Regan v. Wald

LOCATION:Hishon & King Atlanta Office

DOCKET NO.: 83-436
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the First Circuit

CITATION: 468 US 222 (1984)
ARGUED: Apr 24, 1984
DECIDED: Jun 28, 1984

Leonard B. Boudin – on behalf of Respondents
Paul M. Bator – on behalf of Petitioners

Facts of the case


Audio Transcription for Oral Argument – April 24, 1984 in Regan v. Wald

Warren E. Burger:

We will hear arguments first this morning in Regan against Wald.

Mr. Bator, you may proceed whenever you’re ready.

Paul M. Bator:

Thank you, Mr. Chief Justice, and may it please the Court:

This case raises questions about the President’s authority in connection with national emergency economic embargoes, that is, in connection with programs of comprehensive control on financial and property transactions that apply to a few countries with which our foreign relations are in a state of very special and acute difficulty.

This case involves Cuba.

The embargo that is involved here is very much like the Iranian assets control program that was before the Court in Dames & Moore, and the case involves the very statute considered in Dames & Moore, the Trading With the Enemy Act of 1917 and the International Emergency Economic Powers Act, which is known as IEPPA> [“].

Specifically, this case presents the question of the validity of regulations issued in 1982 by the Treasury which prohibit certain financial transactions incident to travel to Cuba.

In effect, these regulations provide that Americans traveling to Cuba may spend money for Cuban goods and services only if the travel involves Government business or involves journalism or involves scholarly research or a visit to close relatives, or if it is authorized by a specific license in connection with humanitarian activities or in connection with sporting or artistic exhibitions.

The regulations do not prohibit travel as such.

You are free to go to Cuba if, for instance, you have friends or relatives who invite you or will fund you, or if the Cuban Government or a Cuban organization will fund your visit, so that hard currency is not spent in Cuba.

But you can’t spend American dollars in Cuba unless you fall within one of the licensed categories.

The 1982 regulations here modified a general license which had been issued by President Carter in March of 1977… that’s an important date… which gave permission to Americans to spend American dollars when they went to Cuba.

Now, that general license itself was, however, subject to important qualifications on the flow of American travel dollars to Cuba.

For instance, American credit card companies were not allowed to make credit card arrangements in Cuba, and that made it harder for Americans to travel on credit.

Perhaps more significant, travelers who wanted to go to Cuba under that general license pretty much had to arrange for charter travel, because financial transactions in connection with any scheduled voyages to Cuba were not permitted by that license.

Both the ’77 license and the ’82 modifications were part of the overall Cuban assets control regulations, regulations that continuously since 1963 have subjected all economic transactions between Americans and Cuba or Cubans to a comprehensive system of licensure.

Section 201(b) of the Cuban assets control regulations has since ’63 provided that no economic transaction in which Cuba has any interest may go forward without a license from the Treasury, so that by the terms of regulation 201(b) it has been unlawful since 1963 to spend American dollars in connection with travel to Cuba unless you had a Treasury license.

Now, from ’63 to ’77 these licenses were issued on an individual basis to particular individuals.

Then in ’77 came the general license, which was in turn modified in 1982.

The legal issue before the Court is whether there is a valid legal authority for the 1982 modifications.

The Cuban assets control regulations were themselves issued under Section 5(b) of the TWEA, Trading With the Enemy Act, which broadly authorizes the President during war or during peacetime declared national emergencies to use rules or regulations or licenses to regulate or prohibit any transaction involving any property in which Cuba… in which a foreign country or a foreign national has any interest.

Now, as explained in our briefs, the question in the case arises because the TWEA was amended by Congress in December of 1977 to apply generally only during wartime.

Peacetime economic embargoes in connection with future national emergencies were switched by Congress onto a different statutory track under a new statute, IEEPA.

IEEPA gave the President pretty much the same substantive authority as he had under the TWEA.

In fact, IEEPA replicates the Section 5(b) TWEA language relevant to this case.

But IEEPA lays down new procedures and new predicates for the exercise of those peacetime powers.

Mr. Bator, what other countries were there at the time of the grandfather clause enactment which our Government had a broad prohibition on unlicensed property transfers?

Paul M. Bator:

The major standing embargoes in ’77 were Cuba, North Korea, Vietnam and Cambodia.

How about China?

Paul M. Bator:

There was… the China situation is complicated.

Paul M. Bator:

There was a general assets embargo, but it had been pretty much reduced to an assets freeze by the time of the statute through general licenses, so that the China situation was very different from these four comprehensive ones in terms of–

But arguably within the same authority–

Paul M. Bator:

–The China situation to us is the most difficult or the most borderline one as to what exactly was grandfathered and what Congress had in mind.

The China issue is pretty much moot by the fact that the whole embargo was taken off when the general settlement was made with China somewhat later.

–But under your theory perhaps could be restored, is that correct?

