b'Severability of Legislative Veto Provision\nA legislative veto provision in the S elective Service Act, w hich w ould authorize either H ouse\no f C ongress to disapprove contracts in excess o f $25,000,000, is unconstitutional under\nIm m igration a n d N aturalization Service v. Chadha, but is severable from the rest o f the\nstatute.\nT his unconstitutional provision m ust be severed from the statute in its entirety, including its\nlanguage callin g fo r notification to C ongress o f proposed contracts.\n\nFebruary 28, 1991\nM e m o r a n d u m O p in io n f o r t h e A c t in g G e n e r a l C o u n s e l\nF ed era l Em ergency M anagem ent A gency\n\nThis responds to your request for the opinion of this Office concerning\nthe severability of an unconstitutional legislative veto provision in section\n18(a) of the Selective Service Act of 1948, 50 U.S.C. app. \xc2\xa7 468(a). The\nstatute authorizes the President to secure expedited delivery of materials\nprocured for the military forces of the United States. It also contains a\nprovision added in 1973 that would enable one House of Congress to disap\xc2\xad\nprove contracts of more than twenty-five million dollars. We conclude that\nthe unconstitutional legislative veto is severable from the statute\xe2\x80\x99s grant of\nauthority to the President to obtain expedited delivery of military contracts.\nWe further conclude that the better view, under the unsettled authority, is\nthat the portion of the statute added by the 1973 amendment constitutes the\nprovision that must be severed from the statute.\nI.\n\nSection 18(a) of the Selective Service Act of 1948 provides:\nWhenever the President after consultation with and receiv\xc2\xad\ning advice from the National Security Resources Board\ndetermines that it is in the interest of the national security for\nthe Government to obtain prompt delivery of any articles or\nmaterials the procurement of which has been authorized by\nthe Congress exclusively for the use of the armed forces of\n49\n\n\x0cthe United States, or for the use o f the Atomic Energy Com\xc2\xad\nmission, he is authorized, through the head o f any Government\nagency, to place with any person operating a plant, mine, or\nother facility capable of producing such articles or materials\nan order for such quantity of such articles or materials as the\nPresident deems appropriate, except that no order which re\xc2\xad\nquires payments thereunder in excess of $25,000,000 shall be\nplaced with any person unless the Committees on Armed Ser\xc2\xad\nvices of the Senate and the House of Representatives have\nbeen notified in writing of such proposed order and 60 days\nof continuous session of Congress have expired following the\ndate on which such notice was transmitted to such Commit\xc2\xad\ntees and neither House of Congress has adopted, within such\n60-day period, a resolution disapproving such order.\n50 U.S.C. app. \xc2\xa7 468(a). Section 18(b) of the Act directs contractors to give\nprecedence to orders placed pursuant to the statute. 50 U.S.C. app. \xc2\xa7 468(a).\nThe statute did not contain a legislative veto as originally enacted. Congress\nadded the clause in section 18(a) that begins \xe2\x80\x9cexcept that no order\xe2\x80\x9d in 1973.\nSee Department of Defense Appropriation Authorization Act, 1974, Pub. L.\nNo. 93-155, \xc2\xa7 807(d)(1), 87 Stat. 605, 616 (1973).\n\nII.\nThe provision authorizing one House of Congress to disapprove an order\nof more than twenty-five million dollars is unconstitutional. Immigration\nand N aturalization Service v. Chadha, 462 U.S. 919 (1983). Chadha states\nthat congressional \xe2\x80\x9caction that ha[s] the purpose and effect of altering the\nlegal rights, duties, and relations of persons . . . outside the Legislative\nBranch,\xe2\x80\x9d id. at 952, must comply with the constitutional requirements of\npassage by both Houses of Congress and presentment to the President for\napproval or veto. U.S. Const, art. I, \xc2\xa7\xc2\xa7 1, 7. The resolution of disapproval\nauthorized by the 1973 addition to section 18(a) authorizes one House of\nCongress to limit the President\xe2\x80\x99s legal powers. The congressional disap\xc2\xad\nproval mechanism, therefore, may not constitutionally be employed.\n\nIII.\nA.\nThe next question is whether the legislative veto may be severed from the\nremaining provisions of the statute that grant the President authority to order\narticles and materials on an expedited basis. The Supreme Court has de\xc2\xad\ncided the severability of a legislative veto provision on two occasions. See\n\n50\n\n\x0cAlaska Airlines, Inc. v. Brock, 480 U.S. 678 (1987); Chadha, 462 U.S. at\n\n931-35. Both cases employ the standard test for severability questions:\n\xe2\x80\x9cUnless it is evident that the Legislature would not have enacted those pro\xc2\xad\nvisions which are within its power, independently of that which is not, the\ninvalid part may be dropped if what is left is fully operative as a law.\xe2\x80\x9d\nAlaska Airlines, 480 U.S. at 684; Chadha, 462 U.S. at 931-32.1 Writing\nwith specific reference to legislative vetoes, the Court in Alaska Airlines\nemphasized that \xe2\x80\x9c [t]he more relevant inquiry in evaluating severability is\nwhether the statute will function in a manner consistent with the intent of\nCongress.\xe2\x80\x9d 480 U.S. at 685. Additionally, unconstitutional provisions are\npresumed to be severable from the remainder of a statute. See Regan v.\nTime, Inc., 468 U.S. 641, 653 (1984) (plurality opinion). Finally, unconsti\xc2\xad\ntutional provisions are further presumed to be severable if they are contained\nin a statute that includes a severability clause. See, e.g., Alaska Airlines,\n480 U.S. at 686; Chadha, 462 U.S. at 932. The absence of such a clause,\nhowever, does not give rise to a presumption against severability. See Alaska\nAirlines, 480 U.S. at 686.2\nThe grant of authority to the President in section 18(a) would remain\nfully operative as a law if the congressional disapproval language is excised.\nThe language authorizing the President to order materials needed for na\xc2\xad\ntional security was part of the statute as originally enacted in 1948. It was\nfully operational in its original form. The congressional disapproval mecha\xc2\xad\nnism was added by Congress in 1973 to provide congressional review o f a\nPresidential decision to place orders over $25,000,000. As the Court ex\xc2\xad\nplained in Alaska Airlines, provisions of this sort are by their \xe2\x80\x9cvery nature . . .\nseparate from the operation of the substantive provisions of a statute,\xe2\x80\x9d and do\nnot affect the capacity of the balance of the legislation to function indepen\xc2\xad\ndently. 480 U.S. at 684-85.\nNext, the law that results when the legislative veto provision is severed is\nnot one that Congress would not have enacted. See Alaska Airlines, 480\nU.S. at 685 (severance improper where it would produce a statute that Con\xc2\xad\ngress would not have accepted). O f course, \xe2\x80\x9cthe absence of the veto necessarily\nalters the balance of powers between the Legislative and Executive Branches\nof the Federal Government,\xe2\x80\x9d Alaska Airlines 480 U.S. at 685, but that is not\nenough to preclude severance. Rather, the appropriate inquiry is whether the\ndelegation to the President of the power to enter into these military contracts is\n\xe2\x80\x9cso controversial or so broad that Congress would have been unwilling to make\nthe delegation without a strong oversight mechanism.\xe2\x80\x9d Id.\nThere is no reason to believe that Congress would have refused to grant\nthis power. Congress made such a grant in 1948, and added the legislative\nveto provision only in 1973. In this case, then, the proper question is whether\nin 1973 Congress would have repealed the 1948 law if it had known that the\n1 This is the C ourt\xe2\x80\x99s longstanding test for severability. See Champlin Refining Co. v. Corporation\nComm \'n, 286 U.S 2 1 0 ,2 3 4 (1932).\n2 Neither the 1948 act nor the 1973 amendments include a severability clause.\n\n51\n\n\x0clegislative veto provision was impermissible. We are aware of no indication\nthat Congress would have taken such a step, and the legislative history of\nthe 1973 amendment strongly suggests that it would have done no such\nthing. Congress added the legislative veto to the statute in 1973 as one of a\ngroup o f amendments to four statutes giving the President emergency pow\xc2\xad\ners in an attempt to \xe2\x80\x9creassert congressional control over backdoor financing\nof defense contractors.\xe2\x80\x9d 119 Cong. Rec. 30,873 (1973) (statement of Sen.\nProxmire). The initial Senate version of the 1973 amendment would have\nprovided that no order over twenty-million dollars could be placed \xe2\x80\x9cexcept\nwith the prior approval of the Congress.\xe2\x80\x9d Id. at 30,872. The Conference\nCommittee changed this and the other three provisions because \xe2\x80\x9c[w]hile the\nHouse conferees were sympathetic to the purposes of the amendment, they\nwere concerned that the language was unduly restrictive and could result in\ndelays on important weapons programs.