressures.\nThe nature of the state balanced budget amendments also makes compliance\neasier and litigation less likely. For example, almost all of the governors have\nimpoundment authority, a line item veto, or other powerful tools to assist them\nin enforcing state balanced budget requirements. While I do not mean to suggest\nthat this makes the actual decisions on what to cut easy ones, it probably does\nmake compliance easier by shifting much of the power to decide how to balance\nthe budget from the legislature to the unilateral judgment of an executive officer.\nFurthermore, it eliminates the possibility of litigation over whether the amendment\ncreates such authority. Finally, the states may comply with their balanced budget\namendments even if they do not balance their budgets, but issue bonds to finance\nlong-term expenditures. This distinction between capital budgets and operating\nbudgets may have served to insulate certain questions from judicial resolution.\nThus, while the experience of the states does tend to support, as Senators Brown\nand Simon suggest, the argument that there would be no avalanche of litigation\nunder such an amendment, it does not prove that judicial involvement would be\nlimited to unusual cases, or that even a restrained judicial role would be\nunproblematic.\nIn the end, there is a range of views as to the extent to which courts would\ninvolve themselves in issues arising under the balanced budget amendment.\nFormer Solicitor General Bork believes that there \xe2\x80\x9c would likely be hundreds, if\nnot thousands, of lawsuits around the country\xe2\x80\x9d challenging various aspects of\nthe amendment.25 Similarly, Professor Archibald Cox of Harvard Law School\nbelieves that \xe2\x80\x9c there is a substantial chance, even a strong probability, that . . .\nfederal courts all over the country would be drawn into its interpretation and\n25 Robert H. Bork, On Constitutional Economics, Am. Ent. Inst. J. on G ov\xe2\x80\x99t and Soc\xe2\x80\x99y 14, 18 (Sepi.-O ct. 1983),\nreprinted in 1989 House Hearings at 645, 649.\n\n17\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nenforcement,\xe2\x80\x9d 26 and former Solicitor General Charles Fried has testified that \xe2\x80\x9c the\namendment would surely precipitate us into subtle and intricate legal questions,\nand the litigation that would ensue would be gruesome, intrusive, and not at all\nedifying.\xe2\x80\x9d 27 Other commentators, such as former Attorney General William Barr,\nbelieve that the political question and standing doctrines likely would persuade\ncourts to intervene in relatively few situations28 and that there will not be an\n\xe2\x80\x9c avalanche\xe2\x80\x9d of litigation,29 but that, \xe2\x80\x9c [w]here the judicial power can properly\nbe invoked, it will most likely be reserved to address serious and clearcut viola\xc2\xad\ntions.\xe2\x80\x9d 30\nFormer Attorney General Barr may well be right that courts would be reluctant\nto get involved in most balanced budget cases \xe2\x80\x94 and I agree with him that it\nwould be proper for them to be so reluctant. However, none of the commentators,\nincluding former Attorney General Barr himself, believes that the amendment\nwould bar courts from at least occasional intrusion into the budget process.\nAccordingly, whether we would face an \xe2\x80\x9c avalanche\xe2\x80\x9d of litigation or fewer cases\nalleging \xe2\x80\x9c serious and clearcut violations,\xe2\x80\x9d there is clearly a consensus that the\namendment creates the potential for the involvement of courts in issues arising\nunder the balanced budget amendment, and that these issues are plainly inappro\xc2\xad\npriate subjects for judicial resolution.31 And, should it turn out that courts do\nnot become involved, we would be faced with the prospect of an amendment\nthat includes no enforcement mechanism, and of constitutional violations,\nincluding unconstitutional taxation, for which there will be no judicial remedy.\nAs I will discuss below, this prospect also would be deeply troubling.\n26 1994 Senate Hearings at 157 (prepared statement o f Archibald Cox, Professor o f Law, Harvard University).\n27 Id. at 83 (testimony o f Charles Fried, Professor o f Law, Harvard University).\n28 A ttorney G eneral Barr has stated that \xe2\x80\x9c I would be the last to say that the standing doctrine is an ironclad\nshield against judicial activism. The doctrine is malleable and it has been manipulated by the courts in the past.\xe2\x80\x9d\n1996 Senate H earing at 126 (prepared statement o f former Attorney General William Barr).\n29/</..at 129 (prepared statement of former Attorney General W illiam Barr).\n30Id.; see also 1994 Senate Hearings at 8 2 -8 3 (testimony o f Charles Fried) (\xe2\x80\x98\xe2\x80\x981 cannot be confident that the\ncourts w ould treat as a political question a dem and by a taxpayer or by a m ember of Congress that further spending\nin the course o f that year which would unbalance the budget should be enjoined. . . . I cannot be confident that\nthe courts would stay out o f this.\xe2\x80\x9d ).\nForm er Attorney General B arr\xe2\x80\x99s acknowledgment that there may be "serious and clearcut violations\xe2\x80\x9d that courts\ncould rem edy appears to be inconsistent w ith his suggestion, discussed in footnote 9, supra, that there can never\nbe a constitutional violation o f section 1 o f S J . Res. 1 until the very last moment o f the fiscal year, and that\nthe President therefore would not have im poundm ent authority under that proposed amendment. This construction\no f section 1 o f the amendment would appear to deprive courts o f jurisdiction as well: it means that claims would\nbe unripe until the very end o f the fiscal year, when it could finally be known whether Congress would ratify\na budget imbalance, but would be moot immediately thereafter.\n31 In rejecting the m ajority\xe2\x80\x99s conclusion in Missouri v. Jenkins, 495 U.S. 33 (1990), that a court could order\na state to raise taxes. Justice Kennedy admonished: \xe2\x80\x9c (0 ]u r Federal Judiciary, by design, is not representative or\nresponsible to the people in a political sense; it is independent. . . . It is not surprising that imposition of taxes\nby an authority so insulated from public communication or control can lead to deep feelings of fhistration, powerless\xc2\xad\nness, and anger on the part o f taxpaying citizen s.\xe2\x80\x9d 495 U.S. at 69 (Kennedy, J., concurring in part and concurring\nin judgm ent).