Paul M. Bator:

It’s… the Government simply has not taken a position, Your Honor, on the question of whether the legislative intent with respect to China is clear enough to warrant reimposition.

Of course, it couldn’t be reimposed now because the whole assets situation… there would be no continuity now, since there was a general takeover.

So that as of how that issue really is moot.

That is, we do not contend that the grandfather clause authorizes the reimposition of embargoes which have been completely eliminated.

As Justice O’Connor question indicates, the problem of this case arises because, although Congress switched new national emergency embargoes onto the IEEPA track, future ones, at the same time it did grandfather the existing embargoes.

Congress decided that it did not want to force the President to issue new national emergency declarations under IEEPA in order to continue the four existing embargo systems in operation in 1977, and therefore it specified in the grandfather clause that TWEA authorities which were being exercised on July 1, 1977, could continue to be exercised as long as the President makes an annual determination that that is in the national interest.

And Presidents Carter and Reagan have each year made that determination.

Now, the Court of Appeals in this case held that the President was without authority in 1982 to modify the 1977 general license which governed the flow of hard currency to Cuba, because it reasoned that the ’77 general license permitted many trave-related financial transactions; it was issued a few months before the July 1, ’77, cutoff, and therefore it concluded that the authority to regulate those transactions was simply not being exercised at all on that date.

The Government believes that the most substantial question before the Court is the question of the proper scope of the grandfather clause, and that President Carter’s 1977 general license is perhaps a good starting point for the analysis of that issue.

As I said, the Court of Appeals concluded that, since the March ’77 general license authorized most travel-related expenditures, it follows that the authority to regulate them was not being exercised.

But we think that’s a complete non sequitur and that it is based on a misunderstanding of the structure of the Cuban assets control program.

We think the authority to regulate financial transactions incident to travel was being exercised on that date at four different levels.

First, we have regulation 201(b), which prohibited all property transactions unless licensed.

This represented an underlying exercise of authority to demand licensure, and that has been continuously asserted since 1963.

Second, the general license gave permission to engage in transactions incident to travel, but against the background of regulation 201(b).

We think this was an act of regulation, not of deregulation.

That is, the Court of Appeals simply assumed that the exercise of an authority to regulate only goes on at such times when the activity is prohibited.

But we think that’s a false picture.

It distorts the nature of a system of licensure.

Regulatory authority does not simply vanish when it is exercised to license an activity, and this point is made very plain by the words of the statute.

The grandfather clause doesn’t authorize the preservation simply of prohibitions on the books.

It authorizes the reservation of authorities being exercised under 5(b), and 5(b) specifies that its authorities include the power to regulate, “regulate” by means of “licenses”.

So to us the message is quite clear.

Congress was referring to the continuation of a licensing system, an ongoing licensing system, which of course–

Do you think the message was as clear in the minds of Congress as it is to you from looking at the structure of the legislation?

Certainly there are expressions in the legislative history that would indicate that members of Congress may have had a different view and that they were really concerned about thinking that the authorities then being exercised were being grandfathered in, but nothing else.

Paul M. Bator:

–Well, Justice O’Connor, I think that there are countervailing intonations and quite often rather loose language in the legislative history.

Congress was torn by the fact that it wanted to accomplish two ends: one, to narrow the President’s authority to use these peacetime embargoes; on the other hand, very clearly to allow the President to continue to operate these existing embargoes.

That really was the compromise.

Well, I haven’t spotted anything in the legislative history that clearly indicates that the members of Congress were as aware of the structure that you propose.

Paul M. Bator:

Well, Your Honor, in our brief we do indicate that there are passages, although they are not as… we would be happier if they were clearer, but we think there are in fact specific examples in the legislative history where it was indicated that what would be grandfathered was an embargo system, not simply a kind of frozen list of specific prohibitions, because there was no reference, certainly no reference to anything involving the fact that travel was not to be regulated.

There is no specific indication of that in the history of the grandfather clause.

Congress must have been aware, Your Honor, that assets controls programs generally have been ongoing and rather flexible systems, subject to adjustment from time to time.

There is another point here, which is that travel in fact was being regulated at that time because the ’77 license, general license, did include some specific regulations and prohibitions on financial transactions.

Now, that fact, of course, must be a major embarrassment to the Respondents’ theory of this case.

It’s ignored in their brief, ignored by the Court of Appeals.

It raises a very important question.

On July 1, ’77, President Carter was in fact prohibiting certain financial transactions incident to personal travel, including all transactions incident to scheduled travel.

Now, how, in light of that, can it be said that the authority to regulate travel-related financial expenditures was not being exercised?

I remind the Court, too, that the ’77 general license, which is so critical to the Court of Appeals’ theory of this case, was explicitly by regulation subject to revocation and modification, and in that respect we think this case is governed and controlled by Dames & Moore, because in Dames & Moore the Court explicitly held that a general license subject to revocation is a contingent instrument, subordinate to the President’s continuing underlying regulatory authority, and that reasoning seems to us compelling here.

