b'Liability of the United States for State and Local Taxes on\nSeized and Forfeited Property\n\nIn c iv il fo rfe itu re p ro c e e d in g s (u n d e r 21 U S C \xc2\xa7 8 8 1 ), th e U n ite d S ta te s is o b lig a te d to pay lie n s for\ns ta le a n d lo cal ta x e s a c c ru in g a fte r the c o m m is s io n o f th e o ffe n se le a d in g to fo rfe itu re an d b e fo re\nth e e n try o f a ju d ic ia l o rd e r o f fo rfeitu re, if th e lie n -h o ld e r e sta b lis h e s, b e fo re the c o u rt e n te rs the\no r d e r o f fo rfe itu re , th a t it is an in n o cen t o w n e r o f the in te re s t it a sse rts\n\nIn c rim in a l fo rfe itu re p ro c e e d in g s (u n d e r 18 U S C . \xc2\xa7 1963 o r 21 U S C . \xc2\xa7 8 53), the U n ite d S ta te s m ay\nn o t p a y s u c h h e n s b e c a u s e state and lo cal tax lie n -h o ld e rs a re not b o n a fide p u rc h a se rs for valu e o f\nth e in te re s ts th e y w o u ld a sse rt, and th e re fo re d o n o t c o m e w ith in a n y a p p lic ab le e x c e p tio n to a s ta t\xc2\xad\nute th a t, u p o n e n try o f a c o u r t\xe2\x80\x99s final o rd e r o f fo rfe itu re , v e sts full o w n e rsh ip re tro a c tiv e ly in the\nU n ite d S ta te s as o f th e d a te o f th e offen se.\n\nO ctober 18, 1993\n\nM e m o r a n d u m O p in io n f o r t h e D i r e c t o r a n d C h i e f C o u n s e l\nE x e c u t iv e O f f i c e f o r A s s e t F o r f e i t u r e\n\nYou have asked us to reconsider our opinion that property seized by and for\xc2\xad\nfeited to the United States is not subject to state or local taxation for the period\nbetween the com m ission of the offense that leads to the order of forfeiture and the\nentry o f the order o f forfeiture. See Liability o f the United States fo r State and\nLocal Taxes on Seized and Forfeited P roperty, 15 Op. O.L.C. 69 (1991)\n(\xe2\x80\x9cHarrison M em orandum \xe2\x80\x9d). In light of the Supreme C ourt\xe2\x80\x99s decision in United\nStates v. 92 Buena Vista A ve., 507 U.S. 111 (1993), we partially reverse our opin\xc2\xad\nion.\nB ecause states and localities may not tax federal property (absent express con\xc2\xad\ngressional authorization),1 the time at which ownership o f forfeited property passes\nto the United States and the extent of the ownership interest that passes to the\nUnited States determ ine whether state and local taxes are owed. In many property\ntransactions, the time and the extent o f transfer o f ownership are unambiguous and\nindependent issues. In cases of transfers of ownership under the federal forfeiture\nstatutes, however, the answ er to the question of when ownership is transferred has\nbeen a m atter o f dispute, and of great consequence for the extent of the interest\ntransferred.\nT he Harrison M emorandum expresses the Justice D epartm ent\xe2\x80\x99s traditional view\nthat title vests in the United States at the time of the offense. This view is based on\n\n1\nSee, e g , U n ited S ta te s v C ttx oj D etroit, 355 U S 466, 4 6 9 (1958) ( \xe2\x80\x9c a State cannot constitutionally\nlevy a tax d irectly against the G overnm ent o f the U nited States o r its property w ithout the consent o f C o n \xc2\xad\ngress"), M \'C u llo ch v. M a ryla n d , 17 U S (4 W h eat.) 3 16 (1819).\n\n104\n\n\x0cLiability o f U.S. fo r State and L ocal Taxes on Seized and F orfeited P roperty\n\nan interpretation of the \xe2\x80\x9crelation back\xe2\x80\x9d doctrine, which provides that a judicial or\xc2\xad\nder of forfeiture retroactively vests title to the forfeited property in the United\nStates as of the time of the offense that leads to forfeiture, not as o f the time of the\njudicial order itself. See 21 U.S.C. \xc2\xa7 881(h) (\xe2\x80\x9c[a]ll right, title, and interest in prop\xc2\xad\nerty [subject to forfeiture] shall vest in the United States upon commission of the\nact giving rise to forfeiture . . . .\xe2\x80\x9d); 18 U.S.C. \xc2\xa7 1963(c), 21 U.S.C. \xc2\xa7 853(c)\n(substantially identical to quoted language from 21 U.S.C. \xc2\xa7 881(h)). Under the\nDepartm ent\xe2\x80\x99s traditional interpretation, title in forfeited property vests in the fed\xc2\xad\neral government at the time of the offense. The date o f the judicial order o f for\xc2\xad\nfeiture is not significant. From the date of the offense, states and other parties are\nbarred from acquiring interests in the property from the owner whose interests are\nforfeited to the United States. See In re One 1985 Nissan, 889 F.2d 1317, 1319-20\n(4th Cir. 1989); Eggleston v. Colorado, 873 F.2d 242, 245-48 (10th Cir. 1989),\ncert, denied, 493 U.S. 1070 (1990) (cases decided before Buena Vista and consis\xc2\xad\ntent with the Harrison Memorandum).\nThe Harrison M emorandum considers and rejects several possible grounds for\nlimiting the operation of the relation back doctrine and requiring payment of state\nand local tax liens for the period between the offense and the forfeiture order. The\ntwo grounds of principal concern here are the \xe2\x80\x9cinnocent ow ner\xe2\x80\x9d defense in the civil\ndrug forfeiture statute, see 21 U.S.C. \xc2\xa7 881(a)(6)2, and the \xe2\x80\x9cbona fide purchaser\xe2\x80\x9d\ndefense in the criminal drug forfeiture statute, see 21 U.S.C. \xc2\xa7 853(c), and in the\nforfeiture provision of the RICO statute, see 18 U.S.C. \xc2\xa7 1963(c). The Harrison\nMemorandum concludes that these defenses do not protect a state or locality (or\nanyone else) who innocently acquires a property interest after the time o f the of\xc2\xad\nfense. The Supreme C ourt\xe2\x80\x99s decision in Buena Vista forces us to reconsider this\nconclusion. We conclude that the Harrison M em orandum \xe2\x80\x99s conclusion concerning\nthe innocent owner defense must be reversed, but that the Harrison M em orandum \xe2\x80\x99s\nconclusion regarding the bona fide purchasers defense is correct (although this\nlatter conclusion is less certain than the Harrison M emorandum indicates and we\nreach it through an analysis different from that set forth in the Harrison M em oran\xc2\xad\ndum).\nI.\nThe civil drug forfeiture statute provides that \xe2\x80\x9cno property shall be forfeited\n. . . , to the extent of the interest of an owner, by reason o f any act or omission es\xc2\xad\ntablished by that owner to have been committed or omitted without the knowledge\nor consent of that owner.\xe2\x80\x9d 21 U.S.C. \xc2\xa7 881(a)(6). The Harrison Memorandum\n\n\' T he conclusions w ith regard to \xc2\xa7 881(a)(6), the innocent o w n er provision im m ediately at issue in B uena\nVisia and applicable to all \xe2\x80\x9c things o f value" traceable to an exchange for a controlled substance also apply to\n\xc2\xa7 881(a)(7), w hich co n tain s a nearly identical innocent ow ner provision applicable to real properly used in a\ndrug offense See notes 3, 7, injra\n\n105\n\n\x0cOpinions o f th e Office o f L egal C ounsel\n\naccepted that \xe2\x80\x9cowner\xe2\x80\x9d could include a state or locality holding a tax lien on the\nproperty. See H arrison M emorandum, 15 Op. O.L.C. at 72 . The Memorandum\nconcluded, however, that this \xe2\x80\x9cinnocent ow ner\xe2\x80\x9d provision does not apply to as\xc2\xad\nserted property interests that arise after the tim e of the offense because, as of the\nmom ent o f the offense, the property belongs (by operation of the relation back\ndoctrine) to the United States, and not to the person from whom a third party inno\xc2\xad\ncently acquires an interest.\nW e conclude, consistent with the Harrison M emorandum, that a state or locality\nholding a tax lien can be an \xe2\x80\x9cowner\xe2\x80\x9d as that term is defined in the civil forfeiture\nstatute\xe2\x80\x99s innocent ow ner provisions. The broad language of the statute \xe2\x80\x94 \xe2\x80\x9c[a ] ll. . .\nthings o f value\xe2\x80\x9d and \xe2\x80\x9c [a]ll real property, including any right, title and interest\xe2\x80\x9d \xe2\x80\x94\nprovides no reason to exclude a tax lien-holder from the definition of \xe2\x80\x9cowner.\xe2\x80\x9d\n21 U.S.C. \xc2\xa7 881(a)(6), (7). The legislative history urges a broad reading.3 And the\ncourts have followed, sometimes explicitly, the path suggested by Congress.4 The\n\xe2\x80\x9cinnocence\xe2\x80\x9d requirem ent o f an innocent ow ner defense would seem to be easy to\nsatisfy in most cases. Like an innocent donee or purchaser, a state or locality\nholding a tax lien generally has obtained its interest without knowledge of the of\xc2\xad\nfense giving rise to the forfeiture.\nThe Harrison M em orandum \xe2\x80\x99s further conclusion with regard to the innocent\nowner defense, however, cannot survive the ruling in Buena Vista. The plurality\nand concurring opinions reject the interpretation of the relation back doctrine set\nforth in the Harrison M emorandum, and agree that the innocent owner defense is\navailable to persons who acquire interests in forfeitable property after the com m is\xc2\xad\nsion o f the offense that rendered the property subject to forfeiture. The opinions\ndiffer only as to the reading of the statute that leads to this result.\nThe plurality and the concurrence both analyze the common law doctrine of re\xc2\xad\nlation back as transferring ownership of forfeited property retroactively to the date\nof the offense, but only upon the entry of a judgm ent of forfeiture. Until a court\nissues such a judgm ent, this retroactive vesting of ownership in the United States\ndoes not occur, and all defenses to forfeiture that an owner of the property other\xc2\xad\nwise may invoke will remain available. Thus, a person who has acquired an inter\xc2\xad\nest in the property may raise any such defense in a forfeiture proceeding. If that\n3 S e e Jo in t E xplanatory S tatem en t of Titles II and III o f Pub L No 95-633, 95th C ong , 2d Sess. (1978),\nr ep rin te d in 1978 U S C C A N 9522 (in \xc2\xa7 8 8 1 (a)(6 ), \xe2\x80\x9c [t]he term \xe2\x80\x98o w n er\' should be broadly interpreted to\ninclude any person w ith a recognizable legal o r equitable interest in the property seized ), see also S. Rep.\nNo 98-2 2 5 , at 195, 215 (1984), reprinted in 1984 U .S .C C A N 3182, 3378, 3398 (describing \xc2\xa7 881(a)(7)\nas, in effect, ex te n d in g \xc2\xa7 88 1 (a)(6 ) to cover re a l property used in a drug offense but not acquired w ith pro\xc2\xad\nceeds o f p ro h ib ited d rug tran sactio n s)\n4 See, e g ., U n ite d S ta tes v. 7 / 7 S. W oodw ard S t , 2 F 3d 529, 535 (3d C ir.1993) (citing legislative h is\xc2\xad\ntory); U n ited S ta te s v 6 9 6 0 M ira jlo res Ave , 9 9 5 F.2d 1558, 1561 (11th C ir 1993) ("L ien holders have the\nright to assert th eir claim [s] o f innocent o w n ersh ip " u n d er \xc2\xa7 881(a), as interpreted in B uena Vi,\\ta); U nited\nSlates v\' 6 1 0 9 G ru h b Rd., 886 F 2d 618, 625 n 4 (3d C ir 1989) (cited in Buena Vista and citing legislative\nhistory); see a lso U nited S ta te s i\\ 2350 N W 187 S t . 9 9 6 F.2d 1141, 1144 (11th C ir 1993) (B uena Vista\nanalysis o f \xc2\xa7 8 8 1(a) innocent o w n er provisions assum ed to apply where purported innocent ow ner is local tax\nlien holder).\n\n106\n\n\x0cLiability o f U S. f o r State a n d Local Taxes on Seized an d F orfeited P roperty\n\nperson prevails, a judgm ent of forfeiture will not vest (retroactively) ow nership of\nthat property interest in the United States. Buena Vista, 507 U.S. at 125-27, 12830 (plurality opinion) 131-38 (Scalia, J., concurring).\nThe plurality and the concurrence both conclude that the federal civil forfeiture\nstatute is fully compatible with the common law, and that the statutory innocent\nowner clause provides a defense for a third party who innocently acquires owner\xc2\xad\nship of the property after the offense and before a judgm ent of forfeiture. The plu\xc2\xad\nrality notes that \xc2\xa7 881(h), which sets forth the relation back doctrine for the civil\nforfeiture statute, applies that doctrine only to \xe2\x80\x9cproperty described in subsection (a)\no f this section.\xe2\x80\x9d Subsection (a)(6) excepts, from its description o f forfeitable prop\xc2\xad\nerty, the property of an innocent owner. Therefore, in the plurality\xe2\x80\x99s analysis, sub\xc2\xad\nsection (a) places the property of an innocent owner beyond the reach of the\nforfeiture and relation back provisions in subsection (h). See Buena Vista, 507\nU.S. at 127-30. Accordingly, an ownership interest in forfeitable property that is\ntransferred to an innocent person (after the offense giving rise to forfeiture) does\nnot vest in the United States as of the time of the offense. Indeed, it does not vest\nin the United States at all.