\n\n18\n\n\x0cThe Balanced Budget Amendment\n\nS.J. Res. 1 also fails to state whether federal courts would or would not be\nempowered to order tax increases in order to bring about compliance.32 In Mis\xc2\xad\nsouri v. Jenkins,33 the Supreme Court held that a federal district court could man\xc2\xad\ndate that a state increase taxes in order to fund a school desegregation program.34\nOnce the outcome of the budgeting process has been specified in a constitutional\namendment, a plaintiff with standing might successfully argue that he or she had\na right to have a court issue whatever relief is necessary to remedy the constitu\xc2\xad\ntional violation. The failure of the amendment to preclude such powers might\neven be thought to suggest, in light of Jenkins, that the possibility deliberately\nwas left open.\nTo summarize my concerns about the potential for judicial involvement, the\nfailure to specify any enforcement mechanisms for the amendment could result\nin the transfer of power over fundamental political questions of taxing and\nspending to the courts. This would represent a substantial reordering of our basic\nconstitutional structure. The placing of the \xe2\x80\x9c power over the purse\xe2\x80\x9d in the hands\nof the legislature \xe2\x80\x94 and not in the hands of the executive or judicial branches \xe2\x80\x94\nwas not a decision lightly made by the framers of the Constitution. James Madison\nwrote in the 58th Federalist that the \xe2\x80\x9c power over the purse may, in fact, be\nregarded as the most complete and effectual weapon with which any constitution\ncan arm the immediate representatives of the people, for obtaining a redress of\nevery grievance, and for carrying into effect every just and salutary measure.\xe2\x80\x9d 35\nThe framers explicitly rejected the notion that such untrammeled discretion over\nthe power of the purse should be granted to either the executive36 or to the\njudiciary.37 We should be reluctant to reconsider this basic balance of powers\namong the branches of government, particularly while legislative alternatives are\navailable.\n32 Because section 1 o f H.J. Res. 1 does not require that outlays not exceed receipts, but only that actual outlays\nnot exceed estimated outlays, a tax increase would not eliminate the constitutional violation. Accordingly, a court\nwould not possess authority to order a tax increase under H J . Res. 1.\n33 495 U.S. at 50-58.\n34 The Court held, however, that the details o f how to implement that mandate must be left to state authorities.\nId. at 51; see also id. at 5 5 -5 6 (listing additional cases in which the Supreme Court upheld orders to local govern\xc2\xad\nments to \xe2\x80\x9c levy taxes adequate to satisfy their debt obligations" or obligations to fund desegregated school systems).\n35 The Federalist No. 58, at 359 (James Madison) (Clinton Rossiter ed., 1961).\n26See, e.g., 3 Annals o f Cong. 938-39 (1793) (remarks o f Rep. James Madison) (summarizing Rep. Findley as\nhaving concluded that \xe2\x80\x9c appropriations o f money were . . . the great bulwark which our Constitution had carefully\nand jealously established against Executive usurpations," during the course of a congressional debate over the pro\xc2\xad\npriety o f the President\xe2\x80\x99s using funds appropriated to satisfy the foreign debt for another purpose; Madison appears\nto have been o f the view that this would be acceptable provided that a careful accounting was kept and the funds\nrepaid to the account against which they had been drawn); see also 3 Joseph Story, Commentaries on the Constitution\n\xc2\xa71342, at 213-14 (1833) (noting that \xe2\x80\x9c [i)f [the power o f the purse were not placed in congressional hands], the\nexecutive would possess an unbounded power over the public purse o f the nation," and that \xe2\x80\x9c [t]he pow er to control,\nand direct the appropriations, constitutes a most useful and salutary check upon profusion and extravagance, as\nwell as upon corrupt influence and public peculation").\n31 The Federalist No. 78, at 465 (Alexander Hamilton) (Clinton Rossiter ed., 1961) (noting that the judicial branch\ndid not pose as great a danger to liberty as opponents feared because it "has no influence over either the sword\nor the purse; no direction either o f the strength or o f the wealth of the society").\n\n19\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nOne such alternative is a statute that would grant the President the equivalent\nof a line item veto. President Clinton has long supported the concept of a line\nitem veto; the Administration will work with Congress towards enactment of a\nstatute that would confer line item veto power on the President and that would\nsurvive constitutional challenge. Toward that end, the Office of Legal Counsel\nhas, on behalf of the Justice Department, conducted a thorough analysis of the\nline item veto proposals that have been introduced in this session of Congress.\nThose proposals are H.R. 2, 104th Cong. (1995), S. 4, 104th Cong. (1995), and\nS. 14, 104th Cong. (1995). H.R. 2 and S. 4 would give the President the authority\nto rescind discretionary budget authority after an appropriations bill has been\nenacted. In our view, this delegation of power to the President is constitutional.38\nS. 14 would establish expedited procedures under which Congress would consider\nproposed presidential rescissions of discretionary authority. We believe that this\nproposal is constitutional as well.\nLike the balanced budget amendment, the line item veto is intended to tackle\nthe Nation\xe2\x80\x99s deficit problem. But unlike the balanced budget amendment, a statute\nmodeled on the line item veto proposals that we have reviewed would not disrupt\nthe basic structure of our government. In contrast to the balanced budget amend\xc2\xad\nment, these proposals would carefully delineate the budget-cutting authority that\nis to be conferred on the President. As a result, the proposals would be unlikely\nto lead to extensive judicial involvement in the budget process. Moreover, as legis\xc2\xad\nlation, a line item veto statute could be revised if it turned out to have unintended\nconsequences.