I want to go back to Justice O’Connor’s question, which I think is really the heart of the case.

What could Congress have had in mind when they grandfathered this?

We think that it is simply an incoherent account of what Congress could have meant to suppose that they were simply freezing an existing laundry list of specific prohibitions.

We don’t think this is a sensible or a credible reading.

I don’t think Congress could have wished to freeze the North Korean and the Vietnamese and the Cuban embargoes so that the President couldn’t fill in loopholes or gaps, that he couldn’t clarify coverage, that he couldn’t add a restriction, for instance, in connection with a negotiation to create an incentive for settlement.

The ironic thing actually is that under the Court of Appeals’ reading the executive may even be disabled from amending an embargo to implement a negotiated settlement with another country, because that settlement might call for the addition of new 5(b) measures, as indeed happened in the Iranian settlement.

Again perhaps for example to look at the general license, it’s an interesting example, because when it was first issued in March of ’77 it did not include the restriction on financial transactions incident to scheduled travel.

That was added in May of ’77.

Now, suppose it had been added in August rather than in May.

Is it conceivable that the President would have been disabled from making it?

That was obviously an afterthought or, if you will, the filling in of something that was just overlooked.

But that kind of adjustment could not be made, we don’t think that it creates a coherent system.

Now, the Court of Appeals’ answer to this was, use IEEPA.

But to use IEPPA requires the President to issue a new national emergency declaration, and a declaration that Cuba or Vietnam represents an unusual or extraordinary threat to the United States.

And Justice O’Connor, if there’s anything clear from the legislative history, it is that the Congress was persuaded by the Administration in this compromise that it would be undesirable and awkward to force the President to declare such a new emergency and make such a statement in order to maintain these four extraordinary embargoes.

Paul M. Bator:

The purpose of Congress to allow the President to maintain these four extraordinary embargoes without declaring a new national emergency would simply be frustrated if what we say is that the only thing that can be preserved is a frozen list of restrictions, that is, that a new declaration has to be made every time there is an adjustment or a gap filled or a new restriction imposed in order to create a bargaining chip.

Mr. Bator, may I ask one question about the change in May of 1977 of the general license.

I’m not quite clear as I look at the material at the very end of your brief where you quote the version of the asset control regulation at 10(a) on.

You say that’s what was in effect from March ’77 through May of ’82.

Does that include the May ’77 amendment or does it not?

Paul M. Bator:

Yes, Your Honor, that in fact is a… we did not discover the fact that there was a… that is, we used the–

You used something post-May of ’77 to come here?

Paul M. Bator:


There was a change made in May of ’77 from March of ’77.

What part… where do I find that in 10(a) to 12(a)?

What is new in there, because I’m just not–

Paul M. Bator:

I think, Your Honor, I’m going to have to–

–It’s a rather critical part of your argument, because you’re relying on that as evidence of the ability to make the regulations tougher.

Paul M. Bator:

–I’m relying on the fact that, although that happened before the cutoff–


Paul M. Bator:

–the July cutoff, that it’s simply a routine example of, if you will, second thoughts in connection with ongoing administrative regulations.

I just want to be sure I have… I can follow at the appropriate time.

Paul M. Bator:

I would just want to say that I’m not… I could go back, but I think that subsections (4), (5), and (6), certainly (4) and (5), were added in May rather than in March, Your Honor.

But they seem to be authorizations rather than restrictions.

Paul M. Bator:

Well, they’re put in an odd way, but what they add up to when you come down to it in the end is the creation of a rule which says that you cannot expend any moneys in connection with scheduled trips.

In other words, it’s an authorization of all kinds of travel except scheduled trips?

Paul M. Bator:

Most of the material on 11(a) was added in May rather than in March.

I don’t take that as a fundamental argument, Your Honor.

It just gives a clue to how these programs in fact are managed and that there is a constant system of adjustments and repairs.

I want to say a word… I have only a few minutes left… about the Passport Act of 1978.

That’s a statute which the Respondents say forbids the use of TWEA authorities or IEEPA authorities.

Even if they did exist and even if TWEA authorities were grandfathered, they say that the Passport Act of ’78 revoked, restricted, prohibited the President from regulating expenditures incident to personal travel.

They say that expenditures to personal travel are simply now a special category which may not be regulated under these comprehensive embargoes.

We think this reading would… in fact, we think it necessarily follows that what Congress on that reading, what Congress was doing in ’78 was invalidating the ’77 general license with its restrictions.

We think that this reading means that President Carter violated the Passport Act when in 1980 he used IEEPA to control expenditures, to prohibit expenditures in connection with travel to Iran.

Paul M. Bator:

And the point is significant to us because the Carter Administration was instrumental in the Passport Act of ’78.

