b'Emergency Statutes That Do Not Expressly\nRequire a National Emergency Declaration\nThe National Emergencies Act\xe2\x80\x99s coverage is not limited to statutes that expressly require\nthe President to declare a national emergency, but rather extends to any statute \xe2\x80\x9cconferring powers and authorities to be exercised during a national emergency,\xe2\x80\x9d unless\nCongress has exempted such a statute from the Act.\nAugust 24, 2016\n\nMEMORANDUM OPINION FOR THE COUNSEL TO THE PRESIDENT\nThe National Emergencies Act (\xe2\x80\x9cNEA\xe2\x80\x9d), Pub. L. No. 94-412, 90 Stat.\n1255 (1976) (codified as amended at 50 U.S.C. \xc2\xa7\xc2\xa7 1601\xe2\x80\x931651), states that\n\xe2\x80\x9c[a]ny provisions of law conferring powers and authorities to be exercised\nduring a national emergency shall be effective and remain in effect . . .\nonly when the President . . . specifically declares a national emergency.\xe2\x80\x9d\n50 U.S.C. \xc2\xa7 1621(b). You have asked whether this and other provisions of\nthe NEA apply to statutes that grant powers and authorities in a national\nemergency, but do not expressly require the President to declare such an\nemergency. 1\nWe have previously issued conflicting guidance on this question. In a\n1978 opinion, we stated that the NEA applied to\xe2\x80\x94and thus that the President was required to declare a national emergency before invoking\xe2\x80\x94\nsection 6 of the Davis-Bacon Act, 40 U.S.C. \xc2\xa7 276a-5 (1976), a statute\n1 In considering this question, we requested and received the views of the Department of Defense, the Department of Energy, the Department of Homeland Security, and\nthe Department of Commerce. See E-mail for Daniel L. Koffsky, Deputy Assistant\nAttorney General, Office of Legal Counsel, from Robert S. Taylor, Acting General\nCounsel, Department of Defense, Re: OLC Opinion on National Emergencies Act, att.\n(May 17, 2016, 1:09 PM); E-mail for Daniel L. Koffsky, Deputy Assistant Attorney\nGeneral, Office of Legal Counsel, from Eric Fygi, Deputy General Counsel, Department of Energy, Re: OLC Opinion on National Emergencies Act (May 3, 2016, 10:34\nAM); E-mail for Daniel L. Koffsky, Deputy Assistant Attorney General, Office of\nLegal Counsel, from Joseph Maher, Principal Deputy General Counsel, Department of\nHomeland Security, Re: OLC Opinion on National Emergencies Act, att. (May 3, 2016,\n10:34 AM); E-mail for Daniel L. Koffsky, Deputy Assistant Attorney General, Office\nof Legal Counsel, from Lauren Sun, Counsel to the General Counsel, Department of\nCommerce, Re: Department of Commerce Response on National Emergencies Act (Apr.\n15, 2016, 4:28 PM).\n\n54\n\n\x0cEmergency Statutes That Do Not Expressly Require a National Emergency Declaration\n\nthat granted powers \xe2\x80\x9c[i]n the event of a national emergency\xe2\x80\x9d but did not\nexpressly require the President to declare the emergency. Wage and Price\nStandards in Government Procurement, 2 Op. O.L.C. 239, 243 (1978)\n(\xe2\x80\x9cWage and Price Standards\xe2\x80\x9d). In 1982, in contrast, in footnote 78 of an\nopinion entitled Legal Authorities Available to the President to Respond\nto a Severe Energy Supply Interruption or Other Substantial Reduction in\nAvailable Petroleum Products, we advised that section 710(e) of the\nDefense Production Act, 50 U.S.C. app. \xc2\xa7 2160(e) (1982), was \xe2\x80\x9cnot subject to the provisions of the National Emergencies Act\xe2\x80\x9d because it did not\n\xe2\x80\x9cexpressly require the President to declare a national emergency in order\nto\xe2\x80\x9d exercise the powers it granted. 6 Op. O.L.C. 644, 674 n.78 (1982)\n(\xe2\x80\x9cSevere Energy Supply Interruption\xe2\x80\x9d).\nFor the reasons set forth below, we conclude that the NEA\xe2\x80\x99s coverage\nis not limited to statutes that expressly require the President to declare a\nnational emergency, but rather extends to any statute \xe2\x80\x9cconferring powers\nand authorities to be exercised during a national emergency,\xe2\x80\x9d unless\nCongress has exempted such a statute from the Act. 50 U.S.C. \xc2\xa7 1621(b).\nTo the extent that footnote 78 of our 1982 Severe Energy Supply Interruption opinion is inconsistent with this conclusion, we no longer adhere to\nit.\nI.\nThe NEA, enacted in 1976, consists of five titles. Title I is backwardlooking: It terminated most powers and authorities that the Executive\npossessed \xe2\x80\x9cas a result of the existence of any declaration of national\nemergency in effect on September 14, 1976,\xe2\x80\x9d the date of the statute\xe2\x80\x99s\nenactment. 50 U.S.C. \xc2\xa7 1601. Title I thus has limited continuing application.\nTitle II of the NEA\xe2\x80\x94which consists of 50 U.S.C. \xc2\xa7\xc2\xa7 1621 and 1622\xe2\x80\x94\nprescribes rules for the declaration and termination of national emergencies. Section 1621(a) grants the President authority to \xe2\x80\x9cdeclare [a] national emergency\xe2\x80\x9d with respect to statutes \xe2\x80\x9cauthorizing the exercise, during\nthe period of a national emergency, of any special or extraordinary power.\xe2\x80\x9d Id. \xc2\xa7 1621(a); see also id. (requiring that such a declaration be transmitted to Congress and published in the Federal Register). Section\n1621(b) states that \xe2\x80\x9c[a]ny provisions of law conferring powers and authorities to be exercised during a national emergency shall be effective and\n55\n\n\x0c40 Op. O.L.C. 54 (2016)\n\nremain in effect (1) only when the President (in accordance with subsection (a) of this section), specifically declares a national emergency, and\n(2) only in accordance with [the NEA].\xe2\x80\x9d Id. \xc2\xa7 1621(b). Section 1622\nprovides that the President or Congress may terminate \xe2\x80\x9c[a]ny national\nemergency declared by the President in accordance with [the NEA],\xe2\x80\x9d and\nthat such an emergency shall in any event \xe2\x80\x9cterminate on the anniversary\nof the declaration of that emergency,\xe2\x80\x9d unless the President timely issues\n\xe2\x80\x9ca notice stating that such emergency is to continue in effect.\xe2\x80\x9d Id.\n\xc2\xa7 1622(a), (d). Once a national emergency declared by the President\nterminates, \xe2\x80\x9cany powers or authorities exercised by reason of said emergency shall cease to be exercised.\xe2\x80\x9d Id. \xc2\xa7 1622(a); see also id. (listing three\nexceptions to this requirement).\nTitles III and IV\xe2\x80\x94which consist of 50 U.S.C. \xc2\xa7\xc2\xa7 1631 and 1641 respectively\xe2\x80\x94set forth requirements that the President and other officers\nmust follow once the President has declared a national emergency. Section 1631 provides that \xe2\x80\x9c[w]hen the President declares a national emergency, no powers or authorities made available by statute for use in the\nevent of an emergency shall be exercised unless and until the President\nspecifies the provisions of law under which he proposes that he, or other\nofficers will act.\xe2\x80\x9d Id. \xc2\xa7 1631. Section 1641 states that \xe2\x80\x9c[w]hen the President declares a national emergency, or Congress declares war,\xe2\x80\x9d the President and each executive agency must maintain a file and index of, and\ntransmit to Congress, certain orders, rules, and regulations \xe2\x80\x9cissued during\nsuch emergency or war issued pursuant to such declarations.\xe2\x80\x9d Id.\n\xc2\xa7 1641(a)\xe2\x80\x93(b). In addition, the President must periodically transmit to\nCongress \xe2\x80\x9ca report on the total expenditures incurred by the United States\nGovernment . . . which are directly attributable to the exercise of powers\nand authorities conferred by such declaration.\xe2\x80\x9d Id. \xc2\xa7 1641(c).\nLast, title V exempts several listed statutes from the NEA\xe2\x80\x99s requirements. See id. \xc2\xa7 1651(a). It also directs congressional committees to issue\na report and recommendations within nine months of the NEA\xe2\x80\x99s enactment. Id. \xc2\xa7 1651(b).\nAt least two types of statutes grant powers or authorities to the Executive during national emergencies. Some statutes provide that certain\nspecified powers or authorities may be exercised during a \xe2\x80\x9cnational emergency\xe2\x80\x9d that has been \xe2\x80\x9cdeclared by the President\xe2\x80\x9d or \xe2\x80\x9cproclaimed by the\nPresident.\xe2\x80\x9d See, e.g., 10 U.S.C. \xc2\xa7 12302(a) (authorizing the secretaries of\n56\n\n\x0cEmergency Statutes That Do Not Expressly Require a National Emergency Declaration\n\nthe military departments and the Coast Guard to order units in the Ready\nReserve to active duty \xe2\x80\x9c[i]n time of national emergency declared by the\nPresident\xe2\x80\x9d); 14 U.S.C. \xc2\xa7 367(3) (authorizing the Coast Guard temporarily\nto retain enlisted personnel beyond their terms of enlistment \xe2\x80\x9cduring a\nperiod of . . . national emergency as proclaimed by the President\xe2\x80\x9d). We\nwill refer to these statutes as declared national emergency statutes. Other\nstatutes provide that particular powers or authorities may be exercised\nduring a \xe2\x80\x9cnational emergency,\xe2\x80\x9d without expressly requiring that the emergency be declared or proclaimed by the President or any other officer or\nentity. See, e.g., 10 U.S.C. \xc2\xa7 871(b) (permitting the commutation of certain court-martial sentences \xe2\x80\x9c[i]n time of . . . national emergency\xe2\x80\x9d); 14\nU.S.C. \xc2\xa7 331 (authorizing the secretary of the department in which the\nCoast Guard is operating to order any regular officer on the retired list to\nactive duty \xe2\x80\x9c[i]n time of . . . national emergency\xe2\x80\x9d). We will refer to these\nstatutes as national emergency statutes. 2\nAs noted above, we have previously issued conflicting statements concerning whether the NEA\xe2\x80\x99s requirements are applicable only to declared\nnational emergency statutes, or to both declared national emergency\nstatutes and national emergency statutes. In our 1978 Wage and Price\nStandards opinion, we stated that \xe2\x80\x9cunder Title II of the [NEA], a Presidential declaration of national emergency [was] required in order to\xe2\x80\x9d\ninvoke section 6 of the Davis-Bacon Act, a national emergency statute.\n2 Op. O.L.C. at 243; see 40 U.S.C. \xc2\xa7 276a-5 (1976) (granting the President authority to suspend provisions of the Davis-Bacon Act \xe2\x80\x9c[i]n the\nevent of a national emergency\xe2\x80\x9d). In 1982, in contrast, we indicated that\nonly those statutes that \xe2\x80\x9cexpressly require the President to declare a national emergency\xe2\x80\x9d\xe2\x80\x94that is, declared national emergency statutes\xe2\x80\x94are\n\xe2\x80\x9csubject to the provisions of the [NEA].