\nInterpreting the civil forfeiture statute as a more straightforward codification of\ncommon law doctrine,5 the concurrence reads the phrase, in subsection (h), \xe2\x80\x98\xe2\x80\x9c shall\nvest in the United States upon commission of the act giving rise to forfeiture\xe2\x80\x99\xe2\x80\x9d as\nmeaning \xe2\x80\x9c \xe2\x80\x98shall vest in the United States upon forfeiture, effective as of com m is\xc2\xad\nsion of the act giving rise to forfeiture.\xe2\x80\x99\xe2\x80\x9d Buena Vista, 507 U.S. at 134 (Scalia, J.,\nconcurring).6 The result, of course, is the same as under the plurality\xe2\x80\x99s analysis: a\nproperty interest innocently acquired after the offense is not forfeited to the United\nStates if an owner asserts the interest in a proper and timely way, before the entry\no f a forfeiture judgment.\nIn sum, we reverse the Harrison M emorandum\xe2\x80\x99s conclusion that the innocent\nowner defense, set forth in 21 U.S.C. \xc2\xa7 881(a), does not protect state and local\nclaims for tax liabilities arising between the time of an offense rendering property\nsubject to forfeiture and the issuance of a court order of forfeiture.7\n3\nThe concurrence specifically rejects the p lu rality \'s reading o f the phrase, in subsection (h), "property\ndescribed in subsection (a)" as m eaning, in effect, \xe2\x80\x9cproperty forfeitable under subsection (a) \xe2\x80\x9d T he co n cu r\xc2\xad\nrence stresses that subsection (h) refers to \'\xe2\x80\x98property d escrib ed in subsection (a)." not property d eem ed for\xc2\xad\nfeitable under subsection (a) Since subsection (a) describes property generally and does not declare that\nproperty that cannot be forfeited is not \' \xe2\x80\x99p ro p e rty ,\' the \xe2\x80\x9cproperty described in subsection (a)* refers to all\nrelevant property interests, including those o f innocent ow ners Buena Vista, 507 U S. at 133 (S calia, J ,\nconcurring)\n6 The concurrence "ack n o w le d g e ^ ] that there is som e textual difficulty w ith th[is] interp retatio n ,\'1 but\nargues, first, that the im precision im puted to the quoted language in subsection (h) is to be e xpected \xe2\x80\x9c in a\nlegal culture fam iliar with retroactive forfeiture" and, second, that the civil forfeiture statute as a whole,\nincluding subsection (d) and u s adoption o f forfeiture procedures applicable under 19 U.S C.\n1602-1631,\ndoes not make sense if one rejects the c o n cu rre n ce \'s reading o f subsection (h) (and the plurality s reading o f\nsubsections (a) and (h)). B uena Vista, 507 U S at 134 (Scalia, J . concurring).\n7 The local tax lien cases decided by low er courts since the Suprem e C ourt s decision in B uena Vista do\nnot alter our conclusion In 2 3 5 0 N .W 187 S t , 996 F 2d 1141, the court vacated the ju d g m en ts in tw o cases\nin w hich the district courts had relied on the interpretation o f the relation back doctrine d escrib ed in the\n\n107\n\n\x0cOpinions o f the Office o f L eg a l C ounsel\n\nII.\nThe two federal criminal forfeiture statutes addressed in the Harrison M em o\xc2\xad\nrandum do not contain an innocent owner defense. Those statutes, however, do\nprovide protection for a \xe2\x80\x9ctransferee [who] establishes in a hearing [to \xe2\x80\x98am end\xe2\x80\x99 an\norder o f forfeiture] that he is a bona fide purchaser for value of [the] property\n[subject to criminal forfeiture] who at the time of purchase was reasonably without\ncause to believe that the property was subject to forfeiture.\xe2\x80\x9d 21 U.S.C. \xc2\xa7 853(c);\n18 U.S.C. \xc2\xa7 1963(c) (same). The Harrison M emorandum concluded that this\nstatutory \xe2\x80\x9cbona fide purchaser\xe2\x80\x9d defense is not available to a state or locality as\xc2\xad\nserting a lien for tax liability incurred after the offense that made the property sub\xc2\xad\nject to forfeiture.\nW e conclude, consistent with the apparent assumption of the Harrison M em o\xc2\xad\nrandum, that such tax liens are \xe2\x80\x9cproperty\xe2\x80\x9d or an \xe2\x80\x9cinterest\xe2\x80\x9d in property under the\ntwo crim inal forfeiture statutes. Both statutes define property broadly, as including\nall \xe2\x80\x9creal property\xe2\x80\x9d and all \xe2\x80\x9ctangible and intangible personal property, including\nrights, privileges, interests, claims and securities.\xe2\x80\x9d 21 U.S.C. \xc2\xa7 853(b); 18 U.S.C.\n\xc2\xa7 1963(b) (same); see also 21 U.S.C. \xc2\xa7 853(c), (n)(6); 18 U.S.C. \xc2\xa7 1963(c), (1)(6)\n(forfeiture and bona fide purchaser defense provisions referring to \xe2\x80\x9cinterest\xe2\x80\x9d in\nsuch property). The legislative history and the courts\xe2\x80\x99 application of this statutory\nlanguage also suggest a definition o f property interests broad enough to include\nstate and local tax liens on real property.8\nH a m so n M em orandum , and had granted sum m ary ju d g m e n t ag ain st a county invoking the innocent ow ner\ndefense in 21 U .S.C . \xc2\xa7 8 8 1 (a)(6), (7) to assert liens for properly taxes ow ed for som e o f the p en o d betw een\nan o ffen se giving rise to forfeiture and the en try o f a ju d g m en t o f forfeiture. The appellate court rem anded\nthe cases for fu rth er co n sideratio n in light o f th e Suprem e C o u rt\'s d ecision in B uena Vista\nIn U n ite d S ta tes v 7501 S W Virginia St., N o 9 2 -9 2 1 -B E (D O re Aug. 3, 1993), the district court held\nthat a c o u n ty asserting a lien, for taxes accruing after the offense, in a forfeiture proceeding was an innocent\now ner un d er \xc2\xa7 8 8 1 (a)(6), but that the relation b ack doctrine had vested the title in the U nited States as o f the\ndate o f the o ffen se and therefore precluded p ay m en t o f the tax lien. T o support this conclusion, the court\nquoted the p lu ra lity \xe2\x80\x99s statem en t in Buena Vista that \xe2\x80\x9c [o]ur d ecisio n d enies the G overnm ent no benefits o f the\nrelation b ack d o ctrin e " Slip op. at 6 (quoting 507 U.S at 129). T he court has taken this quotation out of\ncontext, in terp retin g it as m eaning, in effect, \xe2\x80\x9c o u r decision denies the G overnm ent no benefits o f the relation\nback d o c trin e as it had been understood, erro n eo u sly , in the case law that Buena Vista rejects \xe2\x80\x9d T he district\ncourt sim p ly m isu n d erstan d s o r ignores the S u p rem e C o u rt\'s holding. T his m isinterpretation does not ap \xc2\xad\npear to be w idely shared by courts applying th e Buena Vista analysis o f the relation back d o c tn n e in analo\xc2\xad\ngous co n te x ts See, e.g , U nited States v D a cca rett, 6 F 3d 37, at 53-54 (2d C ir 1993); U nited States v\n41741 N a t 7 Trails W ay, 989 F.2d 1089, 1091 (9th C ir. 1993); 2350 N .W 187 St., 996 F.2d 1141, 1144;\nU nited State* v. O ne 1990 L in co ln Town Car, 817 F. Supp. 1575, 1579-80 ( N D G a 1993).\n8\nS e e S. R ep No. 98 -2 2 5 , at 193, reprinted in 1984 U S C .C A N at 3376 (section enacting current 18\nU S C \xc2\xa7 1963(c) and 21 U .S C \xc2\xa7 853(c) \xe2\x80\x9callo w s the use o f crim inal forfeiture as an alternative to civil for\xc2\xad\nfeiture in all drug felony c ase s\xe2\x80\x99*), id. at 211, rep rin ted in 1984 U .S.C C A N at 3394 (property defined as\nsubject to crim in al fo rfeiture under 18 U S C . \xc2\xa7 1963(a) and 21 U S C . \xc2\xa7 853(a) is equivalent to property\nsubject to civil fo rfeitu re un d er 21 U S C \xc2\xa7 8 8 1 (a)), U nited S ta te s v. Reckm eyer, 836 F.2d 200, 205 (4th Cir.\n1987) (u n secu red cred ito r w ho has reduced h is claim to ju d g m e n t and acquired a lien could seek an am end\xc2\xad\nm ent to a fo rfeitu re o rder under 21 U S C \xc2\xa7 853(n)); U n ited S ta tes v R obinson, 721 F. Supp. 1541, 1545\n(D .R .I. 1989) (a leaseh o ld in terest ordinarily is a real p roperty interest w ithin the definition m 21 U.S C\n\xc2\xa7 8 5 3 (b )), se e also U n ited S ta tes v M onsanto, 491 U S. 600, 6 0 6 -09 (1989) (noting breadth o f forfeitable\nproperty u n d e r 21 U S.C . \xc2\xa7 853(a))\n\n108\n\n\x0cL ia b ility o f U S fo r Slate a n d Local Taxes on Seized and F orfeited P roperty\n\nThe Harrison Memorandum suggests two arguments \xe2\x80\x94 one based on the rela\xc2\xad\ntion back doctrine and another based on the definition of bona fide purchaser \xe2\x80\x94 to\nsupport its conclusion that the bona fide purchaser defense does not extend to\nholders of property interests that consist o f liens for state and local taxes for the\nperiod after the offense and before a judgm ent of forfeiture.\nA.\nThe Harrison M em orandum \xe2\x80\x99s central argument concerning the relation back\ndoctrine addresses the bona fide purchaser defense no less than the innocent owner\ndefense. See Harrison Memorandum, 15 Op. O.L.C. at 72. On the interpretation\nset forth in the Harrison Memorandum, the United States has owned the property\nsince the com m ission of the offense giving rise to the criminal forfeiture, and no\none, including a bona fide purchaser, can later acquire any interest from the former\nowner.\nAlthough the question is a closer one than in the civil forfeiture context, we\nconclude that the Supreme C ourt\xe2\x80\x99s decision in Buena Vista rejects this argum ent as\nwell.9 We recognize that the plurality\xe2\x80\x99s holding is based on a reading o f the civil\nforfeiture statute (and its innocent owner provisions) and does not address the\ncriminal forfeiture statutes (and their bona fide purchaser provisions). That hold\xc2\xad\ning also does not require the plurality to adopt the interpretation of the common\nlaw relation back doctrine that the opinion sets forth. Nonetheless, the plurality\xe2\x80\x99s\ndiscussion of the common law doctrine makes clear that it agrees with the concur\xc2\xad\nrence that the relation back doctrine vests ownership retroactively in the United\nStates only upon entry of a final judgm ent of forfeiture. Under that reading, if a\nstate or locality establishes that it is a \xe2\x80\x9cbona fide purchaser\xe2\x80\x9d of an interest in the\nproperty by virtue of a tax lien, and does so before a court orders forfeiture, the\norder of forfeiture will not extend to the lien-holder\xe2\x80\x99s interest and, therefore, will\nnot vest title to that interest in the United States.10\nW e also recognize that the concurrence in Buena Vista suggests that the relation\nback doctrine precludes a bona fide purchaser defense under the criminal statutes\nwhere it allows an innocent owner defense under the civil statute. As the concur\xc2\xad\nrence points out, the criminal forfeiture statutes establish a procedure by which a\nperson asserting a bona fide purchaser defense raises that defense after the court\nhas entered an order o f forfeiture. See 21 U.S.C. \xc2\xa7 853(n); 18 U.S.C. \xc2\xa7 1963(1). In\ncontrast, the civil forfeiture process (on both the plurality\xe2\x80\x99s and the concurrence\xe2\x80\x99s\n\n9 Cf. U nited S ta tes v H arry, 831 F Supp. 679, 686-87 (E D Iow a) (draw ing on B uena Vista d iscussion of\ninnocent ow ners to resolve bona fide p u rch aser issue under the crim inal forfeiture statute)\n10 This conclusion w ould follow rather sim ply from the C o u rt\'s analysis in Buena Vista w hen the state or\nlocality asserts its bona fide purchaser defense at or before the proceedings in w hich the court issues an order\no f forfeiture T he con clu sio n is less certain under the procedure set forth in the crim inal forfeiture statutes,\nwhich provides for assertio n o f bona fide purchaser claim s at a hearing held after the court issues an initial\norder o f forfeiture T he rem ainder o f this subsection addresses this issue\n\n109\n\n\x0cOpinions o f th e O ffice o f L egal C ounsel\n\nreading) contem plates that a person asserting an innocent owner defense will do so\nbefore the court enters an order o f forfeiture. As the concurrence sees it, in the\nformer case, the court order already has vested title retroactively in the United\nStates (effective as o f the date o f the offense) before the \xe2\x80\x9ctransferee\xe2\x80\x9d asserts a\nclaim to be a bona fide purchaser. In the latter case, however, the court will not yet\nhave issued the order vesting title retroactively when the \xe2\x80\x9cowner\xe2\x80\x9d asserts an inno\xc2\xad\ncent ow ner claim. (The concurrence argues that the civil statute\xe2\x80\x99s use of the term\n\xe2\x80\x9cow ner\xe2\x80\x9d and the criminal statutes\xe2\x80\x99 use of \xe2\x80\x9ctransferee\xe2\x80\x9d reflects this distinction and\nsuggests its significance.) On this view, if a transferee\xe2\x80\x99s claim to be a bona fide\npurchaser succeeds and the court am ends the order of forfeiture, the amendment\ndoes not void, retroactively, the initial retroactive vesting of title in the United\nStates. The am endm ent to the initial order of forfeiture simply effects a new trans\xc2\xad\nfer of title to the bona fide purchaser, leaving undisturbed the United States\xe2\x80\x99 own\xc2\xad\nership from the time o f the offense to the time o f the amendment to the forfeiture\norder. See Buena Vista, 507 U.S. at 136 (Scalia, J., concurring).\nThe Buena Vista concurrence fails to establish, however, that the criminal for\xc2\xad\nfeiture statutes\xe2\x80\x99 bona fide purchaser defense does not protect liens for state and\nlocal tax liabilities incurred after the offense giving rise to the forfeiture. Only the\nconcurrence advances the argument. The plurality does not join in it, and nothing\nin the dissenting opinion suggests that the dissenters would adopt the concurrence\xe2\x80\x99s\nviews.\nFurther, the concurrence\xe2\x80\x99s argum ent reads too much into the actual, multi-step\nprocedures by which a court adjudicates a criminal forfeiture claim. It thereby\noverlooks \xe2\x80\x94 or confuses those procedures with \xe2\x80\x94 the more fundamental legal\n(and fictional) process through which a retroactive transfer o f ownership occurs.\nThe better interpretation o f the criminal forfeiture statutes is that the procedures of\nentering an order of forfeiture, holding a hearing at which transferees assert claims\nto be bona fide purchasers, and am ending the order of forfeiture upon successful\npresentation o f such a claim are but phases in a single (if protracted) process for\ndeterm ining what property interest vests, retroactively, in the United States when\nthe court enters its final, amended order of forfeiture. The entire process is the\nequivalent o f the single order of forfeiture in the civil context.\nThis interpretation fits more easily with the statutory language, especially when\nthat language is read in light of the discussion in Buena Vista of common law rela\xc2\xad\ntion back doctrine. The criminal forfeiture statutes provide that title in property\nsubject to forfeiture \xe2\x80\x9cshall be ordered forfeited to the United States unless the\ntransferee establishes\xe2\x80\x9d that he is a bona fide purchaser for value, and that \xe2\x80\x9cthe\nUnited States shall have clear title to [the] property\xe2\x80\x9d only \xe2\x80\x9cfollowing the court\xe2\x80\x99s\ndisposition o f all petitions\xe2\x80\x9d filed by transferees asserting claims to be bona fide\npurchasers. 21 U.S.C. \xc2\xa7 853(c), (n)(7); 18 U.S.C. \xc2\xa7 1963(c), (1)(7) (emphasis\nadded). Such language would seem to suggest that the United States never obtains\ntitle from a bona fide purchaser, not that the U nited States first obtains title and\n\n110\n\n\x0cL iability o f U S. f o r State an d Local T axes on Seized a n d F orfeited P roperty\n\nthen must give it back. Only after the entry o f the final, amended order of forfei\xc2\xad\nture would ownership vest retroactively in the United States.11\nThis conclusion also avoids an incongruity that the concurrence\xe2\x80\x99s interpretation\nwould create: an innocent owner (under the civil statute) would owe state and lo\xc2\xad\ncal taxes from the moment he or she acquired the property, but a bona fide pur\xc2\xad\nchaser for value (under the criminal statutes) would not owe taxes from the time he\nor she acquired the property until the time the court amended the order o f forfei\xc2\xad\nture.\nFinally, the conclusion we reach also is consistent with the statutory distinction\nbetween \xe2\x80\x9cow ner\xe2\x80\x9d and \xe2\x80\x9ctransferee.\xe2\x80\x9d A person claiming to be a bona fide purchaser\nis nothing more than a transferee until he or she establishes to the court that he or\nshe is a bona fide purchaser (whether the transferee does so after an initial forfei\xc2\xad\nture order, as the statute contemplates, or at some earlier stage). Only after the\ntransferee has made this showing is he or she recognized as an owner (indeed, an\ninnocent owner) of a particular type. Similarly, a person claiming to be an inno\xc2\xad\ncent owner is recognized as an innocent owner only after he or she proves to the\ncourt that he or she meets the standards o f innocent ownership. Before that, such a\nperson is, in the eyes of the court, merely a transferee. The civil forfeiture laws\nsimply do not address or refer explicitly to those who assert, but have not yet es\xc2\xad\ntablished, that they are innocent owners.\nFor these reasons, we do not believe that the concurrence\xe2\x80\x99s discussion o f the le\xc2\xad\ngal significance of the differences between the civil and criminal forfeiture statutes\n(which, in any case, is unnecessary to its conclusions) is correct.\nB.\nThe Harrison Memorandum also states that state and local tax authorities cannot\n\xe2\x80\x9cqualify as bona fide purchasers for value\xe2\x80\x9d under the criminal forfeiture statutes.\nHarrison M emorandum, 15 Op. O.L.C. at 72. The Memorandum does not set forth\nthe basis for this conclusion. The Buena Vista plurality and concurrence have\nnothing to say about this issue and, thus, do not require a reversal o f the Harrison\nMemorandum. Although the matter is not free from doubt, we believe that the\nstronger argument is that state and local tax lien-holders are not \xe2\x80\x9cbona fide pur\xc2\xad\nchasers.\xe2\x80\x9d\n\n11\nA lthough the statutory language does not fit perfectly w ith the interpretation adopted here, som ew hat\nim precise drafting concerning the sequence o f events leading to a retroactive vesting o f title is, as the B uena\nVista concurrence points out, perhaps to be expected in a legal culture fam iliar with retroactive vesting See\nBuena Vista, 507 U S al 134.\nM oreover, the legislative history o f the crim inal forfeiture provisions also seem s to su pport the in te rp reta \xc2\xad\ntion set forth in this M em orandum . It refers to hona fide p u rch aser claim s, raised after the initial forfeiture\norder, as \xe2\x80\x9c in essence, . . . challenges to the validity o f the o rder o f forfeiture," and, w hen successful, as\n\xe2\x96\xa0\xe2\x80\x98render[ing] that portion o f the o rder o f forfeiture reaching [the bo n a fide p u rc h a se r\'s] interest in v a lid \xe2\x80\x9d S\nRep. No. 98-225, at 208, reprinted in 1984 U S C .C .A .N . at 3391 (em phasis added)\n\n111\n\n\x0cO pinions o f the O ffice o f L egal C ounsel\n\nThe courts have not adopted a clear and uniform view of how to interpret \xe2\x80\x9cbona\nfide purchaser\xe2\x80\x9d under the criminal forfeiture statutes. See, e.g., United States v.\nLavin, 942 F.2d 177, 182-89 (3d Cir. 1991) (bona fide purchaser acquires interest\nthrough volitional, advertent and, generally, commercial transaction; victim of em\xc2\xad\nbezzlem ent acquired interest through unwitting and inadvertent tortious action of\nanother and therefore was not a bona fide purchaser); Reckmeyer, 836 F.2d at 20608 (bona fide purchaser includes a general, unsecured creditor of defendant who\ngave value to defendant in arms\xe2\x80\x99-length transaction with expectation that he would\nreceive equivalent value in the future, and whose interest must have been in some\npart o f the forfeited property because debtor\xe2\x80\x99s entire estate had been forfeited); cf.\nUnited States v. Campos, 859 F.2d 1233, 1237-38 (6th Cir. 1988) (general, unse\xc2\xad\ncured creditor is not a bona fide purchaser, because he does not have a legal inter\xc2\xad\nest in the forfeited property); Torres v. $36,256.80 U.S. Currency, 827 F.Supp.\n197, 203 (S.D .N .Y . 1993) (similar to Campos\', also pointing out significance, for\ngeneral, unsecured creditor, of unusual circumstance in Reckmeyer that entire es\xc2\xad\ntate had been seized); United States v. Mageean, 649 F. Supp. 820, 824, 829 (D.\nNev. 1986) (definition of bona fide purchaser cannot be \xe2\x80\x9cstretch[ed]\xe2\x80\x9d to include\ntort claim ants, but \xe2\x80\x9cthere is no reason that a good-faith provider o f goods and\nservices,\xe2\x80\x9d although an unsecured creditor, \xe2\x80\x9ccannot be a bona fide purchaser\xe2\x80\x9d), a ff\xe2\x80\x99d\nwithout opinion, 822 F.2d 62 (9th C ir. 1987); see also United States v. 3181 S. W.\n138th Place, 778 F. Supp. 1570, 1574-75 (S.D. Fla. 1991) (civil forfeiture case\nstating that locality is not bona fide purchaser by virtue of tax lien), vacated on\nother grounds, 996 F.2d 1141 (11th Cir. 1993); S. Rep. No. 98-225, at 201, 209,\nreprinted in 1984 U.S.C.C.A.N. at 3384, 3392.\nW e are aw are o f no case that has decided the precise question at issue here. We\nacknow ledge that some o f the claim s that courts have rejected are weaker than\nthose presented by tax liens, and that at least one court has pointed to a primary\npurpose o f the crim inal forfeiture statutes\xe2\x80\x99 relation back provisions that would not\nbe served by denying the bona fide purchaser defense to holders o f liens for state\nand local taxes. See Reckmeyer, 836 F.2d at 208 (\xe2\x80\x9cC ongress\xe2\x80\x99s primary concern in\nadopting the relation-back provision was to make it possible for courts to void\nsham or fraudulent transfers that w ere aimed at avoiding the consequences of for\xc2\xad\nfeiture\xe2\x80\x9d). N onetheless, we have found no authority that has construed bona fide\npurchaser broadly enough to encompass such a tax lien-holder.\nA state or locality does provide something o f value, in the form of government\nservices, in return for the interest it acquires in property (ultimately in the form of a\nlien) by virtue o f its taxing authority. This exchange, however, does not fit the\ntransactional, arm s\xe2\x80\x99-length exchange of values contemplated in the case law and\nsuggested by the statutory phrase \xe2\x80\x9cbona fide purchaser for value.\xe2\x80\x9d 12\n12\nSee, e g., L a vtn , 942 F 2d at 185-86 (C o n g re ss deriv ed bona fide purchaser exception \'\xe2\x80\x98from hornbook\nco m m ercial law \xe2\x80\x9d p rin cip le o f protecting th e \xe2\x80\x98\xe2\x80\x9c innocent p u rch aser for valuable c o n sid e ra tio n \xe2\x80\x99\xe2\x80\x9d w hich had\nd e v elo p ed at co m m o n law \xe2\x80\x9c in order to p ro m o te finality in com m ercial transactions and thus to . . foster\n\n112\n\n\x0cL ia b ility o f U.S. fo r Stale an d Local Taxes on Seized an d F orfeited Property\n\nTherefore, we do not reverse the Harrison Memorandum\xe2\x80\x99s conclusion that the\nbona fide purchaser provisions cannot be relied upon to require payment of state\nand local tax liens.13\nIII.\nFor the reasons set forth above, we reach the following conclusions: In civil\nforfeiture proceedings (under 21 U.S.C. \xc2\xa7 881), the United States may \xe2\x80\x94 and, in\xc2\xad\ndeed, must \xe2\x80\x94 pay liens for state and local taxes accruing after the commission of\nthe offense leading to forfeiture and before the entry of a judicial order o f forfei\xc2\xad\nture, if the lien-holder establishes, before the court enters the order of forfeiture,\nthat it is an innocent owner of the interest it asserts. In criminal forfeiture pro\xc2\xad\nceedings (under 18 U.S.C. \xc2\xa7 1963 or 21 U.S.C. \xc2\xa7 853), however, the United States\nmay not pay such liens because state and local tax lien-holders are not bona fide\npurchasers for value of the interests they would assert, and therefore do not come\nwithin any applicable exception to a statute that, upon entry of a court\xe2\x80\x99s final order\nof forfeiture, vests full ownership retroactively in the United States as of the date of\nthe offense.\n\nWALTER DELLINGER\nAssistant Attorney General\nOffice o f Legal Counsel\n\ncom m erce\xe2\x80\x9d ), Reckm ever, 836 F 2 d at 208 (scope o f bona fide p urchaser provision \xe2\x80\x9cconstrued liberally\'* is to\nprotect \xe2\x80\x9call persons who give value to the defendant in an arm s\xe2\x80\x99-length transaction w ith the expectation that\nthey w ould receive equivalent value in return\xe2\x80\x9d )\nThe H arrison M em orandum also found that paym ent o f liens for state and local taxes, accruing after the\noffense, was not w ithin the A ttorney G e n eral\xe2\x80\x99s discretionary authority under 28 U.S C \xc2\xa7 524(c)(1)(D )\n(\xe2\x80\x9c\'paym ent o f valid liens\n. against property that has been forfeited") or 28 U .S.C \xc2\xa7 524(c)( 1)(E) (paym ents\n\xe2\x80\x9cin connection w ith rem ission o r m itigation procedures relating to property forfeited\xe2\x80\x9d ). W e reach the same\nconclusion through a different analysis A tax lien-holder who establishes that he or she is an innocent\now ner under the civil forfeiture statute or a bona fide purchaser under the crim inal statutes is protected from\nthe operation o f the relation back doctrine, and need not rely on the A ttorney G e n eral\'s discretionary pay\xc2\xad\nm ent o f a valid hen o r rem ission o r m itigation of a forfeiture that has not occurred w ith respect to the lien\xc2\xad\nh o ld e r\'s interest S ee S. Rep. No. 98-225, at 207-08, 217, rep rin ted in 1984 U.S C C A .N at 3390-91, 3400,\nLavin, 942 F 2 d at 185 (bona fide purchaser provisions designed to require protection previously left to\ndiscretion o f A ttorney G eneral). If the tax lien-holder fails to establish that he or she is protected by one of\nthese defenses to forfeiture, there can be no \xe2\x80\x9cvalid lien\xe2\x80\x9d for taxes to be paid and no forfeited interest (in the\nform o f tax liabilities) for the A ttorney G eneral to "rem ift] o r m itigat[e] \xe2\x80\x9d B ecause ow nership of the property\nwill have vested in the U nited States as o f the com m ission o f the offense, state and local authorities cannot\n(absent a congressional w aiver o f im m unity from stale and local taxation that we do not find in 28 U .S C.\n\xc2\xa7 524 or elsew here) levy taxes on such property after the dale o f the offense any more than they co u ld levy\ntaxes on a federal courthouse o r post office\n\n113\n\n\x0c'


b'Applicability of the Cargo Preference Act to the\nTransportation of Alaskan Oil\nto the Strategic Petroleum Reserve\nShipments of Alaskan oil for the Strategic Petroleum Reserve, made on commercial United\nStates-flag ships as required by the Jones Act, 46 U.S.C. \xc2\xa7 883, may be counted by the\nDepartment o f Energy towards the 50% United States-flag cargo preference share required by\nthe Cargo Preference Act, 46 U.S.C. \xc2\xa7 1241(b).\nThe Cargo Preference Act, 46 U.S.C. \xc2\xa7 1241(b), applies to both foreign and domestic cargoes\nprocured by the United States, and is not limited to commerce in which United States-flag\nvessels face foreign com petition. In addition, the Act is an \xe2\x80\x9cotherwise applicable Federal\nprocurement statute\xe2\x80\x9d that may be waived by the Secretary of Energy under \xc2\xa7 804(b) o f the\nEnergy Security Act, 10 U.S.C. \xc2\xa7 7340(k).\n\nSeptember 15, 1983\nM\n\nem orandum\n\nO\n\np in io n f o r t h e\n\nand the\n\nSecretary\n\nSecretary\n\nof\n\nof\n\nT r a n s p o r t a t io n\n\nE nergy\n\nThis responds to your joint request to the Attorney General for an opinion on\nthe following question:\nWhether commercial United States-flag oil shipments to the\nStrategic Petroleum Reserve from Alaska may be counted to\xc2\xad\nwards the 50% United States-flag cargo preference share re\xc2\xad\nquired by the Cargo Preference Act.\nUnder the terms of an interagency agreement, you agreed to submit this\nquestion to the Attorney General in order to resolve a dispute between your two\nDepartments. The Attorney General has referred your request to this Office for\ndecision.\nFor the reasons set forth below, we conclude that shipments of Alaskan oil\nfor the Strategic Petroleum Reserve, made on commercial United States-flag\nships as required by the Jones Act, 46 U.S.C. \xc2\xa7 883, may be counted towards\nthe 50% United States- flag cargo preference share required by the Cargo\nPreference Act, 46 U.S.C. \xc2\xa7 1241(b).\nIn addition, the Department of Energy (DOE) has asked us to address two\nrelated questions:\nWhere oil produced from the Naval Petroleum Reserves is ex\xc2\xad\nchanged for other oil to be delivered to the Strategic Petroleum\n139\n\n\x0cReserve, pursuant to \xc2\xa7 804(b) of the Energy Security Act, 10\nU.S.C. \xc2\xa7 7430(k), may the exchange be conducted without re\xc2\xad\ngard to the Cargo Preference Act, and the deliveries excluded from\nthe 50% United States-flag compliance calculation under that Act?\nDoes the Cargo Preference Act require that the Department of\nEnergy and its procurement agents at the Department of De\xc2\xad\nfense, in future oil deliveries to the Strategic Petroleum Reserve,\nmake up any past year shortfalls from the Act\xe2\x80\x99s 50% United\nStates-flag standard?\nThe Department of Transportation (DOT) takes the view that the two additional\nquestions submitted by DOE are covered by the interagency agreement be\xc2\xad\ntween DOT and DOE, and therefore no outstanding dispute exists between the\ntwo agencies with respect to those questions. In an effort to provide as much\nguidance as possible to both agencies, we address below the strictly legal issues\nraised by DOE\xe2\x80\x99s separate questions. That legal analysis, however, does not\ndispose of the problem, because your agencies take different views as to the\nscope and intent of their obligations as agreed upon in the interagency agree\xc2\xad\nment. We are not in a position to interpret that agreement and do not attempt to\ndo so here. We recommend that, if you cannot resolve your differing interpreta\xc2\xad\ntions of the agreement, the matter be referred to appropriate higher levels in the\nExecutive Branch.\nIn analyzing the questions presented to us, we have examined the views of\neach of your departments, the views of the Office of Management and Budget,\nand our independent research.\nI\nThe questions we consider here arise out of the interplay between DOE\xe2\x80\x99s\nobligation to comply with congressional mandates to fill the Strategic Petro\xc2\xad\nleum Reserve (SPR), a stockpile of crude oil intended to provide protection\nagainst interruption in energy supplies to the United States, and its obligations\nand authority under three other statutes: (a) the Cargo Preference Act, 46\nU.S.C. \xc2\xa7 1241(b); (b) the Jones Act, 46 U.S.C. \xc2\xa7 883; and (c) the Energy\nSecurity Act, 10 U.S.C. \xc2\xa7 7430(k). We outline below the relevant portions of\neach of those statutes.1\n1 T he SPR w as authorized by Title I, P a rt B, o f the Energy Policy and C onservation Act, Pub. L. No. 9 4 163, 89 Stat. 8 8 1 -9 0 (1975) (codified at 4 2 U.S.C. \xc2\xa7\xc2\xa7 6 2 3 1 -6422). C ongress has repeatedly legislated with\nresp ect to the fill rate fo r the SPR. See P ub. L. No. 9 7 -3 5 , T itle X, 95 Stat. 619 (1981); Pub. L. No. 96-294,\n\xc2\xa7 8 0 1 , 94 Stat. 775 (1980); Pub. L. N o. 9 6 -5 1 4 , 94 Stat. 2964 (1980). Most recently, in the Energy\nE m ergency Preparedness A ct o f 1982, Pub. L. No. 9 7 -2 2 9 , \xc2\xa7 4 , 96 Stat. 250-52, Congress required the\nP resident to fill the SPR at a rate o f 300,000 barrels per day unless he finds that this rate is not in the national\ninterest, in w hich ev en t the minimum req u ired fill rate is 220,000 barrels per day if appropriations are\navailab le to achieve this rate, o r the highest practicable fill rate that would fully use available appropriations.\nD O E is resp o n sib le fo r administration o f the SPR, including the acquisition, transportation, and storage o f\ncrud e oil. See 42 U .S.C. \xc2\xa7\xc2\xa7 6233, 6240. Pursuant to an interagency agreem ent, the Defense Fuel Supply\nC en ter acts as the D epartm ent of E n e rg y \'s procurem ent ag en t and actually solicits offers and awards\ncontracts (w ith D O E\xe2\x80\x99s approval) for the acquisition o f oil.\n\n140\n\n\x0cA. Cargo Preference Act\n\nOcean shipments of crude oil for the SPR are generally subject to the\nrequirements of the Cargo Preference Act, Pub. L. No. 83-664, 68 Stat. 832\n(1954) (codified as amended at 46 U.S.C. \xc2\xa7 1241(b)).2 The Act provides in\npertinent part that:\nWhenever the United States shall procure, contract for, or\notherwise obtain for its own account, or shall furnish to or for\nthe account of any foreign nation without provision for reim\xc2\xad\nbursement, any equipment, materials, or commodities, within or\nwithout the United States, or shall advance funds or credits or\nguarantee the convertibility of foreign currencies in connection\nwith the furnishing of such equipment, materials, or commodi\xc2\xad\nties, the appropriate agency or agencies shall take such steps as\nmay be necessary and practicable to assure that at least 50 per\ncentum of the gross tonnage of such equipment, materials, or\ncommodities . . . which may be transported on ocean vessels\nshall be transported on privately owned United States-flag com\xc2\xad\nmercial vessels, to the extent such vessels are available at fair\nand reasonable rates for United States-flag commercial vessels,\nin such manner as will insure a fair and reasonable participation\nof United States-flag commercial vessels in such cargoes by\ngeographic areas.\nThus, the Cargo Preference Act requires DOE to take \xe2\x80\x9csuch steps as may be\nnecessary and practicable to assure that at least 50 per centum\xe2\x80\x9d of oil for the\nSPR that is transported on ocean vessels be transported on United States-flag\ncommercial vessels, if such vessels are available at fair and reasonable rates for\nUnited States-flag commercial vessels.\nB. Jones A ct\n\nAlthough most of the oil shipped to the SPR has been obtained from foreign\nsources, such as the Persian Gulf, the North Sea, North Africa, and the Carib\xc2\xad\nbean, a substantial volume was shipped, particularly in 1981, from the Alaskan\nNorth Slope Fields via Valdez, Alaska, to SPR receiving docks in Texas and\nLouisiana.3 Because these shipments of Alaskan oil took place between United\nStates ports, they were subject to the Jones Act, Act of June 5,1920, ch. 250,41\nStat. 988, 999 (codified as amended at 46 U.S.C. \xc2\xa7 883).4 The Jones Act\nprovides in relevant part that:\n2 The C argo Preference Act added a new subparagraph (b) to \xc2\xa7 901 o f the M erchant M arine Act o f 1936,\nPub. L. No. 7 4 -8 3 5 , 49 Stat. 1985.\n3 DOE has inform ed us that approxim ately 10 7 percent o f oil stored in the SPR as of D ecem ber 31, 1982,\nwas produced in Alaska.\n4 The Jones Act is one in a series o f statutes, beginning in 1789, w hich have im posed general restrictions on\nthe transportation o f freight in coastw ise traffic by vessels not ow ned by citizens o f the U nited States. See\nCentral Vermont Co. v. D u m in g , 294 U.S. 33, 38 & n .l (1935).\n\n141\n\n\x0cNo merchandise shall be transported by water, or by land and\nwater, on penalty of forfeiture thereof, between points in the\nUnited States, including Districts, Territories, and possessions\nthereof embraced within the coastwise laws, either directly or\nvia a foreign port, or for any part of the transportation, in any\nother vessel than a vessel built in and documented under the\nlaws of the United States and owned by persons who are citizens\nof the United States, or vessels to which the privilege of engag\xc2\xad\ning in the coastwise trade is extended by section 13 or 808 of\nthis title.\n46 U.S.C. \xc2\xa7 883. In accordance with the terms of the Jones Act, we understand\nthat shipments of Alaskan oil for the SPR have been made entirely in United\nStates-flag commercial vessels.\nC. E nergy Security A ct\n\nThe Energy Security Act (ESA), Pub. L. No. 96-294, 94 Stat. 611 (1980),\nwas passed in the aftermath o f the 1979 Iranian supply disruption, when efforts\nto fill the SPR fell behind the approved fill schedule and oil purchases for the\nSPR came to a halt. In the ESA, passed in June 1980, Congress required that the\nSPR oil fill be resumed and sustained at an average rate of at least 100,000\nbarrels per day. In order to facilitate this fill rate, Congress authorized the\nSecretary of Energy to store oil from the Naval Petroleum Reserves (NPR)5 in\nthe SPR, or to:\n(B) exchange, directly or indirectly, that petroleum [from the\nNPR] for other petroleum to be placed in the Strategic Petroleum\nReserve under such terms and conditions and by such methods as\nthe Secretary determines to be appropriate, without regard to other\xc2\xad\nwise applicable Federal procurement statutes and regulations.