Nevertheless, President Carter clearly assumed that the Passport Act did not override this preexisting separate power to regulate travel expenditures in the context of comprehensive assets embargoes.

And we think that’s the natural assumption.

The Passport Act says nothing about economic or financial transactions.

It says nothing about anything except the regulation of passports.

Nothing in the legislative history indicates that Congress was overriding an independent, long-standing regulatory power to restrict the flow of financial and economic benefits to countries which… and I want to remind the Court, the few countries with which by hypothesis our relations are in a state of acute difficulty.

The Respondents speak as if it were somehow inconceivable that Congress could say that passports must be issued on the one hand and yet that the President could continue to exercise an authority to restrict the flow of American dollars from American travelers abroad.

But there’s nothing inconceivable about it.

It’s an absolute commonplace of modern public policy in many countries… England and France… that have created fiscal restrictions on the expenditure of travel moneys, without in any way aiming at travel as such or trying to restrict the liberty of the citizens to travel.

And we do not credit the Respondents’ suggestion that the TWEA on our reading, the grandfathered authority, can be used to negate the Passport Act.

We’re talking about four grandfathered embargoes.

We’re talking about the regulation of travel expenditures as a subsidiary element in the context of comprehensive assets programs.

We think that’s simply a different subject than the subject of the regulation of passports.

Unless the Court has further questions, I would like to reserve the remainder of my time for rebuttal.

Warren E. Burger:

Very well.

Mr. Boudin.

Leonard B. Boudin:

Mr. Chief Justice and may it please the Court:

I would like to address myself first to Justice O’Connor’s question, what did Congress have in mind.

I do this before I come to the other aspect of the case, that we are dealing here with a liberty, a liberty recognized by the Court in the cases ranging from Kent to Agee and even Califano, protected by the Fifth Amendment.

But I thought Justice O’Connor’s question really was directed to the heart of the case here.

Congress did not direct itself to the four countries referred to by my good friend the Deputy Solicitor General.

Congress was concerned about two things:

First, the broad power that the President had exercised over the many years which led Congress to pass the statute under consideration, which is not merely the grandfather clause, but the broad statute which included IEEPA, the Economic Control Act.

Congress in doing that was aware of the fact that the proliferated emergencies declared by the President over the years, A, were either outmoded or not justified and, as the administrative spokesman stated to the Congress, particularly the Assistant Treasury Secretary, there was no emergency at the time that Congress was considering IEEPA.

And as the administrative spokesman said, without an emergency, Mr. Bergsten, the Assistant Secretary of Treasury said,

“We recognize we do not have the powers to carry out the embargoes. “

Therefore, Congress passed this very broad statute which was upheld in IEEPA, in which Congress set forth a procedure bringing the President into the… bringing the Congress into the consultative operations of this statute, because it was concerned with what had been done in the past.

Now, what the Government is doing here is acting as if all we have to do here is consider what I will consider in a moment, the savings clause, and it forgets the dominant purpose of the legislation, which was to restrict the President, and that the savings clause was, as most savings clauses are, a narrow savings clause for the purpose of preserving something.

And that really is the question, Justice O’Connor: What were they trying to save?

Well, right, and we have to focus on the legislative history–

Leonard B. Boudin:


–for the coverage of the grandfather clause.

Leonard B. Boudin:


Now, if one looks at the statements made, as the Court of Appeals for the First Circuit pointed out and the Court of Appeals for the Eleventh Circuit in the Frade case which came to the same conclusion, one sees that they were concerned about the existing uses.

And you see there in the opinion of the Court of Appeals and in our brief and in the Frade opinion a reference to existing controls, existing embargoes.

You never see this inchoate conception which is suggested by the Government in its brief and argument.

Mr. Boudin, are you referring to the language of the Court of Appeals?

Leonard B. Boudin:

I’m referring specifically to the language used by the Congressmen–

By the Congress.

Leonard B. Boudin:

–discussing the problem.

And Your Honors will see, for example at page 39 of our brief, when Congressman Bingham observed:

“If the President has not used up to now some authority he has under 5(b), I don’t know why it should be necessary to give him authority to expand what has already been done. “

And Your Honors will see the references made by Congressmen and by administrative spokesmen which appear at the bottom of page 39 of our brief in footnote 70, when they talk about powers currently operative, not powers inchoate, not powers possessed, powers currently operative; and then when they refer to current employment of controls.

This is everything that was said by the various people here, and you do not find any support for the suggestion made by the Government that there is some ambiguity in the legislative history.

Now, as a matter of fact, as Your Honors will see from our brief, a proposal was made to give the power to the Government, to the executive, under the savings clause, precisely the one which is suggested by my friend here… an old friend, I may say… the power to add new regulations, new controls.

And that legislation would have added another paragraph to the existing statute, which is that the President can exercise not only the authorities being exercised, but any other authority conferred upon the President by that section may be exercised to deal with the same set of circumstances.

