b'Legality of the International Agreement with Iran\nand Its Implementing Executive Orders\nExecutive orders providing for the establishment o f escrow accounts with the Bank of\nEngland and the Central Bank o f Algeria, directing the transfer o f previously blocked\nIranian government assets to those accounts, and nullifying all interests in the assets\nother than the interests of Iran and its agents, are within the President\xe2\x80\x99s authority under\nthe International Emergency Economic Powers Act (IEEPA ). Banks and other holders\no f Iranian assets need not await formal vacation of court-ordered attachments before\ncomplying with transfer orders, since they as well as Executive Branch officials are\nrelieved from any liability for actions taken in good faith in reliance on the IEEPA.\nExecutive order prohibiting the prosecution o f any claims against Iran arising from the\nhostage seizure, and terminating any previously instituted judicial proceedings based on\nsuch a claim, is within the President\'s authority under the IE E PA and the Hostage\nAct. The order does not purport to preclude any claimant from petitioning Congress\nfor relief in connection with his claim, nor could it constitutionally do so.\nProvisions of executive order blocking property of the former Shah\xe2\x80\x99s estate and that of\nhis close relatives, and requiring all persons subject to the jurisdiction of the United\nStates to submit to the Secretary o f the Treasury information about this property to be\nmade available to the government of Iran, are within the President\xe2\x80\x99s authority under\nthe IEEPA. Proposed order also directs the Attorney General to assert in appropriate\ncourts that claims of Iran for recovery of this property are not barred by foreign\nsovereign immunity or act of state doctrines, and asserts that all Iranian decrees\nrelating to the former Shah and his family should be enforced in courts of the United\nStates.\nThe President has constitutionally and congressionally conferred authority to enter an\nagreement designating the Iran-United States Claims Tribunal as the sole forum for\ndetermination of claims by the United States or its nationals against Iran, and to confer\nupon the Tribunal jurisdiction over claims against the United States.\n\nJanuary 19, 1981\nT h e P r e s id e n t\nT h e W h it e H o u se\nM y D e a r M r . P r e s i d e n t : I have been asked for my opinion con\xc2\xad\ncerning the legality of certain actions designed to resolve issues arising\nfrom the detention in Iran of 52 American hostages, including the\ndiplomatic and consular staff in Tehran.\nAn international agreement has been reached with Iran. The agree\xc2\xad\nment, which consists of four separate documents, commits the United\nStates and Iran to take specified steps to free the hostages and to\nresolve specified claims between the United States and its nationals and\nIran and its nationals. These documents embody the interdependent\n\n13\n\n\x0ccommitments made by the two parties for which Algeria has been\nacting as intermediary.\nT he first document is captioned \xe2\x80\x9cDeclaration of the Government of\nthe Dem ocratic and Popular Republic of Algeria\xe2\x80\x9d (Declaration). The\nDeclaration provides, first, for nonintervention by the United States in\nthe internal political and military affairs of Iran.\nSecond, the Declaration provides generally for return of Iranian\nassets. The transfer utilizes the Central Bank o f Algeria as escrow agent\nand the Bank of England in London as depositary: their obligations and\npowers are specified in tw o other documents, the \xe2\x80\x9cEscrow Agreement\xe2\x80\x9d\nand the \xe2\x80\x9cDepositary Agreement.\xe2\x80\x9d Separate timetables and conditions\nare described for assets in the Federal Reserve Bank of New York\n(Fed), in foreign branches of United States banks, and in domestic\nbranches of United States banks, and for other financial assets and other\nproperty located in the United States and abroad. The transfer of the\nassets in the Fed and in the foreign branches to the Bank of England is\nscheduled to take place first. Upon Iran\xe2\x80\x99s release of the hostages, the\nCentral Bank o f Algeria, as escrow agent, shall direct the Bank of\nEngland, under the terms o f the Escrow and Depositary Agreements,\nto disburse the escrow account in accordance with the undertakings of\nthe United States and Iran with respect to the Declaration.\nT he transfer from the Central Bank of Algeria to Iran of the assets\npresently in the domestic branches will take place upon Iran\xe2\x80\x99s establish\xc2\xad\nment with the Central Bank of Algeria of a Security Account to be\nused for the purpose of paying claims against Iran in accordance with a\nClaims Settlement Agreement set forth in the fourth document, which\nis captioned \xe2\x80\x9cDeclaration o f the Government of the Democratic and\nPopular Republic of Algeria Concerning the Settlement of Claims by\nthe Governm ent of the United States of America and the Government\nof the Islamic Republic o f Iran\xe2\x80\x9d (Claims Settlement Agreement). The\nClaims Settlement Agreement provides for the establishment of an IranUnited States Claims Tribunal, which will have jurisdiction to decide\nthree categories o f claims: (1) claims by United States nationals against\nIran and claims by Iranian nationals against the United States, and\ncounterclaims arising out of the same transaction or occurrence, for\nclaims and counterclaims outstanding on the date of the A greem ent;1\n(2) official claims of the governments of the United States and Iran\nagainst each other arising out of contracts for the purchase and sale of\ngoods and services; and (3) any dispute as to the interpretation or\nperformance of any provision of the Declaration.\n\xe2\x96\xa0Two categories o f claims are specifically excluded: (1) claims relating to the seizure or detention\no f the hostages, injury to United States property or property within the compound of the embassy in\nT ehran, and injury to persons or property as a result of actions in the course o f the Islamic Revolution\nin Iran which were not actions of the government of Iran and (2) claims arising under the terms of a\nbinding contract specifically providing that any disputes thereunder shall be within the sole jurisdic\xc2\xad\ntion o f the com petent Iranian courts^\n\n14\n\n\x0cThird, the Declaration provides for nullification of trade sanctions\nagainst Iran and withdrawal of claims now pending in the International\nCourt of Justice. The United States also agrees not to prosecute its\nclaims and to preclude prosecution by a United States national or in the\nUnited States courts of claims arising out of the seizure of the embassy\nand excluded by the Claims Settlement Agreement.\nFourth, the Declaration provides for actions by the United States\ndesigned to help effectuate the return to Iran of the assets of the family\nof the former Shah.\nA series of executive orders has been proposed to carry out the\ndomestic, and some foreign, aspects of the international agreement. It is\nmy opinion that under the Constitution, treaties, and laws of the United\nStates you, your subordinates, the Fed, and the Federal Reserve Board\nare authorized to take the actions described in the four documents\nconstituting the international agreement and in the executive orders.2\nI shall first examine the proposed executive orders and consider them\nas to form and legality. Subsequently I shall consider certain questions\nwhich arise from other proposed actions and documents related thereto.\n1.\nThe first proposed executive order is captioned \xe2\x80\x9cDirection Relat\xc2\xad\ning to Establishment o f Escrow Accounts.\xe2\x80\x9d Under it, the Secretary o f\nthe Treasury is authorized to direct the establishment of an appropriate\nescrow agreement with the Bank of England and with the Central Bank\nof Algeria to provide as necessary for distribution of funds in connec\xc2\xad\ntion with the release of the hostages. The Escrow Agreement provides,\namong other things, that certain assets in which Iran has an interest\nshall be credited by the Bank o f England to an escrow account in the\nname o f the Central Bank of Algeria and transferred to Iran after the\nCentral Bank of Algeria receives certification from the Algerian gov\xc2\xad\nernment that the 52 hostages have safely departed from Iran.\nThe International Emergency Economic Powers Act (IEEPA), 50\nU.S.C. \xc2\xa7\xc2\xa7 1701-1706 (Supp. I 1977), provides you with authority,\nduring a declared national emergency, to direct transactions and trans\xc2\xad\nfers of property in which a foreign country has an interest under such\nregulations as you may prescribe. As the proposed order recites, such\nan emergency has been declared. IE E PA was the authority for the\nblocking order of November 14, 1979, Executive Order No. 12,170,\nwhich asserted control over Iranian government assets. Moreover, the\nstatute known as the Hostage Act, 22 U.S.C. \xc2\xa7 1732, authorizes the\nPresident, when American citizens are unjustly deprived of liberty by a\nforeign government, to use such means, not amounting to acts of war,\nas he may think \xe2\x80\x9cnecessary and proper\xe2\x80\x9d to bring about their release.