\nB. The Prospect o f an Unenforceable Amendment\nIn the absence of enforcement mechanisms such as presidential impoundment\nof funds or judicial involvement in the budgeting process, a balanced budget\namendment is unlikely to bring about a balanced budget. To have the Constitution\ndeclare that the budget shall be balanced, while providing no mechanism to make\nthat happen, would place an empty promise in the fundamental charter of our\ngovernment and lead to countless constitutional violations. Moreover, to have a\nprovision of the Constitution routinely violated would inevitably make all other\nprovisions of the Constitution seem far less inviolable. As Alexander Hamilton\nnoted:\nWise politicians will be cautious about fettering the government\nwith restrictions that cannot be observed, because they know that\nevery breach of the fundamental laws, though dictated by necessity,\n38 H.R. 2 would also authorize the President to cancel targeted tax benefits after the enactment o f a revenue\nbill. We believe that, with m inor changes that would preserve its purpose, the targeted tax benefit provision of\nH.R. 2 would be constitutional as well. See Memorandum for the Attorney General from Walter Dellinger, Assistant\nAttorney General, Office o f Legal Counsel, R e : Line Item Veto Act (Jan. 4, 1995).\n\n20\n\n\x0cThe Balanced Budget Amendment\n\nimpairs that sacred reverence which ought to be maintained in the\nbreast of rulers towards the constitution of a country, and forms\na precedent for other breaches where the same plea of necessity\ndoes not exist at all, or is less urgent and palpable.39\nSome have suggested that even if the amendment failed to eliminate the deficit,\nit would nonetheless have the salutary effect of creating pressure to reduce the\ndeficit. While this might be true, the effect would come at considerable cost. Even\nsupposing that the amendment brought about a reduction in the size of the deficit,\nthe remaining excess of expenditures over receipts would constitute a continuing\nmulti-billion-dollar violation of the Constitution, every day that the budget is not\nin balance. For how long would we as a people continue to make difficult\ndecisions to comply with the First Amendment or with the Due Process or Takings\nClauses of the Fifth Amendment if we had routinely failed, for lack of an enforce\xc2\xad\nment mechanism, to come within a billion dollars of complying with the most\nrecent amendment to our Constitution?\nIII. Conclusion\nIt would be wonderful if we could simply declare by constitutional amendment\nthat from this day forward the air would be clean, the streets free of drugs, and\nthe budget forever in balance. But merely saying those things in the Constitution\ndoes not make them happen. As countries around the world have discovered,\nplacing a statement of principle in a constitution does not mean that such a prin\xc2\xad\nciple, however laudatory, will be obeyed. Many constitutions \xe2\x80\x9c guarantee\xe2\x80\x9d\nenvironmental purity or freedom from poverty; the only effect when such promises\nfail is that the constitution is not taken seriously as positive law, the kind of\nlaw that is invocable in court by litigants. The framers of the American Constitu\xc2\xad\ntion, on the contrary, understood that provisions of the Constitution must be\nenforceable if the rule of law is to be respected. We should hesitate long before\n\n39 The Federalist No. 25, at 167 (Alexander Hamilton) (Clinton Rossiter ed., 1961). For further expression of\nthis concern, as it relates to proposed balanced budget amendments quite similar to this one, see, e.g., Peter W.\nRodino, The Proposed Balanced BudgetiTax Limitation Constitutional Amendment: No Balance, N o Limits, 10\nHastings Const. L.Q. 785, 800 (1983); Letter for W arren Grimes, Counsel, House Judiciary Committee, from W illiam\nVan Alstyne, Professor o f Law, Duke University, reprinted in 1989 House Hearings at 614-15, Letter for the Honor\xc2\xad\nable Peter W. Rodino, Jr., Chairman, House Judiciary Committee, from Jonathan Varrat, Professor o f Law, U C.L.A.,\nreprinted in 1989 House Hearings at 606-13; and 1980 House Hearings, at 22 (prepared testimony o f Paul A. Samuelson, Nobel-pnze-winning economist) ( \xe2\x80\x9c If the adopted amendment provides escape valves so easy to invoke that\nthe harm o f the amendment can be avoided, the amendment degenerates into little more than a pious resolution,\na rhetorical appendage to clutter up our magnificent historical Constitution. . . . There is no substitute for disciplined\nand informed choice by a democratic people of their basic economic policies.\xe2\x80\x9d ).\n\n21\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 19\n\nplacing an unenforceable promise in the fundamental document that binds our\nnation together.\nWALTER DELLINGER\nAssistant Attorney General\nOffice o f Legal Counsel\n\n22\n\n\x0c'


b'Presidential Memorandum Delaying\nProposed and Pending Regulations\nT h e President has authority, under A rticle II, \xc2\xa7 3 o f the C onstitution, to d irec t executive\nagencies to postpone proposed and pending regulations for a 60-day period.\nE ven w here a regulation has been published in final form , the A dm inistrative Procedure\nA ct does not require an agency to follow notice and com m ent procedures in connec\xc2\xad\ntion w ith a tem porary postponem ent o f its effective date, since such a postponem ent\nwill not generally be regarded as a rulem aking. E ven if it w ere so regarded, an agency\nwill in general have good cause for dispensing w ith notice and com m ent procedures\nw here a new President is assum ing office during a tim e o f econom ic distress.\n\nJanuary 28, 1981\nM EM ORANDUM OPIN IO N FOR T H E D IR EC TO R , O F FIC E OF\nM A N A G EM EN T A N D BU DG ET\nThe President is currently considering a series of measures to estab\xc2\xad\nlish new procedures for the supervision of the regulatory process and\nthe improvement of federal regulation. Among those measures is a\nproposed Memorandum to the heads of certain executive departments\nand agencies, directing a 60-day postponement in the effective date of\npending and proposed regulations. This memorandum will discuss the\nlegal basis for the President\xe2\x80\x99s directive and will outline the procedures\nfor affected agencies to follow in complying with that directive.*\nThe President\xe2\x80\x99s authority to impose obligations of the kind included\nin the proposed Memorandum derives from his power to ensure that\nthe laws are faithfully executed. U.S. Const., Art. II, \xc2\xa7 3. This provision\nauthorizes the President to supervise and guide executive agencies and\nofficers in the execution of their responsibilities. As the Supreme Court\nstated in Myers v. United States, 272 U.S. 52, 135 (1926):\nThe ordinary duties of officers prescribed by statute come\nunder the general administrative control of the President\nby virtue of the general grant to him o f the executive\npower, and he may properly supervise and guide their\nconstruction of the statutes under which they act in order\nto secure that unitary and uniform execution of the laws\nwhich Article II of the Constitution evidently contem\xe2\x80\xa2 N o t e : The President\xe2\x80\x99s Memorandum, entitled \xe2\x80\x9c Postponement o f Pending Regulations,\xe2\x80\x9d was pub\xc2\xad\nlished on January 29, 1981, 46 Fed. Reg. 11227. Ed.