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Dames & Moore v. Reagan, 453 U.S. 654 (1981) p.367


presidential power


Petitioner, which had obtained a prejudgment attachment of assets of certain Iranian banks, brought an action against the United States and the Secretary of Treasury seeking to prevent enforcement of the various executive orders and regulations implementing the hostage release agreement with Iran. Carter entered into an executive agreement with Iran to release the hostages. He issued several executive orders in order to bring the agreement into effect.


The United States District Court for the Central District of California dismissed the complaint for failure to state a claim upon which relief could be granted, and appeal was taken to the United States Court of Appeals for the Ninth Circuit.


Whether the president's executive power to act was constitutional.


The president can act because he had the authorization of Congress.


After granting certiorari before judgment, the Supreme Court, Justice Rehnquist, held that: (1) President was authorized by International Emergency Economic Powers Act to nullify post-November 14, 1979, attachments and direct those persons holding blocked Iranian funds and securities to transfer them to Federal Reserve Bank for ultimate transfer to Iran, and (2) President did not lack the power to suspend claims of American nationals against Iran and terminate such claims through binding arbitration in an Iran-United States Claims Tribunal. Affirmed.


Held: 1. The President was authorized to nullify the attachments and order the transfer of Iranian assets by the provision of the IEEPA, 50 U.S.C. 1702 (a) (1) (B), which empowers the President to "compel," "nullify," or "prohibit" any "transfer" with respect to, or transactions involving, any property subject to the jurisdiction of the United States, in which any foreign country has any interest. Pp. 669-674. (a) Nothing in the legislative history of either 1702 or 5 (b) of the Trading With the Enemy Act (TWEA), from which 1702 was directly drawn, requires reading out of 1702 all meaning to the words "transfer," "compel," or "nullify," and limiting the President's authority in this case only to continuing the freeze, as petitioner claims. To the contrary, both the legislative history and cases interpreting the TWEA fully sustain the President's broad authority when acting under [453 U.S. 654, 656] such congressional grant of power. And the changes brought about by the enactment of the IEEPA did not in any way affect the President's authority to take the specific action taken here. By the time petitioner brought the instant action, the President had already entered the freeze order, and petitioner proceeded against the blocked assets only after the Treasury Department had issued revocable licenses authorizing such proceedings and attachments. The attachments obtained by petitioner, being subject to revocation, were specifically made subordinate to further actions which the President might take under the IEEPA. Pp. 671-673. (b) Blocking orders, such as the one here, permit the President to maintain foreign assets at his disposal for use in negotiating the resolution of a declared national emergency, and the frozen assets serve as a "bargaining chip" to be used by the President when dealing with a hostile country. To limit the President's authority, as petitioner urges, would mean that claimants could minimize or eliminate this "bargaining chip" through attachments or similar encumbrances. Pp. 673-674. (c) Petitioner's interest in its attachments was conditional and revocable and as such the President's action nullifying the attachments and ordering the transfer of the assets did not effect a taking of property in violation of the Fifth Amendment absent just compensation. P. 674, n. 6. (d) Because the President's action in nullifying the attachments and ordering the transfer of assets was taken pursuant to specific congressional authorization, it is "supported by the strongest presumptions and the widest latitude of judicial interpretation, and the burden of persuasion would rest heavily upon any who might attack it." Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 637 (Jackson, J., concurring). Under the circumstances of this case, petitioner has not sustained that burden. P. 674. 2. On the basis of the inferences to be drawn from the character of the legislation, such as the IEEPA and the Hostage Act, which Congress has enacted in the area of the President's authority to deal with international crises, and from the history of congressional acquiescence in executive claims settlement, the President was authorized to suspend claims pursuant to the Executive Order in question here. Pp. 675-688. (a) Although neither the IEEPA nor the Hostage Act constitutes specific authorization for the President's suspension of the claims, these statutes are highly relevant as an indication of congressional acceptance of a broad scope for executive action in circumstances such as those presented in this case. Pp. 675-679. (b) The United States has repeatedly exercised its sovereign authority to settle the claims of its nationals against foreign countries. [453 U.S. 654, 657] Although those settlements have sometimes been made by treaty, there has also been a longstanding practice of settling such claims by executive agreement without the advice and consent of the Senate, and this practice continues at the present time. Pp. 679-680. (c) That Congress has implicitly approved the practice of claims settlement by executive agreement is best demonstrated by Congress' enactment of the International Claims Settlement Act of 1949, which created the International Claims Commission, now the Foreign Claims Settlement Commission, and gave it jurisdiction to make final and binding decisions with respect to claims by United States nationals against settlement funds. And the legislative history of the IEEPA further reveals that Congress has accepted the authority of the President to enter into settlement agreements. Pp. 680-682. (d) In addition to congressional acquiescence in the President's power to settle claims, prior cases of this Court have also recognized that the President has some measure of power to enter into executive agreements without obtaining the advice and consent of the Senate. See, e. g., United States v. Pink, 315 U.S. 203. Pp. 682-683. (e) Petitioner's argument that all settlement claims prior to 1952 when the United States had adhered to the doctrine of absolute sovereign immunity should be discounted because of the evolution of sovereign immunity, is refuted by the fact that since 1952 there have been at least 10 claim settlements by executive agreement. Thus, even if the pre-1952 cases should be disregarded, congressional acquiescence in settlement agreements since that time supports the President's power to act here. Pp. 683-684. (f) By enacting the Foreign Sovereign Immunities Act of 1976 (FSIA), which granted personal and subject-matter jurisdiction to federal district courts over commercial suits by claimants against foreign states that waived immunity, Congress did not divest the President of the authority to settle claims. The President, by suspending petitioner's claim, has not circumscribed the jurisdiction of the United States courts in violation of Art. III, but has simply effected a change in the substantive law governing the lawsuit. The FSIA was designed to remove one particular barrier to suit, namely, sovereign immunity, and cannot be read as prohibiting the President fromsettling claims of United States nationals against foreign governments. Pp. 684-686. (g) Long continued executive practice, known to and acquiesced in by Congress, raises a presumption that the President's action has been taken pursuant to Congress' consent. Such practice is present here and such a presumption is also appropriate. P. 686. (h) The conclusion that the President's action in suspending petitioner's [453 U.S. 654, 658] claim did not exceed his powers is buttressed by the fact the President has provided an alternative forum, the Claims Tribunal, to settle the claims of the American nationals. Moreover, Congress has not disapproved the action taken here. Pp. 686-688. (i) While it is not concluded that the President has plenary power to settle claims, even against foreign governmental entities, nevertheless, where, as here, the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between this country and another, and Congress has acquiesced in the President's action, it cannot be said that the President lacks the power to settle such claims. P. 688. 3. The possibility that the President's actions with respect to the suspension of the claims may effect a taking of petitioner's property in violation of the Fifth Amendment in the absence of just compensation, makes ripe for adjudication the question whether petitioner will have a remedy at law in the Court of Claims. And there is no jurisdictional obstacle to an appropriate action in that court under the Tucker Act. Pp. 688-690


Court knew this was a grave national situation so they were reluctant to interfere. The court gave a lot of deverence to executive here because it was dealing with other nations. Different from Steel Seizure case because the steel was domestic problem. Don't want the court to step in international affairs. Seems like the court is more likely to step in, in domestic cases rather than foreign affairs case.

Created on: Wednesday, September 29, 1999 at 16:04:49 (PDT)

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