\nThe phrase \xe2\x80\x9cnecessary and proper\xe2\x80\x9d is, of course, borrowed from the\nConstitution, and has been construed as providing very broad discre\xc2\xad\n8 Documents testifying to the adherence to the agreement by both the United States and Iran will\nalso be executed; these documents present no substantive legal issues.\n\n15\n\n\x0ctionary powers for legitimate ends. U.S. Const. Art. I, \xc2\xa78, cl. 18;\nMcCulloch v. Maryland, 17 U.S. (4 W heat.) 316 (1819). Establishment of\nthe escrow account is directed to the release o f the hostages. This order\nthus falls within your powers under these A cts.3\nIt is approved as to form and legality.\n2.\nThe second proposed executive order is captioned \xe2\x80\x9cDirection to\nT ransfer Iranian Government Assets.\xe2\x80\x9d The Fed is directed to transfer\nto its account at the Bank o f England, and then to the escrow account\nreferred to in paragraph 1, the assets of the government of Iran, as\ndirected by the Secretary o f the Treasury. The order also revokes the\nauthorization for, and nullifies all interests in, the frozen Iranian gov\xc2\xad\nernm ent property except the interests o f Iran and its agents. The effect\nof this order will be to void the rights of plaintiffs in any possible\nlitigation to enforce certain attachments and other prejudgment reme\xc2\xad\ndies that were issued against the blocked assets following the original\nblocking order.\nI believe that this provision is lawful for several reasons. I am\ninformed, first, that the Iranian funds on deposit in the Fed are funds of\nthe Bank Markazi, the Central Bank o f Iran. As such, they are clearly\nnot subject to attachment. T he Foreign Sovereign Immunities A ct of\n1976 specifically states that the property of a foreign central bank held\nfor its ow n account shall be immune from attachment and execution\nunless that immunity has been explicitly waived. 28 U.S.C. \xc2\xa71611(b). It\nis my view that there has been no such waiver.\nEven assuming, arguendo, that the attachments are not precluded by\n28 U.S.C. \xc2\xa7 1611(b), there is power under IE E PA to nullify them or to\nprevent the exercise of any right under them. Under IEEPA , the\nPresident has authority in time of emergency to prevent the acquisition\nof interests in foreign property and to nullify new interests that are\nacquired through ongoing transactions. The original blocking order\ndelegated this power to the Secretary of the Treasury, who promul\xc2\xad\ngated regulations prohibiting the acquisition, through attachment or any\nother court process, of any new interest in the blocked property. The\neffect o f these regulations was to modify both the substantive and the\nprocedural law governing the availability of prejudgment remedies to\ncreditors o f Iran. The regulations contemplated that provisional reme\xc2\xad\ndies might be permitted at a later date but provided that any unauthor\xc2\xad\nized remedy would be \xe2\x80\x9cnull and void.\xe2\x80\x9d 31 C.F.R. \xc2\xa7 535.203(e).\nSubsequently, all of the attachments and all of the other court orders\nagainst the Iranian assets held by the Fed were entered pursuant to a\ngeneral license or authorization given by the Secretary o f the Treasury\neffective Novem ber 23, 1979. This authorization, like all authorizations\nissued under the blocking regulations, may be revoked at any time in\n3 A lthough I do not specifically discuss the applicability of the Hostage Act to the other proposed\norders described in this opinion, I believe that it generally supports their issuance.\n\n16\n\n\x0caccordance with 31 C.F.R. \xc2\xa7 535.805, which expressly provides that\nany authorization issued under the blocking order could be \xe2\x80\x9camended,\nmodified, or revoked at any time.\xe2\x80\x9d See Orvis v. Brownell, 345 U.S. 183\n(1953). The regulations did not purport to authorize any transaction to\nthe extent that it was prohibited by any other law (other than IEEPA ),\nsuch as the Foreign Sovereign Immunities A ct.4 31 C.F.R. \xc2\xa7 535.101(b).\nUpon revocation, the exercise or prosecution of any interests created\nby the outstanding attachments and other orders will be unauthorized.\nThe orders themselves will no longer confer any enforceable right upon\nthe creditors. Indeed, because IEEPA expressly grants to the President\na power of nullification, the interests created by these provisional reme\xc2\xad\ndies are themselves subject to nullification, in addition to nullification\nby the revocation of the underlying authorization. In this respect the\nPresident\xe2\x80\x99s power under IE E PA is analogous to his constitutional\npower to enter into international agreements that terminate provisional\ninterests in foreign property acquired through domestic litigation if\nnecessary in the conduct of foreign affairs. See The Schooner Peggy, 5\nU.S. (1 Cranch) 103 (1801). The nullification of these interests is an\nappropriate exercise of the President\xe2\x80\x99s traditional power to settle inter\xc2\xad\nnational claims. United States v. Pink, 315 U.S. 203 (1942); United States\nv. Belmont, 301 U.S. 325 (1937).\nUpon the direction of the Secretary of the Treasury, the Fed will be\nfree to transfer the Iranian assets; the attachments and other prejudg\xc2\xad\nment encumbrances will have been rendered unenforceable by the con\xc2\xad\ntemporaneous change in law. Moreover, the Fed may comply with the\nSecretary\xe2\x80\x99s directive without litigating in advance the issue of the\nSecretary\xe2\x80\x99s authority to nullify the provisional interests. IE E PA explic\xc2\xad\nitly states, and the proposed order affirms, that \xe2\x80\x9c [n]o person shall be\nheld liable in any court . . . for anything done or omitted in good faith\nin connection with the administration of, or pursuant to and in reliance\non, [IEEPA] or any regulation, instruction, or direction issued under\n[IEEPA].\xe2\x80\x9d 50 U.S.C. \xc2\xa7 1702(a)(3). I believe that Congress intended this\nprovision to relieve holders of foreign property, as well as individuals\nadministering or carrying out orders issued pursuant to IEEPA , from\nany liability for actions taken in good faith in reliance on IE E PA and\npresidential directives issued under IEEPA . This provision protects not\nonly the Fed and the Federal Reserve Board but Executive Branch\nofficials as well. In my opinion, this provision is valid and effective for\nthat purpose.\n4 In New England Merchants National Bank v. Iran Power Generation and Transmission Co.. 502 F.\nSupp. 120 (S.D.N.Y 1980), the district court took the position that the freeze order under IEE PA\ntook precedence over the Foreign Sovereign Immunities Act, thus removing Iran\xe2\x80\x99s immunity. Assum\xc2\xad\ning, arguendo, the correctness of that position, the legal effect of the totality of actions dicussed herein\nwould be to reinstate Iran\'s immunity, thereby removing the ratio decedendt of the district court\xe2\x80\x99s\ndecision.\n\n17\n\n\x0cSimilarly, the Secretary himself is empowered, in my opinion, to\nnullify these provisional interests and to license the transfer of the assets\nw ithout submitting the issue to litigation and without insisting that the\nFed refuse any transfer until all objections to the transfer have been\ndefinitively rejected by the courts. As noted, the interests, if any,\ncreated by these prejudgment remedies were created upon the condi\xc2\xad\ntion that the authority for the underlying transactions might be revoked\n\xe2\x80\x9cat any time\xe2\x80\x9d; and that condition may be invoked without delay. The\npowers that the Constitution gives and the Congress has given the\nPresident to resolve this kind o f crisis could be rendered totally ineffec\xc2\xad\ntive if they could not be exercised expeditiously to meet opportunities\nas they arise. The primary implication o f an emergency power is that it\nshould be effective to deal with a national emergency successfully.\nUnited States v. Yoshida International, Inc., 526 F.2d 560, 573 (C.C.P.A.\n1975).\nM oreover, the Fed may transfer the assets before the outstanding\ncourt orders have been formally vacated. When a supervening legisla\xc2\xad\ntive act expressly authorizes a course of conduct forbidden by an\noutstanding judicial order, the new legislation need not require the\npersons subject to it to submit the m atter to litigation before pursuing\nthe newly authorized course. See Pennsylvania v. Wheeling & Belmont\nBridge Co., 59 U.S. (18 How.) 421 (1855). I believe that this case is\nclosely on point. A valid executive order has the force of a federal\nstatute, superseding state actions to the extent that it is inconsistent.\nContractors Association o f Eastern Pennsylvania v. Secretary o f Labor, 442\nF.2d 159, 166 (3d Cir.), cert, denied, 404 U.S. 854 (1971). Thus, the\nholding of the Wheeling case applies here.\nThe order is approved as to form and legality, and actions taken\nconsistent with and pursuant to it will be lawful and valid.\n3.\nThe third proposed executive order is captioned \xe2\x80\x9cDirection to\nTransfer Iranian Government Assets Overseas.