\n\n55\n\n\x0cplated in vesting general executive power in the President\nalone. Laws are often passed with specific provision for\nthe adoption of regulations by a department or bureau\nhead to make the law workable and effective. The ability\nand judgm ent manifested by the official thus empowered,\nas well as his energy and stimulation o f his subordinates,\nare subjects which the President must consider and super\xc2\xad\nvise in his administrative control.\nIn accordance with these principles, we believe that the President\xe2\x80\x99s\nauthority to direct executive agencies to postpone proposed and pend\xc2\xad\ning regulations for a 60-day period, for the reasons stated in the Memo\xc2\xad\nrandum, is beyond reasonable dispute. See generally Bruff, Presidential\nPower and Administrative Rulemaking, 88 Yale L.J. 451 (1979).\nThe proposed Memorandum covers two m ajor categories of regula\xc2\xad\ntions: those which have been proposed but have not been published in\nfinal form; and those which have been published in final form but have\nnot taken legal effect. A s to the first category, the Administrative\nProcedure A ct (APA) imposes no special procedural requirements. The\nnotice and comment procedures of 5 U.S.C. \xc2\xa7 553 need not be fol\xc2\xad\nlowed, for nothing in that provision requires an agency to allow a\nperiod for comment on a decision briefly to delay final adoption of a\nproposed rule. However, the agency\xe2\x80\x99s decision may be subject to judi\xc2\xad\ncial review, and the agency may have to furnish a reasoned explanation\nfor that decision. See A S G Industries, Inc. v. Consumer Product Safety\nCommission, 593 F.2d 1323, 1335 (D.C. Cir. 1979). The explanation\nhere\xe2\x80\x94that the new Administration needs time to review initiatives\nproposed by its predecessor\xe2\x80\x94is, we believe, sufficient.\nThe second category of regulations covered by the President\xe2\x80\x99s\nM emorandum raises somewhat different legal issues. Under the APA, a\nsubstantive rule must be published \xe2\x80\x9cnot less than 30 days before its\neffective date.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 553(d). As the language and legislative\nhistory of this provision make clear, the 30-day period is a minimum,\nand agencies are generally free to delay the effectiveness of regulations\nbeyond the 30-day period. See Administrative Procedure Act\xe2\x80\x94Legislative\nHistory, S. Doc. No. 248, 79th Cong., 2d Sess. 259-60 (1946) (reproduc\xc2\xad\ning report of House Committee on the Judiciary); id. at 201 (report of\nSenate Committee on the Judiciary). The purposes of the 30-day delay\nin effective date are, first, to permit private parties to adjust their\nconduct in order to conform to new regulations and, second, to permit\nagencies to correct errors or oversights. See id. at 259-60, 359; Final\nReport, A ttorney General\xe2\x80\x99s Committee on Administrative Procedure\n114-15 (1941); Sannon v. United States, 460 F. Supp. 458, 467 (S.D. Fla.\n1978). It is therefore plain that the APA permits an agency to adopt in\nthe first instance an effective date provision extending beyond 30 days.\nW e do not find anything in the language or legislative history of\n56\n\n\x0c\xc2\xa7 553(d) to suggest that agencies are forbidden to reach the same result\nby initially providing a 30-day period, and subsequently taking action to\nextend this period.\nNevertheless, it is necessary to consider what procedures an agency\nmust follow in order to extend an effective date provision after the\nregulations at issue have been published in final form but have not yet\nbecome effective. For purposes of \xc2\xa7 553, the issue is whether a suspen\xc2\xad\nsion of the effective date of a rule is an \xe2\x80\x9camendment\xe2\x80\x9d o f the rule.1 If so,\nnotice and comment procedures or a finding of good cause to dispense\nwith them are required before an agency may suspend the operation of\na rule, and the regulations issued by the previous Administration will\ntake effect before the new Administration has an opportunity to review\nthem.\nWe believe that such a result would not comport with either the\nterms or the purposes of \xc2\xa7 553. Therefore, we conclude that a 60-day\ndelay in the effective date should not be regarded as \xe2\x80\x9crule making\xe2\x80\x9d for\nthe purposes of the APA. Although such a delay technically alters the\ndate on which a rule has legal effect, nothing in the APA or in any\njudicial decision suggests that a delay in effective date is the sort of\nagency action that Congress intended to include within the procedural\nrequirements of \xc2\xa7 553(b).2 This conclusion is supported by the clear\ncongressional intent to give agencies discretion to extend the effective\ndate provision beyond 30 days. The purposes of the minimum 30-day\nrequirement would plainly be furthered if an extension of the effective\ndate were not considered \xe2\x80\x9crule making,\xe2\x80\x9d for such an extension would\npermit the new Administration to review the pertinent regulations and\nwould free private parties from having to adjust their conduct to\nregulations that are simultaneously under review.\nWe would note, however, that even if an extension of effective dates\ndoes not trigger notice and comment procedures, it may still be subject\nto judicial review under \xc2\xa7 706. A statement of reasons for the deferral\nshould therefore be provided. See Action fo r Children\'s Television v.\nFCC, 564 F.2d 458, 478-79 (D.C. Cir. 1977). F o r this purpose a refer\xc2\xad\nence to the President\xe2\x80\x99s Memorandum should be sufficient in most cases.\nThe exception would be any rule for which the effective date has been\na matter of controversy during the notice and comment period. In these\n\n\'U n d er 5 U.S.C. \xc2\xa7 SS3, notice and comment procedures must be followed for \xe2\x80\x9crule making*\xe2\x80\x99 unless\n\xe2\x80\x9cthe agency for good cause finds (and incorporates the finding and a brief statement o f reasons\ntherefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary,\nor contrary to the public interest \xe2\x80\x99\xe2\x80\x99 Under 5 U.S C. \xc2\xa7 551(5), the term \xe2\x80\x9c rule making\xe2\x80\x9d is in turn defined\nas \xe2\x80\x9cagency process for formulating, amending, or repealing a rule.