And then came the very important colloquy which came at the end, not in the early stages of the legislation, as the Government suggests, between the leading representative of the Administration, Mr. Bergsten, Assistant Secretary of the Treasury, when he was asked:

“First of all, Mr. Bergsten, would it be your understanding that Section 101, the grandfather clause, would strictly limit and restrict the grandfathering of powers currently being exercised under 5(b) to those specific uses of the authorities granted in 5(b) being employed. “

–it is hard to find…

“as of June 1, ’77, now July 1? “

Mr. Bergsten said: “Yes, sir”.

And then the question was:

“And it would preclude the expansion by the President of the authorities that might be included in 5(b) but are not being employed as of June 1, 1977? “

And he says: “That is right”.

Now, in fact, on July 1, 1977, in reality, forgetting about whether you could travel on this plane or that plane, which is simply a question of mechanics, in reality there was no substantive bar to travel to Cuba.

I will take up in a moment this whole conception of general licenses.

But in fact the realities of the situation were there was no embargo on travel to Cuba.

And the Government’s petition at page 5, as I recall it, original petition for certiorari, stated what is our view, that the purpose of the savings clause was “to continue an existing embargo”.

And the question is, was there an embargo on travel to Cuba?

There were difficulties, but were those an embargo on travel to Cuba, and the answer is no.

Leonard B. Boudin:

And I would consider this a very telling argument even if it were not dealing with liberty.

Well, Mr. Boudin, but they take the position that there was in effect the general prohibition on financial transactions, regulation 201(b).

Leonard B. Boudin:


May I address that?


Leonard B. Boudin:

The Government actually has five different theories of what the exercise of authorities means, but let me address myself, which we’ve talked about in our brief, to the general license theory.

The general license is merely a convenient device for withdrawing controls previously in existence, and Your Honors will see that when you look at the China situation.

There is a general license exempting China for the most part from the controls.

Under the Government theory, whatever the executive is now doing, that general license is a control.

A general license is merely a technique.

When you have a broad prohibition, then you decide not to carry out that with respect to particular areas, you have a general license.

And the best illustration would be if I were to take an alternative way to handle the situation.

If in Section 201, which forbids financial transactions… and I’m assuming for the purpose of this discussion that a man is engaging in a financial transaction with respect to property, although I have some hesitation in accepting that.

The statute, Section 201, could read as follows: All transactions with respect to property in which Cuba has an interest are prohibited, except those relating to travel.

Now, no one would suggest if the statute, if the regulation had been thus written, that there was an exercise of control over travel.

But because it is in the form of a general license, the Government suggests that somehow or other they are giving permission to exercise this liberty of travel.

But what they’re really doing in the general license technique is withdrawing it, withdrawing the prohibition of travel from the transactional area.

This of course brings to mind Justice Rehnquist’s opinion in Dames against Moore.

Dames against Moore… Dames & Moore, excuse me, against Regan was a case in which there was a general license issued and the Government’s contention, upheld by the Court… and I may say by me supporting the Government in that case… was that where the President had attached assets, or rather frozen assets, and then released them and allowed them to be subject to attachments, the President by virtue of a later provision was able to… was able to recover the assets and use them the way he did.

But in Dames against Moore there was no grandfather clause.

We are dealing here with the meaning of the grandfather clause, and the grandfather clause was intended, as the two courts that I referred to indicated, was intended to allow only those prohibitions that were in effect.

Now, why do I say that it was intended to do that, aside from the language, which is uniform, as Your Honors will see.

It is precisely because the Congressmen who were in charge of this and the administrative spokesmen recognized that they were attempting to save something, to save the embargoes in existence, and most important, to save the assets which were under embargo, to save those from being given away, because it was recognized there would be dealings with Cuba and with other countries eventually.

But more than that it is not, because the continuation… and this is the key problem with the Government’s position… the continuation under the savings clause of those controls, those embargoes, was not predicated upon an emergency, it was predicated upon a non-emergency, and it is because of that that we have to give a limited interpretation to those words in the savings clause.

Now, when we consider the Government’s argument of flexibility, an argument which this Court of course upheld in Dames & Moore, that was flexibility under IEEPA, the Economic Control Act, subject to the control which Congress had and exercised in that real emergency of consultation with the President.

Flexibility is of course necessary in foreign relations, and that’s why IEEPA was passed.

Flexibility is not necessary in connection with the savings clause, because the savings clause is based upon a narrow area which cannot be justified on an emergency basis.

And Mr. Bergsten recognized and Mr. Katz, from another Department of the Government, in testifying recognized that there might not be constitutional validity even to those things being grandfathered, because there was no emergency.

So that whether we take the conception of the statute as a whole, it comes down to the question of what was prohibited.