\xe2\x80\x9d Severe Energy Supply Interruption, 6 Op. O.L.C. at 674 n.78.\nII.\nTo resolve the conflict in our prior opinions, we now consider whether\nthe NEA\xe2\x80\x99s provisions apply only to declared national emergency statutes\nor to both declared national emergency statutes and national emergency\n2 We do not address whether the NEA applies to statutes other than declared national\nemergency statutes and national emergency statutes.\n\n57\n\n\x0c40 Op. O.L.C. 54 (2016)\n\nstatutes. In Part II.A, we conclude that the NEA\xe2\x80\x99s text unambiguously\nextends to both types of statutes. In Part II.B, we consider the NEA\xe2\x80\x99s\nlegislative history and find that it reinforces that conclusion.\nA.\nWe begin with the text of the NEA. See Sebelius v. Cloer, 133 S. Ct.\n1886, 1893 (2013) (\xe2\x80\x9cAs in any statutory construction case, \xe2\x80\x98[w]e start, of\ncourse, with the statutory text.\xe2\x80\x99\xe2\x80\x9d (alteration in original) (quoting BP Am.\nProd. Co. v. Burton, 549 U.S. 84, 91 (2006))). As we noted earlier, the\nNEA\xe2\x80\x99s first forward-looking provision, 50 U.S.C. \xc2\xa7 1621, contains two\nsubsections: subsection (a) states that \xe2\x80\x9c[w]ith respect to Acts of Congress\nauthorizing the exercise, during the period of a national emergency, of\nany special or extraordinary power, the President is authorized to declare\nsuch national emergency,\xe2\x80\x9d 50 U.S.C. \xc2\xa7 1621(a) (emphasis added); and\nsubsection (b) states that \xe2\x80\x9c[a]ny provisions of law conferring powers and\nauthorities to be exercised during a national emergency shall be effective\nand remain in effect . . . only when the President (in accordance with\nsubsection (a) of this section), specifically declares a national emergency,\xe2\x80\x9d id. \xc2\xa7 1621(b) (emphasis added). The language of each of these subsections straightforwardly extends to national emergency statutes. National emergency statutes are both \xe2\x80\x9cActs of Congress authorizing the exercise,\nduring the period of a national emergency, of . . . special or extraordinary\npower[s]\xe2\x80\x9d and \xe2\x80\x9cprovisions of law conferring powers and authorities to be\nexercised during a national emergency\xe2\x80\x9d\xe2\x80\x94indeed, they often use precisely\nor nearly those terms. See, e.g., 10 U.S.C. \xc2\xa7 2208(l )(2) (authorizing the\nSecretary of Defense to waive certain notification requirements \xe2\x80\x9cduring a\nperiod of . . . national emergency\xe2\x80\x9d); 7 U.S.C. \xc2\xa7 4208 (waiving certain\nprovisions with respect to the acquisition or use of farmland for national\ndefense purposes \xe2\x80\x9cduring a national emergency\xe2\x80\x9d). And neither subsection\nof section 1621 contains any language limiting section 1621\xe2\x80\x99s coverage to\nstatutes that themselves require a presidential declaration of emergency:\nsection 1621(a) does not state, for instance, that it applies only to statutes\ngranting powers \xe2\x80\x9cduring the period of a national emergency declared by\nthe President,\xe2\x80\x9d and section 1621(b) does not state that it applies to provisions of law conferring powers and authorities to be exercised \xe2\x80\x9cduring a\nnational emergency declared by the President.\xe2\x80\x9d\n58\n\n\x0cEmergency Statutes That Do Not Expressly Require a National Emergency Declaration\n\nThis straightforward reading of section 1621(a) and (b) is reinforced by\nthe fact that both subsections would be almost entirely superfluous if they\nextended only to declared national emergency statutes. There would be no\nneed for subsection (a) to \xe2\x80\x9cauthorize[]\xe2\x80\x9d the President to declare national\nemergencies only with respect to declared national emergency statutes,\nbecause statutes that apply \xe2\x80\x9cduring a national emergency declared by the\nPresident\xe2\x80\x9d already implicitly authorize such declarations. (If they did not,\nthey would have been inoperative prior to the NEA\xe2\x80\x99s enactment.) Similarly, there would be no need for subsection (b) to prohibit the President\nfrom exercising powers or authorities granted by declared national emergency statutes except \xe2\x80\x9cwhen the President . . . specifically declares a\nnational emergency,\xe2\x80\x9d because those statutes already require a presidential\ndeclaration of national emergency as a precondition to their operation.\nSee, e.g., 10 U.S.C. \xc2\xa7 155(f )(4) (suspending limitations on tours of duty\n\xe2\x80\x9cduring a national emergency declared by the President\xe2\x80\x9d). To interpret the\nprovisions of section 1621 as limited to declared national emergency\nstatutes would thus violate the basic principle that \xe2\x80\x9c\xe2\x80\x98[a] statute should be\nconstrued so that effect is given to all its provisions, so that no part will\nbe inoperative or superfluous, void or insignificant.\xe2\x80\x99\xe2\x80\x9d Corley v. United\nStates, 556 U.S. 303, 314 (2009) (alteration in original) (quoting Hibbs v.\nWinn, 542 U.S. 88, 101 (2004)).\nBy their plain terms, then, both subsections of 50 U.S.C. \xc2\xa7 1621 apply\nto national emergency statutes. Subsection (a) authorizes the President\nto declare a national emergency \xe2\x80\x9c[w]ith respect to\xe2\x80\x9d national emergency\nstatutes, 50 U.S.C. \xc2\xa7 1621(a), and subsection (b) requires the President\nto declare a national emergency \xe2\x80\x9cin accordance with subsection (a)\xe2\x80\x9d\nbefore any \xe2\x80\x9cpowers and authorities\xe2\x80\x9d conferred by a national emergency\nstatute for use in the event of a national emergency may be exercised, id.\n\xc2\xa7 1621(b).\nIt follows from this conclusion that the other forward-looking provisions of the NEA also apply to national emergency statutes. This is because each of those provisions is expressly tied to the declaration of a\nnational emergency under section 1621 or to the statutory powers or\nauthorities triggered by such a declaration. The first additional forwardlooking provision, 50 U.S.C. \xc2\xa7 1622, states that the President or Congress\nmay terminate \xe2\x80\x9c[a]ny national emergency declared by the President in\naccordance with\xe2\x80\x9d title II of the NEA, and that upon such termination \xe2\x80\x9cany\n59\n\n\x0c40 Op. O.L.C. 54 (2016)\n\npowers or authorities exercised by reason of said emergency shall cease to\nbe exercised.\xe2\x80\x9d Id. \xc2\xa7 1622(a). Section 1621 forms part of title II of the\nNEA, and, as we have just discussed, section 1621(b) requires the President to \xe2\x80\x9cdeclare[]\xe2\x80\x9d a national emergency \xe2\x80\x9cin accordance with\xe2\x80\x9d section\n1621(a) before any powers and authorities conferred by a national emergency statute for use in the event of a national emergency may be exercised. As a result, such powers and authorities can only be exercised \xe2\x80\x9cby\nreason of \xe2\x80\x9d an emergency declared under title II of the NEA. Id. \xc2\xa7 1622(a).\nSection 1622 thus authorizes the President or Congress to terminate any\nemergency triggering the exercise of powers and authorities conferred by\na national emergency statute, thereby causing those powers and authorities to \xe2\x80\x9ccease to be exercised.\xe2\x80\x9d Id.\nThe next provision of the NEA, 50 U.S.C. \xc2\xa7 1631, provides that\n\xe2\x80\x9c[w]hen the President declares a national emergency, no powers or authorities made available by statute for use in the event of an emergency\nshall be exercised unless and until the President specifies the provisions\nof law under which he proposes that he, or other officers will act.\xe2\x80\x9d Id.\n\xc2\xa7 1631. National emergency statues make \xe2\x80\x9cpowers or authorities . . .\navailable . . . for use in the event of an emergency,\xe2\x80\x9d see, e.g., 10 U.S.C.\n\xc2\xa7 871(b) (permitting the commutation of certain court-martial sentences\n\xe2\x80\x9c[i]n time of . . . national emergency\xe2\x80\x9d); and (as we have said), under\nsection 1621(b) of the NEA, the President must \xe2\x80\x9cdeclare[] a national\nemergency\xe2\x80\x9d in order to invoke a national emergency statute. Accordingly,\nsection 1631 provides that the President and other officers cannot exercise\npowers or authorities conferred by a national emergency statute \xe2\x80\x9cunless\nand until the President specifies the provisions of law under which he\nproposes that he, or other officers will act.\xe2\x80\x9d 50 U.S.C. \xc2\xa7 1631.\nFinally, 50 U.S.C. \xc2\xa7 1641 states that \xe2\x80\x9c[w]hen the President declares a\nnational emergency, or Congress declares war,\xe2\x80\x9d the President and executive agencies must maintain and transmit to Congress all rules, regulations, and significant orders \xe2\x80\x9cissued during such emergency or war . . .\npursuant to such declarations.\xe2\x80\x9d Id. \xc2\xa7 1641(a)\xe2\x80\x93(b). It also provides that the\nPresident must periodically report to Congress any federal expenditures\n\xe2\x80\x9cdirectly attributable to the exercise of powers and authorities conferred\nby such declaration.\xe2\x80\x9d Id. \xc2\xa7 1641(c). Because the President must declare a\nnational emergency in order to exercise powers or authorities conferred by\na national emergency statute for use in the event of a national emergency,\n60\n\n\x0cEmergency Statutes That Do Not Expressly Require a National Emergency Declaration\n\nany rules, regulations, or significant orders issued in reliance on those\npowers or authorities are issued \xe2\x80\x9cpursuant to\xe2\x80\x9d such a declaration. Id.\n\xc2\xa7 1641(a); see Webster\xe2\x80\x99s Third New International Dictionary 1848 (1966)\n(defining \xe2\x80\x9cpursuant to\xe2\x80\x9d to mean \xe2\x80\x9cin the course of carrying out; in conformance to or agreement with\xe2\x80\x9d). And, for the same reason, any expenditures incurred by the United States Government when exercising such\npowers and authorities are \xe2\x80\x9cdirectly attributable to the exercise of powers\nand authorities conferred by such declaration.\xe2\x80\x9d 50 U.S.C. \xc2\xa7 1641(c). The\nPresident and executive agencies therefore must report such orders, regulations, rules, and expenditures in accordance with the requirements of\nsection 1641.\nIn sum, the plain language of section 1621 makes clear that the NEA\napplies to national emergency statutes, as well as declared national emergency statutes. As a result, each forward-looking provision of the NEA\nunambiguously extends to both types of statutes as well. If it chooses, of\ncourse, Congress can exempt particular national emergency statutes or\ndeclared national emergency statutes from the scope of the NEA. However, we have no occasion to consider here whether any particular statute is\nso exempt.\nB.\nBecause the NEA\xe2\x80\x99s provisions unambiguously apply to national emergency statutes, it is unnecessary for us to examine the statute\xe2\x80\x99s legislative\nhistory. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546,\n568 (2005) (\xe2\x80\x9cExtrinsic materials have a role in statutory interpretation\nonly to the extent they shed a reliable light on the enacting Legislature\xe2\x80\x99s\nunderstanding of otherwise ambiguous terms.\xe2\x80\x9d). But to the extent the\nlegislative history is relevant, it too indicates that Congress intended the\nNEA\xe2\x80\x99s provisions to apply to national emergency statutes.\nBoth the NEA\xe2\x80\x99s House report and testimony delivered prior to its enactment by Antonin Scalia, who was then the Assistant Attorney General\nfor the Office of Legal Counsel, indicate that Congress intended titles II\nand III of the NEA to apply to national emergency statutes. The House\nreport states:\n[Title II] of the bill provides, for the first time, explicit provision for\nthe President to make the declaration of national emergency which\n61\n\n\x0c40 Op. O.L.C. 54 (2016)\n\ncertain statutes require. . . . This clarifies an existing problem as to\nemergency statutes. At present this power can be implied with respect to some statutes\xe2\x80\x94for example, those which state that certain\nlaws are deemed to be in effect \xe2\x80\x9cduring any . . . period of national\nemergency declared by the President[\xe2\x80\x9d provide], in so many words,\n[that the President] may declare such an emergency; and some statutes dependent upon the existence of states of emergency do not specifically say who shall declare them. . . . When the Act fully takes\neffect, emergency provisions will only be implemented by the President in accordance with the terms of Title II and Title III of the\namended bill.\nH.R. Rep. No. 94-238, at 6 (1975) (second ellipsis in original) (emphasis\nadded). This passage, which repeats almost verbatim testimony that Assistant Attorney General Scalia had delivered one month earlier, makes clear\nthat Congress did not intend for the NEA to be limited to statutes \xe2\x80\x9cwhich\nstate that certain laws are deemed to be in effect \xe2\x80\x98during any . . . period of\nnational emergency declared by the President\xe2\x80\x99\xe2\x80\x9d\xe2\x80\x94that is, declared national\nemergency statutes. Id.; see National Emergencies Act: Hearings Before\nthe Subcomm. on Admin. Law & Governmental Relations of the H. Comm.\non the Judiciary on H.R. 3884, 94th Cong. 91 (1975) (\xe2\x80\x9cNEA Hearings\xe2\x80\x9d)\n(statement of Assistant Attorney General Scalia) (similar). Rather, as the\nHouse report also explains, the NEA was designed to ensure that \xe2\x80\x9cstatutes\ndependent upon the existence of states of emergency [that] do not specifically say who shall declare them\xe2\x80\x9d\xe2\x80\x94that is, national emergency statutes\xe2\x80\x94\n\xe2\x80\x9cwill only be implemented by the President in accordance with the terms\nof Title II and Title III\xe2\x80\x9d of the NEA. H.R. Rep. No. 94-238, at 6 (emphasis added); see NEA Hearings at 91. The House report and Assistant\nAttorney General Scalia\xe2\x80\x99s testimony thus indicate that Congress intended\nthat the President would implement national emergency statutes \xe2\x80\x9conly . . .\nin accordance with\xe2\x80\x9d titles II and III of the NEA.\nA subsequent passage from the House report reaffirms this intention.\nThat passage (which again borrows nearly verbatim from Assistant Attorney General Scalia\xe2\x80\x99s testimony) explains that in some cases, \xe2\x80\x9cchanges in\nlaw automatically take effect during times of national emergency,\xe2\x80\x9d but\nthat title III of the NEA would \xe2\x80\x9cchange this by establishing that no provision of law shall be triggered by a declaration of national emergency\nunless and until the President specifies that provision as one of those\n62\n\n\x0cEmergency Statutes That Do Not Expressly Require a National Emergency Declaration\n\nunder which he or other officers will act.\xe2\x80\x9d H.R. Rep. No. 94-238, at 7\xe2\x80\x938\n(emphasis added); see NEA Hearings at 93 (similar). The report (and\nAssistant Attorney General Scalia\xe2\x80\x99s testimony) cite two statutes as\n\xe2\x80\x9c[e]xamples\xe2\x80\x9d of the provisions that would be affected by title III of the\nNEA in this manner, and one of those statutes\xe2\x80\x9437 U.S.C. \xc2\xa7 202(e)\xe2\x80\x94was\na national emergency statute. H.R. Rep. No. 94-238, at 8 n.3; see NEA\nHearings at 93; 37 U.S.C. \xc2\xa7 202(e) (1970) (altering the pay of certain rear\nadmirals who served in active duty \xe2\x80\x9cin time of . . . national emergency\xe2\x80\x9d).\nThe inclusion of this statute as one of two such examples strongly suggests that the drafters expected the NEA to apply to national emergency\nstatutes.\nIn footnote 78 of our Severe Energy Supply Interruption opinion, we\nidentified two pieces of legislative history as supporting the contrary view\nthat statutes that do not \xe2\x80\x9cexpressly require the President to declare a national emergency\xe2\x80\x9d are \xe2\x80\x9cnot subject to the provisions of \xe2\x80\x9d the NEA. 6 Op.\nO.L.C. at 674 n.78. On closer examination, however, we do not think\neither of these passages from the legislative history supports such a conclusion.\nFirst, the Severe Energy Supply Interruption opinion quoted a sentence\nfrom Assistant Attorney General Scalia\xe2\x80\x99s testimony, repeated in both the\nNEA\xe2\x80\x99s House report and its principal Senate report, stating that \xe2\x80\x9c[l]aws\nlike the Defense Production Act of 1950, which do not require a Presidential declaration of emergency for their use, are not affected by this title\n[i.e., Title I]\xe2\x80\x94even though they may be referred to in a lay sense as\n\xe2\x80\x98emergency\xe2\x80\x99 statutes.\xe2\x80\x9d Id. (second alteration in original) (quoting NEA\nHearings at 91); see H.R. Rep. No. 94-238, at 5; S. Rep. No. 94-1168, at 4\n(1976). The opinion recognized that this statement \xe2\x80\x9crefers only to Title I\nof the NEA,\xe2\x80\x9d but nevertheless appears to have inferred from it that laws\nthat \xe2\x80\x9cdo not require a Presidential declaration of emergency for their use\xe2\x80\x9d\nare categorically exempt from the NEA. Severe Energy Supply Interruption, 6 Op. O.L.C. at 674 n.78. The basis for this inference, however, is\nunclear. As Assistant Attorney General Scalia explained in the sentence\npreceding the passage quoted in the Severe Energy Supply Interruption\nopinion, his statement was based on the particular terms of title I, which\nat the time he delivered his testimony expressly stated that title I applied\nonly to those statutes relying on \xe2\x80\x9c\xe2\x80\x98a general declaration of emergency\nmade by the President pursuant to a statute authorizing him to declare a\n63\n\n\x0c40 Op. O.L.C. 54 (2016)\n\nnational emergency.\xe2\x80\x99\xe2\x80\x9d NEA Hearings at 90\xe2\x80\x9391 (emphasis added) (quoting\nH.R. 3884, 94th Cong. \xc2\xa7 101(b) (as introduced in House, Feb. 27, 1975)). 3\nThat language was removed from the NEA before it was enacted, however, see 50 U.S.C. \xc2\xa7 1601(a)\xe2\x80\x93(b) (terminating powers and authorities exercised pursuant to \xe2\x80\x9ca general declaration of emergency made by the President\xe2\x80\x9d), and even in the draft discussed by Assistant Attorney General\nScalia it was applicable to title I alone. This passage thus sheds no light\non whether the enacted versions of titles II, III, and IV\xe2\x80\x94 the forwardlooking parts of the NEA with which we are concerned\xe2\x80\x94apply to national\nemergency statutes.\nSecond, the Severe Energy Supply Interruption opinion quoted and relied upon two sentences from the NEA\xe2\x80\x99s Senate report to support its\nconclusion. The first sentence states that \xe2\x80\x9c\xe2\x80\x98[t]he provisions of Title II . . .\nare designed to insure congressional oversight of Presidential actions\npursuant to declarations of a national emergency authorized by an act of\nCongress.\xe2\x80\x99\xe2\x80\x9d 6 Op. O.L.C. at 674 n.78 (emphasis and alterations in original) (quoting S. Rep. No. 94-1168, at 4). This statement remains true,\nhowever, even if the NEA applies to national emergency statutes, because\nby the Act\xe2\x80\x99s terms, any statute that falls within the scope of 50 U.S.C.\n\xc2\xa7 1621 may be invoked only \xe2\x80\x9c\xe2\x80\x98pursuant to declarations of a national\nemergency authorized by an act of Congress.\xe2\x80\x99\xe2\x80\x9d Id. (emphasis removed);\nsee 50 U.S.C. \xc2\xa7 1621(b) (prohibiting the President from invoking statutes\n\nIndeed, Assistant Attorney General Scalia made this statement in part to draw a contrast between titles I and II of the draft bill. The relevant portion of his testimony reads, in\nfull:\n3\n\nAny emergency declared after the date of enactment of this legislation would not\nbe terminated by title I, but would instead fall under the limiting scheme created by\ntitle II. Moreover, title I would only affect those statutes whose conferral of powers\nis expressly conditioned upon a Presidential declaration of national emergency.\nThis is made clear by section 101(b), which defines the phrase \xe2\x80\x9cany national emergency in effect\xe2\x80\x9d to mean only \xe2\x80\x9ca general declaration of emergency made by the\nPresident pursuant to a statute authorizing him to declare a national emergency.\xe2\x80\x9d\nThus, laws like the Defense Production Act of 1950, which do not require a Presidential declaration of emergency for their use, are not affected by this title\xe2\x80\x94even\nthough they may be referred to in a lay sense as \xe2\x80\x9cemergency\xe2\x80\x9d statutes.\nNEA Hearings at 90\xe2\x80\x9391. Furthermore, one paragraph after this discussion of title I,\nAssistant Attorney General Scalia proceeded to separately describe the provisions and\neffects of title II. See id. at 91.