\xe2\x80\x9d H.R. Conf. Rep. No. 588, 93d\nCong., 1st Sess. 44 (1973) (explaining amendment to 10 U.S.C. \xc2\xa7 2307). In\nshort, Congress wanted a legislative veto, but not at the price of destroying\nthe President\xe2\x80\x99s authority to act in an emergency. Refusal to sever the legislative\nveto would produce the harsh result Congress was careful to avoid. Accord\xc2\xad\ningly, the legislative veto may be severed from the remainder of the statute.\n\n1.\nBecause of the way in which this statute is phrased, we must determine\nthe proper way in which to sever the unconstitutional provision. The 1973\nam endment reads:\nexcept that no order which requires payments thereunder in\nexcess of $25,000,000 shall be placed with any person unless\nthe Committees on Armed Services of the Senate and the House\no f Representatives have been notified in writing of such pro\xc2\xad\nposed order and 60 days of continuous session of Congress\nhave expired following the date on which such notice was\ntransmitted to such Committees and neither House of Con\xc2\xad\ngress has adopted, within such 60-day period, a resolution\ndisapproving such order.\n50 U.S.C. app. \xc2\xa7 468(a). If the entire provision were severed, the statute\nwould return to the form it had when first enacted. The language also\npermits another line of severance. If only the disapproval mechanism \xe2\x80\x94\ni.e., the words \xe2\x80\x9cand neither House of Congress has adopted, within such 60day period, a resolution disapproving such order\xe2\x80\x9d \xe2\x80\x94 were removed, the\nprovision would in effect be transformed into a report-and-wait requirement.3\n3 T here is at least one other alternative: severance of the words "and 60 days of continuous session of\nC ongress have expired following the date on which such notice was transmitted to such Com mittees\nand neither House o f Congress has adopted, within such 60-day period, a resolution disapproving such\norder.\xe2\x80\x9d Severance o f this clause would elim inate the sixty-day delay period and the disapproval require\xc2\xad\nm ent but would preserve the reporting requirement. The C ourt\xe2\x80\x99s decisions, however, lend no support to\nthis choice.\n\n52\n\n\x0cIn order to decide this question, we must identify the portion of the statute\nthat constitutes the unconstitutional legislative veto. Neither Alaska Airlines\nnor Chadha addressed this as a separate issue, although each case in some\nsense decided it, because each case described the statute that would remain\nafter severance. The Court\xe2\x80\x99s unexplained decisions in the two cases point in\nopposite directions: Alaska Airlines supports severance of the entire provi\xc2\xad\nsion added in 1973, but Chadha supports the line of severance that would\nleave a report-and-wait requirement. While the existing authorities thus do\nnot provide a certain answer, we believe the better view to be that the entire\nclause added in 1973 constitutes the legislative veto that must be severed\nfrom the valid remainder of the statute.\nSeverance o f the entire provision is supported by textual analysis and by\nAlaska Airlines. First, the legislative veto is most naturally read as a single\nrequirement; it is only an accident of phrasing that makes it possible to\nproduce a report-and-wait procedure by deleting certain words. The require\xc2\xad\nment of a report to Congress is integral to the operation of the legislative\nveto itself. It gives each House of Congress the notice and information\nneeded to exercise its veto power, and provides a time-table for the onehouse veto procedure. Without these, the legislative veto could not function,\nbut they have no independent importance. There is therefore no reason to\ngive the notification rule any independent status. Nothing in the legislative\nhistory demonstrates any perception of separate requirements for reporting,\nwaiting, and disapproval. Instead, Congress seemingly viewed the entire\nclause as indivisible, with the reporting requirement and the sixty-day delay\nperiod operating only to facilitate the exercise of the disapproval power.\nThe 1973 amendment therefore would not operate in the manner that Con\xc2\xad\ngress intended if only the disapproval mechanism is removed from the statute.\nAlaska A irlines , in which the Supreme Court most recently considered\nquestions of severability in depth, reinforces this conclusion. The statute at\nissue in that case authorizes the Secretary of Labor to issue regulations for\nthe administration of an airline employee protection program. 49 U.S.C.\napp. \xc2\xa7 1552(0(1)- The statute further provides:\nThe Secretary shall not issue any rule or regulation as a final\nrule or regulation under this section until 30 legislative days\nafter it has been submitted to the Committee on Commerce,\nScience, and Transportation of the Senate and the Committee\non Public Works and Transportation of the House of Repre\xc2\xad\nsentatives. Any rule or regulation issued by the Secretary\nunder this section as a final rule or regulation shall be submit\xc2\xad\nted to the Congress and shall become effective 60 legislative\ndays after the date of such submission, unless during that 60day period either House adopts a resolution stating that that\nHouse disapproves such rules or regulations, except that such\nrules or regulations may become effective on the date, during\n53\n\n\x0csuch 60-day period, that a resolution has been adopted by both\nHouses stating that the Congress approves o f them.\n49 U.S.C. app. \xc2\xa7 1552(f)(3). The Court characterized the entire second\nsentence o f this subsection as the \xe2\x80\x9clegislative-veto provision which gave rise\nto this litigation,\xe2\x80\x9d 480 U.S. at 682, and severed that provision from the rest\nof the statute. Likewise, the legislative veto provision added to the Selective\nService Act in 1973 has the same three components: a report requirement, a\nwait requirement, and a disapproval mechanism. According to the opinion\nin A laska A irlines, those provisions together constitute the legislative veto\nand should be treated as a unit for purposes of severance.\nW hile we take some guidance from Alaska Airlines, we do not suggest\nthat the case is dispositive. For one thing, the disputed question in that case\nwas whether the regulatory authority the statute gives to the Secretary of\nTransportation survived the invalidation of the legislative veto. Once the\nCourt determined that the legislative veto could be severed from the grant of\nauthority to issue regulations, the Court did not have to decide what the\n\xe2\x80\x9clegislative veto\xe2\x80\x9d was. Also, the statute at issue in Alaska Airlines already\ncontains a report-and-wait requirement (the first sentence of 49 U.S.C. app.\n\xc2\xa7 1552(0(3)) distinct from the provision the Court severed (the second sen\xc2\xad\ntence of 49 U.S.C. \xc2\xa7 1552(0(3)). Thus, severance did not eliminate all\nstatutorily-mandated congressional oversight, a point the Court made in its\nopinion. See 480 U.S. at 689 (\xe2\x80\x9cshould Congress object to the regulations\nissued, it retains a mechanism for the expression o f its disapproval that re\xc2\xad\nduces any disruption of congressional oversight caused by severance of the\nveto provision\xe2\x80\x9d). By contrast, severance of the entire provision added to\nsection 18(a) of the Selective Service Act in 1973 would eliminate any statu\xc2\xad\ntory oversight procedure.\nSeverance of the disapproval mechanism alone is supported by other\nstrands o f the C ourt\xe2\x80\x99s severability analysis and by the Court\xe2\x80\x99 opinion in\nChadha. Severance of the last clause of the 1973 amendment instead of the\nwhole 1973 amendment results in legislation that Congress might have en\xc2\xad\nacted. If the purpose of the 1973 amendment was to facilitate congressional\noversight, preservation of a report-and-wait requirement would further this\ngoal, albeit less successfully than the legislative veto Congress drafted.4\nChadha lends some support to this line of severance. In Chadha, the Court\xe2\x80\x99s\nmode of severance removed the congressional disapproval mechanism while\n\n4 It also m ight be argued that this line o f severance is most faithful to the Court\xe2\x80\x99s command to \xe2\x80\x9crefrain\nfrom invalidating more of the statute than is necessary.\xe2\x80\x9d Alaska Airlines, 480 U.S. at 684. We doubt,\nhowever, that the C ourt\xe2\x80\x99s point is to save as many words as possible. Rather, the goal is to preserve\n\xe2\x80\x9cunobjectionable provisions separable from those found to be unconstitutional.\xe2\x80\x9d Id. at 684 (quoting\nRegan v. Time, Inc., 468 U.S. at 652) (em phasis added). That rule cannot be applied until we have\ndecided w hether the words that would produce a report-and-wait procedure constitute a separate \xe2\x80\x9cpro\xc2\xad\nvision."\n\n54\n\n\x0cleaving a report-and-wait requirement.5 Application of this technique to sec\xc2\xad\ntion 18(a) of the Selective Service Act would eliminate the congressional\ndisapproval mechanism but preserve the rest of the section, thus effectively\ncreating a report-and-wait requirement.