\xe2\x80\x9d\n3 Indeed, it is not clear that an agency is, as a general rule, required to provide an opportunity for\ncomment on the intended effective date of a rule in the first instance. If agencies are not required to\ndo so, a mere extension of that provision would not trigger the procedures of \xc2\xa7 553\n\n57\n\n\x0ccases, the explanation should refer to the specific considerations justify\xc2\xad\ning deferral of the rule in question.3\nEven if the suspension o f a rule\xe2\x80\x99s effective date is regarded as rule\xc2\xad\nmaking, we believe that agencies will in general have good cause for\ndispensing with notice and comment procedures. A new President\nassuming office during a time of economic distress must have some\nperiod in which to evaluate the nature and effect of regulations promul\xc2\xad\ngated by a previous Administration. Cf. N ader v. Sawhill, 514 F.2d 1064\n(Temp. Emer. Ct. App. 1975) (good cause for dispensing with notice\nand comment when increase in petroleum price necessitated by eco\xc2\xad\nnomic conditions); Reeves v. Simon, 507 F.2d 455 (Temp. Emer. Ct.\nApp. 1974), cert, denied, 420 U.S. 991 (1975) (same conclusion for\nregulation issued during gasoline crisis); Derieux v. Five Smiths, Inc.,\n499 F.2d 1321 (Temp. Em er. Ct. App.), cert, denied, 419 U.S. 896 (1974)\n(same conclusion for executive order freezing prices and salaries). If\nnotice and comment procedures were required, the President would not\nbe permitted to undertake such an evaluation until the regulations at\nissue had beome effective. A notice and comment period, preventing\nthe new Administration from reviewing pending regulations until they\nimposed possibly burdensome and disruptive costs o f compliance on\nprivate parties, would for this reason be \xe2\x80\x9cimpracticable, unnecessary, or\ncontrary to the public interest.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 553(b)(3)(B). This rationale\nfurnishes good cause for dispensing with public procedures for a brief\nsuspension o f an effective date.\nF o r the foregoing reasons, we conclude that: (1) the President\xe2\x80\x99s\nM emorandum is a lawful exercise o f his authority; (2) agencies need not\nallow a period for notice and comment on a 60-day suspension of the\neffective date o f proposed regulations; and (3) at least in general,\nagencies need not allow such notice and comment for final but not yet\neffective regulations, and may comply with legal requirements with a\nsimple statement incorporating the President\xe2\x80\x99s reasons for the proposed\nsuspension.4\nL\n\narry\n\nL.\n\nS im m s\n\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n3 If the effective date provision in a final rule has been the product o f an agency resolution of a\ndispute am ong afTected parties, the view that an alteration o f the effective date is an \xe2\x80\x9camendment"\nunder the A PA is o f greater w eight. Even in such cases, however, there may be good cause to\ndispense w ith notice and comment procedures. T he explanation of specific considerations discussed in\ntext above should suffice as a good cause statement even if the agency action is viewed as rulemaking.\n4As indicated above, a more detailed explanation may be necessary when the effective date\nprovision was itself a subject of controversy during the notice and comment period.\n\n58\n\n\x0c'


b'June 2 9 , 1978\n\n78-37\n\nMEMORANDUM OPINION FOR THE CHIEF\nCOUNSEL, FOOD AND DRUG ADMINISTRATION\nAdvisory Committees\xe2\x80\x94 Food and Drug\nAdministration\xe2\x80\x94 Conflicts of Interest\n(18 U.S.C. \xc2\xa7 208)\n\nThis responds to your inquiry regarding the scope of the term \xe2\x80\x9c particular\nmatter\xe2\x80\x9d as used in 18 U.S.C. \xc2\xa7 208(a), in connection with the service of\npersons from the private sector on advisory committees in the Food and Drug\nAdministration (FDA).\nSection 208 requires an officer or employee of the executive branch to\ndisqualify himself in any \xe2\x80\x9c particular matter(s)\xe2\x80\x9d in which, to his knowledge,\nhe, his spouse or minor child, or an organization in which he is serving as an\nofficer, director, trustee, partner, or employee has a financial interest. Thus,\nthe meaning of the term determines the sort of occasions on which an advisory\ncommittee member must disqualify himself under the statute.\nWe understand that the advisory committees involved in the inquiry are\nutilized by FDA in the areas of premarketing approval of prescription drugs,\nclassification of medical devices, and drafting of monographs for ingredients\nused in over-the-counter drugs. Your Office indicated in conversations with\nthis Office last spring that without the use of these advisory committees, the\nmembers of which are expert in the areas involved, FDA could not discharge its\nstatutory responsibilities at the level which the safety and the health of the\npublic warrant.\nFour examples of participation by members of various FDA advisory\ncommittees were given to us. Three of the members were on the faculties of\nuniversities that received research grants from pharmaceutical firms or\nmanufacturers of medical devices. At least two actually worked on the\nuniversity projects funded by the firms. You state that none of the individuals\nparticipated as an advisory committee member in any deliberations relating\nspecifically to the firm or the product of the firm that funded the particular\nresearch grant to his university, but that each did participate in the committee\xe2\x80\x99s\ndeliberations relating to general categories of medical devices or ingredients of\n151\n\n\x0ca certain classification of products, some of which were manufactured by the\nfirm that funded the research.\nThe fourth example involved a member of the National Advisory Food and\nDrug Committee who had substantial holdings in a cattle feedlot operation and\nwho participated in deliberations concerning the desirability of continuing the\nuse of low levels of antibiotics in animal feeds for prophylactic purposes and\ngrowth promotion. He was not a manufacturer of any of the products involved\nand no competitive advantage or disadvantage would be conferred upon him\nvis-a-vis other members of his industry1 regardless of the Agency\xe2\x80\x99s ultimate\ndecision. It was also pointed out that this example and those of the university\nfaculty members involved advisory committees established to advise the FDA\nabout matters that involve segments of the regulated industry as a whole rather\nthan particular products or companies.