EarthRights International Examines EO 13303

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EarthRights International Examines EO 13303

This memo, which is more comprehensive than previous analyses of Executive Order 13303, confirms that the Order is extraordinarily broad and possibly illegal. It lends credence to the suspicion that the Iraq War was in fact fought at least part for control of Iraq’s oil.

Introduction

In July of this year, researchers at the Sustainable Energy and Economy Network (SEEN) discovered a previously unreported May 22nd Executive Order regarding legal immunity for oil activities in Iraq. Executive Order 13303, “Protecting the Development Fund for Iraq and Certain Other Property in Which Iraq Has An Interest,” set off alarm bells among groups concerned with corporate accountability and undue influence of the oil industry on foreign policy, including toward Iraq. The Order was billed as an implementation of the U.N. Security Council Resolution 1483, which lifted sanctions against Iraq, created a Development Fund for Iraq and immunized some Iraqi oil products from legal liability until late 2007. However, EO13303 went a good deal further than Resolution 1483 to include all oil related products and activities and environmental damages from oil activities.

An initial reading of EO 13303 by staff at EarthRights International, SEEN and the Government Accountability Project (GAP), indicated that it appeared to provide blanket legal immunity for oil companies doing business in Iraq, and that the President may have overstepped his authority in issuing it.

During late July and August, SEEN, EarthRights International and the Government Accountability Project released a number of analyses and engaged in conversation with the Treasury Department over the meaning of EO13303. The Treasury Department claimed that our interpretation was incorrect, and that EO13303 was meant only to protect monies going into the Development Fund for Iraq, and was not meant to protect the companies. They claimed that the EO was actually narrower than our reading of it, and that, in fact, not all oil-related activities were protected—only profits derived from Iraqi oil.

The following memo, which is more comprehensive than previous analyses of EO13303, confirms that the Order is extraordinarily broad and possibly illegal. It lends credence to the suspicion that the Iraq War was in fact fought at least part for control of Iraq’s oil.

Summary

Executive Order 13303 is written very broadly to protect a wide range of profits or items of value, legal documents, interests, and contracts; using common rules of statutory construction, it is not unreasonable to read EO 13303 as immunizing almost anything to do with the sales and marketing of Iraqi petroleum and petroleum products. EO 13303 is significantly broader in both scope and time period than is U.N. Security Council Resolution 1483, which EO 13303 seeks to implement. These deviations may lead a court to reject the implementing executive order as overbroad. Furthermore, while the President has broad authority to issue executive orders under the International Emergency Economic Powers Act (IEEPA), EO 13303 may exceed his powers under IEEPA because it effectively dismisses claims of U.S. citizens without providing an alternate forum or additional benefit to the victims.

The impact of EO 13303 is to provide extraordinarily broad protection to oil companies working in Iraq. Under the terms of EO 13303, an oil company employee injured in Iraq cannot get redress; the owner of an oil tanker that spills en route is immunized from suit; and local Iraqis who suffer human rights abuses associated with oil production are unable to access U.S. courts. EarthRights International, along with the Government Accountability Project (GAP) and the Sustainable Energy and Economy Network (SEEN) are greatly concerned that EO 13303 represents an abuse of executive power in the service of the oil industry.

Questions Presented and Brief Answers

I. Does the language in Executive Order 13303 (“EO 13303”) violate the President’s legal obligations to implement U.N. Security Council Resolution 1483?

Possibly. Under Article 25 of the U.N. Charter, the U.S. is obligated to support and implement the decisions of the Security Council; the guidelines for the scope of the implementing legislation are unclear, although examination of courts’ review of legislation implementing treaties suggests a “rational basis” standard of review. There are significant differences between the original text (in this case, UNSC 1483) and the implementing document (EO 13303), which may lead a court to hold implementation is overbroad.

II. What is the scope of the language used in section 1(b) of Executive Order 13303? Specifically, what is the meaning of the words, “interests,” “obligations,” “products,” “proceeds,” “financial instruments of any nature whatsoever”?

The language of section 1(b) is written very broadly to encompass as much activity related to Iraqi oil as possible. The specific words used are generally interpreted according to their context. There is not much illuminating context in EO 13303, but the tone suggests the language should be read quite broadly.

III. Does the President have the authority under IEEPA to issue EO 13303, which deems “any attachment, judgment, decree, lien, execution, garnishment, or other judicial process null and void with respect to proceeds, interests, and financial instruments of any nature whatsoever arising from or related to sale or marketing of all Iraqi petroleum and petroleum products”?

Maybe. Executive orders, such as 13303, issued under the authority of IEEPA, are given wide latitude by the courts because they are pursuant to a congressional grant of authority. However, the Supreme Court has recognized that the President’s power to settle or dismiss the claims of U.S. citizens, which EO 13303 does, is limited. Because the Court has not addressed cases, as would be the case here, where the claims are against private entities rather than foreign governments, where no alternative forum has been provided in the executive order for settlement of the claims, or where the preclusion of claims is not beneficial to the plaintiffs, the outcome of a challenge to 13303 is not clear.