\nPub. L. No. 96-294, \xc2\xa7 804(b), 94 Stat. 777 (1980) (codified at 10 U.S.C.\n\xc2\xa7 7430(k)(l)). In 1980 and 1981 DOE used the authority in the ESA to place in\nthe SPR a substantial amount of crude oil that had been exchanged for NPR oil.\nII\nA. A p p licability o f the Cargo Preference A ct to Jones Act Cargoes\n\nThe question you have jointly referred to us for decision is whether ship\xc2\xad\nments of Alaskan oil \xe2\x80\x94 100 percent of which were made in United States-flag\ncommercial vessels pursuant to the Jones Act \xe2\x80\x94 may be counted towards the\n50 percent Cargo Preference Act share for the SPR program. DOT takes the\n5 The N aval Petroleum Reserves in c lu d e several specific crude oil or petroleum reserves designated\noriginally by executive o rd er and now specifically authorized by 10 U .S.C. \xc2\xa7\xc2\xa7 7420-7438. In general, the\nreserves may be used for production o f petroleum only if specifically authorized by joint resolution of\nC ongress and approved by the President. Id. \xc2\xa7 7422(b).\n\n142\n\n\x0cposition that the Cargo Preference Act reserves 50 percent of foreign oil\ntransported to the SPR for United States-flag tankers, and asserts that DOE\nmust base its Cargo Preference Act compliance calculation only on foreign\nshipments. DOT maintains that the purpose and legislative intent of the Cargo\nPreference Act is to reserve 50 percent of government-generated cargo for\nUnited States-flag vessels in commerce in which the United States vessels face\ncompetition from foreign-flag vessels, i.e., import or export foreign commerce.\nBecause foreign-flag vessels are already excluded by operation of the Jones\nAct from domestic trade, DOT contends that government-procured or owned\ncargoes shipped in such commerce should not be included in the calculation of\nCargo Preference Act compliance. DOT points out that the effect of allowing\nJones Act cargoes to be included in the Cargo Preference Act calculation would\nbe to reduce the share of foreign trade that must be reserved to United Statesflag commercial ships \xe2\x80\x94 a result DOT contends is \xe2\x80\x9centirely inconsistent\xe2\x80\x9d with\nthe purpose of the Cargo Preference Act.\nDOE\xe2\x80\x99s position is that the plain language of the Cargo Preference Act covers\nall government-procured or owned cargoes, which would include Alaskan oil\nshipments, and that, while the Act may have been passed primarily to deal with\nforeign cargoes exported from or imported into the United States, the legisla\xc2\xad\ntive history of the Act does not demonstrate any clear congressional intent to\nlimit that language to foreign cargoes. As a policy matter, DOE maintains that\nexclusion of Alaskan oil shipments from the calculation of its Cargo Preference\nAct share for the SPR program would substantially increase the overall cost of\nacquisition of oil for the SPR, inconsistently with the goal of minimizing the\ncost of the SPR, see 42 U.S.C. \xc2\xa7 6231,6 particularly if DOE is required to make\nup shortfalls from the 50 percent level for prior years.7\nThe question is a close and novel one, and the arguments made in support of\nboth positions have been skillfully presented and have considerable merit.\nAfter a careful review of the memoranda provided to us, an independent review\nof the legislative history of the Cargo Preference Act, and additional research,\nwe conclude that DOE may include Jones Act shipments of Alaskan oil in the\ncalculation of its overall 50 percent Cargo Preference Act compliance level for\nthe SPR program.\n6 A lthough DOE notes that \xe2\x80\x9c m inim ization o f the cost o f the Reserve\xe2\x80\x9d is an objective set forth in the Energy\nPolicy and Conservation A ct, 4 2 U.S.C. \xc2\xa7\xc2\xa7 6231-6422, it does not assert that the SPR program itse lf has been\nexem pted from the C argo Preference Act.\n7 For calendar year 1982 alone, DOE calculates that it would be in com pliance w ith the Cargo Preference\nAct, whether or not A laskan oil shipm ents are counted. For the years 1981-82, DOE states that it would be in\ncompliance with the C argo Preference A ct SO percent share if A laskan oil shipm ents were included; if such\nshipments w ere excluded, the share o f SPR oil shipm ents carried in United States flag-com m ercial vessels\nwould fall to roughly 39 percent. For the period 1977-1982, covenng m ost o f the acquisition for the SPR, the\nCargo Preference Act com pliance percentage including Alaskan shipments would be either 48.9 percent (if\nNaval Petroleum Reserve exchanges are excluded, see below) o r 46.3 percent (if N aval Petroleum Reserve\nexchanges are included); w ithout Alaskan oil shipments, the compliance figure would be 41.9 percent\n(excluding N aval Petroleum R eserve exchanges) or 38.6 percent (including Naval Petroleum R eserve ex\xc2\xad\nchanges). To the extent D OE is required to make up any shortfall from the 50 percent level, it w ould have to\ndo so by using relatively expensive U nited States com m ercial vessels, which w ould increase the overall cost\no f SPR acquisitions.\n\n143\n\n\x0cOur touchstone in reaching that conclusion is \xe2\x80\x9cthe familiar canon of statu\xc2\xad\ntory construction that the starting point for interpreting a statute is the language\nof the statute itself. Absent a clearly expressed legislative intention to the\ncontrary, that language must ordinarily be regarded as conclusive.\xe2\x80\x9d Consumer\nP roduct Safety C om m \xe2\x80\x99n v. G T E Sylvania, 447 U.S. 102, 108 (1980); see also\nU nited States v. Turkette, 452 U.S. 576,580 (1981); United States Lines, Inc. v.\nBaldridge, 677 F.2d 940, 944 (D.C. Cir. 1982).\nOn its face the language o f the Cargo Preference Act covers all governmentprocured or owned cargoes transported on ocean vessels, which would include\ngovernment cargoes transported between United States ports, as well as car\xc2\xad\ngoes transported to or from a foreign port. The Act applies \xe2\x80\x9c/ w jhenever the\nUnited States shall procure . . . equipment, materials, or commodities within or\nwithout the United States.\xe2\x80\x9d 46 U.S.C. \xc2\xa7 1241(b) (emphasis added). The Act\ncarves out certain explicit exceptions to the 50 percent United States-flag\nvessel requirement, but does not make any specific exception for cargo that is\nsubject to the Jones Act 100 percent United States-flag requirement, or any\ngeneral exception for cargoes transported in trades in which there is, by\noperation of statute, no foreign competition.8\nDOT urges that we must interpret that language in light of the Act\xe2\x80\x99s legisla\xc2\xad\ntive history, which DOT maintains demonstrates a clear congressional intent\nthat the 50 percent United States-flag requirement should apply only to cargoes\nshipped in trades in which the United States vessels face foreign competition.\nIn order to reach the conclusion advocated by DOT, we would have to infer a\nfurther exception, in addition to the explicit exceptions in the Act, for Jones Act\ncargoes. DOT suggests that the implied exception would cover only cargoes\nthat must be transported in United States vessels pursuant to the first clause of\nthe Jones Act; DOT takes the position that domestic shipments that may be\nmade in foreign vessels, pursuant to the third proviso of the Jones Act, would\nbe covered by the general language of the Cargo Preference Act.9\nIn general, we find the legislative history of the Cargo Preference Act to be\ninconclusive on the question of congressional intent. We are unwilling on the\nbasis of that history to infer a specific exception, from the broad language used\nby Congress, for government cargoes that are otherwise subject to the Jones Act.10\n8 Specifically, the A ct does not ap p ly to cargoes carried in vessels o f the Panam a Canal C om pany, or to\ncertain vessels rebuilt abroad, if the o w n e r notified the M aritim e A dm inistration prior to Septem ber 21, 1961,\no f its intent to docum ent the vessel u n d e r United States registry. 4 6 U.S.C. \xc2\xa7 1241(b).\n9 T he th ird proviso o f the Jones A ct exem pts from the exclusive U nited States-flag transportation require\xc2\xad\nm ent \xe2\x80\x9cm erchandise transported betw een points w ithin the continental United States, including Alaska, over\nthrough r o u te s . . . recognized by the In terstate C om m erce C om m ission for which routes rate tariffs have been\no r s h a ll. . . be filed w ith [the ICC] w hen such routes are in part over C anadian rail lines and their own or other\nconnecting w ater fa cilities.\xe2\x80\x9d 46 U .S.C. \xc2\xa7 883.\n10 W e note that, as a general matter o f statutory construction, im plied exceptions are disfavored, especially\nif the statute contains an express ex cep tio n . See, e.g.. C onsum er Product Safety C om m \xe2\x80\x99n v. GTE Sylvania,\n447 U .S. at 108; A n dru s v. Glover C onstr. Co., 446 U.S. 608, 6 1 6 -1 7 (1980); see generally 2A Sands,\nS u th erla n d on Statutory Construction (4th ed. 1973). T his principle would not necessarily preclude us, in a\np ro p er case, from reading particular statutory language narrow ly in order to im plem ent clear congressional\nintent. H ow ever, as w e discuss above, the legislative history o f the C argo Preference Act is not clear on this\npoint, and w e are therefore unwilling to infer the exception DOT suggests.\n\n144\n\n\x0cAs DOT points out and DOE acknowledges, the primary impetus for passage\nof the Cargo Preference Act was to promote the United States shipping industry\nagainst low-cost competition from foreign flag vessels, by reserving to United\nStates-flag vessels a \xe2\x80\x9csubstantial portion\xe2\x80\x9d of cargoes over which the United\nStates has some control. DOT notes that the congressional debates and reports\non S. 3233, which became the Cargo Preference Act, contain numerous state\xc2\xad\nments emphasizing that the purpose of the bill was to assure to privately owned\nUnited States merchant flag vessels a \xe2\x80\x9csubstantial portion of the water-borne\nexport and import foreign commerce,\xe2\x80\x9d in which those vessels faced massive\nforeign competition. See, e.g., S. Rep. No. 1584, 83d Cong., 2d Sess. 1 (1954);\nH.R. Rep. No. 2329, 83d Cong., 2d Sess. 1 (1954); 100 Cong. Rec. 4158-59\n(1954) (remarks of Sen. Butler).\nThese statements, however, do not necessarily indicate that Congress in\xc2\xad\ntended that the bill, despite its broad language, would apply only to commerce\nin which United States-flag vessels face foreign competition.11 We find it\nsignificant that the bill was intended to apply to two distinct types of cargoes:\nforeign-aid cargoes that are furnished or financed by the United States for the\nbenefit of another nation, which necessarily will be \xe2\x80\x9cforeign\xe2\x80\x9d cargoes, and\ncargoes procured by the United States for its own use, which as a practical\nmatter could be foreign or domestic. Most of the legislative history focuses on\nthe first type of cargo, and therefore emphasizes that the primary applicability\nof the bill would be with respect to foreign- cargoes.12\nThe language used in the legislative history to describe the obligations\nimposed with respect to cargoes obtained by the United States for its own use,\nhowever, is not restricted to foreign cargoes. For example, the House Report\nstates that the bill would apply in four situations:\n(1) Where the United States procures, contracts, or otherwise ob\xc2\xad\ntains for its own account equipment, materials, or commodities;\n11 In support o f its reading o f the legislative history and purpose o f the Cargo Preference A ct, DOE cites\nrecent statem ents made by S enator Slade Gorton, C hairm an o f the Senate Commerce C om m ittee\xe2\x80\x99s M erchant\nM arine Subcommittee, during the S ubcom m ittee\'s June 16, 1982 oversight hearings on adm inistration of the\nAct, as well as recent correspondence from the chairm an and ranking mem ber o f the House M erchant Marine\nand Fisheries Com m ittee and the chairm en o f the H ouse Committee on Energy and Commerce Subcom m ittee\non Fossil and Synthetic Fuels. Although these statem ents m ight reflect the view s of those particular\nlegislators on w hether Jones Act shipm ents should, as a m atter o f current legislative policy, be included in\nC argo Preference A ct calculations, they may not be accorded significant w eight in determ ining C ongress\'\nintent when it passed the C argo Preference Act in 1954. Even contem poraneous remarks o f individual\nlegislators are not controlling in analyzing legislative intent. M oreover, the \xe2\x80\x9cviews o f a subsequent Congress\nform a hazardous basis for inferring the intent o f an earlier one.