\nThe relevant statute, 18 U.S.C. \xc2\xa7208(a), provides:\n(a) Except as permitted by subsection (b) hereof, whoever, being\nan officer or employee of the executive branch of the United States\nGovernment, of any independent agency of the United States, or of\nthe District of Columbia, including a special Government employee,\nparticipates personally and substantially as a Government officer or\nemployee, through decision approval, disapproval, recommendation,\nthe rendering of advice, investigation, or otherwise, in a judicial or\nother proceeding, application, request for a ruling or other determina\xc2\xad\ntion, contract, claim,- controversy, charge, accusation, arrest, or\nother particular matter in which, to his knowledge, he, his spouse,\nminor child, partner, organization in which he is serving as officer,\ndirector, trustee, partner or employee, or any person or organization\nwith whom he is negotiating or has any arrangement concerning\nprospective employment, has a financial interest\xe2\x80\x94\nShall be fined not more than $10,000, or imprisoned not more than\ntwo years, or both.\nYou have informed us that the members of FDA advisory committees are\ndesignated as special Government employees. The question presented is\nwhether participation in deliberations of the committees concerning a class of\nrelated products or an ingredient common to many products involves participa\xc2\xad\n\nn t was not indicated w hether the phrase " h is in d u stry " refers to the feedlot industry or to the\ncattle industry as a w hole. It is possible, for exam ple, that the banning o f antibiotics in anim al feeds\nwould work to the com petitive advantage o f those portions o f the cattle industry that do not rely on\nanimal feeds to the degree that feedlot operators do.\n\n152\n\n\x0ction in a \xe2\x80\x9c particular matter\xe2\x80\x9d within the meaning of \xc2\xa7 208(a). We believe that it\ndoes.2\nAs an initial matter, some confusion regarding the scope of \xc2\xa7 208(a) may\narise because of the use of the word \xe2\x80\x9c particular.\xe2\x80\x9d It is our understanding that\nthe word \xe2\x80\x9c particular\xe2\x80\x9d was included to make clear that an individual would not\nbe disqualified from an entire area or range of activities merely because he\nmight have a financial interest in a certain decision, proceeding, transaction, or\nrecommendation arising within that area or range; disqualification is only\nrequired in the \xe2\x80\x9c particular\xe2\x80\x9d matter, not as to the entire area or range. C f,\nHearings on Federal Conflict o f Interest Legislation before Subcommittee No.\n5 o f the House Judiciary Committee, 87th Cong., 1st sess. 38 (1961). But it\n\nwas evidently the purpose to make the enumeration of particular matters in\n\xc2\xa7 208(a) and the other sections of the conflict of interest laws, in which the\nsame enumeration appears, \xe2\x80\x9c comprehensive of all matters that come before a\nFederal department or agency.\xe2\x80\x9d Id.; see also id., at 41. Thus, it has been and\ncontinues to be our view that \xc2\xa7 208(a) applies to any discrete or identifiable\ndecision, recommendation, or other matter even though its outcome may have a\nrather broad impact. Accordingly, the word \xe2\x80\x9c particular\xe2\x80\x9d serves to limit the\napplication of \xc2\xa7 208(a) in terms of discrete areas of the employee\xe2\x80\x99s activities,\nnot the number of outside parties who may be affected.\nOur reading of \xc2\xa7 208(a) in this manner finds support as well in the structure\nof the statute and its contemporaneous interpretation. To determine the proper\nscope of the language of \xc2\xa7208(a), it must be examined as part of a\ncomprehensive statutory scheme rather than in isolation. Utilizing that approach,\nwe find, for example, that 18 U.S.C. \xc2\xa7 203(a) and the first paragraph of \xc2\xa7205\nboth bar regular Government employees from representing other parties in all\n\xe2\x80\x9c particular matters\xe2\x80\x9d involving the United States. However \xc2\xa7 203(c) and the\nsecond paragraph of \xc2\xa7 205 impose narrower restrictions on special Government\nemployees, barring them from acting as agent or attorney only in \xe2\x80\x9c particular\nmatter[s] involving a specific party or parties\xe2\x80\x9d that are pending before the\nDepartments or agencies in which they are serving. Similarly, the postemployment\nstatute, 18 U.S.C. \xc2\xa7 207, bars a former Government employee, whether regular\n\n2There may be som e question w hether a "financial interest\xe2\x80\x9d within the m eaning o f the statute is\npresent on the facts involving the three faculty m em bers. It may be that if the research grant to a\nuniversity concerns the types o f products involved in the advisory com m ittee\xe2\x80\x99s deliberations, the\ncom m ittee\xe2\x80\x99s deliberations could influence F D A \'s decision with respect to the products. T his could\nin turn have an im pact on the continuity o f a research grant pertaining to the same products. But it is\narguable that neither the faculty m em ber nor his em ploying university has a "financial interest\xe2\x80\x9d in\nthe advisory com m ittee\xe2\x80\x99s recom m endations where the university\'s research has no relation to the\nproducts the advisory com m ittee is considering.\nOn the other hand, there is at least som e basis for concluding that a substantial contractual\nrelationship with an affected com pany could itself give the university a financial interest in matters\ntouching on the com pany\xe2\x80\x99s products. See A ssociation o f the Bar o f the City o f New Y ork, Conflict\no f Interest and Federal Service, 200-201 (1960). M oreover, where a faculty m em ber is actually a\nprincipal participant in a university research grant funded by a com pany, the situation presents\nmuch the same type o f potential for divided loyalty in governm ental m atters affecting the company\nas if the m em ber were actually em ployed directly by the com pany and therefore expressly required\nby \xc2\xa7 208(a) to disqualify him self in m atters relating to the com pany.\n\n153\n\n\x0cor special, from representing another person in a \xe2\x80\x9c particular matter involving a\nspecific party or parties\xe2\x80\x9d in which he participated or had official responsibility\nwhile in Government.\nThe Memorandum of the Attorney General Regarding Conflict of Interest\nProvisions of Public Law 87-849, 18 U.S.C. \xc2\xa7201, n., points out that \xe2\x80\x9c the\nphrase \xe2\x80\x98particular matter involving a specific party or parties\xe2\x80\x99 does not include\ngeneral rulemaking, the formulation of general policy or standards, or other\nsimilar matters. Thus, past participation in or official responsibility for a matter\nof this kind on behalf of the government does not disqualify a former employee\nfrom representing another person in a proceeding which is governed by the rule\nor other result of the matter.