\xe2\x80\x9d In general, it directs\nbranches of United States banks outside the country to transfer Iranian\ngovernm ent funds and property to the account of the Fed in the Bank\no f England. The transfer is to include interest at commercially reason\xc2\xad\nable rates from the date of the blocking order. The Secretary o f the\nTreasury shall determine when the transfers shall take place. Any\nbanking institution that executed a set-off against Iranian funds after\nentry of the blocking order is directed to cancel the set-off and to\ntransfer the funds in the same manner as the other overseas deposits.\nThe Iranian funds in the branches o f American banks overseas were\nsubject to the November 1979 blocking order. Subsequently, the Secre\xc2\xad\ntary of the Treasury licensed foreign branches and subsidiaries of\nAmerican banks to set off their claims against Iran or Iranian entities by\ndebit to the blocked accounts held by them for Iran or Iranian entities.\n31 C.F.R. \xc2\xa7535.902. As a result of this license, American banks with\n18\n\n\x0cbranches overseas set off various debts owing to them by Iran and\nIranian entities. I understand that most of the debts were loans origi\xc2\xad\nnally made from offices in the United States and that most of the\noverseas deposits were in branches located in the United Kingdom. The\nbanks with overseas Iranian accounts set off amounts owing not only to\nthem directly but to other banks with whom they were participants in\nsyndicated loans. The banks have acted on the assumption that any loan\nmade to Iran or an Iranian entity could be set off against any account\nof Iran or an Iranian entity or enterpise on the theory that, as a result\nof the control of the Iranian economy by the government of Iran and\nnationalization of private enterprises, all such entities and enterprises\nwere the same party for purpose of setting off debts. In addition, the\nbanks accelerated the amounts due on loans that were in default, and,\nunder the doctrine of anticipatory breach, set off loans that had not\ncome due.\nThe blocking order delegated to the Secretary o f the Treasury the\nauthority to license the set-offs to the extent that the executive order\nprevented them. The license did not, however, determine whether the\nset-offs were valid under any other law. 31 C.F.R. \xc2\xa7535.101(b). I\nunderstand that Iran and its entities are contesting in litigation overseas\nwhether the set-offs are lawful. T he issues include the proper situs of\nthe debts, identity of the parties, the propriety of acceleration, and the\nanticipation of breach.\nIE E PA authorizes the President, under such regulations as he may\nprescribe, to nullify and void transactions involving property in which a\nforeign country has an interest and to nullify and void any right re\xc2\xad\nspecting property in which a foreign country has an interest. 50 U.S.C.\n\xc2\xa7 1702. Either analysis is appropriate here: Iran had an interest in the\noriginal set-off transaction and continues to have an interest both in the\namounts in the accounts which have and have not been set off. The\nlatter, as noted, are the subject o f litigation abroad. See 31 C.F.R.\n\xc2\xa7\xc2\xa7 535.311-312. C f Behring International v. Miller, 504 F. Supp. 552\n(D.N.J. 1980) (holding that Iran continues to have interest in a trust\naccount created to pay debt). The very use o f the words \xe2\x80\x9cnullify\xe2\x80\x9d and\n\xe2\x80\x9cvoid\xe2\x80\x9d persuades me that Congress intended to authorize the President\nto set aside preexisting transactions.5\nAs noted, the order also requires the overseas banks, when transfer\xc2\xad\nring the Iranian assets, to include interest on those assets from Novem\xc2\xad\nber 14, 1979, at commercially reasonable rates. I understand that in\nmost cases the accounts in overseas branches of American banks are\ninterest-bearing. To the extent that they are not, such interest represents\n5 I believe that the present case is distinguishable in several respects from that in Brownell v.\nNational City Bank, 131 F. Supp. 60 (S D.N.Y. 1955). There, the district court concluded that the\nmere revocation of a license did not serve to void a preexisting and apparently uncontested set-off; the\nbank, moreover, had no opportunity to recoup its potential loss by bringing the loan current.\n\n19\n\n\x0cthe benefit realized by the banks from holding the blocked Iranian\nassets which, under the law of restitution, should accrue to the owners\no f the assets. Cf. Phillips Petroleum Co. v. Adams, 513 F.2d 355 (5th\nCir.), cert, denied, 423 U.S. 930 (1975). As such, the interest or benefit\nrealized by the banks is property in which Iran has an interest.6\nF o r these reasons, I believe that you are thus authorized under\nIE E P A to compel the transfer o f both principal and interest to the\nFederal Reserve account at the Bank o f England as provided by the\norder and to nullify or prevent the exercise o f any interests in this\nproperty by anyone other than Iran. I also believe, as discussed in\nparagraph 2 above, that 50 U.S.C. \xc2\xa7 1702(a)(3) relieves from liability\nanyone taking action in good faith under this executive order.7\nThe proposed order is approved as to form and legality, any actions\ntaken consistent with and pursuant to it will be lawful and valid.\n4. The fourth proposed executive order is captioned \xe2\x80\x9cDirection to\nTransfer Iranian Government Assets Held by Domestic Banks.\xe2\x80\x9d The\nproposed order directs American banks in the United States with Ira\xc2\xad\nnian deposits to transfer them, including interest from the date of\nblocking at commercially reasonable rates, to the Fed, which will hold\nthe funds subject to the direction o f the Secretary o f the Treasury.\nAs discussed in paragraphs 2 and 3, the President has power under\nIE E P A to direct the transfer of funds of Iran, including interest, and to\nnullify or prevent the exercise of any interests of anyone other than\nIran in Iranian property. Actions taken in good faith pursuant to this\norder will be, as discussed above, immune from liability.\nThe order is approved as to form and legality, and actions taken\nconsistent with and pursuant to it will be lawful and valid.\n5. The fifth proposed executive order is captioned \xe2\x80\x9cDirection to\nTransfer Iranian Government Financial Assets Held by Non-Banking\nInstitutions.\xe2\x80\x9d This order is similar to the order described in paragraph 4\nexcept that it requires the transfer to the Fed of funds and securities\nheld by non-banking institutions. The President has the power to direct\nthe transfer of funds and securities o f Iran held by non-banking institu\xc2\xad\ntions, and actions taken in good faith pursuant to this order shall\nlikewise enjoy the immunity from liability as reflected in 50 U.S.C.\n\xc2\xa7 1702(a)(3).\nThe proposed order is approved as to form and legality, and actions\ntaken consistent with and pursuant to it will be lawful and valid.\n6 See also Art. VII(2)(b) of the T reaty of Amity, Economic Relations, and Consular Rights Aug 15,\n1955, United States-Iran, 8 U S T . 901, 905, T.l.A.S. No. 3853.\n7 Cf. Cities Service Co. v. McGrath, 342 U.S. 330, 334-36 (1952). It is my opinion that a person who\nhas taken action in compliance with this executive order and is subsequently finally required by any\ncourt to pay amounts with respect to funds transferred pursuant to this executive order will have the\nright as a m atter o f due process to recover such amount from the United States to the extent of any\ndouble liability.\n\n20\n\n\x0c6. The sixth proposed executive order is captioned \xe2\x80\x9cDirection to\nTransfer Certain Iranian Government Assets.\xe2\x80\x9d The order would require\nanyone in possession or control of property owned by Iran, not includ\xc2\xad\ning funds and securities, to transfer the property as directed by the\nIranian government. The order recites that it does not relieve persons\nsubject to it from existing legal, requirements other than those based on\nIEEPA . It does, however, nullify outstanding attachments and court\norders in the same manner as does the order discussed in paragraph 2.\nFor the reasons discussed in the preceding paragraphs, the President\nhas power under IE E PA to order the transfer of property owned by\nIran as directed by Iran and to nullify outstanding attachments and\ncourt orders related to such property. Actions taken in good faith\npursuant to this order shall likewise enjoy the immunity from liability\nas reflected in 50 U.S.C. \xc2\xa7 1702(a)(3).\nThe order is approved as to form and legality, and actions taken\nconsistent with and pursuant to it will be lawful and valid.\n7. The seventh proposed executive order is captioned \xe2\x80\x9cRevocation of\nProhibitions against Transactions Involving Iran.\xe2\x80\x9d It revokes the prohi\xc2\xad\nbitions of Executive O rder No. 12,205 of April 7, 1980; Executive\nOrder No. 12,211 of April 17, 1980; and Proclamation 4702 o f Novem\xc2\xad\nber 12, 1979. The two executive orders limited trade with and travel to\nIran. The proclamation restricted oil imports from Iran. It is my under\xc2\xad\nstanding that although the prohibitions are revoked, the underlying\ndeclarations o f emergency remain in effect.