And again, just to remember what we said about general licenses, lest the conceptual thing overlook the reality here, in the China situation, which the Government says it’s troubled about answering, in the China situation where there’s a general license permitting everything, we could restore that, if we wanted to, under the grandfather clause.

Leonard B. Boudin:

Now, I do want to address–

As to China that’s not right, is it?

Don’t you have… doesn’t the President have to make an annual declaration of a continuing, to keep the authority alive?

Leonard B. Boudin:

–A continuing national interest, rather than emergency.

But he did not do that with respect to China, so that could not be revived.

Leonard B. Boudin:

I don’t… yes, Your Honor is quite right.

I don’t think he did it.

I assume he didn’t do it with respect to China.

Well, they say in the briefs he didn’t do it.

Leonard B. Boudin:

I’ll accept that.

Now, I want to remind the Court what the Government has done here.

The Government has, in contrast to the rather clear-cut position taken by the Court of Appeals for the First Circuit and the Eleventh independently… Your Honors will read the reasoning of the Court of Appeals’ opinion, I trust, in the Eleventh Circuit… the Government gives four or five different possible interpretations of the grandfather clause, itself making each one suspect, although not conclusively so, of course.

Mr. Boudin.

Leonard B. Boudin:


Your brief struck me as somewhat different in theory than the Court of Appeals’ opinion.

Was I wrong in thinking that?

Leonard B. Boudin:

I do know that the Government made that point.

I think we and the courts below, both courts, Courts of Appeals, Eleventh and the First, are of the opinion that if there is a substantive control being exercised by regulation… that may be the thing that was confusing… a substantive control being exercised over travel or over anything, that control could be continued by the grandfather clause.

We do not differ with the Court of Appeals.

Now, remember what the Government has said, if Your Honors please: We believe that one possible reading of the grandfather clause is… rather an odd way to find a clear-cut statute involving a basic liberty like the right to travel.

The first argument is that if any 5(b) authority is exercised, the Government preserves all 5(b) authorities.

The second argument is that under any exercise of a 5(b) authority, referring to the statute now, with respect to property, then everything can be exercised.

We pointed out in our answering brief that there was a problem raised with the Government’s two views, and the main problem was that with respect to many countries, not merely the four that the Government now targets, although there was no indication they were to be targeted, with respect to many countries there were, A, controls under 5(b) generally and controls over transactions.

So the Government came back with its general license theory which, as I have indicated, is really a language problem, a semantic problem, rather than dealing with the reality.

And with respect to that, I trust Your Honors will look at the House Committee report on this bill, Report No. 95-459, which we cite in our brief, but I regret to say somewhat elliptically, because that House report, in discussing the Cuban situation after it discusses a number of other countries, at page 6 says:

“Under the Cuban assets control regulations, all transactions between the United States and Cuba are similarly prohibited. “

–now, there’s a comma after that… “with certain exceptions”.

In other words, they are prohibiting certain things, but the exceptions at that time were travel.

Travel, by the way, is separately mentioned by Professor Lowenfeld, who is a leading spokesman, scholarly spokesman at least.

Secondly, with respect to the general license, again addressing myself to questions that were put by two of Your Honors, the same page 6 explains my position and the Court of Appeals’ position on what it means to have a general license, not that it means that you’re permitting, that you’re regulating something; it means you’re withdrawing it from control.

Leonard B. Boudin:

And here are the words used on page 6:

“On May 8, ’71, the Department licensed most… most… subsequent transactions with China, while continuing the blocking of China assets in U.S. hands before that date. “

“This had the effect of lifting. “

–I emphasize the word “lifting”…

“the United States trade embargo of China. “

Now, if you have lifted an embargo… I think we and the Government, at least theoretically, are in agreement.

If you have lifted the embargo, then there is no embargo.

And there was no embargo on July 1, 1977, after they had lifted the embargo.

I have not addressed myself, because I wanted to get to the heart of the problem raised by two of Your Honors in asking questions of Mr. Bator, of other considerations in connection with the statute, and that is what you would have in terms of general tenets of construction rather simple.

A savings clause is normally a narrow exception, because you have a broad remedial purpose.

Here we have a statute which involves liberty of movement, and here you have a statute with very serious criminal sanctions, all of which have been grounds historically for considering savings clauses and all statutes in a narrow way.

But I had omitted one thing, Your Honors.

After I finished with the general license view, I did… the Government did come in in its answering brief, its reply brief, with a new theory, and that was the one that Mr. Bator quite properly articulated, since it was the newest theory of the Government, namely four countries are being targeted.

Four countries.

It’s no longer the original theory of 5 being exercised and therefore you could exercise new authorities; no longer the property conception; it’s no longer even the licensing thing.

The important thing is, Congress had in mind… I can’t call it a bill of attainder, having heard yesterday’s argument.

Congress had in mind four countries.

Well, this is an odd situation.