IV. How, procedurally, can EO 13303 be overturned? Does Congress have authority to overturn it through legislation?

Presidential executive orders can be overturned in three ways: subsequent executive order, congressional action such as a statute, and judicial process. Congress can act statutorily to overturn the EO, but will need to be able to overcome a presidential veto of the legislation as well.

V. What are the major issues to be anticipated if one seeks to challenge EO 13303 in court?

The major issues are standing (i.e. who can challenge 13303), whether 13303 oversteps its statutory grant of authority (i.e. IEEPA), and presidential discretion in exercising authority granted by Congress.

VI. What is the standard of review for the regulations promulgated pursuant to EO13303?

A challenge to a regulation that implements EO 13303 must either demonstrate that the statute which authorizes the executive order (in this case, IEEPA) clearly forbids the agency’s interpretation, or that the interpretation is unreasonable. A regulation would also be invalid if it exceeds the scope of EO13303.

Discussion

I. U.S. Obligations under the U.N. Charter

As a treaty ratified by Congress, the U.N. Charter is part of the supreme law of the United States. United States v. Steinberg, 478 F.Supp. 29 (E.D. Ill. 1979), qtg. Balfour, Guthrie & Co. v. United States, F.Supp. 831, 832 (N.D. Cal. 1950); U.N. Charter art. 104; U.S.Const. art 6, cl. 2. As such, the U.S. has a “continuing obligation to observe with entire good faith and scrupulous care all of its undertakings under the treaty, including support of resolutions adopted by the Security Council,” Id., which are specifically addressed in Article 25 of the Charter. U.N. Charter art. 25 (“All members of the United Nations agree to accept and carry out the decisions of the Security Council in accordance with the present Charter.”); see also In re Surrender of Ntakirutimana, 1998 U.S. Dist. LEXIS 22173 (S.D. Tx. 1998) (The Charter is a treaty that obligates the U.S. to implement legislation in support of Security Council resolutions.).

The courts have not decisively addressed the degree to which implementing legislation must correspond to the resolution that requires it. Congress’ power to enact legislation implementing treaties, however, is very broad: “Congress has the power to pass such legislation as is necessary and proper to implement the treaty.” U.S. v. Yian, 905 F.Supp. 160, 164 (S.D.N.Y. 1995). The plaintiffs in Yian argued that, because the treaty at issue was narrowly targeted at terrorism, it did not require passage of the broadly worded Hostage Taking Act. The Court rejected this argument, applying a reasonableness standard: “A comparison of the Convention and the Act demonstrates that Congress’ enactment of the Hostage Taking Act reasonably implements the Convention.” Id. at 165. The Court upheld the statute despite “a number of differences” between it and the treaty, including the Act’s definition of “third party,” which was broader than the definition in Article 1 of the Convention, Id. at 165, n. 16, because most of the statute’s sections comported with or “tracked the language of” the treaty. Id. at 165.

EO13303, which implements Resolution 1483, largely “tracks the language” of the resolution. However, as 13303 is broader in scope, there are arguments to be made that the differences between the two are so significant as to fail a Yian-type reasonableness analysis. There are three substantial differences between 1483 and 13303: 1) 1483 contains an exception to the immunity granted to oil companies for environmental harms, (such as oil spill), whereas 13303 contains no such exception, broadly immunizing such companies from “any judgment, decree, lien, execution, garnishment, or other judicial process; 2) 1483 limits the immunity it offers by time (“Until December 31, 2007, Iraqi’s oil products shall be immune”), whereas 13303, in §1 a), grants immunity forever; and 3) 1483 only confers immunity until the first time title passes, whereas 13303 extends the immunity as long as the oil is generating revenue. Although it is not clear whether or not a court would find these differences comparable to the difference between the Hostage Taking Act and the Convention in definitions of “third party” in Yian, the divergences are noteworthy and substantial.

The Yian court was persuaded that the Hostage Taking Act reasonably implemented the Terrorism Convention largely because its language tracked that of the convention. EO 13303’s language, to some degree, echoes that of 1483. UNSCR 1483 immunizes companies from “any form of attachment, garnishment, or execution;” 13303 creates a broader category by adding “judgment, decree, lien, and other judicial process” to the list. However, 1483 couches the immunity granted in terms of the immunity possessed by the United Nations: “all proceeds and sales [of petroleum and petroleum products] shall enjoy privileges and immunities equivalent to those enjoyed by the United Nations.” EO 13303 makes no mention of the immunities of the United Nations. However, it is possible this difference could survive judicial review because the immunity of the U.N., under the multi-lateral Convention on Privileges and Immunities of the United Nations, to which the U.S. is a party, includes immunity from all of the processes mentioned in 13303. 21 U.S.T. 1418, art. II, §2 (“The United Nations, its property and assets wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case it has expressly waived its immunity.”); see also Emmanuel v. United States,253 F.3d 755, 756 (1st Cir. 2001) (“United Nations immunity is absolute unless expressly waived.”).