\xe2\x80\x9d C onsum er P roduct Safety Com m \'n v GTE\nSylvania, 447 U.S. at 117 (quoting United States v. Price, 361 U.S. 304, 313 (I960)).\n12 For exam ple, the legislative history behind inclusion o f the phrase \xe2\x80\x9cw ithin or w ithout the U nited States\xe2\x80\x9d\nem phasizes that C ongress\xe2\x80\x99 prim ary purpose was to reach \xe2\x80\x9coff-shore procurem ent\xe2\x80\x9d foreign-aid c argoes \xe2\x80\x94 i.e.,\nsituations in which the U nited States purchased o r financed the purchase of cargoes in one foreign country,\nfor shipment to another foreign country. See, e.g., 100 C ong. Rec. 41 5 8 -5 9 (1954) (remarks o f Sen. Butler).\nThe language \xe2\x80\x9c without the U nited States\xe2\x80\x9d was intended to assure that the transportation o f such cargoes\nw ould be subject to the 50 percent preference requirem ent. This legislative history is not, how ever, necessar\xc2\xad\nily inconsistent with the conclusion that the 50% preference share m ight also apply to domestic cargoes, but\nrather reflects C ongress\xe2\x80\x99 principal focus on foreign aid-type cargoes. See generally United States Lines, Inc.\nv. Baldridge, 677 F.2d at 944.\n\n145\n\n\x0c(2) furnishes equipment, materials, or commodities to or for the\naccount of any foreign nation without provision for reimbursement;\n(3) advances funds or credits; or\n(4) guarantees the convertibility of foreign currencies in con\xc2\xad\nnection with the furnishing of such equipment, materials, or\ncommodities.\nH.R. Rep. No. 2329, supra, at 1-2. There is no suggestion in the language used\nto describe government-procured or owned cargoes that the reach of the Act\nmust be limited to foreign cargoes procured by the United States.\nIn fact, there is some indication in the legislative history that Congress was\naware that the Act could apply to cargoes acquired domestically by the United\nStates for its own use. The Senate Report notes that the bill affirmed the\nprinciple established by Congress in 1904, when it required that \xe2\x80\x9cvessels of the\nUnited States or belonging to the United States, and no others, shall be\nemployed in the transportation by sea of coal, provisions, fodder, or supplies of\nany description, purchased pursuant to law, for the use of the Army or Navy,\xe2\x80\x9d\nAct of Apr. 28, 1904, ch. 1766, 33 Stat. 518, as amended, 70A Stat. 146 (1956)\n(codified at 10 U.S.C. \xc2\xa7 2631). See S. Rep. No. 1584, supra, at 2. The 1904\nlegislation, which was not repealed by the 1954 Cargo Preference Act, is\nclearly not limited to transportation of foreign cargoes, but applies also to\ncargoes acquired domestically by the Army or Navy. See generally 38 Cong.\nRec. 2464-65 (1904) (remarks of Rep. Perkins) (quoted in 43 Comp. Gen. 792,\n797-98 (1964)).\nOur conclusion that the language of the Cargo Preference Act applies to\ndomestic, as well as foreign, cargoes has some support in a 1964 decision of the\nComptroller General with respect to application of the 1904 act cited above, the\nCargo Preference Act, and the Jones Act to a proposed trainship service\nbetween the United States and Alaska, via Canada. With respect to the applica\xc2\xad\nbility of the Cargo Preference Act, the Comptroller General stated that:\nThe 1954 Cargo Preference Act by amending section 901 of\nthe Merchant Marine Act of 1936, 49 Stat. 2015, 46 U.S.C.\n\xc2\xa7 1241, provided permanent legislation covering the transporta\xc2\xad\ntion of a substantial portion of waterborne cargoes in United\nStates-flag vessels. In H. Rept. No. 80, Administration of Cargo\nPreference Act, 84th Congress, 1st Sess., page 2, it is stated that\nthe 50-percent provisions of the 1954 Cargo Preference Act are\nto apply \xe2\x80\x9cin four kinds of situations\xe2\x80\x9d the first being where the\nUnited States \xe2\x80\x9cprocures, contracts or otherwise obtains for its\nown account equipment, materials, or commodities,\xe2\x80\x9d and the\nremaining three covering transactions involving foreign sub\xc2\xad\njects or nations. This fir s t situation is not restricted in terms to\neither fo reig n or dom estic commerce. In harmony with the basic\nmaritime policy of the United States as stated in section 101 of\n146\n\n\x0cthe Merchant Marine Act of 1936,46 U.S.C. \xc2\xa7 1101, and on the\nbasis of the language alone, the 1954 act might be regarded as\nrelating to Government waterborne cargo transported between\np oin ts in the United States.\n\n43 Comp. Gen. 792, 802 (1964) (emphasis added). The Comptroller General\ndid not, however, find it necessary in that decision to determine whether the\nAct covers transportation in domestic, as well as foreign commerce.\nWe do not find persuasive DOT\xe2\x80\x99s further argument that inclusion of Jones\nAct cargoes in the calculation of DOE\xe2\x80\x99s Cargo Preference Act share for the\nSPR program would be so inconsistent with the purpose of the Cargo Prefer\xc2\xad\nence Act that we must imply an exception from that Act for Jones Act ship\xc2\xad\nments. The purpose of both acts, however it may be characterized, is the same:\nto reserve cargoes for United States-flag vessels in order to promote and protect\nthe United States shipping industry, which may be called upon in times of war\nor national emergency to play a vital sealift role in supplying American forces.\nThe Cargo Preference Act achieves this purpose by requiring United States\nagencies to reserve a substantial portion of their cargoes for United States-flag\ncommercial vessels. The Jones Act achieves that purpose by reserving all\ndomestic coastwise trade to United States vessels.13 In practical terms, we\nunderstand that allowing Jones Act cargoes of Alaskan oil to be counted in\nDOE\xe2\x80\x99s Cargo Preference Act share for the SPR program may disadvantage\nUnited States-flag tankers in the foreign crude oil trades, because inclusion of\nJones Act shipments would lower the ;percentage of foreign oil cargoes that\nmust be shipped on United States vessels in order to reach the 50 percent Cargo\nPreference Act share. However, we do not understand that the effect of inclu\xc2\xad\nsion of the Jones Act shipments will be so great as to undermine or frustrate the\npurposes served by the Cargo Preference Act, and we cannot say that this result\nis so contrary to Congress\xe2\x80\x99 intent in enacting the Cargo Preference Act that it\nwould justify an Executive Branch revision of the statutory language. See\ngenerally United States v. American Trucking A s s \xe2\x80\x99n, 310 U.S. 534,543 (1940).\nDOT has also argued that, as a matter of statutory construction, the Cargo\nPreference Act must be interpreted to cover only cargoes transported in trades\nin which United States-flag ships face foreign competition, because the Act\nwould be unnecessary in a domestic trade from which foreign-flag vessels are\nalready excluded. Therefore, DOT contends, it would be \xe2\x80\x9cinconsistent with\naccepted norms of statutory construction to interpret the Cargo Preference Act\nto apply to a trade where it was unneeded.\xe2\x80\x9d The question we address here,\nhowever, is not whether, when the United States procures cargoes that are\n13 W e see no reason here to address the effect o f the A ttorney G en eral\'s opinion in 1907 that a predecessor\nstatute to the Jones Act did not apply to governm ent-ow ned cargoes. See 26 Op. A tt\xe2\x80\x99y Gen. 415 (1907). The\napplicability o f that opinion to the Jones Act and its continued validity is, as D OT notes, open to some\nquestion. DO E states, how ever, that the A laskan oil acquired for the SPR was bought on an f.o.b. destination\nbasis, so that title was held during the transportation by the private ow ner and not by the U nited States\nGovernm ent. The Jones A ct clearly applies to transportation o f privately ow ned cargoes, and therefore\napplied to the transportation o f SPR oil.\n\n147\n\n\x0csubject to the Jones Act, it must also comply with the Cargo Preference Act. If\nthat were the question, we might concur with DOT\xe2\x80\x99s analysis, because it would\narguably be superfluous to require compliance with the Cargo Preference Act\xe2\x80\x99s\n50 percent United States-flag ship requirement in a situation in which the Jones\nAct already requires 100 percent United States-flag ship carriage. However, the\nquestion we address is whether, when the United States engages in a program\nof acquisition that includes both Jones Act and non-Jones Act shipments, it\nmay count the Jones Act shipments towards its overall Cargo Preference Act\nshare. Seen in that light, we do not believe the Cargo Preference Act can be\nregarded as superfluous, because it would still require the agency to take\nnecessary and practicable steps to reach an overall 50 percent compliance\nlevel.14\nIn sum, while the arguments made by DOT in support of its interpretation of\nthe Cargo Preference Act have considerable merit, we believe in this case that\nthe plain language of the statute should prevail. Therefore, it is our opinion that\nshipments of Alaskan oil by or on behalf of DOE for the SPR may be counted in\ncalculation of DOE\xe2\x80\x99s Cargo Preference Act share for the SPR program.\nB. Exchange o f NPR Oil\n\nThe first of the two questions posed separately by DOE also arises out of the\nSPR program, but involves interpretation of the language of \xc2\xa7 804(b) of the\nEnergy Security Act (ESA), codified at 10 U.S.C. \xc2\xa7 7430(k), that allows the\nSecretary of Energy to exchange oil from the NPR for oil to be placed in the\nSPR \xe2\x80\x9cwithout regard to otherwise applicable Federal procurement statutes and\nregulations.\xe2\x80\x9d The question posed by DOE is whether the Cargo Preference Act\nmay be considered to be an \xe2\x80\x9cotherwise applicable Federal procurement statute\xe2\x80\x9d\nwithin the meaning of \xc2\xa7 804(b) of the ESA, which may therefore be waived by\nthe Secretary of Energy.\nWe concur with DOE\xe2\x80\x99s legal conclusion that, at least for the purpose of\n\xc2\xa7 804(b), the Cargo Preference Act would be an \xe2\x80\x9cotherwise applicable Federal\nprocurement statute,\xe2\x80\x9d which may be waived by the Secretary of Energy if he\ndetermines that application of the Cargo Preference Act would hamper efforts\nto exchange NPR oil for other oil to be placed in the SPR.15 Although the terms\nof the Cargo Preference Act do not expressly characterize the Act as a \xe2\x80\x9cpro\xc2\xad\ncurement\xe2\x80\x9d statute, the Act applies, inter alia, when the United States \xe2\x80\x9cpro\xc2\xad\ncures\xe2\x80\x9d goods to be transported by ocean vessels. See 46 U.S.C. \xc2\xa7 1241(b).\nCertainly in practical terms the Cargo Preference Act regulates the government\xe2\x80\x99s\nprocurement of ocean transportation services and the transportation by vessel\n14 In fact, it appears to us to be possible that some shipm ents m ade betw een dom estic ports could be carried\non fo reig n -flag vessels, pursuant to th e third proviso o f the Jones Act or to w aivers o f the Jones Act\nrequirem ents. D O T has noted that, upon occasion, Jones Act w aivers have been granted for governm entow ned cargo. In that event, it would c learly not be superfluous to apply the Cargo Preference Act to those\ndom estic cargoes, in o rd er to assure a 50 percent overall share to U nited States-flag vessels.\n15 W e do not suggest here that the C arg o Preference A ct w ould necessarily also be considered a \xe2\x80\x9cFederal\nprocurem ent statute\xe2\x80\x9d under a different statutory schem e.