\nChadha , however, can be distinguished from the situation we confront\nhere. The history of the Immigration and Nationality Act indicates that\nCongress sought to confer substantial power on the Attorney General but\nalso to retain some active role in the deportation process, whether or not that\nrole involved the specific legislative veto in force at the time of Chadha.6\nThe Court concluded on the basis of this history that the legislative veto was\nseverable because Congress would not have simply returned to the privatebill system had it known the one-house veto to be impermissible. 462 U.S.\nat 934. The history also supported the conclusion that Congress was deter\xc2\xad\nmined to retain an active role, and thus accorded with the Court\xe2\x80\x99s decision\nto sever the legislative veto so as to produce a report-and-wait mechanism.\nThere is no similar evidence concerning the 1973 amendment to the Selec^\ntive Service Act. Congress had not tinkered with the relative powers of the\ntwo branches and gave no indication that it had any strong separate interest\nin being involved in the decision if the legislative veto was unavailable.\nUnder these circumstances, to change the legislative veto into a report-andwait mechanism would represent a rewriting of the statute based on nothing\nmore than speculation as to Congress\xe2\x80\x99s probable preferences. The C ourt\xe2\x80\x99s\napproach in Alaska Airlines avoids these difficulties.\nTo the extent the two cases are in tension, Alaska Airlines is authoritative,\nboth because it is more recent and because it deals with severability in\ngreater detail and therefore is more likely to represent the Court\xe2\x80\x99s consid\xc2\xad\nered judgment on the matter. The outcome in Alaska Airlines may represent\na judgment (or at least an intuition) by the Court that the severance of entire\nlegislative-veto mechanisms is less likely to produce statutes that Congress\nwould never have written than is the speculative process of removing the portion\nof a single mechanism that seems to contain the legislative veto in isolation.\n\n5 The legislative veto appeared in section 244(c) of the Immigration and Nationality Act, 8 U.S.C. A.\n\xc2\xa7 1254(c) (1970), which has since been amended, see 8 U S C. \xc2\xa7 1254(c) Section 244(c)(1) of the Act\nrequired the Attorney General to report to Congress when he suspends the deportation o f an alien. 8\nU.S.C. \xc2\xa7 1254(c)(1) (1970). Section 244(c)(2) of the Act provided.\n[T]f during the session of the Congress at which a case is reported, or prior to the close of the\nsession o f the Congress next following the session at which a case is reported, either the\nSenate or the House o f Representatives passes a resolution stating in substance that it does\nnot favor the suspension of such deportation, the Attorney General shall thereupon deport\nsuch alien or authorize the alien\xe2\x80\x99s voluntary departure at his own expense under the order of\ndeportation in the manner provided by law. If, within the time above specified, neither the\nSenate nor the House of Representatives shall pass such a resolution, the Attorney General\nshall cancel deportation proceedings.\n8 U.S.C. \xc2\xa7 1254(c)(2) (1970). Thus, the first subsection contained a report requirement, and the second\nsubsection contained both a wait requirement and a disapproval mechanism In Chadha the Court ex\xc2\xad\ncised the disapproval mechanism but retained the wait requirement contained in the sam e subsection,\nobserving that \xe2\x80\x9c [wjithout the one-House veto, \xc2\xa7 244 resembles the \xe2\x80\x98report and w ait\xe2\x80\x99 provision approved\nby the Court in Sibbach v. Wilson <6 Co., 312 U.S. 1 (1941).\xe2\x80\x9d 462 U.S. at 935 n.9.\n\n55\n\n\x0cCONCLUSION\nIn sum, the one-House veto clause added to section 18(a) of the Selective\nService Act in 1973 is unconstitutional. The legislative veto is severable\nfrom the remainder of the section 18(a). Under the best understanding of\nthe Supreme Court\xe2\x80\x99s approach to severability, the 1973 amendment should\nbe severed in its entirety, thus returning the statute to the form it had when\noriginally adopted in 1948. As a matter of comity, however, you may wish to\ninform Congress of a contract of more than twenty-five million dollars. More\xc2\xad\nover, depending on the urgency of the situation, you may wish to allow Congress\ntime to decide if it wants to take legislative action concerning a contract.\nJOHN C. HARRISON\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n*\nAs the Court explained. Congress originally permitted deportable aliens to remain in the United\nStates through private bills. 462 U.S. at 933. In 1940, Congress authorized the Attorney General to\nsuspend deportations but provided that Congress could overrule a suspension by a concurrent resolution.\nId. at 933-34. W hen the concurrent resolution mechanism also proved burdensome, it was replaced with\nthe schem e at issue in Chadha, under which the Attorney G eneral\xe2\x80\x99s decision could be overridden by a\none-H ouse resolution. Id. at 934.\n\n56\n\n\x0c'


b'State Regulation of an Insurance Program Conducted by the\nExport-Import Bank of the United States\nEntities who participate as interm ediaries with small businesses in an insurance program oper\xc2\xad\nated by the Export-Import Bank are subject to non-discrim inatory state regulation o f their\nactivities.\n\nMarch 19, 1986\nM\n\nem orandum\n\nE x p o r t -I m\n\nO p in io n\npo rt\n\nfor the\n\nBank\n\nG eneral C oun sel,\n\nof the\n\nU n it e d S t a t e s\n\nThis memorandum responds to your request for the Department of Justice\xe2\x80\x99s\nopinion whether the states may regulate or tax certain entities involved in an\ninsurance program developed by the Export-Import Bank of the United States\n(Eximbank) for small business.1 Your request is limited to the single issue of\nwhether the states may regulate the \xe2\x80\x9cAdministrators\xe2\x80\x9d who participated in the\nprogram and act as agents for the small businesses purchasing the insurance\ndeveloped by Eximbank. We conclude that the Administrators are subject to\nnondiscriminatory state regulation.\nI. Background\nEximbank is a wholly owned government corporation and an agency of the\nUnited States. 12 U.S.C. \xc2\xa7 635(a)(1). Congress originally established it to\nfacilitate the exchange of commodities between the United States and other\ncountries. In 1953, for the first time, Eximbank was granted, in addition to the\npower to make loans and guarantees, the power to provide insurance against\nrisks of loss associated with commercial exportation of goods. Pub. L. No. 8330,67 Stat. 28 (1953). Current law authorizes Eximbank to \xe2\x80\x9cguarantee, insure,\ncoinsure, and reinsure against political and credit risks of loss.\xe2\x80\x9d 12 U.S.C.\n\xc2\xa7 635(a)(1).\nEximbank also is authorized to employ \xe2\x80\x9cexporters, insurance companies,\nfinancial institutions, or others or groups thereof\xe2\x80\x99 to act as its agents in the\nissuance and servicing of insurance. Id. 635(c)(2). The Foreign Credit Insur\xc2\xad\n1The entities involved in the program are: (1) Eximbank itself; (2) the Foreign Credit Insurance A ssocia\xc2\xad\ntion, an association o f private insurers that acts as E xim bank\'s agent in providing insurance; and (3) various\n\xe2\x80\x98\xe2\x80\x98A dm inistrators\xe2\x80\x9d who act as agents for the small businesses w ho purchase the insurance developed by\nEximbank.\n\n27\n\n\x0cance Association (FCIA) is an association composed of private commercial\ninsurance carriers created in 1961 to act with Eximbank in providing protection\nagainst certain of the commercial and political risks faced by American export\xc2\xad\ners when they sell to foreign customers on credit terms. The FCIA is the agent\nof Eximbank in selling such insurance.\nThe final significant participants in Eximbank insurance activities are known\nas \xe2\x80\x9cAdministrators.\xe2\x80\x9d Your office has described the role of the Administrators\nas follows:\nIn response to a Congressional mandate for Eximbank to en\xc2\xad\ncourage the participation of small business in international trade,\nEximbank has developed a new insurance policy, the Export\nCredit Insurance Umbrella Policy (the \xe2\x80\x9cUmbrella Policy\xe2\x80\x9d) . . . .\nThe Umbrella Policy was devised to improve distribution of,\nand simplify the paperwork associated with, our export credit\ninsurance by using certain entities, which have frequent contact\nwith small businesses, as intermediaries (the \xe2\x80\x9cAdministrators\xe2\x80\x9d).\nEximbank is the only insurer on the Umbrella Policy, and FCIA\nacts as Eximbank\xe2\x80\x99s agent. A number of exporters can be insured\nunder one policy and have the policy paperwork handled by an\nAdministrator who is free to charge the insured exporters a fee\nfor its services.\nThe Administrators are thus essentially insurance brokers for the small busi\xc2\xad\nnesses who wish to purchase insurance from Eximbank through the FCIA.