\n\n64\n\n\x0cEmergency Statutes That Do Not Expressly Require a National Emergency Declaration\n\nunless he \xe2\x80\x9cspecifically declares a national emergency\xe2\x80\x9d in accordance with\nthe NEA). The opinion also quoted a sentence from the Senate report\nstating that the NEA \xe2\x80\x9c\xe2\x80\x98is directed solely to Presidential declarations of\nemergency.\xe2\x80\x99\xe2\x80\x9d Severe Energy Supply Interruption, 6 Op. O.L.C. at 674\nn.78 (emphasis in original) (quoting S. Rep. No. 94 -1168, at 4). But in\ncontext, this sentence only clarifies that the NEA does not apply to or\nlimit authorizations based on national emergencies declared by Congress:\nthe immediately preceding sentence explains that \xe2\x80\x9c[t]he provisions of this\nbill are not meant to supersede existing provisions of law which authorize\ndeclarations of emergency by the Congress.\xe2\x80\x9d S. Rep. No. 94 -1168, at 4.\nThe NEA\xe2\x80\x99s legislative history, then, contains two strong indications\nthat Congress intended the Act to extend to national emergency statutes.\nNeither of the passages cited in our 1982 Severe Energy Supply Interruption opinion suggests that Congress intended to limit the NEA to\ndeclared national emergency statutes, and we have not found any other\nlegislative history that supports such a reading. The NEA\xe2\x80\x99s legislative\nhistory thus reinforces what its text plainly provides: that the provisions\nof the NEA extend to declared national emergency statutes and national\nemergency statutes alike. 4\nIII.\nFor the foregoing reasons, we conclude that the NEA\xe2\x80\x99s coverage is not\nlimited to statutes that expressly require the President to declare a national\nemergency. Rather, the NEA applies to any statute \xe2\x80\x9cconferring powers\nand authorities to be exercised during a national emergency,\xe2\x80\x9d unless\nCongress has exempted such a statute from the Act. 50 U.S.C. \xc2\xa7 1621(b).\nKARL R. THOMPSON\nPrincipal Deputy Assistant Attorney General\nOffice of Legal Counsel\n\nWe note that neither we nor any of the agencies with which we consulted in preparing\nthis opinion identified any administrative practice conducted in reliance on the interpretation of the NEA set forth in our Severe Energy Supply Interruption opinion. See supra\nnote 1. We also have not found any basis for concluding that Congress acquiesced in or\nratified that interpretation.\n4\n\n65\n\n\x0c'


b'Sixth Amendment Implications of Law Enforcement\nContact with Corporate Executives\n\nLaw enforcem ent contacts with high-ranking executives o f a corporation without the presence o f coun\xc2\xad\nsel after crim inal charges have been filed against the corporation violate the corporation\xe2\x80\x99s Sixth\nA m endm ent right to counsel\nNo Sixth Am endm ent violation occurs when such law enforcem ent contacts with high-ranking ex ecu \xc2\xad\ntives occur while civil penalty proceedings are in progress against the corporation\n\nA pril 15, 1994\n\nM e m o r a n d u m O p in io n f o r t h e\nP r in c ip a l A s s o c ia t e D e p u t y A t t o r n e y G e n e r a l\n\nYou have asked us to consider the Sixth Amendment implications o f law\nenforcement contacts with high-ranking corporate executives while criminal or\ncivil penalty proceedings are pending against the corporation that em ploys the ex\xc2\xad\necutives.1 We conclude that such contacts outside the presence of counsel violate\nthe Sixth Amendment when criminal charges have been filed, but that law en\xc2\xad\nforcement contacts of this nature do not contravene the Sixth Amendment when\ncivil penalty proceedings are in progress.\n\nI. The Sixth Am endm ent as a Restriction on Interrogation\nThe Sixth Amendment guarantees that \xe2\x80\x9c[i]n all criminal prosecutions, the ac\xc2\xad\ncused shall enjoy the right . . . to have the assistance of counsel for his defence.\xe2\x80\x9d\nU.S. Const, amend. VI. This constitutional safeguard comes into play concom i\xc2\xad\ntantly with the \xe2\x80\x9cfirst formal charging proceeding,\xe2\x80\x9d2 M oran v. Burbine, 475 U.S.\n412, 428 (1986), and encompasses the right to the assistance of counsel during all\nforms of interrogation. See, e.g., B rew er v. W illiams, 430 U.S. 387, 400-01 (1977)\n\n1 M em orandum for W alter Dellinger, A ssistant A ttorney G eneral, O ffice o f Legal C ounsel, from Irvin B.\nN athan, Principal A ssociate D eputy A ttorney G eneral (Feb 24, 1994) We also received and considered\ncom m ents contained in a M em orandum for M ary Jo W hite, U nited States A ttorney, Southern D istrict o f N ew\nYork, from D avid B Fein, D eputy Chief, C rim inal D ivision, Southern D istrict o f New York (M ar. 11,\n1994).\n2 In 1980, w e explained that, \xe2\x80\x9c[gjenerally, no infringem ent o f the Sixth A m endm ent can occur prior to the\ninitiation o f form al judicial proceedings " E thical R estraints o j the AB A C ode o j P rofessional R espo n sib ility\non F ederal C rim inal Investigations, 4B Op. O L.C 576, 581 (1980) A lthough the Suprem e C ourt had\npreviously h eld that the Sixth A m endm ent right to counsel could attach prior to indictm ent, we noted that the\nC o u rt\xe2\x80\x99s d ecisio n in that case \xe2\x80\x94 Escobedo v Illinois, 378 U S 478 (1964) \xe2\x80\x94 \xe2\x80\x9chas been lim ited to its facts \xe2\x80\x9d\n4B O p O .L C at 581 n 10 (citing Johnson v N ew J ersev. 384 U S. 7 19, 733-34 (1966), and K trbv v. Illinois,\n406 U S. 682, 6 9 0 (1 9 7 2 )).\n\n47\n\n\x0cO pinions o f the O ffice o f L egal C ounsel\n\n(confession elicited by so-called Christian burial speech); M assiah v. U nited\nS ta tes , 377 U.S. 201, 206 (1964) (surreptitious interrogation).\n\nM ost judicial decisions interpreting the right to counsel involve individual\ndefendants, but the Sixth Amendment also affords corporations the right to coun\xc2\xad\nsel. U nited S tates v. Rad-O -Lite o f P hiladelphia, Inc., 612 F.2d 740, 743 (3d\nCir. 1979); see also U nited States v. Unimex, Inc., 991 F.2d 546, 549 (9th Cir.\n1993) (holding that \xe2\x80\x9ca corporation has a Sixth Amendment right to be represented\nby counsel\xe2\x80\x9d at trial); U nited States v. Thevis, 665 F.2d 616, 645 n.35 (5th Cir.\n1982) (accused corporation can avail itself of guarantees provided to \xe2\x80\x9can\n\xe2\x80\x98accused\xe2\x80\x99\xe2\x80\x9d by Sixth Amendment), cert, denied, 459 U.S. 825 (1982). Because a\ncorporation \xe2\x80\x98\xe2\x80\x9c is an artificial entity that can only act through agents,\xe2\x80\x9d \xe2\x80\x99 Am erican\nA irw a ys C harters, Inc. v. Regan, 746 F.2d 865, 873 n.14 (D.C. Cir. 1984) (quoting\nJones v. N ia g a ra F rontier Transp. A uth., 722 F.2d 20, 22 (2d Cir. 1983)), the pro\xc2\xad\nscription o f interrogation in the absence of counsel after the commencement of\nadversary judicial proceedings engenders some confusion when a corporation is\nnamed as a defendant. Nevertheless, the contours of the Sixth Amendment right to\ncounsel available to corporations can be defined in both the criminal and civil\ncontexts.\n\nII. C rim inal Proceedings Involving Corporations\nOnce the governm ent files criminal charges against a corporation, the Sixth\nAm endm ent forecloses interrogation of the corporation outside the presence of\ncorporate counsel. U nited States v. K ilpatrick, 594 F. Supp. 1324, 1350 (D. Colo.\n1984), re v \'d on o th er grounds, 821 F.2d 1456 (10th Cir. 1987), a jf \xe2\x80\x99d sub\nnom. Bank o f N ova S cotia v. U nited States, 487 U.S. 250 (1988). Although the\ndistrict court opinion in Kilpatrick provides the only direct affirmation o f this\nproposition, Sixth Amendment precedent bolsters the conclusion reached in K il\xc2\xad\np a trick. The Suprem e C ourt has em phasized that the Sixth Amendment \xe2\x80\x9cprovides\nthe right to counsel at postarraignment interrogations.\xe2\x80\x9d M ichigan v. Jackson, 475\nU.S. 625, 629 (1986). Because the Sixth Am endm ent right to counsel applies to\ncorporations as well as individuals, Unimex, 991 F.2d at 549; R ad-O -L ite, 612\nF.2d at 743, corporations \xe2\x80\x94 like individuals \xe2\x80\x94 cannot be subjected to interroga\xc2\xad\ntion outside the presence of counsel after the initiation of criminal proceedings.\nSee M aine v. M oulton, 474 U.S. 159, 170 (1985); 4B Op. O.L.C. at 580 (\xe2\x80\x9cOnce\nthe right to counsel has attached, the governm ent may not elicit incriminating\nstatem ents from the [defendant] unless it has obtained a waiver o f his Sixth\nA m endm ent right.\xe2\x80\x9d).\nThe question, then, is whether interrogation of high-level corporate executives\namounts to contact with the corporation itself. The relationship between corpora\xc2\xad\ntions and their high-level executives provides the answer to this question. Corpo\xc2\xad\nrate executives possess the power to invoke a corporation\xe2\x80\x99s right to counsel.\n48\n\n\x0cSixth A m endm ent Im plications o f Law E nforcem ent C ontact with C orporate E xecutives\n\nPotashnick v. P ort C ity Constr. Co., 609 F.2d 1101, 1119 & n.12 (5th Cir.), cert,\ndenied, 449 U.S. 820 (1980). M oreover, statements made by high-level corporate\nexecutives can be imputed to the corporation itself as admissions. M iano v. A C &\nR A dvertising, Inc., 148 F.R.D. 68, 76-77 (S.D.N.Y.) (Katz, M agistrate J.),\nadopted, 834 F. Supp. 632 (S.D.N.Y. 1993). In sum, a corporation can invoke\n\nconstitutional rights and make binding inculpatory statements through its highranking executives. Thus, interrogation o f corporate executives constitutes inter\xc2\xad\nrogation of the corporation itself.3 Id. (collecting cases holding that contact with\nhigh-level executives amounts to contact with corporation itself). Accordingly,\nwhen law enforcement officials question high-ranking corporate executives outside\nthe presence of counsel after the initiation of formal criminal proceedings, the\nSixth Amendment dictates that \xe2\x80\x94 absent a valid waiver of the right to counsel \xe2\x80\x94\nall statements made by corporate executives are inadmissible against the corpora\xc2\xad\ntion at a criminal trial.4 See M oulton, 474 U.S. at 180.\n\nIII. Civil Penalty Actions A gainst Corporations\nCourts traditionally have rejected assertions of the Sixth Amendment right to\ncounsel in civil penalty proceedings on the assumption that the Sixth Amendment\napplies only after the filing of criminal charges. See, e.g., W illiams v. U nited\nS tates D e p \xe2\x80\x99t o f Transp., 781 F.2d 1573, 1578 n.6 (11th Cir. 1986); C ollins v.\nCom m odity Futures Trading C om m \xe2\x80\x99n, 737 F. Supp. 1467, 1482-83 (N.D. 111.