\nThe order is approved as to form and legality.\n8. The eighth proposed executive order is captioned \xe2\x80\x9cNon-Prosecution of Claims of Hostages and for Actions at the United States Em \xc2\xad\nbassy and Elsewhere.\xe2\x80\x9d The order directs the Secretary o f the Treasury\nto promulgate regulations prohibiting persons subject to United States\njurisdiction from prosecuting in any court or elsewhere any claim\nagainst Iran arising from the hostage seizure on November 4, 1979, and\nthe occupation of the embassy in Tehran, and also terminating any\npreviously instituted judicial proceedings based upon such claims.\nThe President has the power under IEEPA and the Hostage A ct to\ntake steps in aid of his constitutional authority8 to settle claims of the\nUnited States or its nationals against a foreign government.9 Thus, he\nhas the right to license litigation involving property in which a foreign\nnational has an interest, as described in paragraph 2. That license can be\nsuspended by the Executive acting alone. New England Merchants N a\xc2\xad\ntional Bank v. Iran Power Generation and Transmission Co., 508 F. Supp.\n47 (S.D.N.Y., 1980) (Duffy, J.). But see National Airmotive Corp. v.\n6See, e.g.. Restatement (Second) of Foreign Relations Law of the United States \xc2\xa7213 (1965).\n9 IEEPA was drafted and enacted with the explicit recognition that the blocking of assets could be\ndirectly related to a later claims settlement. H. R. Rep. No. 459, 95th Cong., 1st Sess 17 (1977); S.\nRep. No. 466, 95th Cong., 1st Sess. 6 (1977). See 50 U.S.C. \xc2\xa7 1706(a)(1) (authorizing continuation of\ncontrols, after the emergency has ended, where necessary for claims settlement purposes).\n\n21\n\n\x0cGovernment and State o f Iran, 499 F. Supp. 401 (D.D.C., 1980) (Greene,\nJ .).10\nT he order is approved as to form and legality.\n9. The final proposed executive order is captioned \xe2\x80\x9cRestrictions on\nthe Transfer o f Property of the Form er Shah of Iran.\xe2\x80\x9d It invokes the\nblocking powers of IE E PA to prevent transfer of property located in\nthe United States and controlled by the Shah\xe2\x80\x99s estate or by any close\nrelative until litigation surrounding the estate is terminated. The order\nalso invokes the reporting provisions o f IEEPA , 50 U.S.C. \xc2\xa7 1702(a)(2),\nto require all persons subject to the jurisdiction of the United States to\nsubmit to the Secretary o f the Treasury information about this property\nto be made available to the government of Iran. The property involved\nis property in which \xe2\x80\x9c[a] foreign country or a national thereof\xe2\x80\x99 has an\ninterest. Restrictions on transfer and reporting requirements therefore\nfall within the authority provided by IEEPA .\nThe order would further direct me, as Attorney General, to assert in\nappropriate courts that claims of Iran for recovery of this property are\nnot barred by principles of sovereign immunity or the act of state\ndoctrine. I have previously communicated to you and to the Depart\xc2\xad\nment o f State my view to this effect (based on advice furnished to me\nby the Office o f Legal Counsel and the Civil Division of this Depart\xc2\xad\nment) and will so assert in appropriate proceedings. The proposed\norder also recites that it is the position of the United States that all\nIranian decrees relating to the assets of the former Shah and his family\nshould be enforced in our courts in accordance with United States law.\nT he proposed order is approved as to form and legality.\n10. The other questions relate to the Claims Settlement Agreement. I\nconclude that you have the authority to enter an agreement designating\nthe Iran-United States Claims Tribunal as the sole forum for determina\xc2\xad\ntion o f claims by United States nationals or by the United States itself\nagainst Iran and to confer upon the Tribunal jurisdiction over claims\nagainst the United States, including both official contract claims and\ndisputes arising under the Declaration.\nT he authority to agree to the establishment of the Tribunal as an\ninitial m atter cannot be challenged. The Claims Settlement Agreement\nfalls squarely within powers granted to the Executive by the Constitu\xc2\xad\ntion, by treaty, and by statute.\nAs a step in the reestablishment of diplomatic relations with Iran, the\nClaims Settlement Agreement represents an appropriate exercise of the\nPresident\xe2\x80\x99s powers under Article II of the Constitution to conduct\nforeign relations. M oreover, by Article XXI(2) o f the 1957 Treaty with\n101 note that the issue of appropriate compensation for the hostages will be considered by a\nCommission on Hostage Compensation established by separate executive order. Moreover, this eighth\norder does not, o f course, purport to preclude any claimant from presenting his claim to Congress and\npetitioning for relief; nor could it constitutionally do so.\n\n22\n\n\x0cIran, the Senate gave its agreement for the two nations to settle dis\xc2\xad\nputes as to the interpretation or application of the treaty by submission\nto the International Court o f Justice or by any \xe2\x80\x9cpacific means.\xe2\x80\x9d 11\nArbitration by the Iran-United States Claims Tribunal is a .pacific means\nof dispute settlement. Finally, by the Hostage Act, 22 U.S.C. \xc2\xa7 1732,\nCongress has conferred upon the President specific statutory powers\napplicable to this crisis. The agreement to resolve by arbitration the\ndisputes now obstructing the release o f the hostages is a proper exercise\no f this power.\nI note in conclusion the congruence o f your constitutional powers\nand the congressionally conferred authority. In this situation, o f course,\nyour authority is at its maximum. Youngstown Sheet & Tube Co. v.\nSawyer, 343 U.S. 579, 635-36 (1952) (Jackson, J., concurring).\nThe specific jurisdiction conferred upon the Tribunal must be further\nexamined. The first category of claims, the private claims based on\ndebts, contracts, expropriations, o r other measures affecting property\nrights, includes both claims by United States nationals against Iran and\nclaims by Iranian nationals against the United States. The former are\nreferrable to the Tribunal under the constitutional authority to settle\nclaims recognized in United States v. Pink, 315 U.S. 203 (1942), and\nUnited States v. Belmont, 301 U.S. 324 (1937). See also Restatement\n(Second) of Foreign Relations Law o f the United States \xc2\xa7 213 (1965).12\nFrom these claims are excluded claims arising out of the seizure of\nthe embassy and claims on binding contracts providing for dispute\nresolution solely by Iranian courts. Again, the power to settle claims\nincludes the pow er to exclude certain claims from the settlement proc\xc2\xad\ness. Cf. Aris Gloves, Inc. v. United States, 420 F.2d 1386 (Ct. Cl. 1970).\nMoreover, the exclusion is not intended to be a final settlement or\ndetermination of these claims. I understand that the claims based on the\nseizure will be given separate consideration, see note 10 supra. I note\nalso that the exclusion o f the claims on binding contracts that provide\nthe exclusive procedure for dispute resolution does not adversely affect\nany option that these claimants would have had prior to the hostage\ncrisis and all the actions taken in response to it. These claimants are not\ndisadvantaged by the Claims Settlement Agreement; as to them, the\nstatus quo as of the time that the hostages were taken is merely\npreserved.\n11 Art. XXI(2) provides:\nAny dispute between the High Contracting Parties as to the interpretation or applica\xc2\xad\ntion of the present Treaty, not satisfactorily adjusted by diplomacy, shall be submitted\nto the International Court o f Justice, unless the High Contracting Parties agree to\nsettlement by some other pacific means.\nBecause the Treaty provides for peace and friendship between the two nations, trade and commercial\nfreedom, protection and security o f nationals, prom pt and just compensation for the taking o f\nproperty, and the absence o f restrictions on the transfer o f funds, the disputes to be referred to the\nTribunal are disputes \xe2\x80\x9cas to the interpretation or application o f the . . . Treaty."\n11Here again, your constitutional powers are supplemented by statute. S et note 9, supra.\n\n23\n\n\x0cT he latter claims in the first category, the claims by Iranian nationals\nagainst the United States, and also the official claims in the second\ncategory by Iran against th e United States, are referrable to the Tribu\xc2\xad\nnal for adjudication under the same authority. The President\xe2\x80\x99s power to\nrefer these claims to binding arbitration as part o f an overall settlement\nof our disputes with Iran is within the authority conferred on him by\nthe T reaty and the Hostage Act and is also within his sole authority\nunder A rticle II of the Constitution. Any award made by the Tribunal\nagainst the United States w ould create an obligation under international\nlaw. Such obligations have invariably been honored by the Congress in\nour constitutional system.\nT he rem ainder of the claims in this second category are official\nclaims o f the United States against Iran. The submission of the claims to\nthe Tribunal is a matter fo r the Executive\xe2\x80\x99s sole determination in the\nconduct of foreign relations.\nFinally, jurisdiction over the third category o f claims, consisting of\ndisputes as to the interpretation or performance of the Declaration, is\nappropriately conferred upon the Tribunal incident to the exercise of\nthe pow er to agree to the Declaration in the first instance.\nF o r these reasons, I conclude that the United States may enter into\nthe international agreement and that you have legal authority to issue\nall o f these documents and executive orders.\nRespectfully,\nB e n j a m i n R.\n\n24\n\nC iv il e t t i\n\n\x0c'