\xe2\x80\x9d The clear implication is that general rulemaking\nand the formulation of general policy would be covered in the absence of the\nreference to specific parties.\nBayless Manning, an authoritative commentator on the conflict of interest\nlaws, describes the importance of the limiting phrase \xe2\x80\x9c involving a specific\nparty or parties\xe2\x80\x9d as follows:\nWhere the language is used [in the conflict of interest laws], it is clear\nthat the statute is concerned with discrete and isolatable transactions\nbetween identifiable parties. Thus, the former employee of the\nDefense Department who worked on the\'establishment of contract\nprocedures is not on that account forbidden by subsection (a) of\nSection 207 to act as agent or attorney with respect to any particular\nDefense contract . . . .\nThe significance of the phrase \xe2\x80\x9c involving a specific party or\nparties\xe2\x80\x9d must not be dismissed lightly or underestimated. Law\n87-849 discriminates with great care in its use of this phrase.\nWherever the phrase does appear in the new statute it will be found\nto reflect a deliberate effort to impose a more limited ban and to\nnarrow the circumstances in which the ban is to operate. [B.\nManning, Federal Conflict o f Interest Law, 204 (1964)]\nThe implication of this passage would appear to be that the establishment of\ngeneral contracting or similar procedures is a \xe2\x80\x9c particular matter,\xe2\x80\x9d but that\nparticipation in formulating such procedures does not trigger the postemployment\nbar of 18 U.S.C. \xc2\xa7 207 because no specific parties are involved. See also, id.,\nat 70-71.\nBy way of contrast, a Presidential Memorandum of May 2, 1963, entitled\n\xe2\x80\x9c Preventing Conflicts of Interest on the Part of Special Government Employ\xc2\xad\nees,\xe2\x80\x9d explains the broader scope of the term \xe2\x80\x9c particular matter\xe2\x80\x9d in \xc2\xa7 208(a) as\nfollows:\nThe matters in which special Government employees are disqualified\nby section 208 are not limited to those involving a specific party or\nparties in which the United States is a party or has an interest, as in\nthe case of sections 203, 205 and 207. Section 208 therefore\nundoubtedly extends to matters in addition to contracts, grants,\njudicial and quasi-judicial proceedings, and other matters of an\n154\n\n\x0cadversary nature. Accordingly, a special Government employee\nshould in general be disqualified from participating as such in a\nmatter o f any type the outcome of which will have a direct and\npredictable effect upon the financial interests covered by the section.\nHowever, the power of exemption may be exercised in this situation\nif the special Government employee renders advice of a general\nnature from which no preference or advantage over others might be\ngained by any particular person or organization. The power of\nexemption may of course be exercised also where the financial\ninterests involved are minimal in value. 28 Fed. Reg. 4539, 4543.\n[Emphasis added.]3\nThe broad statement in the memorandum that the disqualification requirement\nin \xc2\xa7 208(a) applies to a \xe2\x80\x9c matter of any type\xe2\x80\x9d in which the employee has a\nfinancial interest does not on its face suggest that certain types of governmental\ndecisionmaking should be excluded merely because they involve rules,\npolicies, or recommendations that affect several or a number\xe2\x80\x99 of different\ncompanies or products. Indeed, the further statement in the memorandum to the\neffect that the power of exemption in \xc2\xa7 208(b)( 1) may be exercised to permit a\nspecial Government employee to participate notwithstanding the ordinary\ndisqualification requirement if the special Government employee renders\n\xe2\x80\x9c advice of a general nature from which no preference or advantage over others\nmight be gained\xe2\x80\x9d necessarily proceeds on the assumption that \xe2\x80\x9c advice of a\ngeneral nature\xe2\x80\x9d is covered by \xc2\xa7 208(a).\nBased on the contemporaneous construction of the statute reflected in the\nPresidential memorandum, we have consistently interpreted \xc2\xa7 208(a) to apply\nto rule-making proceedings or advisory committee deliberations of general\napplicability where the outcome may have a \xe2\x80\x9c direct and predictable effect\xe2\x80\x9d on\na firm with which the Government employee is affiliated, even though all other\nfirms similarly situated will be affected in a like manner. An example might be\nthe drafting or review of environmental regulations which would require\nconsiderable expenditures by all firms in the particular industry of which the\ncompany is a part.4\nIn one example cited in your letter, banning the use of antibiotics in animal\nfeed could well have a direct and predictable effect on the operations of the\nfeedlot owned by the advisory committee member, even though other feedlot\nowners would also, be affected. Similarly, we would suppose that FDA\xe2\x80\x99s\ndecision with respect to the classification of medical devices or use of\n\xe2\x96\xa0\n\xe2\x80\x99The Presidential m em orandum was drafted by the Office o f Legal Counsel and therefore reflects\na contem poraneous interpretation o f the conflict o f interest laws by the Departm ent charged with\nconstruing them . The substance o f the paragraph o f the Presidential m em orandum quoted in the text\nis now incorporated at page 4 o f Appendix C , C hapter 735 o f the Federal Personnel Manual, which\nprescribes the policies and procedures for appointing special Governm ent em ployees.\n\xe2\x80\x9cO f course the outcom e of the particular m atter must affect the firm distinctively, and not m erely\nas a m em ber o f the general public or as part o f the entire business com m unity. For exam ple, a\nm em ber of an FDA advisory com m ittee would not be disqualified from participating in the\nform ulation o f a recom m endation about ingredients in aspirin m erely because he purchased aspirin\nas a consum er.\n\n155\n\n\x0cingredients in drugs could have a direct and predictable effect on a manufac\xc2\xad\nturer of a given device or drug although the manufacturer\xe2\x80\x99s competitors who\nproduce the same drug or device were affected in a like fashion.