\n1990). One commentator has suggested, however, that the Supreme C ourt\xe2\x80\x99s ruling\nin U nited States v. H alper, 490 U.S. 435 (1989), may have rendered this assum p\xc2\xad\ntion obsolete. Linda S. Eads, Separating Crim e From Punishment: The C on stitu \xc2\xad\ntional Im plications o f U nited S tates v. H alper, 68 Wash U.L.Q. 929, 971-72\n(1990). Consequently, you have asked us to address the effect \xe2\x80\x94 if any \xe2\x80\x94 of the\nH alper decision upon the notion that the Sixth Amendment right to counsel does\nnot apply in civil penalty proceedings.\nThe H alper case involved a Double Jeopardy Clause challenge to a $130,000\ncivil penalty imposed upon an individual who had previously been convicted on\nfelony charges for the same conduct that led to the civil penalty. H alper, 490 U.S.\nat 437-38. The Supreme Court found that the $130,000 civil penalty served re\xc2\xad\ntributive or deterrent purposes, rather than merely remedial purposes, because the\npenalty bore \xe2\x80\x9cno rational relation to the goal of compensating the Governm ent\xe2\x80\x9d for\n3 T he New Jersey Suprem e Court has even suggested that a \'\'c o rp o ra tio n \'s Sixth A m endm ent right to\ncounsel may be im plicated if governm ent prosecutors m ight, after indictm ent, unqualifiedly interview [a\nlow er-level em ployee] w hose conduct establishes the guilt o f the corporation *\' M a tter o f O pinion 6 6 8 o f the\nA d viso ry Com m on P rofessional Ethics, 633 A .2d 959, 963 (N J. 1993)\n4 If the executives them selves have not been form ally charged, how ever, the statem ents they m ake can be\nintroduced in a subsequent crim inal proceeding against the executives See M o u lto n , 474 U.S at 180 C\xe2\x80\x98[T]o\nexclude evidence pertaining to charges as to w hich the Sixth A m endm ent right to counsel had not attached at\nthe tim e the evidence was obtained, sim ply because other charges w ere pending at that tim e, w ould unneces\xc2\xad\nsarily frustrate the p u b lic\'s in terest in the investigation o f c n m in al activities ")\n\n49\n\n\x0cO pinions o f the O ffice o f L egal C ounsel\n\nthe $585 loss caused by H alper\xe2\x80\x99s conduct. Id. at 449. Therefore, the civil penalty\namounted to \xe2\x80\x9cpunishm ent\xe2\x80\x9d as contemplated by the Double Jeopardy Clause. Id. at\n452.\nThe H a lp er Court unmistakably extended the reach of the Fifth Amendment,\nbut the C ourt carefully distinguished the Double Jeopardy Clause from \xe2\x80\x9cthe proce\xc2\xad\ndural protections o f the Sixth A m endm ent\xe2\x80\x9d and other constitutional safeguards\ntraditionally confined to criminal proceedings. H a lp er , 490 U.S. at 447. Specifi\xc2\xad\ncally, the C ourt reaffirm ed that the application o f such constitutional guarantees\nturns upon the \xe2\x80\x9cabstract approach\xe2\x80\x9d prescribed in U nited States v. Ward, 448 U.S.\n242, 248-51 (1980), rather than the \xe2\x80\x9c intrinsically personal\xe2\x80\x9d approach devised by\nthe H alper Court to assess the availability of Double Jeopardy Clause protection.\nH alper, 490 U.S. at 447. In the wake of H alper, the lower courts have agreed that\nthe availability o f Sixth Amendment protections in civil penalty actions depends\nupon the W ard test, rather than the H a lp e r standard. See U nited States v. 38 W hal\xc2\xad\ners C ove D rive, 954 F.2d 29, 35 (2d Cir.), cert, denied, 506 U.S. 815 (1992);\nU nited S tates v. N evada P ow er Co., 31 E nv\xe2\x80\x99t Rep. Cas. (BNA) 1878, 1882 (D.\nNev. 1990).\nA ccording to Ward, a civil penalty action ordinarily should not be viewed as\na criminal case with all the attendant Fifth and Sixth Amendment guarantees.\nWard, 448 U.S. at 248-51. When a litigant in a civil penalty proceeding invokes\nSixth A m endm ent rights by characterizing the action as a criminal prosecution, the\ncourt must engage in a two-part inquiry. Id. at 248. First, the court must \xe2\x80\x9cset\nout to determ ine whether Congress, in establishing the penalizing mechanism,\nindicated expressly or impliedly a preference for one label or the other.\xe2\x80\x9d Id.\nSecond, \xe2\x80\x9cwhere Congress has indicated an intention to establish a civil penalty,\xe2\x80\x9d\nthe court m ust \xe2\x80\x9cinquire[] further w hether the statutory scheme [is] so punitive ei\xc2\xad\nther in purpose or effect as to negate that intention.\xe2\x80\x9d Id. at 248-49. \xe2\x80\x98\xe2\x80\x9c Only the\nclearest p ro o f that the purpose and effect of the [civil penalty] are punitive will\nsuffice to override C ongress\xe2\x80\x99 manifest preference for a civil sanction.\xe2\x80\x9d U nited\nS tates v. One A ssortm en t o f 89 F irearm s, 465 U.S. 354, 365 (1984). Because the\n\xe2\x80\x9cprotections provided by the Sixth A m endm ent are explicitly confined to \xe2\x80\x98criminal\nprosecutions,\xe2\x80\x9d \xe2\x80\x99 Austin v. U nited S tates, 509 U.S. 602, 608 (1993), and civil pen\xc2\xad\nalty actions generally cannot be characterized as \xe2\x80\x9ccriminal prosecutions,\xe2\x80\x9d see\nW ard, 448 U.S. at 248-51, the Sixth Amendm ent does not foreclose interrogation\no f a corporation\xe2\x80\x99s executives while a civil penalty action is pending against the\ncorporation.\nIV. C on clusion\nLaw enforcem ent contact with high-ranking corporate executives must be\njudged by the same Sixth Amendment standards that govern individual defendants\xe2\x80\x99\nright to counsel. Thus, contact with corporate executives outside the presence of\n\n50\n\n\x0cSixth A m endm ent Im plications o f Law E nforcem ent C ontact with C orporate E xecutives\n\ncounsel is impermissible after the initiation of criminal proceedings against a cor\xc2\xad\nporation, but such contact passes muster under the Sixth Amendment when civil\npenalty proceedings are in progress.\n\nW ALTER DELLINGER\nA ssistan t A ttorney G eneral\nOffice o f Legal Counsel\n\n51\n\n\x0c'


b'June 21, 1977\n\n77-39\n\nMEMORANDUM OPINION FOR THE\nUNITED STATES ATTORNEY, JUDICIAL\nDISTRICT OF MAINE\nBorrowing Practices of Bank Examiners\n\nO ur opinion has been requested whether the provisions of 18 U.S.C.\n\xc2\xa7\xc2\xa7212-13 are violated if (1) the spouse of a bank examiner borrows\nmoney from a federally insured State bank, or (2) a bank examiner\nborrow s money from such a bank where the State superintendent of\nbanking has first revoked the examiner\xe2\x80\x99s authority to examine that bank.\nFor the reasons that follow, it is our conclusion that no violation of 18\nU.S.C. \xc2\xa7\xc2\xa7212-13 would be presented by the second approach; the first\napproach, however, poses problems that we believe are best avoided.\nW e shall first discuss the problems presented under 18 U.S.C. \xc2\xa7\xc2\xa721213 by a loan to the spouse of a bank examiner. Section 212 prohibits\nbank officers of any federally insured bank, under penalty of criminal\nsanction, from making or granting \xe2\x80\x9cany loan or gratuity . . . to any\nexaminer or assistant examiner who examines o r has authority to exam\xc2\xad\nine such bank.\xe2\x80\x9d Section 213 provides for a corresponding prohibition\non bank examiners from accepting \xe2\x80\x9ca loan or gratuity from any bank\n. . . examined by him or from any person connected therewith.\xe2\x80\x9d It is\nquite apparent that neither of these provisions explicitly imposes any\nrestrictions on the spouses o f bank examiners. According to the general\nrule requiring strict construction of criminal statutes, the activities of a\nspouse would not normally come within the provisions of such laws.\nH ow ever, we question w hether this result will always follow. Our\nproblem here stems from the decision in United States v. Bristol, 343 F.\nSupp. 1262 (S.D. Tex. 1972), affirmed, 473 F. 2d 439 (5th Cir. 1973). In\nthat case it was held that a bank officer\xe2\x80\x99s loan funneled through an\nentity not subject to 18 U.S.C. 213, nevertheless came within the\nprovisions o f that statute. T h e courts reasoned that, even though crimi\xc2\xad\nnal statutes must be strictly construed, \xc2\xa7213 should not be interpreted\nso as to depart from the evident congressional intent \xe2\x80\x9cto proscribe\ncertain financial transactions which could lead to a bank examiner\n154\n\n\x0ccarrying out his duties with less than total, unbiased objectivity.\xe2\x80\x9d 473 F.\n2d at 442.\nWe believe that this same reasoning would apply to at least some\nloans made to spouses of bank examiners. In the most egregious case,\nthe loan to the spouse may in actuality be a loan to the bank examiner.\nEven if the transaction did not partake o f this type of fraudulent\nbehavior, it seems to us that, in certain circumstances, a loan to the\nspouse of a bank examiner could easily cause that examiner to perform\nhis or her duties with respect to the particular bank in less than an\nunbiased and objective manner. In both sorts of situations the courts\nmight then adopt the approach in Bristol and apply 18 U.S.C. \xc2\xa7\xc2\xa7 212-13\nto such loans.\nThe Federal Deposit Insurance Corporation apparently shares this\nview, for it has laid down criteria that must be met before the spouse of\nan examiner may borrow from an uninsured bank. These criteria gener\xc2\xad\nally mandate that the loan be based entirely on the spouse\xe2\x80\x99s credit, be\nsupported by the spouse\xe2\x80\x99s own income or assets, and be employed for\nthe spouse\xe2\x80\x99s own personal use. While these criteria largely alleviate our\nconcerns here, they do not entirely eliminate them. For example, it is\npossible that the borrowed funds could allow the examiner\xe2\x80\x99s income to\nbe used for purposes for which they might not otherwise be available.\nA default on the loan, although theoretically enforceable only against\nthe spouse, could also bear on the examiner\xe2\x80\x99s standard of living and\nmight even end up being paid out of the examiner\xe2\x80\x99s own funds.\nIt thus seems that a bank examiner cannot be entirely insulated from\nthe effects o f his spouse\xe2\x80\x99s loan transactions in every circumstance. We\ntherefore cannot conclude that the purposes underlying 18 U.S.C.\n\xc2\xa7\xc2\xa7212-13 would not encompass a loan to a bank examiner\xe2\x80\x99s spouse in\nevery situation, and that the courts would not follow Bristol and apply\nthose statutes to such situations. While this may not often occur, we do\nbelieve that this prospect poses significant problems and precludes the\nview that loans to the spouse of a bank examiner will never violate 18\nU.S.C. \xc2\xa7\xc2\xa7212-13. We would therefore recommend that this practice be\nfollowed, if at all, with extreme caution.