b"April 11, 1977\n\n77-19\n\nMEMORANDUM OPINION FOR THE\nASSISTANT ATTORNEY GENERAL,\nCRIMINAL DIVISION\nInterpretation of the Grandfather Clause in 18\nU.S.C. \xc2\xa7 709\xe2\x80\x94Use of Word \xe2\x80\x9cFederal\xe2\x80\x9d in Name of\nInsurance Company\n\nThis memorandum is in response to a request for this Office to\nresolve a difference of opinion within the Criminal Division concerning\nthe correct interpretation o f 18 U.S.C. \xc2\xa7709. For the reasons stated\nhereafter, we have concluded that the grandfather clause enacted as\npart of the predecessor o f \xc2\xa7 709 should be construed narrowly to\nprotect only the proprietary interest already in existence in 1926 with\nregard to the full name of a firm.\nI.\n\nBackground\n\nA dispute documented in various memorandums submitted to this\noffice has arisen with regard to whether an insurance company present\xc2\xad\nly using the word \xe2\x80\x9cFederal\xe2\x80\x9d in its name may continue the use of the\nword \xe2\x80\x9cFederal\xe2\x80\x9d in the name given to the corporate entity to be created\nafter the merger or consolidation of the insurance company with an\xc2\xad\nother company. This new name would not be identical to the insurance\ncompany\xe2\x80\x99s present name. T he Criminal Division has, in the past, issued\nletters to various institutions declaring that such name changes as the\none contemplated here are not in violation of 18 U.S.C. \xc2\xa7709, which\nreads, in pertinent part, as follows:\nW hoever . . . uses the words \xe2\x80\x9cnational\xe2\x80\x9d , \xe2\x80\x9cFederal\xe2\x80\x9d, \xe2\x80\x9cUnited\nStates\xe2\x80\x9d, \xe2\x80\x9creserve\xe2\x80\x9d, or \xe2\x80\x9cdeposit insurance\xe2\x80\x9d as part of the business or\nfirm name of a business entity engaged in the . . . insurance . . .\nbusiness [shall be punished as a misdemeanant].\nThis section shall not make unlawful the use of any name or title\nwhich was lawful on the date of enactment o f this title.\n60\n\n\x0cThe essence of the difference appears to be whether the grandfather\nclause applies to all name changes where both the new and old names\ncontain one or more of the prohibited words.\nII.\n\nThe Pertinent Statute and Its Legislative History\n\nAlthough the various memorandums generated within the Criminal\nDivision, as well as correspondence from the insurance company\xe2\x80\x99s\ncounsel, focus to a great extent on the language and meager legislative\nhistory of 18 U.S.C. \xc2\xa7709, we think that focus is somewhat misplaced.\nSection 709 is a conglomerate provision assembled from other stat\xc2\xad\nutes as part of the 1948 revision of the Federal Criminal Code. Being\npart of that 1948 revision, interpretation of \xc2\xa7 709 is governed by princi\xc2\xad\nples laid down by the Supreme Court in Muniz v. Hoffman, 422 U.S.\n454 (1975). The basic principle established by Muniz relevant here is\nthat the 1948 code revision did not change the substance of any legisla\xc2\xad\ntion that was placed in the criminal code by that revision. Id. at 468-70.\nThus, we proceed to analyze the question on the assumption that the\nrelevant law is not strictly \xc2\xa7 709 as it presently reads, but rather its\npredecessor, which was enacted in 1926. Section 2 of the 1926 Act, 44\nStat. 628, provided, in pertinent part:\nThat no . . . firm . . . engaged in the . . . insurance . . . business\nshall use the word \xe2\x80\x9cFederal\xe2\x80\x9d, the words \xe2\x80\x9cUnited States\xe2\x80\x9d, or the\nword \xe2\x80\x9creserve\xe2\x80\x9d, or any combination of such words, as a portion of\nits corporate, firm or trade name or title . . . . Provided, however,\nthat provisions of this section shall not apply to . . . any . . . firm\n. . . actually engaged in business under such name or title prior to\nthe passage of this Act.\nThe question is whether the grandfather clause was intended by\nCongress to exempt from the prohibition established by \xc2\xa7 2 changes in\nthe name of an institution or business covered by that section so long as\nthe old name contained one of the prohibited words. We believe that\nthe answer to this question turns upon the meaning to be ascribed to\nthe words \xe2\x80\x9cactually engaged in business under such name or title prior\nto the passage of this A ct.\xe2\x80\x9d\nWith regard to this critical language in \xc2\xa7 2, we think that the most\nnatural reading of the words \xe2\x80\x9csuch name or title\xe2\x80\x9d is that they refer to\nthe complete name of an entity that contained in 1926 one or more of\nthe words prohibited from future use by \xc2\xa7 2. If Congress in 1926 had\nintended to exempt not only existing names but new and different\nnames, so long as the new name was created by an entity previously\nbearing an exempted name, it could have done so in language much\nmore explicit than the language it used. Indeed, if the exemption was\nintended to go to the entity, rather than the name, language appropriate\nto achieve that result could easily have been used.\n61\n\n\x0cWe also think that the language actually used must be interpreted in\ncontext, i.e., as part of a grandfather clause exempting certain conduct\nfrom criminal sanctions that would otherwise be subject to sanctions.\nAs a general proposition, grandfather clauses are designed to pre\xc2\xad\nserve the rights of persons who would otherwise be divested of those\nrights by the operation of a new law.1 Although they may be included\nby a legislature to avoid any constitutional \xe2\x80\x9ctaking\xe2\x80\x9d problem with\nregard to new legislation, they may also be simple acts of grace on the\npart of a legislature or represent otherwise rational policymaking on the\npart of the legislature. See, generally. City o f New Orleans v. Dukes, 96\nS. Ct. 2513 (1976).\nThe position might be taken that the grandfather clause in \xc2\xa7 2 was\nincluded by Congress because Congress did not wish to deprive exist\xc2\xad\ning enterprises of the goodwill attached to their names, and probably\ncould not do so without compensation. Whether this was the reason for\nthe inclusion of the grandfather clause in 1926 cannot be gleaned from\nthe legislative history of the Act, but the legislative history does sup\xc2\xad\nport the proposition that the overall intent of the Act was to prevent\nthe exploitative use of certain words by companies as well as to prevent\nthe public from being misled by the use of such words. See H.R. Rep.\nNo. 1065, 69th Cong., 1st Sess. (1926); S. Rep. No. 514, 69th Cong., 1st\nSess. (1926).\nGiven this overall intent, we think that several assumptions may be\nmade concerning the grandfather clause. First, Congress, even though\ncondemning the then current exploitation and deception associated with\nthe use of the prohibited words, was, for whatever reason, willing to\npermit firms already engaged in such conduct to continue to do so.\nSecond, Congress, by including the grandfather clause, did not implicit\xc2\xad\nly approve of such continued use of the prohibited words; Congress\nmerely tolerated the continued use of those words by firms already\nusing them.\nThus, unlike situations in which a grandfather clause permits activity\nto continue that is not malum in se or malum prohibitum, the activity\npermitted to continue by the grandfather clause here in question is, at a\nminimum, malum prohibitum .2 Although we have been able to find no\ncase law directly on point, we think that any grandfather clause sanc\xc2\xad\ntioning the continuance of activity found by the legislature to be harm\xc2\xad\nful to the general public should be given the narrowest construction\n\n'W h e th e r a nam e change occurs as part o f a m erger or consolidation o r simply because\no f a business decision m ade by a com pany, is irrelevant to the operation o f \xc2\xa7 2.\n\xe2\x80\x9cT h e re can be no doubt on this point. In the Senate and House reports on the 1926\nA ct, supra, there appear in detail exam ples of the abusive and deceptive practices that\nm ade th e legislation necessary. Y et, under the grandfather clause the very situations\ndocum ented in support o f the legislation w ere perm itted to continue unabated.\n\n62\n\n\x0cpossible consistent with the overall purposes of the Act in which it\nappears. We therefore conclude that the words \xe2\x80\x9csuch name or title\xe2\x80\x9d\nshould be read to include only those full names or titles that were in\nexistence in 1926 when that provision was adopted.\nL\n\neon\n\nU\n\nlm an\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n63\n\n\x0c"