\nII. Analysis\nFederal instrumentalities are immune from state regulation, in the absence of\n\xe2\x80\x9cclear and unambiguous\xe2\x80\x9d congressional authorization. Hancock v. Train, 426\nU.S. 105, 179 (1976). It is well settled, however, that independent federal\ncontractors are not federal instrumentalities and therefore may be subject to\nstate regulation even if such regulation increases the burden on the federal\ngovernment. See Penn Dairies, Inc. v. Pennsylvania Milk Control Comm\xe2\x80\x99n,\n318 U.S. 261, 269 (1943) (\xe2\x80\x9cthose who contract to furnish supplies or render\nservices to the government are not [federal] agencies and do not perform\ngovernmental functions\xe2\x80\x9d). We understand that the Administrators are not even\nagents of federal government, but instead are agents of the small business\nexporters for whom they obtain Eximbank\xe2\x80\x99s umbrella insurance and do the\npolicy paperwork and from whom they receive a fee for their services. There\xc2\xad\nfore, it is clear that the Administrators are not immune from state regulation on\nthe grounds that they constitute federal instrumentalities.\nThe remaining basis for exempting the Administrators from state regulation\nis federal preemption. A state law will be deemed preempted by federal law\neither if it conflicts with federal law, or if the federal law suggests that\nCongress intended its own law to occupy the field fully, irrespective of the\n28\n\n\x0csubstance of the state law. Florida Avocado Growers v. Paul, 373 U.S. 132,\n141 (1963). We understand that state laws that restrict certain institutions such\nas state banks from acting as insurance brokers limit the potential class of\nAdministrators, thus possibly inhibiting the distribution of insurance in the\nsmall business community.2 We are also informed that some states impose\nlicensing requirements on corporations engaged in insurance activities such as\nthose undertaken by the Administrators, and thereby subject such corporations\nto regulation. The overall effect of these state laws may be to discourage some\ninstitutions, particularly banks, from becoming Administrators.3\nThe touchstone of a preemption claim is the intent of Congress. See, e.g.,\nMalone v. White Motor Corp., 435 U.S. 497, 504 (1978). Preemption analysis,\nhowever, begins with certain presumptions, because congressional intent with\nrespect to displacing state regulations is often unclear. When Congress legis\xc2\xad\nlates \xe2\x80\x9cin a field which the states have traditionally .. . occupied we start with\nthe assumption that the historic police powers of the States [are] not to be\nousted by the Federal Act unless that was the clear and manifest purpose of\nCongress.\xe2\x80\x9d Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). The\nregulation of insurance is a field traditionally occupied by the states and\ntherefore it cannot lightly be inferred that Congress intended to legislate in\nderogation of state regulation of corporations operating in this area.4\nAfter a survey of the statute and the legislative history we are unable to\nlocate any statutory provision that conflicts with state insurance law or any\ncongressional intent to abrogate state licensing and regulatory schemes. To be\nsure, the November 30, 1983 Amendments to the Export-Import Bank Act,\nPub. L. No. 98- 181, 97 Stat. 1254, evince an intent to increase Eximbank aid\nto small business. In the 1983 Amendments Congress stated:\n(i) (I) It is further the policy of the United States to encourage\nthe participation of small business in international com\xc2\xad\nmerce.\n(II) In exercising its authority, the Bank shall develop a\nprogram which gives fair consideration to making loans\nand providing guarantees for the export of goods and\nservices by small businesses.\n(ii) It is further the policy of the United States that the\nBank shall give due recognition to the policy stated\nin \xc2\xa7 631(a) of Title 15 that \xe2\x80\x9cthe Government should\n2See, e.g., Conn. Gen. Stat. \xc2\xa7 38-72(a).\n3 See generally W ise. G en Stat. \xc2\xa7 618.\n4 Indeed, Congress has recognized the im portance o f local regulation o f insurance in the M cCarranFerguson Act, which provides that \xe2\x80\x9c [tjhe business o f insurance, and every person engaged therein, shall be\nsubject to the laws o f the several States which relate to the regulation or taxation o f such businesses." 1S\nU.S.C \xc2\xa7 1012(a). A subsequent provision o f the Act provides that \xe2\x80\x9c [njo Act o f C ongress shall be construed to\ninvalidate, impair, or supersede any law enacted by any state for the purpose o f regulating the business of\ninsurance, unless such A ct specifically relates to the business o f insurance \xe2\x80\x9d Id \xc2\xa7 10 12(b). Because we\nconclude that state regulation o f the A dm inistrators is not prohibited under general principles o f preem ption,\nwe do not have to decide w hether the M cCarran-Ferguson Act would preclude preemption in any event.\n\n29\n\n\x0caid, counsel, assist, and protect insofar as is possible,\nthe interests of small business concerns in order to\npreserve free competitive enterprise.\xe2\x80\x9d\n12 U.S.C. \xc2\xa7 635(b)(1)(E).5 The Amendments also provide that one of the\nmembers of Eximbank\xe2\x80\x99s board of directors is to \xe2\x80\x9cbe selected from among the\nsmall business community .. . and represent the interests of small business.\xe2\x80\x9d\nId. \xc2\xa7 635(b)(l)(E)(v). Finally, the Amendments direct Eximbank to render\nreports on the allocation of sums set aside for small business. Id. \xc2\xa7 635g(c).\nNotably lacking in the Amendments or their legislative history is any language\nwhich suggests that insurance brokers for exporters connected with an Eximbank\nprogram are relieved of the obligation to comply with state insurance require\xc2\xad\nments. Nor is there any suggestion that state insurance laws have proved an\nobstacle to the sale of Eximbank\xe2\x80\x99s insurance to small business.6\nAcknowledging that there is no direct conflict between state and federal law,\nEximbank argues that state insurance regulation and licensing is preempted\nbecause by inhibiting certain kinds of corporations from becoming Administra\xc2\xad\ntors such laws impose burdens on the means Eximbank has chosen to meet the\ncongressional goal of developing export insurance for small business. How\xc2\xad\never, courts have uniformly refused to displace state regulations applicable to\nfederal contractors even if such regulations impose incidental burdens on the\nmeans of fulfilling a congressional mandate. See, e.g., Penn Dairies v. Milk\nControl C om m \xe2\x80\x99n, 318 U.S. 261, 271 (1943) (state can refuse to renew the\nlicense of a milk dealer who sold milk below the state minimum price to United\nStates despite impact in United States\xe2\x80\x99 procurement policy; \xe2\x80\x9cstate regulations\nare to be regarded as the normal incidents within the same territory of a dual\nsystem of government\xe2\x80\x9d); James Stewart & Co. v. Sadrakula, 300 U.S. 94\n(1939) (sanctioning state\xe2\x80\x99s imposition of safety requirements upon a contractor\nconstructing a federal building in the face of arguments that such regulations\nwould raise the cost to the government); O \xe2\x80\x99Reilly v. Board o f Medical Examin\xc2\xad\ners, 426 P.2d 167 (Cal. 1967) (Traynor, C.J.) (refusing to infer federal preemp\xc2\xad\ntion of state licensing rules for doctors even in light of burdens such licensing\nimposed on foreign medical exchange program authorized by Congress); United\nStates v. Town o f Windsor, 496 F. Supp. 581, 591 (D. Conn. 1980) (upholding\n5 In o rd er to assure that the policy of aid in g sm all business is carried out, Eximbank is directed to:\nprom ote sm all business export financing programs in cooperation w ith the Secretary of Com \xc2\xad\nm erce, the O ffice o f International T rade o f Small Business A dm inistration, and the private\nsector, particularly sm all business organizations, state agencies, cham bers o f com m erce, banking\no rganizations, export management com panies, export trading com panies, and private industry.\n12 U .S.C . \xc2\xa7 6 3 5 (b )(I)(E )(v iii).\n6 In a hearing before a subcomm ittee o f the Senate C om m ittee on Sm all B usiness, the C hairm an o f\nE xim bank described the proposed \xe2\x80\x9cum brella\xe2\x80\x9d insurance program for small businesses but now here suggested\nth at th is program w ould require the abrogation o f state insurance regulation or licensing schemes. To the\ncon trary , one o f the them es o f the C hairm an\xe2\x80\x99s testimony was that he had cooperated with state agencies in the\npast and expected to continue to work clo sely w ith them in the future. Financing o f Small Business Exports by\n\nThe Export-Import Bank: Hearing before the Subcomm. on Export Promotion and Market Development o f the\nSenate Comm, on Small Business, 98th C ong., 1st Sess. 8 - 9 (1983) (\xe2\x80\x9c W e have m et several times with\nrep resen tativ es o f state governments an d we w ill continue to work closely with them as*the cam paign\ndev elo p s.\xe2\x80\x9d ).