\nWe have no problem, however, with the second alternative of revok\xc2\xad\ning a bank examiner\xe2\x80\x99s authority to examine particular banks and allow\xc2\xad\ning him to obtain loans from those banks.1 We do not believe it\nappropriate for this Office to comment on the authority of the superin\xc2\xad\ntendent of banking to take this action; this is a question of State law\nand should therefore be decided by the State authorities. However,\nassuming that this authority exists, we believe that the revocation of an\nexaminer\xe2\x80\x99s authority to examine certain banks would meet the purposes\nserved by 18 U.S.C. \xc2\xa7\xc2\xa7212-13. The examiner would, then, never be in\n\xe2\x96\xa0We note here that 18 U.S.C. \xc2\xa7213 does not expressly refer to those banks that the\nexam iner has authority to examine, but only includes banks \xe2\x80\x9cexam ined\xe2\x80\x9d by the examiner.\nN o such lim itation appears in 18 U.S.C. \xc2\xa7212, how ever, and so the question o f the\nexam iner\xe2\x80\x99s authority is at least relevant to the bank officers\xe2\x80\x99 liability.\n\n155\n\n\x0ca position o f having dealings with a bank he could examine, and this\nwould serve to guarantee the examiner\xe2\x80\x99s unbiased objectivity in the\nperformance of his duties. W e would caution, however, that 18 U.S.C.\n\xc2\xa7213 would still prohibit any dealings with a bank that the examiner\nhas already \xe2\x80\x9cexamined.\xe2\x80\x9d\nL eon U lm an\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n156\n\n\x0c'


b"Application for Approval of a Joint Operating Arrangement\nUnder the Newspaper Preservation Act\nThe Attorney General is not required as a matter o f law to disapprove an application for a joint\noperating arrangement under the Newspaper Preservation Act because the allegedly failing\nparticipant in the, proposed arrangement has not been offered for sale, and no good faith efforts\nhave been made to find a purchaser ready, w illing, and able to operate it independently.\n\nMay 7, 1982\nMEMORANDUM OPINION FOR THE ATTORNEY GENERAL\nIn connection with your consideration of the application by the Seattle Times\nCompany and the Hearst Corporation for approval of a Joint Newspaper Operat\xc2\xad\ning Arrangement pursuant to the Newspaper Preservation Act, 15 U .S.C .\n\xc2\xa7\xc2\xa7 1801-04 (1976), you have requested that this Office advise you whether\napproval must, on a per se basis, be denied if the allegedly failing participant in\nthe proposed arrangement has not been offered for sale or if good-faith efforts to\nfind a purchaser ready, willing, and able to operate it independently have not been\nmade. We conclude that no such p er se rule pertains.\nI. Background\nOn March 27, 1981, pursuant to the Newspaper Preservation Act (Act), 15\nU.S.C. \xc2\xa7\xc2\xa7 1801-04 (1976), the Seattle Times Company, as owner of the Seattle\nTimes, and the Hearst Corporation, as owner of the Seattle Post-Intelligencer,\n(hereinafter Applicants) applied to the Attorney General for approval of a joint\nnewspaper operating arrangement.1The Assistant Attorney General in charge of\nthe Antitrust Division, acting under 28 C.F.R. \xc2\xa7 48.7 (1980) and aftera review of\ndocuments and information submitted in support of the Application, recom\xc2\xad\nmended that a hearing be held under 28 C.F.R. \xc2\xa7 48.10 to resolve material issues\nof fact. Such a hearing was ordered. Attorney General Order No. 953-81, 46\nFed. Reg. 41230. Petitions for intervention were entertained and granted under\n\n1 The Act provides, inter aha, a limited antitrust exemption for such arrangements entered into subsequent to J u ly\n24, 1970, with the prior written consent of the Attorney General. 15 U.S.C. \xc2\xa7 1803(b). Approval of the Attorney\nGeneral is dependent upon his determination that \xe2\x80\x9c (n]ot more than one of the newspaper publications involved in the\narrangement is a publication other than a failing newspaper and that approval of such arrangement would effectuate\nthe policy and purpose of [the Act)\xe2\x80\x9d Id. \xe2\x80\x9c Failing newspaper\xe2\x80\x9d is a defined term under the Act, 15 U.S.C. \xc2\xa7 1802(5),\nand the Act contains a congressional declaration of policy. 15 U.S C. \xc2\xa7 1801.\n\n243\n\n\x0c28 C.F.R. \xc2\xa7 48.11, Attorney General Order No. 959-81, 46 Fed. Reg. 49228,\nand a hearing was held. The Administrative Law Judge who conducted the\nhearing has issued his Recommended Decision, including findings of fact and\nconclusions of law, pursuant to 28 C.F.R. \xc2\xa7 48.10(d). Intervenors and the Anti\xc2\xad\ntrust Division (hereinafter Opponents) have filed exceptions to the Recom\xc2\xad\nmended Decision, and Applicants have filed a response. 28 C.F.R. \xc2\xa7 4 8 .10(e).\nThe Application is now ripe for Attorney General consideration and decision\nunder 28 C.F.R. \xc2\xa7 48.14.\nIt is conceded that the Seattle Times is not a failing newspaper under the\ndefinition of the Act, 15 U.S.C. \xc2\xa7 1802(5). Applicants contend that the Seattle\nPost-Intelligencer does fall within the statutory definition. The burden of proving\nthis fact is on the Applicants. 28 C.F.R. \xc2\xa7 48.10(4). The Administrative Law\nJudge concluded, as a matter of fact and law, that Applicants have satisfied this\nburden. Recommended Decision at 103. Opponents contend as a matter of law\nthat, because Hearst has not offered the Post-Intelligencer for sale and has not\nmade a good-faith effort to find a ready, willing, and able purchaser, Applicants\nhave failed to carry their burden of demonstrating that the Seattle Post-Intel\xc2\xad\nligencer is failing.\nYou have asked us to consider Opponents\xe2\x80\x99 position and advise you concerning\nit. Our analysis is set forth below.2\nII. Analysis\nThe Opponents urge that the definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d under the Act\ncontains a p e r se \xe2\x80\x9c salability\xe2\x80\x9d rule. This rule, they say, requires denial of an\napplication for approval of a joint newspaper operating arrangement if the\nallegedly failing participant has not been offered for sale or if good-faith efforts\nhave not been made to find a purchaser (other than a competing newspaper) ready,\nwilling, and able to operate it independently. Based on findings 156-158 of the\nAdministrative Law Judge, this rule, the Opponents contend, mandates denial of\nthe present application.\n2\nWe note that O p p o n en ts, particularly th e A ntitrust D ivision , urge, in addition, that the A dm inistrative Law\nJudge com m itted an e rro r o f law in failing to adm it and fully to co n sid er th eir proffered evidence o n increm ental\nanalysis. W hile we agree w ith your prior ru lin g , expressed in A ttorney G en eral O rder N o . 9 62-81 (unpublished) o f\nN ovem ber 9 , 1981, that \xe2\x80\x9c the terms of the N ew spaper Preservation A ct certainly d o not preclude all inquiry into\nfinancial relationships betw een parent co rp o ratio n s and th e ir new spaper su b sid iaries,\xe2\x80\x9d we also ag ree w ith the\ncon clu sio n o f the A dm inistrative Law J u d g e that the inclusion o f the phrase \xe2\x80\x9c reg ard less o f its o w nership o r\naffiliatio n s'' in the definition o f \xe2\x80\x9c failing n ew sp ap er\xe2\x80\x9d p reclu d es ap plication o f increm ental analysis, as urged by\nO p p o n en ts, in m aking th e determ ination w h e th e r a new spaper is \xe2\x80\x9c failin g \xe2\x80\x9d u n d er the A ct. T he legislative history o f\nthe A ct m akes cle a r that financial interrelationships m ay be investigated fo r the purposes o f d eterm ining w hether a\nparent co rporation has \xe2\x80\x9d create[d] [a ] \xe2\x80\x98failing new spaper\xe2\x80\x99 by artificial book k eep in g en tries \xe2\x80\x9d S Rep N o 5 3 5 ,9 1 s t\nC o n g ., 1st. S ess. 5 (1969). However, the leg islativ e history m akes equally clear, passim, th a t, aside from the issue o f\ncreative b o o k k ee p in g , \xe2\x80\x9c w h eth e r a new spaper is failing should be d eterm ined on the b asis o f the o peration in the\np articu lar city rather than on th e basis of th e sw eep of the n ew spaper o w n er's business interests.\xe2\x80\x9d Id. See also , e .g .,\n116 C o n g . Rec 23147 (q u estio n of Rep. E ckhardt and response by Rep. K astenm eier); 116 C ong. Rec. 2006\n(statem ent o f S en . H ruska) Increm ental a n a ly sis, how ever packaged , w ould require investigation o f th e econom ic\np osition o f the P o st-In tellig e n cer not as an independent en tity but as a con trib u to r to the overall H earst corporate\nstructure. M oreover, it w ould require that ex p e n ses of the P ost-Intelligencer found legitim ate by the A dm inistrative\nLaw Judge be d isreg a rd e d and thus effectively absorbed by th e rem ainder o f the H earst ch a in . T his w ould be a form\no f subsidy an d , as the legislative history m a k e s clear, the A ct is intended to elim inate any requirem ent th a t ow ners,\np articularly n ew spaper c h a in s, subsidize th e ir failing new spapers from external resources\n\n244\n\n\x0cIt is clear that the rule urged by Opponents does not appear either in the plain\nlanguage of the Act generally or in its definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d specifi\xc2\xad\ncally. That definition states that\nThe term \xe2\x80\x9c failing newspaper\xe2\x80\x9d means a newspaper publication\nwhich, regardless of its ownership or affiliations, is in probable\ndanger of financial failure.\n15 U.S.C. \xc2\xa7 1802(5).\nNor does this rule appear in the regulations issued by the Attorney General to\nimplement the Act. See 28 C.F.R. Part 48. Opponents contend, nevertheless, that\nthe legislative history of the Act demonstrates that the rule urged was within the\ncontemplation of Congress when the definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d was\nframed. This, however, does not seem to be the case. To the contrary, those\nreferences in the legislative history specific to a sales requirement indicate that\nCongress intended that the definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d would contain no\nsuch p er se rule.