\n\n148\n\n\x0cof commodities procured by the government, and is an integral part of the\nacquisition process.16\nIn addition, the purpose of the waiver authority in \xc2\xa7 804(b) supports the\nconclusion that the Cargo Preference Act can be considered a \xe2\x80\x9cprocurement\nstatute\xe2\x80\x9d for the purpose of exchanges of NPR oil. Although the legislative\nhistory of the ESA does not list or otherwise describe in detail what is included\nin the term \xe2\x80\x9cFederal procurement statutes and regulations,\xe2\x80\x9d the purpose of the\nwaiver authority is clearly to grant the Secretary of Energy sufficient flexibility\nto use the exchange authority effectively to meet the pressing need to increase\nthe fill rate of the SPR. See H.R. Rep. No. 1104, 96th Cong., 2d Sess. 317-18\n(1980). To the extent that it regulates some aspect of the acquisition process,\nand could substantially frustrate efforts by the Secretary of Energy to use the\nauthority granted in the ESA to exchange NPR oil, we believe the Cargo\nPreference Act is a \xe2\x80\x9cprocurement\xe2\x80\x9d statute covered by the ESA. Therefore if, in\nthe Secretary of Energy\xe2\x80\x99s judgment, limiting the NPR exchange in order to\nassure 50 percent Cargo Preference Act shipping would have frustrated the\nobjectives of the ESA, reliance on the waiver authority in \xc2\xa7 804(b) to permit\nthe exchange without regard to the Cargo Preference Act would be consistent\nwith the letter and the spirit of the ESA. Any resulting shortfall in meeting\nCargo Preference Act requirements for the NPR exchange should thus not be\ncounted as a Cargo Preference Act deficiency.\nWe take no view, however, as to whether the Secretary of Energy has\nactually waived or could yet waive applicability of the Cargo Preference Act to\nNPR exchanges that have already taken place. DOT takes the position that the\nocean transportation of foreign oil delivered to the SPR in exchange for NPR\noil was included in calculating DOE\xe2\x80\x99s existing obligations under the inter\xc2\xad\nagency agreement, and therefore DOE cannot now maintain that such ex\xc2\xad\nchanges should be excluded from calculation of its Cargo Preference Act\ncompliance for past years. DOE asserts that the agreement does not address\ntreatment of NPR exchanges, and therefore that the Secretary of Energy is not\nbarred by the agreement from exercising his waiver authority.17\n16 The definition o f the term \xe2\x80\x9cprocurem ent\xe2\x80\x9d as used in the Federal Procurem ent Policy Act A m endm ents o f\n1979, Pub. L. No. 9 6 -8 3 , \xc2\xa7 3, 93 Stat. 649 (41 U.S.C. \xc2\xa7 403(b)), is certainly broad enough to cover the C argo\nPreference Act. That definition reads as follows:\nAs used in this ch ap ter the term \xe2\x80\x9cprocurem ent\xe2\x80\x9d includes all stages of the acquisition process,\nbeginning w ith the process for determ ining a need for property and services through to the\nFederal G overnm ent\xe2\x80\x99s disposition o f such property and services.\nSim ilarly, the definition o f \xe2\x80\x9cprocurem ent\xe2\x80\x9d contained in the Federal Procurem ent Regulations includes the\n\xe2\x80\x9cacquisition (and directly related m a tte rs ). . . o f personal property and non-personal services,\xe2\x80\x9d which w ould\nalso appear broad enough to cover C argo Preference Act requirem ents. FPR \xc2\xa7 1-1.209. Finally, w e note that\nrules governing Cargo Preference Act com pliance are included in the Federal Procurem ent Regulations and\nthe Defense Acquisition R egulations. FPR \xc2\xa7 1 -19.108-2; DAR \xc2\xa7 1-1404.\n17 DO E does not address w hether the Secretary has m fact exercised that authority for som e or all NPR\nexchanges, o r what action w ould be necessary to exercise that authority. We understand from conversations\nwith DOE that no official w aiver action was taken at the tim e the NPR exchange cargoes w ere acquired.\nSection 804(b) o f the ESA does not explicitly require such form al action and, to o u r know ledge, there are no\nregulations that establish particular procedures o r prerequisites for such w aivers. As a m atter of logic,\nhow ever, it seems to us that the w aiver authority should be exercised at the time o f acquisition o f the cargoes.\nContinued\n\n149\n\n\x0cAs we were not privy to the negotiations that led to the interagency agree\xc2\xad\nment, we are not in a position to determine whether the treatment of past NPR\noil exchanges was resolved during those negotiations. We recommend that this\nissue be addressed again by DOE and DOT and, if necessary, resolved at a\nhigher level within the Executive Branch.\nC. R em edies f o r Shortfalls in Cargo Preference A ct Compliance\n\nThe second question posed separately by DOE concerns the available rem\xc2\xad\nedies under the Cargo Preference Act for a calendar year shortfall in United\nStates-flag vessel shipments. We understand that the Maritime Administration\n(MarAd), which is the component of DOT responsible for administering the\nCargo Preference Act, see 46 U.S.C. \xc2\xa7 \xc2\xa7 1 1 14(b), 1122(d), took the position in\ndiscussions and correspondence with DOE, prior to negotiation of the inter\xc2\xad\nagency agreement, that annual shortfalls in meeting the 50 percent United\nStates-flag ship share must be made up in succeeding years. DOT now also\nasserts that in the interagency agreement DOE agreed, independently of its\nundertaking to make up its 1981 Cargo Preference Act deficiency and to\ntransport at least 50 percent of foreign oil delivered to the SPR on United\nStates-flag tankers \xe2\x80\x94 both o f which are contingent to some degree on issuance\nof our opinion here \xe2\x80\x94 that it would carry forward calendar year deficits or\nsurpluses in calculating Cargo Preference Act requirements for United Statesflag vessels in future years.\nFor its part, DOE asserts that it is not required, as a matter of law, to carry\ndeficiencies forward from one year to the next in order to reach the 50 percent\nlevel, and that there had been, at least prior to 1980, a \xe2\x80\x9clongstanding\xe2\x80\x9d agree\xc2\xad\nment between MarAd and DOE that Cargo Preference Act compliance would\nbe measured on a calendar year basis, without carrying forward either a surplus\nor a deficiency from one year to the next. With respect to the effect of the\ninteragency agreement, DOE maintains that its obligation to carry forward\ndeficits and surpluses is contingent on the issuance of an opinion on the\nquestion jointly referred to the Attorney General, and therefore ceases with the\nissuance of that opinion.\nThe fundamental disagreement between DOE and DOT as to what they\nagreed upon in the interagency agreement makes it impossible for us to provide\nspecific guidance to either agency with respect to remedying shortfalls in\nCargo Preference Act compliance.18 Obviously, the method of complying with\n17 (. . . continued)\nw heo the Secretary can make a determ ination that com pliance w ith the C argo Preference Act fo r those\np a rtic u la r cargoes w ould frustrate the D ep artm en t\'s ability to m aintain or increase the SPR fill rate to levels\nm andated by C ongress. W e have some d o u b t that the w aiver authority in the ESA w as intended to provide a\npost hoc rationalization fo r overall program m atic shortfalls in an a g en cy \'s Cargo Preference Act compliance.\n18 A t best, the interagency agreement is am biguous on this point. Subparagraph 1(D) of the agreem ent\nrecites in p art that \xe2\x80\x9ccommencing w ith calendar year 1981, deficits from and surpluses over 50% in the\ncalculation o f the SP R \xe2\x80\x99s cargo preference obligation w ill be cum ulative, to be carried forward in calculating\nthe requirem ents for U nited States-flag vessels in future years." DOG m aintains that this obligation is subject\nC ontinued\n\n150\n\n\x0cthe Act can be a proper matter for negotiation and agreement between MarAd,\nwhich is charged with administering the Act, and a federal agency, such as\nDOE, that ships cargoes subject to the Act. We would not disturb such an\nagreement unless it were predicated on an incorrect reading of the applicable\nlaw and regulations \xe2\x80\x94 a conclusion we could not draw with respect to either\ninterpretation advanced here.19 We are not the appropriate office within the\nExecutive Branch to resolve the questions of fact and policy that should have\nbeen addressed by both agencies in the course of negotiation of the interagency\nagreement, or that must be addressed now in order to resolve the outstanding\ndisagreement between those agencies. We suggest therefore that DOT and\nDOE attempt to resolve that disagreement in further discussions between the\ntwo agencies or, if need be, with the participation of other appropriate Execu\xc2\xad\ntive Branch officials.\nIll\nWe have considered carefully the thorough presentations by both agencies\nwith respect to the application of the Cargo Preference Act to SPR shipments of\n18 (. . . continued)\nto the general condition in paragraph 1 that the obligations each agency undertakes last \xe2\x80\x9cuntil such tim e as the\nA ttorney General may rule affirm atively\xe2\x80\x9d on the issue presented by both agencies for decision. A lthough the\nstructure o f the agreem ent appears to support D O E\xe2\x80\x99s position that this general condition was intended to\napply to all obligations undertaken in subparagraph (A) through (D) o f the agreem ent, the language used in\nsubparagraph (D) suggests an independent obligation. In addition, if DOE is correct in its interpretation of\nsubparagraph (D), it appears that the subparagraph is largely redundant with subparagraphs (B) and (C),\nwhich outline specific rem edies for D O E \'s 1981 Cargo Preference Act shortfall.\n19 We can provide some guidance to both agencies on the issue w hether an agency, as a m atter o f law, is\nrequired to reach the SO percent United States-flag ship level established in the Cargo Preference Act. We\nbelieve it is clear that the Act does not impose an absolute duty on federal agencies to ship 50 percent o f the\ncargo of a particular program (or o f the agency) in United States-flag vessels, regardless o f the availability of\nsuch vessels or o f unforeseen circum stances that might prevent an agency from reaching the 50 percent level.\nAn early version o f S. 3233 w ould have set 50 percent as a mandatory minimum com pliance level, by\nrequiring that \xe2\x80\x9ca t lea st 50 p er centum o f the gross tonnage . . which may be transported on ocean vessels\nshall be transported on privately-ow ned United States-flag com m ercial vessels.\xe2\x80\x9d S. Rep. No. 1584, supra , at\n2 (em phasis added). The bill w as subsequently am ended, however, to require only that agencies \xe2\x80\x9ctake such\nsteps as may be necessary and practicable to assure that at least 50 per centum . . . \xe2\x80\x9d Id. (em phasis added). In\ndiscussing this am endm ent. Senator Butler, the sponsor o f the bill, specifically noted that the \xe2\x80\x9cunequivocal\nprovision for shipm ent o f at least 50 percent o f all aid or federally ow ned or financed cargoes was softened to\nrequire only such steps as may be reasonable and practicable to assure shipm ent o f at least 50 percent in\nAmerican bottom s.\xe2\x80\x9d 100 Cong. Rec. 8228 (1954) (remarks o f Sen. Butler). M oreover, the Act by its terms\nrequires 50 percent shipm ent in U nited States-flag vessels only \xe2\x80\x9cto the extent such vessels are available at fair\nand reasonable rates for U nited States-flag com m ercial vessels.\xe2\x80\x9d 46 U.S.C. \xc2\xa7 1241(b).\nT he language o f the statute, particularly when read in light o f its legislative history, therefore clearly\ncontem plates that agencies may not be able to meet the 50 percent level \xe2\x80\x94 i.e., if, despite the best efforts of\nthe agency, it could not arrange for 50 percent shipment o f its cargo on U nited States-flag vessels, or if United\nStates-flag vessels were not available for particular shipm ents at fair and reasonable rates for such vessels.\nTherefore, we do not believe that, as a m atter o f law, a federal agency is required to m eet an absolute 50\npercent m inimum in its shipm ents o f cargo subject to the C argo Preference Act.\nIf M ar A d \'s position on D O E\xe2\x80\x99s obligation to remedy C argo Preference Act deficits were predicated on the\nlegal assum ption that the Act requires DOE to reach a m inimum 50 percent United States-flag vessel share\nfor the SPR program , we believe it would have to be revised to reflect the legal conclusion we have ju st\noutlined. However, w e do not understand that to be M arA d\xe2\x80\x99s position, and therefore cannot provide addi\xc2\xad\ntional guidance on the issue raised by DOE.\n\n151\n\n\x0cAlaskan oil, and have concluded that the plain language of the Cargo Prefer\xc2\xad\nence Act allows such shipments to be included in DOE\xe2\x80\x99s calculation of its\nCargo Preference Act compliance for the SPR program. We understand that\nour analysis of this issue will resolve much of the actual dispute between DOT\nand DOE with respect to DOE\xe2\x80\x99s Cargo Preference Act compliance obligations.\nWith respect to the two questions raised independently by DOE, however, we\ncannot fully resolve the disagreement between DOT and DOE, because of the\ncontinuing controversy between those agencies as to the intent and effect of\ntheir interagency agreement.\nT h eo d o r e B. O lso n\n\nAssistant Attorney General\nOffice o f Legal Counsel\n\n152\n\n\x0c'