\n\n30\n\n\x0cstate\xe2\x80\x99s right to require building permit of contractor who was building gasifica\xc2\xad\ntion plant pursuant to congressional mandate to develop a more efficient means\nof utilizing coal). An essential rationale underlying these cases is that state\nregulation of private contractors, unlike state regulation of federal instrumen\xc2\xad\ntalities or federal officials, cannot be viewed as superfluous, because the\nfederal ties government does not directly supervise private contractors even\nwhen they ties act as its agents. This rationale applies a fortiori to the Adminis\xc2\xad\ntrators who are not even agents of the federal government and are not subject to\nany federal supervision.\nTherefore, we conclude that in the absence of some contrary indication of\ncongressional intent states are not preempted from regulating private entities\neven if such regulations impose some burdens on their participation in a federal\nprogram.7 When Congress establishes an objective for a federal agency, it is to\nbe presumed that it wishes the agency to pursue the objective against the\nbackground of ordinary state regulation of private entities because such regula\xc2\xad\ntion has legitimate objectives of its own. Any other conclusion would curtail\nthe ability of the states to protect the welfare of their citizens: federal agencies\npossessed of some statutory mandate would acquire the authority to grant\nimmunity from state regulation to private entities simply on the grounds that\nsuch immunity would lead to the more efficient fulfillment of their mandate.8\nConclusion\nOn the basis of the analysis set forth above, we have concluded that the\nAdministrators are subject to non-discriminatory state regulation.\nD ouglas\n\nW.\n\nK m ie c\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n1 Fidelity Federal Savings & Loan Ass\'n v. De La Cuesta, 458 U.S. 141 (1982), a case principally relied on\nby Eximbank to support its argum ent that the 1983 Export-Im port Bank A mendments preem pt state insurance\nlicensing requirem ents does not change the foregoing analysis. In Fidelity , the Federal Home Loan Bank\nBoard had issued a regulation providing that a federal savings and loan association continued to have the\npow er to include a due-on-sale provision in its loan agreem ents. Id. at 146-47. The pream ble to the regulation\nalso stated that the banks would not be subject to any conflicting state law with respect to due-on-sale\nprovisions. Id. at 147. The C ourt held that the B oard\xe2\x80\x99s due-on-sale regulations preem pted conflicting state\nlim itations on the due-on-sale provisions o f a federal savings bank. Id. at 1SS. Fidelity thus sim ply represents\nan instance o f federal preem ption arising from an express conflict betw een state and federal laws. It stands for\nthe proposition that a duly prom ulgated and authorized regulation o f an agency has the sam e pow er to\npreem pt contrary state law as a statute passed by the C ongress. Fidelity does not support the argum ent for the\npreem ption o f state insurance regulation because neither any provision o f the statute under which Exim bank\noperates nor any regulation issued by Eximbank conflicts with state law.\n8 O ur opinion that the A dm inistrators w ould ordinarily be subject to State regulation is not inconsistent w ith\nthe argum ents advanced in Squire, Inc. v. Export-Import Bank o f the United States, No. 84-0 2 3 4 (S.D . Cal.\n1985), that Exim bank and the FCIA should not be subject to punitive dam ages. First, the argum ent in Squire\nis not based on a claim that the federal statute preem pts all state regulation, but rather that in litigation arising\nout o f nationw ide program s in the param ount federal interest com pels the application o f federal law to\nquestions o f liability in governm ental program s and transactions. See United States v Little Lake Misere\nLand Co., 412 U .S. 580, 5 9 2 -9 4 (1974); Clearfield Trust Co. v. United States, 318 U.S. 363 (1943). Second,\nthis m em orandum does not address w hether ^xim bank o r the FCIA may be immune from state regulations on\nthe ground that they are federal instrum entalities.\n\n31\n\n\x0c'


b'May 22, 1979\n\n79-34\n\nMEMORANDUM OPINION FOR THE ACTING\nCHIEF, ORGANIZED CRIME AND\nRACKETEERING SECTION, CRIMINAL\nDIVISION\nOffice o f Legal Counsel\xe2\x80\x94Limitation on Opinion\nFunction\n\nThis confirms the advice we gave orally concerning your May 18 memo\xc2\xad\nrandum concerning a requested Office o f Legal Counsel opinion. You\nstate that a Federal district judge has asked for our opinion on an issue\nthat has arisen in connection with a pending grand jury investigation. That\nissue is whether the Department o f Justice has the authority to investigate\npossible violations o f title 18, involving pension plans covered by the\nEmployee Retirement Income Security Act, 29 U .S.C . \xc2\xa7 1001 et seq. As I\nindicated orally to you previously, it would not be appropriate in this cir\xc2\xad\ncumstance for us to render a legal opinion.\nThe Attorney General has delegated certain responsibilities to the Office\no f Legal Counsel, including the preparation o f his formal opinions and\nadvice to Government agencies. 28 CFR \xc2\xa7 0.25. That delegation does not\nauthorize us to provide legal advice at the request o f the judicial branch.\nMoreover, the opinion function o f the Attorney General himself is limited\nby statute to the provision o f advice to the President, the heads o f execu\xc2\xad\ntive departments, and the Secretaries o f military departments. 28 U.S.C.\n\xc2\xa7\xc2\xa7 511-513.\nIn addition to those restrictions on our opinion function, we note that\nthis Department has, as a m atter o f policy, consistently refrained from\nopining on questions presented to the courts for resolution. The Attorney\nGeneral has stated, for example:\n[T]his Department has uniformly refused to consider any ques\xc2\xad\ntions that have been committed to judicial review. To do so might\nbring this Department into conflict with a Judicial tribunal, and\nthis has been held to be an adequate reason for a refusal to give an\nofficial opinion. [24 Op. A tt\xe2\x80\x99y Gen. 59, 60 (1902).]\n215\n\n\x0cSimilar statements appear in num erous other opinions o f the Attorneys\nGeneral. See, e.g., 41 Op. A tt\xe2\x80\x99y Gen. 266, 273 (1956); 38 Op. A tt\xe2\x80\x99y Gen.\n149, 150 (1934); 37 O p. A tt\xe2\x80\x99y Gen. 34, 42 (1932). Since the question you\nhave asked us is pending before the court, we do not believe it would be\nappropriate for us to respond to the request.\nJohn M. Harm on\n\nAssistant A ttorney General\nOffice o f Legal Counsel\n\n216\n\n\x0c'


b'Authority of the General Services Administration to Provide\nAssistance to Transition Teams of Two Presidential Candidates\nT h e P residential T ransition A ct of 1963, with certain lim ited exceptions, authorizes the A dm inistrator\no f the G enera1 S ervices A dm inistration to provide transition assistance only for those services and\nfacilities n ecessary to assist the transition o f the \xe2\x80\x9c P resident-elect\xe2\x80\x9d and the \xe2\x80\x9c V ice-President-elect,\xe2\x80\x9d\nas those term s are defined in the A c t. Since there cannot be m ore than one \xe2\x80\x9c President-elect\xe2\x80\x9d\nand o n e \xe2\x80\x9c V ice-P resident-elect\xe2\x80\x9d u n d e r the Act, the Act does not authorize the A dm inistrator to\np ro v id e transition assistance to the tran sitio n team s o f m ore than one presidential candidate.\n\nNovember 28, 2000\nM\n\nem orandum\n\nO p in io n\n\nfo r t h e\n\nC ou n sel\n\nto th e\n\nP r e s id e n t\n\nYou have asked our opinion whether, under the Presidential Transition Act of\n1963, as amended,1 the Administrator of the General Services Administration\n(\xe2\x80\x9c Administrator\xe2\x80\x9d ) has the authority to provide transition assistance to more than\none presidential candidate in circumstances in which it remains unclear after the\nelection which of two candidates will become the President of the United States.\nWith the limited exceptions set forth below in note 3, the Act authorizes the\nAdministrator to expend the funds appropriated to implement the Act only for\nthose services and facilities that are necessary to assist the transition of the \xe2\x80\x9c President-elect\xe2\x80\x9d and the \xe2\x80\x9c Vice-President-elect.\xe2\x80\x9d See Presidential Transition Act,\n\xc2\xa7 3(a). The terms \xe2\x80\x9c President-elect\xe2\x80\x9d and \xe2\x80\x9c Vice-President-elect\xe2\x80\x9d are defined under\nthe Act to mean the individuals that the Administrator determines are \xe2\x80\x9c the\napparent successful candidates for the office of President and Vice-President,\nrespectively.\xe2\x80\x9d Id. \xc2\xa73(c). Since there cannot be more than one \xe2\x80\x9c President-elect\xe2\x80\x9d\nand one \xe2\x80\x9c Vice-President-elect\xe2\x80\x9d under the Act, the Presidential Transition Act\ndoes not authorize the Administrator to provide transition assistance to more than\none transition team.2\nAs summarized above, the assistance that the Administrator is authorized to\nprovide under the Presidential Transition Act is expressly tied to the Administra\xc2\xad\ntor\xe2\x80\x99s determination of a \xe2\x80\x9c President-elect\xe2\x80\x9d and a \xe2\x80\x9c Vice-President-elect.