\nInterpreting the term \xe2\x80\x9c particular matter\xe2\x80\x9d in the manner described above is\nconsistent with the purposes of \xc2\xa7 208(a). A benefit conferred on an industry\ngenerally can be as much of a boon to a firm within that industry as a\ncompetitor\xe2\x80\x99s going out of business. Typically, stockholders are primarily\ninterested in the earnings of their corporation, and only secondarily in the\ncorporation\xe2\x80\x99s relative standing in the industry. Thus, the fact that others will\nalso be affected should not render wholly inapplicable the prohibition against a\nGovernment employee\xe2\x80\x99s participation in a matter in which he would have the\nopportunity to further his firm\xe2\x80\x99s financial interests. Moreover, to interpret\n\xc2\xa7 208(a) in the way you have suggested\xe2\x80\x94 i.e ., requiring disqualification only\nwhere the firm with which the advisory committee member is affiliated is\nspecifically involved\xe2\x80\x94 would be to introduce by way of construction the phrase\n\xe2\x80\x9c involving a3specific party or parties\xe2\x80\x9d that was deliberately omitted from that\nsection at the time of enactment.\nA determination that the term \xe2\x80\x9c particular matter\xe2\x80\x9d includes recommendations\naffecting a category of products or a number of firms similarly situated does\nnot, however, automatically foreclose participation on advisory committees by\npersons with related outside affiliations. Section 208(b)(1) provides that the\ndisqualification requirement in \xc2\xa7 208(a) shall not apply if the Government\nemployee first advises the Government official responsible for appointment to\nhis position of the nature and circumstances of the particular matter, makes full\ndisclosure of the relevant financial interest, and receives an advance written\ndetermination from the appointing official that the interest is not so substantial\nas to be deemed likely to affect the integrity of the services which the\nGovernment may expect from the employee.5 There may be a question, of\ncourse, whether the financial interests involved in each of the four examples\nyou cite are \xe2\x80\x9c insubstantial\xe2\x80\x9d in an absolute sense. However, the paragraph in\nthe 1963 Presidential memorandum quoted above states that in addition to\nsituations in which the financial interest is minimal, \xe2\x80\x9c the power of exemption\nmay be exercised . . . if the special Government employee renders advice of a\ngeneral nature from which no preference or advantage over others might be\ngained by any particular person or organization.\xe2\x80\x9d This is an interpretation of\n\xc2\xa7 208(b)(1) given soon after its enactment, and, as indicated above, this policy\nhas been carried forward in Appendix C to Chapter 735 of the Federal\nPersonnel Manual.\n\nThe effect of this interpretation is to put a gloss on the statutory language that\nthe interest \xe2\x80\x9c is not so substantial as to be deemed likely to affect the integrity of\nthe services which the Government may expect\xe2\x80\x9d from the special Government\n\xe2\x80\x99A lthough by its literal term s \xc2\xa7 208(b)( 1) would appear to require the appointing official to issue\na separate exem ption for each particular m atter in which a given financial interest may arise, we\nhave consistently taken the position that a blanket exem ption covering a given financial interest\nmay be issued in appropriate circum stances if the appointing official concludes that the financial\ninterest will not be so substantial as to affect the integrity o f the em ployee\xe2\x80\x99s services in whatever\ncontext it arises.\n\n156\n\n\x0cemployee. It seems to be particularly geared to special Government employees,\nmembers of advisory committees, who are often specifically chosen because of\nan expertise that results from their affiliation with particular organizations,\nfirms, or groups having a general interest in the very matters before the\nadvisory committee.\nThe responsibility for issuing exemptions under \xc2\xa7 208(b)(1) lies with the\nAgency concerned. We should stress, however, that \xc2\xa7 208(b)(1) contemplates a\nclose scrutiny of each special Government employee\xe2\x80\x99s outside affiliation to\ndetermine whether an affiliation may properly be deemed unlikely to affect the\nintegrity of service as an advisory committee member. It may also be\nappropriate in certain cases to tailor the exemption in a way that permits the\nemployee to participate in general policy matters but not in those proceedings\nwhich more narrowly affect the organization or firm with which he is affiliated.\nWhile the ultimate result of utilizing the exemption procedure in this manner to\nfacilitate participation in general policy matters may be the same as if \xc2\xa7 208(a)\nwere construed to be wholly inapplicable in such a setting, this does not mean\nthat granting an exemption should be viewed as a mere formality or an empty\nexercise. The process of granting an exemption compels the responsible\nAgency official to focus on the question of the special Government employee\xe2\x80\x99s\noutside affiliations and to make a specific, written finding with respect to the\nexpected integrity of the individual\xe2\x80\x99s services. We may assume as well that this\nprocedure will also have a beneficial effect on the advisory committee\nmember\xe2\x80\x99s own perception of his responsibilities.\nFinally, it should be noted that \xc2\xa7 208(b)(1) requires that an exemption be\ngranted prior to the employee\xe2\x80\x99s participation in the particular matter. We\nassume that separate exemptions were not granted to the four individuals\ndescribed in your letter. It cannot be said with certainty whether the decisions\nwith which the advisory committees were concerned would have a direct and\npredictable effect on the members\xe2\x80\x99 outside interests. Because your letter refers\nto past conduct, the determination of the application of \xc2\xa7 208(a) in a case such\nas this would ordinarily be for the Criminal Divison of this Department to\nmake. However, after consultation with the Criminal Division regarding the\nfacts described in your letter, we can advise you that in the absence of some\nelement of bad faith or other aggravating factor, a referral to the Criminal\nDivision is not in order here. In the future, the principles outlined in this letter\nshould be followed and advisory committee members should be notified of their\nobligations under whatever arrangements are made in each case.\nThe Office of the General Counsel of the Department of Health, Education,\nand Welfare is familiar with the application of \xc2\xa7 208(a) to special Government\nemployee members of advisory committees and the exemption procedures\nunder \xc2\xa7 208(b)(1). That Office no doubt can assist you in these matters, and we\nare of course prepared to offer additional guidance if necessary.\nJo h n M . H\n\narm on\n\nAssistant Attorney General\nOffice o f Legal Counsel\n157\n\n\x0c'