So you have a flexibility argument that they would recognize, that they insist upon with respect to four countries, and you have another standard, namely non-flexibility with respect to all other countries of the world.

Your Honors will read or have read the legislative history.

You’ll find no theory under which Congress drew a line between “comprehensive embargoes and embargoes generally”.

Now, as far as IEEPA is concerned, one of course has to ask, not under my theory that perhaps IEEPA couldn’t control, but under the Court of Appeals’ implied view that IEEPA applies, why the Government doesn’t deal, doesn’t go under IEEPA.

They didn’t want, the Administration spokesmen and the Congressmen didn’t want, for the continuation of the old controls in old situations to have to have an application under IEEPA.

But IEEPA wa passed for a purpose.

It was passed after at least seven years of study by the Congress.

It was passed because that’s what Congress wanted when we had a crisis situation.

And of course, the Government claims that the current situation is a quasi-emergency or emergency.

It is a new situation which they say has arisen since 1977, to when a new Administration took effect.

Well, if this is a new situation, if this is an emergency, then the Government is supposed to go to the Congress, the President is supposed to go to Congress and consult with the Congress on the IEEPA and put into effect these regulations.

And on their theory that this is a serious problem, this is exactly the thing that Congress had in mind.

Leonard B. Boudin:

Congress didn’t intend that when new crises arose that suddenly Congress… the President could disregard the IEEPA procedures.

Seven years of study went into the drafting of the IEEPA.

There was a reason for it.

And they have not followed that procedure.

This will bring me very briefly to three other points that have been made in our brief and that obviously the Court of Appeals did not decide any of those points, although I think it considered some of them in determining the general interpretation, the narrow interpretation of the savings clause.

The first relates to the 1978 statute.

The 1978 statute was passed because the Congress was not satisfied, as a matter of fact the Administration wasn’t satisfied, to rest merely upon President Carter’s removal of bars to travel to Cuba.

And the reports of the committees in charge said, we don’t want this to depend upon a particular Administration’s policies or discretion.

Great prescience, as we see.

And they were concerned about liberty of movement, and they said so, and the basic Helsinki general declarations, which are not statutory of course, relating to freedom of movement.

Now, the Government says it talks about the Secretary of State and it talks about passports.

Why do we think this has anything to do with this case?

Well, the reason we do is because the Congress was concerned about protecting liberty of movement.

If it directed its attention to the Secretary of State, it was because that was the normal way in which travel restrictions were imposed.

And as we argued in Laub, and as we argued in Zemel, as we argued in Kent, the whole history of travel control had been a history in which the Secretary of State was doing his job, controlling it, sometimes we said wrongly sometimes the Court said rightly; and Treasury, if it did anything, was ancillary.

Are you saying that none of the restrictions ever issued under the TWEA from the time of its passage had any effect on the control of travel?

Leonard B. Boudin:

Your Honor will note that the restrictions were never restrictions by regulation directed specifically to travel, and I have suggested, yes, I have thought that TWEA was never passed to control travel as such.

I do recognize that every time the Secretary of State gave a license… sorry, amended a passport… by removing restrictions, the Treasury Department would automatically… and I say automatically… give a license to spend money.

But I have found nothing in the legislative history of TWEA that suggests that that statute really authorized the practice even of the Treasury in connection with licensing.

Well, it authorizes the restriction and control of property in the hands described, and if the regulation affects the property the fact it has an incidental effect on travel doesn’t make it illegal under the statute.

Leonard B. Boudin:

Of course.

I haven’t suggested that.

I have suggested that historically travel was never contemplated by the Congress, and that each time legislation was proposed to control travel nobody ever mentioned the Treasury Department, nobody ever mentioned TWEA.

And this Court in discussing either in Haig or in Laub, in discussing travel controls, recognized that the first travel control statute was a 1918 statute, not the 1970 TWEA.

I must say to Your Honor, as I say, we’ve studied this problem for a long time.

It is a murky area.

I cannot… it’s probably the reason why the Court of Appeals did not think it advisable to found its decision upon that.

Let me address finally the constitutional issue.

I don’t want to overlook it.

We raised it, that the Court consider the fact that we are dealing with a liberty to be significant in interpreting the grandfather clause, and that is this.

Leonard B. Boudin:

I would agree… I must agree, having read Agee, having looked at a few other cases of this Court in the travel area and elsewhere… that there are emergency circumstances under which travel could be controlled, forbidden, but not this one.

The Court had a very serious nuclear confrontation problem which it addressed, with the consequent dangers to American citizens traveling to Cuba, when I argued Zemel against Rusk, and the Court held there, not that the President could prevent the travel, but it said that the President could not be compelled through the Secretary of State to validate a passport for travel to Cuba.

Then came Haig against Agee, the second clear-cut bar on travel, but of an individual.

And the Court is aware of the stipulations made by Congress and of the findings made in the Chief Justice’s opinion with respect to the great danger to foreign relations, to national security, in the possible assassination of CIA agents.