\xe2\x80\x9d \xe2\x80\x9c Presi\xc2\xad\ndent-elect\xe2\x80\x9d and \xe2\x80\x9c Vice-President-elect\xe2\x80\x9d are defined terms under section 3(c) of\nthe Act, which provides:\nThe terms \xe2\x80\x9c President-elect\xe2\x80\x9d and \xe2\x80\x9c Vice-President-elect\xe2\x80\x9d as used\nin this Act shall mean such persons as are the apparent successful\ncandidates for the office o f President and Vice President, respec\xc2\xad\n\xe2\x80\x98 The Presidential Transition Act is set out in the notes to \xc2\xa7 102 of title 3 of the United States Code See 3\nU S C. \xc2\xa7 102 (1994). The Act has also recently been amended For those amendments, see Presidential Transition\nAct o f 2000, Pub L No 106-293, 114 Stat. 1035 (2000).\n2 This m emorandum addresses only the narrow question o f the Administrator\xe2\x80\x99s authority to provide assistance\nunder the Presidential Transition Act It does not address w hether the Administrator, or any other department or\nagency, may have separate authonty to provide transition assistance to more than one transition team.\n\n322\n\n\x0cGSA Authority to Provide Assistance to Transition Teams o f Two Presidential Candidates\n\ntively, as ascertained by the Administrator following the general\nelections held to determine the electors of President and Vice Presi\xc2\xad\ndent in accordance with title 3, United States Code, sections 1 and\n2.\nId. \xc2\xa7 3(c). As a matter of the statutory definition, as well as common usage, there\n\ncan be only one \xe2\x80\x9c President-elect\xe2\x80\x9d and \xe2\x80\x9c Vice-President-elect\xe2\x80\x9d from any election.\nIt is only to that \xe2\x80\x9c President-elect\xe2\x80\x9d and that \xe2\x80\x9c Vice-President-elect\xe2\x80\x9d that the\nAdministrator is authorized by the Act to provide transition assistance. Section\n3(a) of the Act, which sets out the services and facilities that the Administrator\nis authorized to provide, specifically states:\nThe Administrator of General Services . . . is authorized to pro\xc2\xad\nvide, upon request, to each President-elect and each Vice-Presidentelect, for use in connection with his preparations for the assumption\nof official duties as President or Vice President necessary services\nand facilities, including [the assistance specifically identified in\nsubparagraphs (a)(1) through (a)(10)].\nId. \xc2\xa73(a). Accordingly, by its terms, the Act generally authorizes assistance only\n\nto the \xe2\x80\x9c President-elect\xe2\x80\x9d and the \xe2\x80\x9c Vice-President-elect.\xe2\x80\x9d Consistent with this gen\xc2\xad\neral structure, the subparagraphs within subsection 3(a), which list specific serv\xc2\xad\nices and facilities that the Administrator is authorized to provide, also generally\nmake explicit reference to the President-elect and the Vice-President-elect. For\nexample, subparagraph 3(a)(2) authorizes the payment of compensation to the\n\xe2\x80\x9c members of the office staffs designated by the President-elect or Vice-Presidentelect.\xe2\x80\x9d Without the existence of a President-elect or Vice-President-elect, there\ncan be no staff who have been designated and to whom compensation may there\xc2\xad\nfore be paid. See id. \xc2\xa7 3(a)(2) (emphasis added); see also id. \xc2\xa7\xc2\xa7 3(a)(1), (3)-(5),\n(7), 3(b), 3(d), 3(e).3 Similarly, the provisions in section 5 of the Act for the\ndisclosure of financing and personnel information related to the transition are also\nexpressly premised on, and limited to, the \xe2\x80\x9c President-elect\xe2\x80\x9d and the \xe2\x80\x9c Vice-President-elect.\xe2\x80\x9d Each subsection in section 5 begins with language along the lines\n3 The only exceptions to the general structure o f section 3 limiting assistance to a \xe2\x80\x9c President-elect\xe2\x80\x9d are two\nprovisions from the 2000 amendments that appear to envision the expenditure of funds pnor to the determination\nof a \xe2\x80\x9c President-elect\xe2\x80\x9d See Pub. L No. 106-293, \xc2\xa73 (relevant provisions added as subparagraphs (9) and (10)\nof the Presidential Transition Act) These additional provisions, by their distinct language and functions, reinforce\nthe general limitation lhat assistance may be provided only to a \xe2\x80\x9c President-elect.\xe2\x80\x9d In particular, subparagraph (10)\nexpressly provides that it applies to the \xe2\x80\x9c candidates.\xe2\x80\x9d See Presidential Transition Act, \xc2\xa73(a)(10) ( \xe2\x80\x9c Notwithstanding\nsubsection (b), consultation by the Administrator with any candidate for President or Vice President to develop\na systems architecture plan for the computer and communications systems of the candidate to coordinate a transition\nto Federal systems, if the candidate is elected.\xe2\x80\x9d (emphasis added)) Subparagraph (9) involves the development\nby the General Services Administration o f a transition directory on the officers, organization, and statutory and\nadministrative authorities, functions, duties, responsibilities, and mission of each department and agency\xe2\x80\x94 expendi\xc2\xad\ntures that are preparatory to transition for whomever is determined to be the \xe2\x80\x9c President-elect\xe2\x80\x9d and that are not\nmaterially altered by multiple transition teams since the directory would remain the same\n\n323\n\n\x0cOpinions of the Office o f Legal Counsel in Volume 24\n\nof the following: \xe2\x80\x9c The President-elect and Vice-President-elect (as a condition\nfor receiving services under section 3 and for funds provided under section\n6(a)(1)) shall disclose to the Administrator . . .\nE.g., id. \xc2\xa7 5(a)(1) (emphasis\nadded); see also \xc2\xa7\xc2\xa7 5(b)(1), 5(c). We thus believe that both the specific terms\nand the general structure of the Act preclude the Administrator from relying upon\nthis Act to provide assistance to more than one transition team.\nThe most plausible contrary argument for providing assistance to multiple transi\xc2\xad\ntion teams, notwithstanding the clear language and structure of the Act, would\nbe that such assistance is necessary under present circumstances because of the\nshortened time period for the transition. In support of this argument, it is clear,\nboth in the section of the Act stating Congress\xe2\x80\x99s purpose and similar expressions\nof purpose in the legislative history, that the Act was intended \xe2\x80\x9c to promote the\norderly transfer of executive power.\xe2\x80\x9d Id. \xc2\xa7 2. In this regard, the Act states:\nAny disruption occasioned by the transfer of the executive power\ncould produce results detrimental to the safety and well-being of\nthe United States and its people. Accordingly, it is the intent of\nthe Congress that appropriate actions be authorized and taken to\navoid or minimize any disruption.\nId. See also, e.g., H.R. Rep. No. 88-301, at 4 (1963) ( \xe2\x80\x9c [T]he size and complexity\n\nof our Federal Government today, to say nothing of the difficult domestic and\ninternational problems that the President must face, make it a vital necessity that\nthe machinery of transition be as smooth as possible and that sufficient resources\nare at hand to properly orient the new national leader in whatever manner is\nrequired. . . . Under present conditions, a new President, in one sense, begins\nworking for the Government the morning after the election.\xe2\x80\x9d ); 109 Cong. Rec.\n13,349 (1963) (statement of Rep. Joelson) (\xe2\x80\x9c In that interim time he is called upon\nprobably to make more fateful decisions than he will have to make after he is,\nindeed, sworn into office. For that reason it is up to us to see that he has the\ntools and the implements.\xe2\x80\x9d ).\nWe doubt that this expression of intent would, in any event, be sufficient to\novercome the evidence from the express terms and structure of the Act that funds\nappropriated to implement the A ct are not available in circumstances in which\nthe Administrator cannot ascertain who the apparent victorious candidate is. The\nlegislative history, moreover, makes clear that Congress did not intend the Presi\xc2\xad\ndential Transition Act to be available until an apparent President-elect emerged.\nDuring debate on the bill, concern was raised about the effect that an Adminis\xc2\xad\ntrator\xe2\x80\x99s determination of the \xe2\x80\x9c President-elect\xe2\x80\x9d could potentially have on a close\nelection. See 109 Cong. Rec. 13,348-49 (1963). As part of that debate, Represent\xc2\xad\native Gross expressed the concern that, in connection with the voting of the elec\xc2\xad\ntoral college, \xe2\x80\x9c those designated as President and Vice President by the present\n324\n\n\x0cGSA Authority to Provide Assistance to Transition Teams o f Two Presidential Candidates\n\nAdministrator of General Services would be given psychological and other advan\xc2\xad\ntages by designating them as President and Vice President.\xe2\x80\x9d Id. at 13,348. In\nresponse, Representative Fascell, who was the sponsor of the bill and the House\nmanager, stated as follows: \xe2\x80\x9c I do not think so, because if they were unable at\nthe time to determine the successful candidates, this act would not be operative.\nTherefore in a close contest, the Administrator would not make the decision.