b'The President\xe2\x80\x99s Authority to Convene the Senate\nArticle II, section 3 of the Constitution gives the President a broad grant of authonty to con\xc2\xad\nvene Congress or either House of Congress \xe2\x80\x9con extraordinary occasions." The language\nand purpose of the clause make plain that the President may exercise this authority to\nconvene the Senate during an intra-session break\n\nJuly 26, 1989\nM e m o r a n d u m O p in io n\n\nfor the\n\nC ounsel\n\nto the\n\nP r e s id e n t\n\nThe Constitution grants to the President the authority to \xe2\x80\x9con extraor\xc2\xad\ndinary Occasions, convene both Houses, or either o f them.\xe2\x80\x9d U.S. Const,\nart. II, \xc2\xa7 3. This is stated as a broad grant o f authority, and it has, accord\xc2\xad\ningly, been exercised almost fifty times by various Presidents. Most\nrecently, President Truman convened both Houses o f Congress to con\xc2\xad\nsider the questions o f inflation and foreign aid. However, many o f those\ntimes the President convened only the Senate, often for the purpose o f\nconsidering whether to give its advice and consent to Presidential nomi\xc2\xad\nnees. The most recent example was in 1933 when President Hoover con\xc2\xad\nvened the Senate so that it could consider President Roosevelt\xe2\x80\x99s nomi\xc2\xad\nnees. To date, Presidents have used their special convening power only\nbetween sessions o f Congress \xe2\x80\x94 either calling Congress into session ear\xc2\xad\nlier than scheduled or calling it back into session after the normal end-ofsession adjournment. However, the language and purpose o f the clause\nmake plain that the President has the power to convene Congress or\neither House during an intra-session break.\nThe first President to convene the Senate was President Washington,\nwho issued a \xe2\x80\x9cSummons\xe2\x80\x9d to the Senate immediately following the adjourn\xc2\xad\nment o f the First Congress. President Washington\xe2\x80\x99s summons recited that\n\xe2\x80\x9c[c]ertain matters touching the public good require[] that the Senate be\nconvened.\xe2\x80\x9d 1 Senate Executive Journal 79-84. While the Senate was con\xc2\xad\nvened President Washington submitted a substantial number o f civil and\nmilitary nominations. President Washington convened the Senate again on\nthe day o f his second inauguration, immediately following the adjournment\no f the Second Congress. During this period, President Washington submit\xc2\xad\nted to the Senate three nominations. Id. at 138. After the end o f the Third\nCongress, he convened the Senate to consider the Jay Treaty, during which\ntime he also submitted to the Senate a number o f nominations.\n245\n\n\x0cThe Senate was convened by the President many times throughout the\n19th century, frequently for the purpose o f confirming nominations.1 In\nfact, Presidents uniformly convened the Senate for a special session that\nbegan on the day o f their successor\xe2\x80\x99s inauguration. This was done because,\nprior to the Twentieth Amendment, one Congress would come to a close\nbefore the new President\xe2\x80\x99s inauguration. Had the preceding President not\nconvened the Senate, it would not have been able to consider the new\nPresident\xe2\x80\x99s appointments until the start o f its next session, which the\nConstitution sets as the first Monday o f the following December.\nAlthough Presidents have traditionally convened the Senate when\nCongress has been on intersession adjournment, the President\xe2\x80\x99s power to\n\xe2\x80\x9cconvene both Houses\xe2\x80\x9d is not limited to such circumstances. President\nTruman was advised, and w e agree, that \xe2\x80\x9cthere is nothing in the\nConstitution to indicate, nor is there any basis for believing, that the\nPresident\xe2\x80\x99s power to convene the Congress on extraordinary occasions\ndepends on the precise nature o f the recess or adjournment, that is,\nwhether the adjournment is sine die, until a day certain, or until the\nmajority leaders o f the Congress find it in the public interest to reassem\xc2\xad\nble the two Houses.\xe2\x80\x9d2\nBoth the text o f the Constitution and the purpose o f the provision indi\xc2\xad\ncate that the President\xe2\x80\x99s constitutional power to convene either House\nextends to periods within sessions o f Congress. His power is stated in the\nbroadest possible terms; it is not limited only to when Congress is not in\nsession.3 This is appropriate to the purposes o f the clause \xe2\x80\x94 namely, to\nensure that the President can summon Congress to Washington so that\nCongress and the President together may face a matter o f national\nimport. As Justice Story said in his Commentaries on the Constitution :\nThe pow er to convene congress on extraordinary occa\xc2\xad\nsions is indispensable to the proper operations, and even\nsafety o f the government. Occasions may occur in the\nrecess o f congress requiring the government to ... provide\nfor innumerable ... important exigencies ....\nJoseph Story, 3 Commentaries on the Constitution \xc2\xa7 1556 (1833).\nl See, e.g., Proclamation N o 51,11 Stat. 798 (1858) (President Buchanan); Proclamation No 53,11 Stat\n\n799 (1859) (sam e), Proclam ation No. 1, 12 Stat. 1257 (1860) (sam e); Proclamation No. 18, 12 Stat. 1269\n(1863) (President Lincoln), Proclamation N o. 26, 13 Stat 752 (1865) (sam e); Proclamation No. 10,14 Stat.\n821 (1867) (President Johnson), Proclamation N o 1, 16 Stat. 1125 (1869) (President Grant); Proclamation\nNo. 1, 17 Stat. 949 (1871) (sam e), Proclamation No 12, 18 Stat 855 (1875) (sam e); and Proclamation No.\n44, 32 Stat 2036 (1903) (President Roosevelt).\n\n2Memorandum fo r the Attorney General, from George T Washington, Assistant Solicitor General, Re:\nA u th ority o f the Presid en t to Call a Special Session o f the Congress at 1 (O ct 17, 1947)\n\n3In fact, the Constitution expressly contemplates indeterminate periods o f actjouminent within a session.\nFor instance, Article I states that \xe2\x80\x9c[n]either House, during the Session o f Congress, shall, without the\nConsent o f the other, ac^joum for more than three days.\xe2\x80\x9d U.S. Const art. I, \xc2\xa7 5 Thus, because the President\xe2\x80\x99s\npow er to convene Congress is unlimited, it applies to times when Congress is adjourned but in session\n\n246\n\n\x0cMoreover, to contend the President lacks the power to convene when\nCongress is in session but adjourned is to contend that the President may\nnot during time o f war, for example, summon Congress to Washington if\nCongress chooses to remain absent. Such a contention would also allow\nCongress, by remaining formally in session but adjourned for most o f the\ntime, to defeat the President\xe2\x80\x99s constitutional power to convene Congress.\nIn sum, the Senate has been convened many times and for many rea\xc2\xad\nsons. It has considered both nominations and treaties during those times.\nThe Constitution places no limitation on when the President may convene\neither or both Houses. We therefore conclude that the President has the\npower to convene the Senate during the planned August adjournment.\nWILLIAM P. BARR\nAssistant Attorney General\nOffice o f Legal Counsel\n\n247\n\n\x0c'


b'February 23, 1978\n\n78-10\n\nMEMORANDUM OPINION FOR THE DEPUTY\nGENERAL COUNSEL, DEPARTMENT OF\nHOUSING AND URBAN DEVELOPMENT\nFlood Disaster Prevention Act (42 U.S.C. \xc2\xa7 4106)\xe2\x80\x94\nMortgage Loans\xe2\x80\x94 Effect of Statute on Executive\nOrder\n\nThis is our response to your request for our opinion on the relationship\nbetween Executive Order No. 11988 and \xc2\xa7 703(a) of the Housing and\nCommunity Development Act of 1977 (Pub. L. No. 95-128; 91 Stat. 1111).\nSection 703(a) has replaced \xc2\xa7 202(b) of the Flood Disaster Prevention Act of\n1973 (87 Stat. 975).\nYour General C ounsel\xe2\x80\x99s opinion reaches the following five conclusions: (1)\nExecutive Order No. 11988 applies to the Federal agencies regulating financial\ninstitutions; (2) it requires them to minimize harmful results o f their activities in\nflood plains; (3) this result is not contrary to the intent of \xc2\xa7 703(a); (4) this result\nis consistent with the Flood Disaster Protection Act o f 1973 and other statutes;\nand (5) the order is therefore valid and has the force o f law. More specifically,\nthe opinion concludes that Executive Order No. 11988, 42 F. R. 26951 (1977),\nrequires the agencies regulating banking to minimize flood damage by\nprohibiting regulated institutions from making loans secured by real property\nwithin a flood plain unless flood insurance is available.\nAfter a careful examination o f \xc2\xa7 703(a), the Flood Disaster Prevention Act,\nand their legislative histories, we conclude that \xc2\xa7 703(a) was intended to deny\nthe Federal Government authority to prohibit federally regulated private lenders\nfrom making mortgage loans in a flood plain. The statute takes precedence over\nExecutive Order No. 11988 to the extent of any conflict. Thus, the Executive\norder may not require regulatory agencies to prohibit those lenders from\nmaking such loans.