\nExamination of the legislative history3of the definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d\nmust be approached with two considerations in mind. The first is that the\ndefinition underwent a metamorphosis during the legislative process; the second\nis that statements made concerning the characteristics of failing newspapers refer,\nalternately, depending on the context, either to such newspapers when considered\nunder the \xe2\x80\x9c failing company\xe2\x80\x9d doctrine established by the Supreme Court in\nInternational Shoe Co. v. FTC, 280 U.S. 291 (1930), and applied to newspapers\nin Citizen Publishing Co. v. United States, 394 U.S. 131 (1969), or to such\nnewspapers viewed under the less stringent definition to be enacted. Both of these\nconsiderations bear on Opponents\xe2\x80\x99 legislative history argument.\nOpponents have pointed to a number of statements, made during hearings,\nmade on the floor of the House and Senate, and contained in the committee\n3 The legislative histo ry of the A ct is extensive. It consists of four sets of hearings, a H ouse and a Senate rep o rt,\nand floor debates in both H ouses. A lthough the tw o bodies initially passed varying versions o f the A ct, there is no\nconference report T h e S enate adopted the H ouse version w ithout necessity for a conference 116 C ong. Rec\n24435\nT he first version of w hat eventually becam e the A ct was S 1312. 90th C ong , 1st Sess (1967) H earings w ere\nheld on this bill, know n as the Failing N ew spaper A ct, in July and A ugust of 1967 and in February, M arch, and A p ril\no f 1968. See Hearings on S. 1512, the Failing Newspaper Act, Before the Subcomm. on Antitrust and Monopoly c f\nthe Senate Comm on the Judiciary (I^ rts 1-7), 90th C o n g ., 1st and 2d Sess. (1 9 6 7 -6 8 ) (herein after Senate\nHearings (90th)). A lthough the bill w as favorably reported by the subcom m ittee, it was not acted upon by the full\nSenate Judiciary C om m ittee T he H ouse also held hearings on a num ber of predecessors o f the A ct d u n n g the 90 th\nC ongress. See Hearings on H R 19123 and Related Bills to Exempt from the Antitrust Laws Certain Joint\n\nNewspaper Operating Arrangements, Before the Antitrust Subcomm (Subcomm No 5 ) c f the HouseCom m on the\nJudiciary, 90th C ong , 2d Sess. (1968) (hereinafter H ouse H earings (90th)). H R. 19123 was not rep o rted , and the\nH ouse did not act on it D u n n g the 91st C ongress, after the S uprem e C o u rt\xe2\x80\x99s d ecision in Citizen Publishing Co v\nUnited States, 394 U .S . 131 (1969), additional hearings w ere held in both the H ouse and the S en ate. See Hearings\no n S 1520, the Newspaper Preservation Act, Before the Subcomm on Antitrust and Monopoly c f the Senate Comm,\non the Judiciary, 91st C o n g ., 1st Sess (1969) (hereinafter Senate H earings (91st)) and Hearings on H R 279 and\nRelated Bills to Exempt from the Antitrust Laws Certain Joint Newspaper Operating Arrangements. Before the\nAntitrust Subcomm. (Subcomm No. 5) o f the H ouse Comm on the Judiciary, 9 1 st C o n g ., 1st Sess. (1 9 6 9 )\n(h erein after House Hearings (91st)) S . 1520, as am ended, was reported favorably by the Senate C om m ittee o n the\nJudiciary in S. Rep. N o. 535, 91st C ong , 1st S ess. (1969) (hereinafter Senate Report) as w as H .R 2 7 9 , as\nam en d ed , by the H ouse C om m ittee on the Judiciary in H R\n(h erein after House Report)\n\n245\n\nRep N o\n\n1193, 91st C o n g ., 2d Sess. (1 9 7 0 )\n\n\x0creports4 which suggest that Congress believed that one of the essential charac\xc2\xad\nteristics of a failing newspaper is that no one (except a competitor) wants to buy\nit.E .g ., 116Cong. Rec. 1786 ( \xe2\x80\x9c There is no market for independent ownership of\na failing newspaper. . . .\xe2\x80\x9d ) (statement of Sen. Inouye). They argue from this that\nthe willingness of \xe2\x80\x9c outsiders\xe2\x80\x9d to consider purchasing the Post-Intelligencer\n(Finding 157) is strong evidence that that newspaper is not \xe2\x80\x9c failing\xe2\x80\x9d within the\ncongressional contemplation of the Act\xe2\x80\x99s definition. This argument, however,\nignores the second consideration. When viewed in context, it is equally likely\nthat the statements cited by Opponents refer to the unwillingness of outsiders to\npurchase newspapers that meet the Supreme Court\xe2\x80\x99s \xe2\x80\x9c failing company\xe2\x80\x9d test as it\nis that they refer to their unwillingness to purchase newspapers that might satisfy\nthe A ct\xe2\x80\x99s definition.5 This ambiguity is in sharp contrast to those instances in the\nlegislative history in which a requirement, under the proposed definition, to seek\nan alternate purchaser was discussed directly. In each such case the unequivo\xc2\xad\ncally expressed view was that no such requirement would exist.\nIn a letter addressed to Senator Eastland as Chairman of the Senate Committee\non the Judiciary, which is included in the Senate Report, the Chairman of the\nFederal Trade Commission, an opponent of the Act, observed that under it\n\xe2\x80\x9c [NJewspapers in economic distress may seek an exempt joint arrangement\nwithout search for an available purchaser who could truly continue an indepen\xc2\xad\ndent newspaper operation.\xe2\x80\x9d Senate Report at 10. A similar objection was raised\nby Donald F. Turner, then Assistant Attorney General in charge of the Antitrust\nDivision. It was his view that\n[A] more vital issue is at stake, and I stress this. Under present\nlaw, a company may not invoke the \xe2\x80\x9c failing company\xe2\x80\x9d defense if\nthere are purchasers available who are not direct competitors . . .\nyet, this bill contains no such requirement.\nSenate H earings (Part 7) (90th) at 3110-11. His successor, Assistant Attorney\n\nGeneral McLaren, evinced a similar concern. He believed that\nS. 1520 would establish a special definition for and a special\nfailing company defense for newspapers. This definition falls\nshort of the requirements adopted by the court in the Tucson\nnewspaper case [Citizen Publishing Co. v. United States, supra].\nThere the court disallowed the failing company defense on the\nfinding that the allegedly failing newspaper was \xe2\x80\x9c not on the verge\nof going out of business\xe2\x80\x9d and it had not been established that there\nwere no alternative purchasers. Even assuming justification for\npreserving a failing newspaper through a price-fixing and profitpooling arrangement, certainly this could not be justified . . . if\nthere were a purchaser available who would continue independent\noperations.\n4 See In te rv en o r\xe2\x80\x99s E xceptions at 6 -7 , A n titru st D iv isio n \xe2\x80\x99s E xceptions at 1 2-13\n5\xc2\xa3\n\nS en ate R eport at 4.\n\n246\n\n\x0cSenate Hearings (91st) at 296-97. Mr. McLaren expressed the same concern in\nthe House hearings. House Hearings (91st) at 360. Nongovernment opponents of\nthe Act held similar views. E .g ., House Hearings (91st) at 419 (\xe2\x80\x9c H.R. 279,\n\nhowever, contains no requirement that an allegedly failing newspaper must seek a\npurchaser other than a competitor\xe2\x80\x9d ) (statement of Thomas E. Harris, Associate\nGeneral Counsel, AFL-CIO). Nor were opponents of the Act the only ones to\nmake these observations. Arthur B. Hanson, General Counsel, American News\xc2\xad\npaper Publisher Association, a principal architect of and lobbyist for S. 1312,\ndescribed that bill\xe2\x80\x99s intended effect on the alternate purchaser requirement as\nfollows:\nIn merger cases under section 7 of the Clayton Act, some courts\nhave added to the requirement of proof of a \xe2\x80\x9c failing company\xe2\x80\x9d\nevidence of the absence of a purchaser alternative to the one\nseeking to acquire the stock or assets of the failing company. This\nlimitation is not applicable to S. 1312 . . . any other newspaper\nwould be free to become a party to the joint arrangement or to\nacquire ownership of the failing newspaper. . . . Under the bill\nthere would be no obligation on the part of the failing newspaper\nto accept an offer from a source other than a competitor.\nSenate Hearings (90th) at 58.6\n\nAn additional and persuasive indication that Congress did not believe that the\nAct\xe2\x80\x99s definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d would contain the p er se rule advanced\nby Opponents is that Senator Brooke found it necessary to propose virtually the\nidentical rule as an amendment to S. 1520. His amendment would, inter alia,\nhave imposed, as a prerequisite to qualification as a failing newspaper, the\nrequirement that \xe2\x80\x9c active efforts made in good faith by the managers thereof to\nobtain a purchaser of such newspaper publication who is willing and able to\ncontinue it in operations as a separate and independent newspaper publication\nhave been unsuccessful.\xe2\x80\x9d 115 Cong. Rec. 10625.7 It seems unlikely that Senator\nBrooke would have offered such an amendment had there been general consensus\nthat such a requirement was already contained in the definition of \xe2\x80\x9c failing\nnewspaper.\xe2\x80\x9d Indeed, the Brooke amendment was considered to so have the\npotential to work such a change that even after it had been withdrawn it was\nopposed as \xe2\x80\x9c most objectionable\xe2\x80\x9d by one of the principal lobbyists in favor of the\nAct. Senate H earings (91st) at 321 (Statement of Mr. Levin).\nThe legislative history detailed above admittedly pertains to definitions of\n\xe2\x80\x9c failing newspaper\xe2\x80\x9d different from that which was finally enacted. As Oppo\xc2\xad\nnents point out, modifications to the definition made by the House Judiciary\nCommittee were intended to make it more stringent than the definition as\n6 S 1312, the p red ec esso r o f S . 1520, the Senate version of the A ct, see note 3, supra, w ould have provided an\nantitrust exem ption for m ergers involving failing new spapers as well as fo r join t new spaper operating arran g em en ts.\nS 1312, 90th C ong , 1st Sess. \xc2\xa7\xc2\xa7 3(2) and (3), 4.