Until tested judicially, it is unclear whether the discrepancies between the UNSCR 1483 and EO 13303 are substantial enough to fail the rational basis test that is typically used to examine treaties and their implementing legislation.

II. The Scope of the Language of 13303

The language of EO13303 seems aimed at encompassing as wide a range of Iraqi oil-related activity as possible. A court would likely interpret it as such, particularly since the terms used in 13303 include language commonly used in executive orders authorized by IEEPA, which have been given very broad scope in previous cases. This suggests that, the Treasury Department’s claims to the contrary, the plain language of the executive order might reasonably give rise to the expectation that an extensive range of activities, instruments, documents, proceeds, and other items of value (e.g. securities, commodities) are protected.

“Interest”: The term “interest” is to be interpreted as broadly as possible. A District of Columbia District Court decision interpreting the term “interest” in the language of IEEPA, stated, “the language [of IEEPA] imposes no limit on the scope of the interest.” Holy Land Found. for Relief & Dev. v. Ashcroft, 2003 U.S. App. LEXIS 12701, 12-13 (D.D.C. 2003). In that case, plaintiff argued that “interest” only referred to legally enforceable interests, and as such, did not include charitable donations designated for Specially Designated Terrorists. The court rejected this argument, stating, “the interest need not be a legally protected one in order to be caught within the net of §1702.” Id. at 14.

Furthermore, pursuant to explicit authorization under 50 U.S.C. §1704, the Office of Foreign Assets Control (OFAC) has defined “interest” as follows: “The term ‘interest’ when used with respect to property shall mean an interest of any nature whatsoever, direct or indirect.” 31 C.F.R. §500.312 (Westlaw 2003).

Blacks Law Dictionary describes “interest” as “the most general term that can be employed to denote a right, claim, title, or legal share in something.” Black’s Law Dictionary 729 (5th ed. 1979).

In the context of 13303, “interests therein” modifies “Development Fund for Iraq, Iraqi petroleum and petroleum products,” an extremely broad category of items. Using the broad judicial interpretation of “interest” in combination with OFAC’s definition, it is reasonable to conclude that all direct or indirect rights, claims, titles, and interests, even if not legally enforceable, with respect to Iraqi oil, are incorporated.

“Obligation”: Terms such as “obligation” are often defined in supplemental sections of statutory provisions. See American Textile Mfrs. Inst., Inc. v. Limited, Inc., 190 F.3d 729 (6th Cir. 1999) (interpreting a federal statute’s definition of “obligation” to include obligations arising from acknowledgements of indebtedness, final judgments, and breaches of government contracts). Neither Title 31 of the C.F.R. nor EO 13303 contains a definition of “obligation.” Therefore, a court would be left to interpret “obligation” only according to its surrounding context and plain meaning.

Black’s describes “obligation” as having many wide and varied meanings according to the context in which it is used. Definitions include, among others: that which a person is bound to do or forbear; any duty imposed by law, promise, contract, relations of society, courtesy, kindness; law or duty binding parties to perform their agreement; that which constitutes a legal or moral duty and which renders a person liable to coercion and punishment for neglecting it. Black’s Law Dictionary 968 (5th ed. 1979).

“Product”: The text of EO 13303 explicitly defines “product” in Section 2(d) as any “petroleum, petroleum products, or natural gas originating in Iraq, including any Iraqi-origin oil inventories.”

Black’s defines “product” as follows: “With reference to property, term refers to proceeds, yield, income, receipts, return. Goods produced or manufactured, either by natural means, by hand, or with tools.” Black’s Law Dictionary 1088 (5th ed. 1979).

“Proceed”: In EO 13303, “proceeds” are described as “arising from or related to the sale or marketing thereof” [of “all Iraqi petroleum and petroleum products”]. Courts have defined proceeds differently, depending upon the context. One court, in examining whether “proceeds” from minerals within reservation land included money from possessory interest tax, defined proceeds as “value arising from a commercial transaction,” or “that which results or accrues”. Peabody Coal Co. v. Navajo Nation, 860 F.Supp. 683, 691 (D. Ariz. 1994). Black’s Law Dictionary defines “proceeds” as “issues; income; yield; receipts; produce; money or articles or other thing of value arising or obtained by the sale of property; the sum, amount, or value of property sold or converted into money or into other property…. That which results, proceeds, or accrues from some possession or transaction….” Black’s Law Dictionary 1204 (5th ed. 1979). