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sons for holding on to Cuban assets as long as we are negotiating for settlement of claims.

Mr. JAFFE. We may be talking semantically, because I am certain Congress would want to specify circumstances and conditions under which he could exercise those powers. That might be another way of saying Congress has defined the emergency. There is no definition of emergency. It may be the conditions under which he could invoke those powers in peacetime is the definition of an emergency.

Mr. BINGHAM. That is so circular.

Mr. JAFFE. That is what I am trying to say.

Mr. BINGHAM. I would like you to give that more thought because I really think this may be a troublesome point in the legislation that we intend to draft.

[The information follows:]

Washington, D.C., May 27, 1977.

Hon. JONATHAN B. BINGHAM, Chairman, Subcommittee on International Economic Policy and Trade, Committee on International Relations, House of Representatives, Washington, D.C. DEAR CONGRESSMAN BINGHAM: At the end of my testimony on May 5, 1977 relating to the proposed repeal of Section 5(b) of the Trading with the Enemy Act, you inquired whether a declaration of a national emergency was required before the Executive could take action to meet threats to the national security, national economy or the international financial system.

Our examination of the question leads us to conclude that a formal declaration of an "emergency" is not required. An emergency does not create power; it only furnishes the occasion for the exercise of power. As the Supreme Court said, "although an emergency may not call into life a power which has never lived, nevertheless emergency may afford a reason for the exertion of living power already enjoyed." Wilson v. New York, 243 U.S. 332, 348 (1917).

Although courts do, of course, take cognizance of declarations of national emergencies when the President acts pursuant to congressional authorization specifically limited to periods of national emergency, the reasonableness and validity of the powers exercised by the President are invariably judged in the light of the circumstances giving rise to the use of these powers, and not merely on the basis that the action taken was at a time when a national emergency was declared to be in existence. See, e.g., Sardino v. Federal Reserve Bank, 361 F.2d 106, 111-2 (C.A. 2 1965); Nielsen v. Secretary of Treasury, 424 F.2d 833, 846 (C.A.D.C. 1970).

Congress may specify conditions under which the President may exercise certain extraordinary powers, and the President may, upon a finding that such conditions exist, exercise such powers, without the use of the term "emergency" by Congress or by the President. Numerous examples of the use of specified powers under extraordinary circumstances are catalogued in Mr. Justice Frankfurter's concurring opinion in the Steel Seizure case, 343 U.S. 579, 615-619 (1952). See also the provisions of the Economic Stabilization Act of 1970, 12 U.S.C. 1904, note.

Alternately, should the Congress not wish to specify conditions, Congress may authorize the President to exercise certain powers whenever the President deems it necessary to do so in the national interest or in the conduct of the government's foreign affairs. Congress has done so since the earliest days of the Republic, again without using the term "emergency". See, e.g., the act of June 4, 1794, 1 Stat. 372, which broadly authorized the President "to lay, regulate and revoke Embargoes. . . under such regulations as the circumstances of the case may require, and to continue or revoke the same, whenever he shall think proper." In our view, such action is constitutionally unobjectionable.

Sincerely yours,

Deputy Assistant Attorney General,
Civil Division.

Mr. BINGHAM. Mr. Moyer.

Mr. MOYER. The Department of Commerce would defer to Justice Department on this constitutional issue. I would only add that as I read the opinion of Justice Jackson in the Steel Seizure case which I think has come to be regarded as perhaps closest to the sense of the Court, that the question of the President's constitutional authority is not unrelated to the type of action that the Congress takes with respect to a particular type of delegation of authority. That is, legislative action that the Congress takes could affect the scope of the inherent constitutional powers of the President.

Mr. BINGHAM. Mr. Fowler.

Mr. FOWLER. No questions, Mr. Chairman.

Mr. BINGHAM. Thank you, gentlemen.

We do have another vote.

As I indicated at the beginning, we plan to proceed to draft some legislation, and we will certainly take into account the interests of the various departments. I don't think we have any basic disagreements as to what the executive branch should be in a position to do, but we are trying to develop a logical structure to what has, to say the very least, become an illogical and Alice-in-Wonderland situation. Thank you very much for your patience.