\xe2\x80\x9d\nId. (emphasis added). Representative Gross, however, remained concerned and\ncontinued to press the issue. In response to those further inquires, Representative\nFascell again responded: \xe2\x80\x9c There is nothing in the act that requires the Adminis\xc2\xad\ntrator to make a decision which in his own judgment he could not make. If he\ncould not determine the apparent successful candidate, he would not authorize\nthe expenditure o f funds to anyone; and he should not." Id. (emphasis added).\n\nRepresentative Gross was not the only member concerned about the issue, which\nwas raised again later in the debate by Representative Haley:\nI\nnotice that these funds can be used immediately after the gen\xc2\xad\neral election in November. But how would this situation work, for\ninstance, if the President or, at least, before the determination of\nthe votes in the electoral college, suppose that some person was,\nsay, three or four votes shy? How would this Administrator deter\xc2\xad\nmine who was in a position to expend these funds?\nId. at 13,349. In response, Representative Fascell quoted the section of the bill\n\ndefining \xe2\x80\x9c President-elect\xe2\x80\x9d and \xe2\x80\x9c Vice-President-clcct\xe2\x80\x9d and stated:\nThis act and the Administrator could in no way, in any way,\naffect the election of the successful candidate. The only decision\nthe Administrator can make is who the successful candidate \xe2\x80\x94 the\napparent successful candidate \xe2\x80\x94 for the purposes of this particular\nact in order to make the services provided by this act available\nto them. And, if there is any doubt in his mind, and if he cannot\nand does not designate the apparently successful candidate, then\nthe act is inoperative. He cannot do anything. There will be no\nservices provided and no money expended.\nId. (emphasis added). See also id. (statement of Rep. Fascell) (\xe2\x80\x9c In the whole\n\nhistory of the United States, there have been only three such close situations.\nIt is an unlikely proposition, but if it were to happen, if the administrator had\nany question in his mind, he simply would not make the designation in order\nto make the services available as provided by the act. If as an intelligent human\nbeing and he has a doubt, he would not act until a decision has been made in\nthe electoral college or in the Congress.\xe2\x80\x9d ).\n325\n\n\x0cOpinions of the Office o f Legal Counsel in Volume 24\n\nIt is clear from the legislative history that Congress understood and intended\nthat the Presidential Transition Act would simply be unavailable to fund transition\nservices and facilities in circumstances in which the winner o f the election is not\napparent. This is consistent with the plain language and structure of the Act,\nwhich, with the two exceptions noted above in note 3, authorizes the Administrator\nto provide transition assistance only to the \xe2\x80\x9c President-elect\xe2\x80\x9d and the \xe2\x80\x9c Vice-President-elect.\xe2\x80\x9d Accordingly, the Presidential Transition Act would not authorize the\nAdministrator to expend the funds appropriated to implement the Act to provide\ntransition assistance to multiple transition teams.\nRANDOLPH D. MOSS\nAssistant Attorney General\nOffice o f Legal Counsel\n\n326\n\n\x0c'


b'Procedures for Implementing the Reciprocity Provisions of\nthe Mineral Leasing Act of 1920\nWhile the Departm ent o f Interior has no legal obligation to adopt substantive, prospec\xc2\xad\ntive standards for applying the \xe2\x80\x9creciprocity\xe2\x80\x9d provision of 30 U.S.C. \xc2\xa7 181, if it chooses\nto do so it should comply with the public, notice-and-comment procedures applicable\nto agency rulemaking under the Administrative Procedure Act (APA). If the D epart\xc2\xad\nment of the Interior instead continues to determine on a country-by-country basis\nwhether another country\xe2\x80\x99s laws and regulations accord American investors \xe2\x80\x9csimilar or\nlike privileges,\xe2\x80\x9d APA procedures would not be considered applicable to such decision\xc2\xad\nmaking. However, an adequate record for judicial review o f the substance o f the\nultimate decision should be made.\nAs previously \'concluded, the Secretary o f the Interior has authority under the Mineral\nLeasing A ct o f 1920 to \xe2\x80\x9cm irror" restrictive practices of another country. The question\nwhether the Secretary is required to do k>, or whether he could choose to take some\nmore extreme action such as barring any investment by the other country\xe2\x80\x99s citizens, is\nnot addressed.\n\nAugust 27, 1981\nMEMORANDUM OPINION FOR THE UNDER SECRETARY,\nDEPARTMENT OF TH E INTERIOR\nYou have requested this Department\xe2\x80\x99s comments on certain proposed\'\nactions that would implement the \xe2\x80\x9creciprocity\xe2\x80\x9d provision of the Min\xc2\xad\neral Leasing Act of 1920, 30 U.S.C. \xc2\xa7 181.1\nI. Actions to Implement \xc2\xa7 181\n\nIt is not clear to us precisely what your Department\xe2\x80\x99s intent may be\nregarding the implementation of the \xe2\x80\x9creciprocity\xe2\x80\x9d provision of \xc2\xa7 181. If\nthe intent is to promulgate general, substantive standards for the future\ngoverning the determination whether another country affords Ameri\xc2\xad\ncans \xe2\x80\x9csimilar or like privileges\xe2\x80\x9d under \xc2\xa7 181, we would recommend\nadoption of public notice-and-comment procedures meeting the require\xc2\xad\nments of 5 U.S.C. \xc2\xa7 553. Even though we do not believe your Depart\xc2\xad\nment has any legal obligation to adopt substantive, prospective stand1T he \xe2\x80\x9creciprocity\xe2\x80\x9d provision is as follows.\nCitizens of another country, the laws, customs or regulations o f which deny similar or\nlike privileges to citizens or corporations o f this country, shall not by stock ownership,\nstock holding, or stock control, own any interest in any lease acquired under the\nprovisions o f this chapter.\n30 U.S.C. \xc2\xa7 181.\n\n279\n\n\x0cards for applying \xc2\xa7 181,2 if you do so a court likely would conclude\nthat such action comes within the definition of \xe2\x80\x9crule making\xe2\x80\x9d for\npurposes of the Administrative Procedure Act (APA).3 Although an\nargument might be made that such rulemaking is exempt from the\nrequirements of \xc2\xa7 553 on the ground that is involves a foreign affairs\nfunction of the United States, 5 U.S.C. 553(a)(1), that argument would\nbe difficult to sustain so long as your Department\xe2\x80\x99s intent is to\nenunciate general standards for application of the statutory phrase\n\xe2\x80\x9csimilar or like privileges\xe2\x80\x9d apart from specific consideration of this\nNation\xe2\x80\x99s relations with another country.4 Furthermore, since your De\xc2\xad\npartment in the past has not enunciated general standards implementing\n\xc2\xa7181, a public notice-and-comment procedure consistent with \xc2\xa7553\ndesigned to promulgate standards for applying \xc2\xa7 181\xe2\x80\x99s \xe2\x80\x9csimilar or like\nprivileges\xe2\x80\x9d provision could well generate comments that may prove\nuseful in framing the final standards. Finally, if your intention is to\nconduct a rulemaking, it is not a great deal more cumbersome to\ncomply with \xc2\xa7 553, and if you are going to go part of the way, it would\nbe prudent to go all of the way and avoid any possible claim that \xc2\xa7 553\nwas violated. To the extent that this is your intent, the notice-andcomment procedure should include at a minimum the following ele\xc2\xad\nments: (1) general notice to be published in the Federal Register,\nincluding a statement of the time, place, and nature of the proceedings,\na reference to the legal authority under which the rule is to be promul\xc2\xad\ngated, and either the terms or substance of a proposed rule or \xe2\x80\x9ca\n2T here is no requirement in the Mineral Leasing Act of 1920 that the Secretary of the Interior\nprom ulgate rules to implement \xc2\xa7 181. However, the A ct clearly authorizes such action: \xe2\x80\x9cThe Secretary\no f the Interior is authorized to prescribe necessary and proper rules and regulations and to do any and\nall things necessary to carry out and accomplish the purposes o f this chapter. . .\n30 U.S.C. \xc2\xa7 189.\n3 A \xe2\x80\x9crule\xe2\x80\x9d is defined broadly by the APA as \xe2\x80\x9cthe whole o r part of an agency statement of general\no r particular applicability and future effect designed to implement, interpret, o r prescribe law or\npolicy. . .\n5 U.S.C. \xc2\xa7551(4), and a \xe2\x80\x9crule making" is defined as the \xe2\x80\x9cagency process for formulat\xc2\xad\ning, amending, o r repealing a rule,\xe2\x80\x9d 5 U S .C . \xc2\xa7551(5). The paradigm of APA rulemaking is \xe2\x80\x9cthe\nimplementation or prescription o f law or policy for the future, rather than the evaluation of a\nrespondent\xe2\x80\x99s past conduct. Typically, the issues relate not to the evidentiary facts, as to which the\nveracity and demeanor of witnesses would often be important, but rather to the policy-making\nconclusions to be draw n from the facts.