b'Constitutionality of Allowing Punishment of Misdemeanor\nby a Sentence Exceeding One Year\nT h e Fifth A m endm ent to the Constitution requires th at offenses punishable by im prison\xc2\xad\nm ent for m ore than one year be prosecuted by an indictm ent presented to a grand jury.\nProposed am endm ents to the L acey A ct, by w hich m isdem eanor violations o f the A c t\ncould result in up to five years\xe2\x80\x99 im prisonm ent if the defendant w ere designated a\n\xe2\x80\x9cspecial offender,\xe2\x80\x9d must be construed to require prosecution by indictm ent in all cases.\n\nMarch 30, 1981\nM EM ORANDUM O PIN IO N FO R T H E C H IE F, W IL D L IFE\nSECTION, LA N D A N D N A TU R A L RESOURCES D IVISION\nThis responds to your request for our views regarding a proposed\namendment to the Lacey A ct (Act), 18 U.S.C. \xc2\xa743. According to\ninformation you have provided us, the Safari Club International, an\norganization of \xe2\x80\x9csportsmen,\xe2\x80\x9d has proposed an amendment whereby\ncriminal violations of the Act would be misdemeanors, unless the de\xc2\xad\nfendant were designated a \xe2\x80\x9cspecial offender.\xe2\x80\x9d A court could sentence a\n\xe2\x80\x9cspecial offender\xe2\x80\x9d to a term o f imprisonment up to five years. You\nhave asked us to comment on the constitutionality of sentencing a\ndefendant to a felony penalty when the underlying violation is a misde\xc2\xad\nmeanor prosecuted by way of information rather than indictment. For\nreasons explained below, we conclude that such a statutory scheme\nwould require that all offenses under the statute be brought before a\ngrand jury.\nThe proposed amendment is patterned after the \xe2\x80\x9cdangerous special\noffender\xe2\x80\x9d criminal statute, which authorizes a prosecutor in a felony\ncase to file a notice that the defendant is a \xe2\x80\x9cdangerous special of\xc2\xad\nfender.\xe2\x80\x9d 18 U.S.C. \xc2\xa7 3575(a). If, after the defendant is convicted by a\nplea of guilty or otherwise, it appears at a hearing the defendant is a\n\xe2\x80\x9cdangerous special offender,\xe2\x80\x9d an increased penalty may be authorized.\n18 U.S.C. \xc2\xa7 3575(b). T he proposed Lacey A ct amendment in question\nhere similarly would authorize an attorney prosecuting alleged violators\nof the A ct to file a notice specifying that the defendant is a \xe2\x80\x9cspecial\noffender.\xe2\x80\x9d A defendant could be adjudged a \xe2\x80\x9cspecial offender\xe2\x80\x9d if any\none of three conditions is met: (1) the defendant has been convicted for\nthree or more offenses involving illegal taking of fish and wildlife, or of\nplants; (2) the defendant committed the violation as part of a pattern of\n87\n\n\x0ccriminal conduct which constituted a substantial source of his income\nand in w hich he manifested special skill or expertise; or (3) the defend\xc2\xad\nant was engaged in a conspiracy with five o r more persons. Other than\nincreasing the threshold requirements for special offender status, these\ncategories are almost identical to the categories o f \xc2\xa7 3575(c).\nT he Fifth Amendment provides in part as follows:\nN o person shall be held to answer for a capital, or\notherwise infamous crime, unless on a presentment or\nindictment of a G rand Jury . . . .\nW hen faced with the necessity of defining the words \xe2\x80\x9cotherwise infa\xc2\xad\nmous crime,\xe2\x80\x9d the Supreme Court in 1886 looked for the answer in\nEnglish, Irish, and early American law, and concluded:\n[WJhether a man shall be put upon his trial for crime\nwithout a presentment or indictment by a grand jury of\nhis fellow citizens depends upon the consequences to him\xc2\xad\nself if he shall be found guilty.\n. . . W hen the accused is in danger of being subjected to\nan infamous punishment if convicted, he has the right to\ninsist that he shall not be put upon his trial, except on the\naccusation of a grand jury.\nE x Parte Wilson, 114 U.S. 417, 423, 426 (1885). The Court decided that\n\na crim e punishable by imprisonment for a term of years at hard labor\nwas an infamous crime within the meaning of the Fifth Amendment. Id.\nat 429. In a series of subsequent decisions, it was established that an\ninfamous crime is one punishable by imprisonment in a penitentiary or\nat hard labor. See United States v. Moreland, 258 U.S. 433 (1922); In Re\nClaasen, 140 U.S. 200 (1891); Mackin v. United States, 117 U.S. 348\n(1886). Since imprisonment in a penitentiary may be imposed only if a\ncrim e is punishable by imprisonment exceeding one year, 18 U.S.C.\n\xc2\xa7 4083, the rule has come to be stated that a crime is infamous if it is\npunishable by imprisonment for more than one year. See Duke v. United\nStates, 301 U.S. 492 (1937).\nRule 7(a) o f the Federal Rules o f Criminal Procedure gives effect to\nthis Fifth Amendment requirement by providing:\nAn offense which may be punished by imprisonment for a\nterm exceeding one year or at hard labor shall be pros\xc2\xad\necuted by indictment . . . [unless waived].\nT he Rule does not enlarge the requirement of an indictment beyond the\n\xe2\x80\x9ccapital, or otherwise infamous crime\xe2\x80\x9d of the Fifth Amendment. It\nsimply incorporates the criteria which have been established by the\nSupreme Court. Harvin v. United States, 445 F.2d 675, 678 (D.C. Cir.\n1971).\n\n\x0cApplying these criteria to the question at hand, it is apparent that if\nthe defendant qualifies for treatment as a \xe2\x80\x9cspecial offender,\xe2\x80\x9d prosecu\xc2\xad\ntion must be by indictment.1 The closest analogy to this situation we\nfound in decided cases is the lengthened sentence authorized for youth\xc2\xad\nful offenders under the Youth Corrections Act, 18 U.S.C. \xc2\xa7\xc2\xa7 5005-5025.\nUnder that Act, a defendant under the age of 26 years may be commit\xc2\xad\nted to the custody of the Attorney General for a period up to six years,\neven if the offense for which he is convicted is a misdemeanor. 18\nU.S.C. \xc2\xa7\xc2\xa74216, 5010(b), 5017(c). Many defendants prosecuted by way\nof informations have challenged their convictions, alleging that they\nwere entitled to grand jury indictments. Those cases which have held\nthat an indictment is required include United States v. Ramirez, 556\nF.2d 909 (9th Cir. 1976); 2 United States v. Davis, 430 F.Supp. 1263 (D.\nHaw. 1977; United States v. Neve, 357 F. Supp. 1 (W.D. Wise. 1973),\naffd, 492 F.2d 465 (7th Cir. 1974); United States v. Reef, 268 F. Supp.\n1015 (D. Colo. 1967). Conversely, the District of Columbia Circuit\nCourt of Appeals ruled, in an en banc 6-4 decision, that an indictment is\nnot necessary for prosecutions under the Youth Corrections Act.\nHarvin v. United States, 445 F.2d 675 (D.C. Cir. 1971). This ruling was\nbased on the fact that the purpose of the extended sentence for a\nyouthful offender was to insure proper treatment and was not a reflec\xc2\xad\ntion of the prevailing views o f society as to the infamous or noninfamous character of the crime. Id. at 678. It was also based on the\ncourt\xe2\x80\x99s finding that the Youth Corrections A ct does not permit a\nsentence under it to be served in a penitentiary.3 Neither of these bases\nis applicable to the proposed \xe2\x80\x9cspecial offender\xe2\x80\x9d amendment to the\nLacey Act. The increased penalty would reflect societal judgment of\nthe crime and the sentence probably would be served in a penitentiary.\nEven as to a defendant who does not qualify as a \xe2\x80\x9cspecial offender,\xe2\x80\x9d\nan indictment may be required. If a defendant under this proposed\namendment did not satisfy one of the three conditions of \xe2\x80\x9cspecial\noffender\xe2\x80\x9d status noted above, he or she could be imprisoned no more\nthan one year. The proposed amendment does not require, however,\nthat the facts justifying such status be alleged in the charging document\nso the maximum sentence would not be initially apparent. Under some\xc2\xad\nw hat different but analogous facts, the Supreme Court has required an\nindictment. In Smith v. United States, 360 U.S. 1 (1959), the petitioner\nwas charged with a violation of the Federal Kidnapping Act, 18 U.S.C.\n\xc2\xa7 1201, which was punishable by death if the victim was not liberated\n1 The mere designation of a crime as a felony or misdemeanor is not itself determinative. See E x\nParte Brede, 279 F. 147 (E.D.N.Y. 1922), a ffd sub nom. Brede v. Powers, 263 U.S. 4 (1923)\n2 This opinion was withdrawn when the court was later informed that an indictment had been filed.\nUnited States v. Ramirez, 556 F 2d 909, 926 (9th Cir. 1976). In United States v. Indian Boy X, 565 F 2d\n585 (9th Cir. 1977), the court points out that Ramirez was withdrawn and rules that juvenile\nproceedings under Federal Juvenile Delinquency Act, 18 U S C . \xc2\xa7\xc2\xa75031-5042 may be initiated by\ninformation.\n3 This finding was disputed by the dissenting judges in Harvin and by the Ninth Circuit in Ramirez.\n\n89\n\n\x0cunharmed. He had waived indictment and was prosecuted by informa\xc2\xad\ntion. T he information did not state w hether the victim was released\nharm ed or unharmed. T h e Court held that the waiver of indictment\nwas not valid.4 The C ourt\xe2\x80\x99s reasoning is equally applicable to the\nproposal here. The Court explained its reasoning as follows:\nUnder the statute, that offense is punishable by death if\ncertain proof is introduced at trial. When an accused is\ncharged, as here, with transporting a kidnapping victim\nacross state lines, he is charged and will be tried for an\noffense which m ay be punished by death. Although the\nimposition of that penalty will depend on whether suffi\xc2\xad\ncient proof of harm is introduced during the trial, that\ncircumstance does not alter the fact that the offense itself\nis one which may be punished by death and thus must be\nprosecuted by indictment. In other words, when the of\xc2\xad\nfense as charged is sufficiently broad to justify a capital\nverdict, the trial must proceed on that basis, even though\nthe evidence later establishes that such a verdict cannot\nbe sustained because the victim was released unharmed. It\nis neither procedurally correct nor practical to await the\nconclusion of the evidence to determine whether the ac\xc2\xad\ncused is being prosecuted for a capital offense. For the\ntrial judge must make informed decisions prior to trial\nwhich will depend on whether the offense may be so\npunished.\n360 U.S. at 8. For similar reasons, the Court likely would conclude\nhere that w here an indictment is not waived, the government must\nproceed by way of the grand jury.\nW e conclude that the Fifth Amendment would impose a constitu\xc2\xad\ntional barrier against the use o f informations to prosecute violations\nunder this proposed amendment to the Lacey A ct.5\nL\n\narry\n\nL . S im m s\n\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n4 Indictment may not be waived in capital cases. See Fed. R. Crim. P. 7(a).\n5 You also ask w hether we have any experience with other statutes that might require misdemean\xc2\xad\nors to proceed by indictment. We d o not.\n\n90\n\n\x0c'