\n41\n\n\x0cAs enacted in 1973, \xc2\xa7 202(b) o f the Flood Disaster Prevention Act (Act) (42\nU .S.C . \xc2\xa7 4106(b)), provided as follows:\n(b) Each Federal instrumentality responsible for the supervision,\napproval, regulation, or insuring of banks, savings and loan associations,\nor similar institutions shall by regulation prohibit such institutions on\nand after July 1, 1975, from m aking, increasing, extending, or\nrenewing any loan secured by improved real estate or a mobile home\nlocated or to be located in an area that has been identified by the\nSecretary as an area having special flood hazards, unless the\ncommunity in which such area is situated is then participating in the\nnational flood insurance program .\'\nThis section was part o f a comprehensive scheme to utilize the Federal flood\ninsurance program as a means o f limiting flood losses by controlling housing\ndevelopment in flood plains. Thus, in addition to the provision set forth above,\nthe Act barred Federal financial assistance for construction in flood plains in\ncommunities where flood insurance was riot available.2 It also prohibited\nFederal assistance or private loans for real property not covered by available\nflood insurance.3 For a community to be eligible for flood insurance, it must\nhave a land use code that restricts development in areas vulnerable to flooding.4\nBy limiting the availability o f Federal or private funds for construction in\ncommunities ineligible for flood insurance, these provisions served the statu\xc2\xad\ntory purpose o f inducing States and localities \xe2\x80\x9c to participate in the flood\ninsurance program and to adopt adequate flood plain ordinances with effective\nenforcement provisions consistent with Federal standards to reduce or avoid\nfuture flood losses.\xe2\x80\x9d 5\nIn October 1977, \xc2\xa7 703(a) o f the Housing and Community Development Act\namended \xc2\xa7 202(b) o f the Flood Disaster and Prevention Act to read as follows:\n(b) In addition to the requirements o f section 1364 o f the National\nFlood Insurance Act o f 1968, each Federal instrumentality described\nin such section shall by regulation require the institutions described in\nsuch section to notify (as a condition of making, increasing,\nextending, or renewing any loan secured by property described in\nsuch section) the purchaser or lessee of such property of whether, in\nthe event of a disaster caused by flood to such property. Federal\ndisaster relief assistance will be available to such property.\n\n\'Subsequently enacted exceptions are im m aterial for the purpose o f this opinion.\nSection 3(a)(5) o f the Act. 42 U .S .C . \xc2\xa7 4003(a)(5), defines "federal instrum entality responsible\nfor the supervision, approval, regulation, or insuring o f banks, saving and loan associations, or\nsim ilar institu tio n s" to mean the Federal Reserve Board of G overnors, the C om ptroller of the\nCurrency, the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance\nC orporation, the Federal Hom e Loan Bank Board, and the National Credit Union A dm inistration.\n242 U .S .C . \xc2\xa7 4106(a).\n\xe2\x80\x9942 U .S .C . \xc2\xa7\xc2\xa7 4 0 l2 (a)(b ).\n4See National Flood Insurance Act o f 1968, as am ended, \xc2\xa7\xc2\xa7 1315, 1361; 42 U .S .C . \xc2\xa7\xc2\xa7 4022,\n4102.\n542 U .S .C . \xc2\xa7 4002(b)(3). See also S. Rept. 93-583, 93d C ong., 1st sess. (1973), at 18-19.\n\n42\n\n\x0cThus, it deleted the express requirement that bank regulatory agencies prohibit\nlenders from making secured loans on flood plain real estate.in communities\nwhere flood insurance is not available. Instead, the agencies were directed to\nrequire lenders to notify borrowers whether disaster relief would be available.6\nIt does not, however, contain an explicit requirement that agencies either\npermit or prohibit the making o f real estate loans by regulated lenders in flood\nplain areas not covered by the Federal insurance program. We think that the\nlegislative history o f the am endm ent removes any serious question as to what\nwas intended by the modification.\nSection 703(a) was introduced as a floor amendment by Senator Eagleton,\nwho stated that its purpose was to permit localities to reject land use controls\nand develop flood plains with mortgage loans from private lenders.7 He\nclarified this point in the following colloquy with Senator Danforth:8\nMr. DANFORTH. . . . As I understand this amendment, and I ask\nSenator EAGLETON if he will bear me out in this, he is not objecting\nto the Federal Government conditioning the offering of Federal flood\ninsurance or Federal grants or Federal loans or what amounts to land\nuse planning.\nWhat he is objecting to, as 1 understand it, is the Federal Government\npurporting to tell banks with no connection at all other than, for\nexample, FD1C coverage, banks that are located in a community,\npeople who have lived in the community all their lives, that they are\nnot able to make loans in flood plain areas.\nMr. EAGLETON. The Senator is absolutely correct.\nJust permitted to fit the loan money to a business deriving in that area\nif they think it is a good, prudent loan, the bank is permitted to make\nthe loan [sic]. That is all the amendment does.\nMr. DANFORTH. Under the law as written now, if a Federal\nbureaucrat designates an area as being within a flood plain, then a\nbank which is FDlC-covered, or insured, is prohibited by the present\nlaw from making a loan to a business located in that flood plain.\nMr. EAGLETON. The Senator is exactly correct.\nMr. DANFORTH. And this is exactly the kind o f overreach by the\nFederal bureaucracy that we were objecting to in offering this\namendment.\nMr. EAGLETON. 1 thank my colleague. 1 think he has summed it up\nvery convincingly.\nEven the opponents o f the measure agreed that it would remove the Federal\nGovernm ent\xe2\x80\x99s ability to prohibit such loans as a means o f compelling the\n\n6See also National Flood Insurance Act o f 1968, \xc2\xa7 1364 (88 Stat. 739; 42 U .S .C . \xc2\xa7 4104(a).\n7123 Cong. Rec. S. 8971-72 (June 6, 1977).\n8123 Cong. Rec. S. 8972 (June 6, 1977).\n\n43\n\n\x0cadoption o f local flood plain use ordinances.9 This discussion is the only\nlegislative history pertinent to \xc2\xa7 703(a).\nThe legislative history is unequivocal. Both the sponsor and the opponents of\n\xc2\xa7 703(a) understood that the existing law cut off private regulated mortgage\nfinancing in order to compel localities to adopt your Departm ent\xe2\x80\x99s approved\nland use controls on flood plain development. Both understood that the effect of\n\xc2\xa7 703(a) would be to permit private mortgage loans in flood plains despite the\nlack o f acceptable land use controls. The explanation of the sponsor of a floor\namendment is strong evidence o f legislative intent. United States v. Dickerson,\n310 U .S. 554, 557 (1940); Richbourg M fg. Co. v. United States. 281 U.S.\n528, 536 (1930). Indeed, in this instance it is unrefuted. Hence, it is apparent\nthat by amending \xc2\xa7 202(b) of the Flood Disaster Prevention Act, Congress\nintended to prevent Federal restrictions on private mortgage lending from being\nused as a method for achieving the A ct\xe2\x80\x99s purposes.10\nExecutive Order No. 11988 was promulgated in May 1977, nearly 4 months\nbefore the enactment of the Housing and Community Development Act. The\npreamble cites that it is issued in furtherance of the National Environmental\nPolicy Act (42 U .S.C . \xc2\xa7 4321 e tse q .), the National Flood Insurance Act of 1968\n(42 U .S.C . \xc2\xa7 4001 et seq.), and the Flood Disaster Prevention Act. Section 1 of\nthe order, in pertinent part, directs each Federal agency to act \xe2\x80\x9c to reduce the\nrisk o f flood loss, to minimize the impact of floods on human safety, health,\nand welfare, and to restore and preserve the natural and beneficial values served\nby flood plains in carrying out its responsibilities for . . . (2) providing\nFederally . . . assisted construction or improvements; and (3) conducting Fed\xc2\xad\neral activities and programs affecting land use, including, but not limited to\nwater and related land use planning, regulating, and licensing activities.\xe2\x80\x9d\nUnder \xc2\xa7 2(a)(2), agencies allowing an \xe2\x80\x9c action\xe2\x80\x9d to occur in a flood plain must\nconsider alternatives to avoid \xe2\x80\x9c adverse effects and incompatible develop\xc2\xad\nm ents\xe2\x80\x9d in flood plains. Section 2(d) requires each agency, \xe2\x80\x9c as allowed by\nlaw ,\xe2\x80\x9d to amend its regulations to conform to the order.\nAlthough the Executive order does not, on its face, prohibit the making of\nthese types of loans, we agree, for purposes o f this discussion, that the order\nmay be read to require bank regulatory agencies to prohibit mortgage loans in\nflood plains that are not governed by a federally approved land use code. The\npreamble of the order cites the Flood Disaster Protection Act as authority, and it\nfurthers the congressional policies and purposes in \xc2\xa7 2 of that Act (42 U .S.C .