\xe2\x80\x9d Attorney General\'s Manual on the Administrative Procedure Act\n14 (1947), quoted in American Airlines, Inc. v. CAB, 359 F.2d 624, 629 (D.C. Cir. 1966); See also S.\nRep. No. 752, 79th Cong., 1st Sess. (1945), reprinted in S. Doc. No. 248, Administrative Procedure Act\xe2\x80\x94\nLegislative Historyt 79th Cong., 2d Sess. 199 (1946). W hatever else may be said about the applicability\no f the A P A \xe2\x80\x99s definitions of a \xe2\x80\x9crule\xe2\x80\x99* and \xe2\x80\x9c rule m aking/\xe2\x80\x99 they would appear to apply to a process in\nw hich the Departm ent of the Interior establishes general, substantive standards \xe2\x80\x9cfor the future\xe2\x80\x991\ngoverning w hether another country accords American citizens \xe2\x80\x9csimilar or like privileges" under 30\nU.S.C. \xc2\xa7 181.\n4See S. Rep. No. 752, 79th Cong., 1st Sess. 11 (1945) (the foreign affairs exception \xe2\x80\x9cis not to be loosely\ninterpreted to mean any function extending beyond the borders of the United States but only those\n\xe2\x80\x98affairs\' w hich so affect relations with other governments that, for example, public rule making\nprovisions would clearly provoke definitely undesirable international consequences\xe2\x80\x99\xe2\x80\x99), reprinted in S.\nD oc. No. 248, Administrative Procedure Act\xe2\x80\x94Legislative History, 79th Cong., 2d Sess. 199 (1946), Hou\nChing Chow v. Attorney General, 362 F Supp. 1288, 1290 (D. D.C. 1973) (holding that determinations\nregarding the adjustment of an alien\xe2\x80\x99s status and labor certification requirements are not exempt as\nforeign affairs functions). Cf. WBEN, Inc. v. United States, 396 F.2d 601, 616 (2d Cir.), cert, denied 393\nU.S. 914 (1968) (holding, inter alia, that the FC C was on \xe2\x80\x9cfirm ground" in concluding that negotiation\nby the United States on a new agreement with Canada regarding pre-sunrise broadcasting on AM\nradio was an exempt foreign affairs function).\n\n280\n\n\x0cdescription of the subjects and issues involved\xe2\x80\x9d; (2) an opportunity for\ninterested persons to participate through submission of written data,\nviews, or arguments with or without opportunity for oral presentation;\nand (3) a concise general statement of the basis and purpose of the rules\nultimately promulgated, including a discussion of major comments re\xc2\xad\nceived from interested persons.5\nOn the other hand, your Department may not intend to promulgate\ngeneral, prospective standards implementing the \xe2\x80\x9creciprocity\xe2\x80\x9d provision\nof \xc2\xa7 181. Rather, it may intend to continue to determine on a countryby-country basis whether another country\xe2\x80\x99s laws and regulations accord\nAmericans \xe2\x80\x9csimilar or like privileges.\xe2\x80\x9d Although an argument could be\nmade that such country-by-country decisionmaking should be governed\nby \xc2\xa7 553 rulemaking, we do not believe, as we have indicated orally,\nthat \xc2\xa7 553 or other provisions of the Administrative Procedure Act\nshould be considered applicable to such decisionmaking.6 First, the\ndetermination whether another country\xe2\x80\x99s laws and regulations accord\n\xe2\x80\x9csimilar or like privileges\xe2\x80\x9d requires an assessment of the facts\xe2\x80\x94regard\xc2\xad\ning the way another country\xe2\x80\x99s laws affect investment by Americans as\ncompared with the way this country\xe2\x80\x99s laws affect investment by that\ncountry\xe2\x80\x99s citizens\xe2\x80\x94at the time the decision is made. It thus is in the\nnature of a backward-looking evaluation of facts in light of existing\nstatutory requirements. That decision is not of a type covered by \xe2\x80\x9crule\nmakings\xe2\x80\x9d for APA purposes, which are geared toward the promulga\xc2\xad\ntion of general standards \xe2\x80\x9cfor the future.\xe2\x80\x9d 7 Second, even if such a\ndecision about another country were to be considered covered by the\nAPA\xe2\x80\x99s definitions of a \xe2\x80\x9crule\xe2\x80\x9d and \xe2\x80\x9crule making,\xe2\x80\x9d so long as the deci\xc2\xad\nsion is directed\xe2\x80\x94as it presumably would be\xe2\x80\x94toward interpreting offi\xc2\xad\ncial acts of a foreign government and ascertaining what responses the\nUnited States might make to restrictive laws or regulations of the other\ncountry, such a decision would be within the foreign affairs exemption\nfrom \xc2\xa7 553 procedures. See 5 U.S.C. \xc2\xa7 553(a)(1); S. Rep. No. 752, 79th\nCong., 1st Sess. (1945), reprinted in S. Doc. No. 248, Administrative\nProcedure Act\xe2\x80\x94Legislative History, 79th Cong., 2d Sess. 199 (1946).\nIf your Department were to proceed on a country-by-country basis\nand not adopt public notice-and-comment procedures for establishing\ngeneral standards governing whether another country accords \xe2\x80\x9csimilar\nor like privileges,\xe2\x80\x9d it would be necessary to bear in mind that judicial\nreview of informal, case-by-case decisions not covered by \xc2\xa7 553 may be\nobtained in appropriate cases. In particular, a decision whether another\n5 In addition, the notice-and-comment procedures should conform with the Department\xe2\x80\x99s own\nregulations governing its rulemaking activities, see 43 C.F.R. Part 14, and with Executive O rder No\n12,291, 46 Fed. Reg. 13,193 (1981).\n6The Mineral Leasing A ct of 1920 does not require that determinations under \xc2\xa7 181 be made \xe2\x80\x9con\nthe record\xe2\x80\x9d after opportunity for agency hearing. Thus, the APA procedures for \xe2\x80\x9con the record\xe2\x80\x9d\ndeterminations do not apply. See 5 U.S.C. \xc2\xa7\xc2\xa7 553(c), 554, 556, & 557\n1See n 3, supra.\n\n281\n\n\x0ccountry accords \xe2\x80\x9csimilar or like privileges\xe2\x80\x9d could be challenged as\ncontrary to the substantive requirements of \xc2\xa7 181 (e.g., on the ground\nthat a legally incorrect interpretation of \xc2\xa7 181 was applied), or as\n\xe2\x80\x9carbitrary\xe2\x80\x9d or \xe2\x80\x9ccapricious\xe2\x80\x9d in the context in which it was made (e.g.,\non the ground that there was no rational basis on which the Secretary\ncould make such a determination). See Citizens to Preserve Overton Park,\nInc. v. Volpe, 401 U.S. 402, 410 (1971); Camp v. Pitts, 411 U.S. 138, 142\n(1973). Thus, if a country-by-country approach were taken, your De\xc2\xad\npartment would need to follow a decisionmaking process that would\nprovide an adequate record for judicial review of the substance of the\nultimate decision. We do not believe, however, that any statute, includ\xc2\xad\ning the Administrative Procedure Act, requires that a particular process\nbe followed.8\nII. The Substance of \xc2\xa7 181\n\nI am attaching for your information an opinion of this Office, dated\nAugust 11, 1981, discussing the question whether the Secretary may\n\xe2\x80\x9cmirror\xe2\x80\x9d restrictive practices of another country, thereby restoring\n\xe2\x80\x9csimilar or like privileges\xe2\x80\x9d under \xc2\xa7 181 and averting the need to bar\n\xe2\x80\x9cany\xe2\x80\x9d interest in \xe2\x80\x9cany\xe2\x80\x9d lease by citizens of the other country.* We\nconcluded that the Secretary has such \xe2\x80\x9cmirroring\xe2\x80\x9d authority under the\nMineral Leasing Act o f 1920. We understand that this conclusion is\nconsistent with the practice of the Department of the Interior, which\non at least two occasions has \xe2\x80\x9cmirrored\xe2\x80\x9d other countries\xe2\x80\x99 restrictions\npertaining to the percentage of foreign ownership of corporations\nhaving interests in those countries\xe2\x80\x99 mineral resources.9\nT h e o d o r e B. O\n\nl so n\n\nAssistant Attorney General\nOffice o f Legislative Affairs\n\n8O ur discussion of the procedures for implementing \xc2\xa7 181 has focused on the question that appears\ncentral to your Department\xe2\x80\x99s present concern, namely, how to establish a process for determining\nw hether another country accords \xe2\x80\x9c similar or like privileges.\xe2\x80\x9d Once such a determination is made,\nfurther questions are likely to arise regarding the appropriate means for applying a determination\nabout a given country to particular parties seeking federal mineral leases. We would be glad to assist\nin resolving such questions as they arise.\n\xe2\x80\xa2 N o te : T he August 11, 1981 Memorandum Opinion, \xe2\x80\x9cRestrictions on Canadian Ownership of\nFederal Mineral Leases Under the Mineral Leasing A ct of 1920,\xe2\x80\x9d is reprinted in this volume at p. 250,\nsupra. Ed.\n9 We would not want this memorandum or our opinion o f August 11, 1981, to be understood as\nresolving the additional question w hether, assuming the Secretary could as a practical matter \xe2\x80\x9cmirror\xe2\x80\x9d\nanother country\xe2\x80\x99s restrictions on foreign investment, the Secretary would be bound to do that, or\nw hether he could choose whether to do that or to take a more extreme action such as barring \xe2\x80\x9cany\xe2\x80\x9d\ninvestment by the other country\'s citizens in federal mineral leases. We have not addressed that issue.\nW e suggest that specific attention be given this question if the Secretary would consider taking more\nrestrictive action than \xe2\x80\x9c mirroring\xe2\x80\x9d under \xc2\xa7 181.\n\n282\n\n\x0c'