Mr. JAFFE. The Department of Justice will be happy to cooperate with the staff to any extent we can in those efforts.

Mr. MOYER. As will the Department of Commerce.

Mr. BINGHAM. Thank you, gentlemen.

The hearing stands adjourned.

[Whereupon, at 4:40 p.m. the subcommittee adjourned, subject to the call of the Chair.]



Markup of Trading With the Enemy Reform Legislation






Washington, D.C.

The subcommittee met in open markup session at 2:15 p.m., in room 2200, Rayburn House Office Building, Hon. Jonathan Bingham (chairman of the subcommittee) presiding.

Mr. BINGHAM. The Subcommittee on International Economic Policy and Trade will be in order.

Today we are to begin markup of the proposed legislation to revise section 5(b) of the Trading With the Enemy Act, which delegates certain authorities to the President to regulate financial transactions in times of war and national emergency.

The subcommittee has held hearings on section 5(b). The recommendations of the Committee on International Relations with respect. to any changes that may be needed in section 5 (b) or the exercise of 5(b) authorities is mandated by section 502 (b) of the National Emergencies Act.

I would like to note that I have received a number of documents relating to this legislation, which I believe should be included in the report. These documents are:

An article by Stanley L. Sommerfield entitled, "Treasury Regulation of Foreign Assets and Trade;"

A memorandum dated January 24, 1977, from the American Law Division of the Congressional Research Service on "Repeal of Section 5(b) of the Trading With the Enemy Act";

A letter and enclosure from Arthur F. Burns, Chairman, Federal Reserve Board, commenting on H.R. 1560, dated May 4, 1977;

A statement dated May 13, 1977, by John E. Clute, president of the Shanghai Power Co., concerning H.R. 1560;

A letter dated May 10, 1977, from Hon. Julius L. Katz, Assistant Secretary of State for Economic and Business Affairs, containing administration comments on proposals made by public witnesses before this subcommittee; and

A memorandum dated March 9, 1977, from the American Express Co. on "Trading With the Enemy Act-Experience of the American Express Co."


If there is no objection, I would like these documents to be included in the record, subject to obtaining necessary permission and copyright waivers.1

The subcommittee has before it two drafts of legislation, one prepared by the subcommittee staff, and the other by the administration. Since we do not have a quorum, and since this is unfamiliar material, it is my thought that we devote this afternoon's session to a discussion of these drafts with the subcommittee staff and with legislative counsel, representatives of the Congressional Research Service and of the administration, and that we not take any formal action on either of these drafts today.

I have scheduled further markup sessions for Monday and Tuesday of next week at 2 p.m.

I would like to start, if it is all right with you, Mr. Whalen, by asking the subcommittee staff director, Roger Majak, to identify the people at the witness table who will be available to assist in answering any questions that we may have in the course of the markup. Then he will briefly explain the staff draft, after which we can have some discussion about the differences between the staff draft and the administration draft, and try to resolve any questions that may arise. If you would proceed, Mr. Majak.

Mr. MAJAK. At my left is William Mohrman, assistant counsel, Office of the Legislative Counsel, who is well known to us and works closely with our committee, and worked closely with the staff on the preparation of the subcommittee draft.

At my right is Mr. Leonard E. Santos, who is attorney adviser in the Office of the General Counsel, Department of the Treasury. Mr. Santos specializes in the international affairs area. He will represent the views of the several concerned agencies of the executive branch.

At his right is Mr. Raymond J. Celada, senior specialist in American Public Law, Congressional Research Service. Mr. Celada, among other things, has prepared for the staff and the members of the committee a rather detailed background memorandum on the Trading With the Enemy Act, focusing on judicial interpretations of the act and related statutory authorities. He is especially prepared to answer any questions that might arise in those areas.

I would mention as well that seated somewhere behind Mr. Santos are representatives of other executive agencies, including Mr. William Root of the Department of State; Mr. John Crook of the Department of State; Mr. Melvin Schwechter of the Department of Commerce; and Mr. Jack Goldklang of the Department of Justice.

1 These documents appear in the appendixes.

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