\n\xc2\xa7 4002). The A ct\xe2\x80\x99s and the order\xe2\x80\x99s definition o f \xe2\x80\x9c agency\xe2\x80\x9d extends to the bank\nregulatory agencies. M oreover, this interpretation o f the order would be com \xc2\xad\n\nvSee 123 Cong. Rec. S. 8973-74 (Senator Proxm ire): S. 8974-75 (Senator Brooke); S. 8975-76\n(Senator W illiam s).\nl0The congressional statem ents o f policy and purpose in S 2 o f the Flood Disaster Prevention\nA ct, 42 U .S .C . \xc2\xa7 4002, were not am ended. H ow ever, later specific am endm ents to a statute modify\nearlier general statem ents o f purpose. See generally. Inr\'I. Longshorem en\'s W arehousem en\'s\nUnion v. W irtz, 170 F. (2d) 183 (9th Cir. 1948); Callahan v. U nited Slates, 122 F. (2d) 216 (D C.\nCir. 1941).\n\n44\n\n\x0cpletely consistent with \xc2\xa7 202(b) of the Act at the time the order was\npromulgated.\nThus, its application would in our view be contrary to the intent of Congress\nmanifested in the subsequent amendment of \xc2\xa7 202(b). In such a conflict, the\nstatute controls. Both the provision of flood insurance and disaster relief and\nthe regulation of lending institutions are normally subjects of domestic\nlegislation." The Constitution, of course, has vested \xe2\x80\x9c all legislative pow ers\xe2\x80\x9d\nover these subjects in Congress. The President can ordinarily regulate the\naffairs of private persons by Executive order only on the basis of some express\nor implicit statutory authority. Youngstown Sheet and Tube Co. v. Sawyer, 343\nU.S. 579, 587-89 (1952); United States v. Guy W. Capps, Inc.. 204 F. (2d)\n655, 658-60 (4th Cir. 1953), a j f d on other grounds, 348 U.S. 296 (1955);\nIndependent M eat Packers Assn. v. B u n , 526 F. (2d) 228, 234-36 (8th Cir.\n1975); United States v. Yoshida International, 526 F. (2d) 560, 583 (C .C .P.A .\n1975).12 By revising \xc2\xa7 202(b), it is our opinion that Congress clearly intended\nto prohibit the bank regulatory agencies from using their powers to prevent\nunregulated development in flood plains. W hile it retained the objections of the\nFlood Disaster Protection Act, Congress nevertheless intended to withdraw the\nExecutive\xe2\x80\x99s power to use that method of attaining them. See, Youngstown Sheet\nandTube Co. v. Sawyer, supra, 343 U .S ., at 587-89, 599-604 (Frankfurter, J.,\nconcurring).13\nBasically, the question turns on congressional intent in replacing \xc2\xa7 202(b)\nwith \xc2\xa7 703(a) o f the Housing and Com m unity Development Act. Your General\nCounsel concluded that the amendment simply resurrected the status quo before\npassage of \xc2\xa7 202(b) in 1973. If this were all that could fairly be concluded from\nthe 1977 am endment, we would agree that the President has the power to\nprohibit altogether the making of these types of loans. It would be clearly\nappropriate for the Executive to fill in the details o f a program which Congress\nhas defined only in its broad outline. We do not think, however, for the reasons\nstated above, that \xc2\xa7 703(a), when read as it must be with its legislative history,\ncan\' fairly be understood to have left to executive discretion the question of\nprohibiting regulated institutions from approving loans in these circumstances.\n\n" S f f U .S . C onstitution, Art. I, \xc2\xa7 8, cl. 1, 3, 18.\nl2The cases cited in your opinion are not to the contrary. M ost involve Executive orders for\nwhich the courts found underlying statutory authority. E .g .. L etter C arriers v. A ustin. 418 U.S.\n273 (1974); G notta v. U nited States. 415 F. (2d) 1271 (8th Cir. 1969); F arkas v. Texas Instrum ent,\nInc., 375 F. (2d) 629 (5th Cir. 1967); F arm er v. P hiladelphia E lectric C o., 329 F. (2d) 3 (3d Cir.\n1964). P orter v. U nited States, 473 F. (2d) 1329 (5th Cir. 1973), involved the Executive order\ncreating the W arren C om m ission. Although the point was not discussed, authority to create the\nCom m ission can be found in the P resident\'s constitutional duty to "ta k e care that the laws be\nfaithfully ex ecu ted .\xe2\x80\x9d See U .S . C onstitution, Art. II, \xc2\xa7 3. None involves an order contrary to a\nstatute.\nl3W e are aware o f the cases that state that the Executive order requiring nondiscrim ination by\nGovernm ent contractors is valid despite the repeated failure o f Congress to confer such authority by\nstatute. E .g ., F arm er v. P hiladelphia E lectric C o.. 329 F. (2d) 3, 7-9 (3d Cir. 1964). In the case\nyou have brought us, how ever, Congress first granted express statutory authority and then\nwithdrew it, and the legislative intent to deny the authority is sufficiently clear to prevent the action\ncontem plated under the Executive order.\n\n45\n\n\x0cInsofar, then, as Executive Order No. 11988 is read as imposing such a\nprohibition, we do not think it may be enforced.\nLarry A . Ham m\n\nond\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n46\n\n\x0c'


b'Emergency Assistance to the District of Columbia Department\nof Corrections in Case of a Work Stoppage\nU n d e r 31 U .S .C . \xc2\xa7 685a(a), w h ic h a u th o riz e s federal ag en cies to p ro v id e se rv ices on a\nc o n tra c tu a l basis to th e D istric t o f C o lu m b ia g o v e rn m e n t, th e A tto rn e y G e n e ra l m ay\np ro v id e B u reau o f P riso n s p erso n n el to th e D istric t o f C o lu m b ia D e p a rtm e n t o f\nC o rre c tio n s in th e e v e n t o f a w o rk sto p p a g e by D e p a rtm e n t em ployees.\n\nDecember 22, 1980\nM EM ORANDUM OPINION FOR TH E ASSISTANT ATTORNEY\nG EN ER A L, CRIM INA L DIVISION\nThis responds to your request for our opinion whether the Attorney\nGeneral may, if requested to do so by the Mayor of Washington, D.C.,\nprovide Bureau of Prisons (BOP) personnel to the District of Columbia\nDepartment of Corrections in the event of a work stoppage by Depart\xc2\xad\nment employees. We have concluded that the Attorney General does\nhave the authority to provide such assistance.\nThe federal government is authorized to furnish services to the Dis\xc2\xad\ntrict of Columbia government. 31 U.S.C. \xc2\xa7 685a(a).1 Requiring explicit\nstatutory authorization for each agency\xe2\x80\x99s rendering of services to the\nDistrict of Columbia would render this statute superfluous. Unless,\ntherefore, there is some impediment in the BOP\xe2\x80\x99s regulations to provid\xc2\xad\ning such services which is itself based upon a statutory prohibition, the\nstatute would permit the Mayor and BOP to negotiate a contract,\nsubject to the approval of the Office of Management and Budget and\nthe Mayor.\nBOP, a part of the Department of Justice, is charged with guarding\nfederal prisoners. 18 U.S.C. \xc2\xa74042(2), (3); 28 C.F.R. \xc2\xa7 0.95(b), (c). The\n1 T h e provision, w hich is also found a! D .C . C ode Ann. \xc2\xa7 1-826 (Supp. V 1978), states:\n(a) F o r the purpose o f preventing duplication o f effort o r for the purpose o f\notherw ise prom oting efficiency and econom y, any Federal officer o r agency may\nfurnish services to the D istrict governm ent and any D istrict officer or agency may\nfurnish services to the Federal G overnm ent. E xcept w here the term s and conditions\ngoverning the furnishing o f such services are prescribed by o th e r provisions o f law,\nsuch services shall be furnished pursuant to an agreem ent (1) negotiated by the Federal\nand D istrict authorities concerned, and (2) approved by the Federal O ffice o f M anage\xc2\xad\nm ent and Budget and by the M ayor.\n*\n\n*\n\n*\n\n*\n\n\xe2\x80\xa2\n\n*\n\n(c) T h e cost o f each Federal officer and agency in furnishing services to the D istrict\npursuant to any such agreem ent are [sic] authorized to be paid, in accordance w ith the\nterm s o f the agreem ent, out o f appropriations available to the D istrict officers and\nagencies to w hich such services are furnished.\n\n826\n\n\x0cAttorney General\xe2\x80\x99s authority to control and manage federal prisons, 18\nU.S.C. \xc2\xa7 4001(b)(1), has been delegated to the Director of the BOP. 28\nC.F.R. \xc2\xa7 0.95(a). We are advised that there have been only two inci\xc2\xad\ndents in the recent past in which BOP personnel have been assigned to\nwork away from their normal post. One occurred during an antiwar\ndemonstration when personnel from Lewisburg Prison and the central\nWashington, D.C. office were used to man a federal detention center\nset up in the District of Columbia. In the other, personnel from the\ncentral office were sent to Danbury Prison because of a threatened\nwork stoppage.\nThe Master Agreement between the BOP and its guards\xe2\x80\x99 union\nreserves to BOP the right \xe2\x80\x9c(1) to direct employees of the Federal\nPrison System; (2) to . . . transfer [and] assign . . . employees . . . and\n(6) to take whatever actions may be necessary to carry out the mission\nof the Federal Prison System in situations of emergency.\xe2\x80\x9d Article 5, 9a.\nSee also Article 18, \xc2\xa7 m. The authority, therefore, to transfer guards to\ntemporary duties in time of emergency does exist.\nL a r r y L . S im m s\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n827\n\n\x0c'