Given those facts, I may say, I don’t… quite aside from the question of statutory authorization, I don’t see how the constitutional power of the Government could be challenged to meet situations such as Haig and Agee.

But what do we have here in reality?

We have a hypothetical that if somebody goes to Cuba with his dollars, including these Americans who have never violated any laws at all and who are perfectly good people, if somebody goes to Cuba with his dollars, that money will someday help build a Cuban tourist industry.

I’m not an authority on how to build an industry, including a tourist industry, but I suspect it’s a long way off between the dollars of American citizens today and building it.

And that industry will make money, and with that money they will eventually be able to subvert Latin America against American interests.

Now, I suggest this series of hypotheticals is far too tenuous, particularly in the light of the amount of money which, as we describe in our brief, we are allowing to go to Cuba by the travel that is permitted.

Thank you, Your Honor.

Warren E. Burger:

Do you have anything further, Mr. Bator?

Paul M. Bator:

I have a few points I’d like to make.

Thank you, Mr. Chief Justice.

I think that Mr. Boudin and the Government are in happy agreement on what the central issues are.

The question is what Congress meant by the grandfather clause.

That in turn depends crucially on what the situation was in ’77 with respect to the authorities being exercised under the TWEA.

Mr. Boudin takes this whole bundle of complex authorities, which include the general regulation 201(b), the restricted general license, the fact that that restricted license is subject to revocation and modification, and he just says that all adds up to total deregulation, and he says a general license in general is nothing but an administrative technique for deregulation.

But the very first exercise of power to regulate travel-related transactions under the TWEA in 1940 by President Roosevelt, in connection with remittances abroad, to travelers abroad, was by way of a general license and asserted the authority to restrict expenditures over $250 a month.

If this Court will read its own opinion in Dames & Moore, it will see that there was a general license in that case and it was not simply an administrative technique which receded and said, we are no longer exercising the power to regulate.

It is simply a contingent and subordinate instrument.

Now, Mr. Boudin read a sentence from the House report which said that in connection with China the structure of the situation did look as if the authority to regulate had been reduced to a very, very narrow point, and that is why we have this.

We are troubled by the question as to what the grandfather clause would have implied for China if that question were still a live question today.

But the very question… the very sentence that Mr. Boudin read you is followed by the following sentence.


“this had the effect of lifting the U.S. trade embargo of China. “

it then goes on and says:

“However, the embargoes of North Korea, Vietnam, Cambodia, and Cuba continue. “

“Second. “

the report continues,

Paul M. Bator:

“under the Cuban assets control regulations all transactions between the United States and Cuba are similarly prohibited, with certain exceptions. “

That is, the structure that is suggested here is quite different.

It’s suggested that the general regulation continues, but subject to exceptions.

It’s not a statement about deregulation.

Mr. Boudin objects to the fact that we think the fair reading of the legislative history targets these four countries.

The very last thing Mr. Bingham said on the floor of the House was that “This legislation”… that is, that he said about the grandfather clause was, he says on the floor of the House:

“This legislation specifically grandfathers the embargoes against Vietnam, Cambodia, Laos and Cuba, and other existing embargoes, so that they are not affected in any way by this legislation. “

The one he dropped from there was North Korea.

So it is targeted, and he says they are not affected in any way.

Now, one further quick point, Mr. Chief Justice.

The Congress I think was persuaded in 1977 that these four situations were extraordinary and that special powers needed to be maintained to allow the President to conduct a credible and serious foreign policy with respect to these four extraordinary situations.

It’s the statute that says that the President does not need to make a new emergency declaration in connection with these four embargoes.

That doesn’t mean that our relations with these countries have not and cannot from time to time reach very acute and difficult circumstances.

The fact that the President has not formally declared a new state of emergency with Cuba has no probative effect on what is the state of our relations with Cuba as long as it is true, as the President was persuaded is true, that he has authority to continue to administer these embargo systems because of the extraordinary situation that persists with these four countries.

Mr. Bator, may I ask just one question I’m a little puzzled about.

Apart from these four countries, just in other parts of the world, as I understand it there are certain kinds of property transactions that are prohibited by the President.

And are those prohibitions also pursuant to the TWEA, and if so to what extent do they survive and is there any flexibility under your theory for changes in those?

Paul M. Bator:

Your Honor, there are very special and specific prohibitions, there were in ’77 under TWEA, with respect to the export of what I believe are described as strategic items to certain countries.

And we assume that those are continued in place under TWEA and they may be maintained without a new IEEPA.

But you would not–

Paul M. Bator:

We do not think, we do not think it would be a fair reading of this legislation to use those as a springboard for a comprehensive assets program.

We have never maintained that.

Unless there are further questions–

Warren E. Burger:

Very well.

Thank you, gentlemen.

The case is submitted.