\n7 A sim ilar proposal h ad been put forw ard by a representative of th e A m erican N ew spaper G u ild early in the\nSenate hearings Senate Hearings (90th) (P art 1) at 219 (S tatem ent o f M r Parson)\n\n247\n\n\x0coriginally proposed and as passed by the Senate.8 116 Cong. Rec. 23154-55\n(Statement of Rep. Railsback). In view of this, it could be argued that the final,\nmore stringent definition incorporated the p er se rule advanced by Opponents,\neven though the statements cited above indicate that the earlier versions under\nconsideration would not have. We regard this as a dubious conclusion. In our\nview, it is not supported by anything specific in the legislative history, and it\nseems unlikely that such a sweeping (but specific) change of intent would have\nincorporated sub silencio. This is particularly so since the Act, as a whole, as is\nrecognized by Opponents, was clearly intended to ameliorate, both as to existing\nand future joint newspaper operating arrangements, the Supreme Court\xe2\x80\x99s deci\xc2\xad\nsion in Citizen Publishing C o. v. United States, supra, that the traditional\n\xe2\x80\x9c failing company\xe2\x80\x9d doctrine applied in full force to such arrangements. One of\nthe major features of that doctrine found objectionable by the proponents of the\nAct when applied to joint newspaper operating agreements was its strict \xe2\x80\x9c alter\xc2\xad\nnate purchaser\xe2\x80\x9d requirement. We doubt that Congress would have intended to\nimpose any new p e r se requirement in this regard, even a less stringent one,\nwithout saying so.\nOpponents argue that certain statements made in the Senate Report and during\nthe House and Senate debates relating the language \xe2\x80\x9c in probable danger of\nfinancial failure\xe2\x80\x9d (contained in the final definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d ) to the\nBank Merger Act of 1966,12U .S.C . \xc2\xa7 1828 (c) (1976) and to the case of United\nStates v. Third N ational Bank, 390 U.S. 171 (1968), interpreting that Act, are\nspecific indicators of a congressional intent to incorporate their per se rule into\nthe final definition. We do not agree. First, as the Administrative Law Judge\npoints out (Recommended Decision at 91), the House Report contains no\nreference to either the Bank M erger Act of 1966 or to the Third National Bank\ncase.9 This is significant because the House Judiciary Committee was the source\nof the final version of the definition. More important than this omission, however,\nis the inevitable conclusion to be drawn from a full tracing of the references in the\nlegislative history to the Bank M erger Act of 1966 and to the Third National Bank\ndecision.\nReference was first made to the Bank Merger Act of 1966 and to the Third\nNational Bank case before the phrase \xe2\x80\x9c in probable danger of financial failure\xe2\x80\x9d\nwas added to the definition of \xe2\x80\x9c failing newspaper.\xe2\x80\x9d 10House Hearings (90th) at\n8 In S . 1312 and H R . 19123, see note 3 supra, and in S 1520 and H R. 279, as orig in ally introduced, the\nd efinition o f \xe2\x80\x9c failing n ew sp ap er\xe2\x80\x9d read \xe2\x80\x9c th e term \xe2\x80\x98failing new spap er' m eans a new spaper publication w hich,\nregardless o f its o w n ersh ip o r affiliations, ap p e a rs unlikely to rem ain o r becom e a financially sound p u b licatio n .\xe2\x80\x9d\nT h e Senate subcom m ittee considering S 1520 am ended th e definition by ad ding in the disjunctive the p h rase \xe2\x80\x9c is in\np robable d an g e r o f financial failure or\xe2\x80\x9d b efo re \xe2\x80\x9c appears unlikely to . . . \xe2\x80\x9d Senate Hearings (91st) at 7 In the\nH ouse J u d iciary C o m m ittee, th e phrase \xe2\x80\x9c ap p e a rs unlikely to rem ain o r becom e a financially sound p u b licatio n \xe2\x80\x9d\nw as deleted from th e d efinition. 116 C o n g . Rec. 2 3 1 5 4 -5 5 (S tatem ent o f Rep R ailsback) That standard,\nconsidered to be m ore len ien t, w as, however, retained w ith respect to ju d g in g jo in t new spaper o perating arrange*\nmerits already in effect. 15 U S .C . \xc2\xa7 1803(a); House Report at 10. A s a result, the A c t\xe2\x80\x99s definition o f \xe2\x80\x9c failing\nn ew sp ap er\xe2\x80\x9d is relevant only in the case of jo in t new spaper operating arran g em en ts entered into after Ju ly 25, 1970,\nw hich require A ttorney G eneral approval Compare 15 U S .C \xc2\xa7 1803(a) with 15 U .S .C \xc2\xa7 1803(b).\n9 T he A dm inistrative Law Judge is also c o rre c t in his observation that th e Bank M erger A ct o f 1966 does not,\nitself, co n tain the quoted p h rase o r an approxim ation o f it.\n10 See fn 8. supra, for a discussion of th e developm ent o f the definition o f \xe2\x80\x9c failing n ew sp ap er\xe2\x80\x9d\n\n248\n\n\x0c74. More extensive references to that Act and that case were made after the\ndefinition had been modified in the Senate subcommittee to include the phrase\n\xe2\x80\x9c in probable danger of financial failure\xe2\x80\x9d in the disjunctive along with the phrase\n\xe2\x80\x9c appears unlikely to remain or become a financially sound publication.\xe2\x80\x9d Signifi\xc2\xad\ncantly, most references to the Bank Merger Act of 1966 and to the Third National\nBank case were made while the proposed legislation contained both the \xe2\x80\x9c in\nprobable danger\xe2\x80\x9d and the \xe2\x80\x9c unlikely to remain or become\xe2\x80\x9d language. In most of\nthese references each phrase, not simply \xe2\x80\x9c in probable danger of financial\nfailure,\xe2\x80\x9d is tied to the Bank Merger Act of 1966 and the Third National Bank\ncase. E.g., Senate Hearings ( 9 1st) at 7-8, 319; House Hearings (91st) at 13, 96.\nIt seems clear from the legislative history (apart from the references to the\nBank Merger Act of 1966 and the Third National Bank case) outlined above that\nthe unanimous interpretation of the definition of \xe2\x80\x9c failing newspaper,\xe2\x80\x9d while it\ncontained only the phrase \xe2\x80\x9c appears unlikely to remain or become a financially\nsound publication\xe2\x80\x9d (and while parallels were already being drawn between that\ndefinition and that act and case), was that it did not include the per se rule argued\nfor by Opponents. By introducing the phrase \xe2\x80\x9c in probable danger of financial\nfailure\xe2\x80\x9d in the disjunctive and relating both it and the phrase \xe2\x80\x9c appears unlikely to\nremain or become a financially sound publication\xe2\x80\x9d to the Bank Merger Act of\n1966 and the Third National Bank case, the Senate subcommittee intended \xe2\x80\x9c to\nbroaden the scope of the definition and not to narrow it.\xe2\x80\x9d Senate Hearings (91 st)\nat 8. Given this progression and these understandings, it hardly seems likely that\nreferences to the Bank Merger Act of 1966 and to the Third National Bank case\nwere intended to serve to incorporate a per se rule concerning salability derived\nfrom either into the language \xe2\x80\x9c in probable danger of financial failure.\xe2\x80\x9d Rather, it\nis our view that, taken as a whole, the references in the legislative history to the\nBank Merger Act of 1966 and the Supreme Court\xe2\x80\x99s interpretation of it in Third\nNational Bank indicate a general rather than a specific congressional intent. This\nis that the loss of newspapers (like the loss of banks) is of such serious detriment\nto the public that the risks entailed in applying the normal \xe2\x80\x9c failing company\xe2\x80\x9d\ndoctrine to them cannot be tolerated. See United States v. Third National Bank,\n390 U.S. at 187.\nEven if Congress had intended to import the entire holding of Third National\nBank into the A ct\xe2\x80\x99s definition of \xe2\x80\x9c failing newspaper,\xe2\x80\x9d Opponents\xe2\x80\x99 position could\nnot be sustained on a p e r se basis. In Third National Bank the Supreme Court\nrequired the investigation of the possibility of a sale as one means of establishing\nthe \xe2\x80\x9c unavailability of alternate solutions to the [management] woes of the\nNashville Bank and Trust Co.\xe2\x80\x9d United States v. Third National Bank, 390 U.S. at\n190-191. It went on to hold that\nThe burden of showing that an anticompetitive bank merger\nwould be in the public interest because of the benefits it would\nbring to the convenience and needs of the community to be served\nrests on the merging banks. Houston Bank, supra. A showing that\none bank needed more lively and efficient management, absent a\n249\n\n\x0cshowing that the alternative means for securing such management\nwithout a merger would present unusually severe difficulties,\ncannot be considered to satisfy that burden.\nId. at 192. Thus it would appear that the requirements of the Third National Bank\n\ncase, as applied to an allegedly failing newspaper, could be satisfied by proof that\nthe introduction of new management (whether or not under a new owner) would\nnot improve the situation. The Administrative Law Judge seems to have made\nsuch a finding (Finding 109).\xe2\x80\x9c\nConclusion\nThe legislative history of the Act does not support the proposition that\nCongress intended that the definition of \xe2\x80\x9c failing newspaper\xe2\x80\x9d contain a p e rse rule\nrequiring that before a newspaper may qualify as such it must have been offered\nfor sale and good-faith efforts must have been made to find a purchaser ready,\nwilling, and able to operate it as an independent publication.\nT\n\nheodore\n\nB. O\n\nlson\n\nAssistant Attorney General\nOffice c f Legal Counsel\n\nM We note th a t Intervenors have disputed th is finding Interveno rs\xe2\x80\x99 Exceptions at 12 ei seq. A nother of the\nA dm inistrative Law J u d g e \xe2\x80\x99s conclusions (F in d in g 158) ( \xe2\x80\x9c T he P ost-In tellig en cer could in all p robability be sold at\nfair m a rk et value to a person o r firm who c o u ld , and w ould, co ntinue it in operation as an independent m etropolitan\ndaily.\xe2\x80\x9d ) ca n be read as in consistent with it. T h e factual issue w ill have to be resolved on the basis o f the en tire record\nb efo re th e A ttorney G en eral 28 C F R . \xc2\xa7 4 8 .1 4 (a ).*\n\xe2\x99\xa6 N o t e : T h e A ttorney G eneral approved th e jo in t operating arran g em en t o n June 15, 1982. In subsequent\nlitigation ch a llen g in g it, the d istrict court held that alternatives to a jo in t operating arrangem ent w ere relevant to a\nd eterm in atio n w h eth e r a n ew sp ap er qualifies fo r an antitrust exem ption under the N ew spaper P reservation A ct, and\nth at such alternatives h ad not been adequately ex p lo red by the p arties to the ag reem en t in this case. 549 F. Supp. 985\n( W D W ash. 1982) T h e court of appeals ag reed as to the legal stan d a rd , but reversed on the m erits, holding that the\nT im es C o m p a n y and H earst had sufficiently negated the possibility that any such alternatives w ere available. 704\nF .2d 4 6 7 (9 th Cir. 1983) T h e Suprem e C ourt denied certiorari on O ctober 11, 1983. 464 U S 892 (1983). Ed.\n\n250\n\n\x0c"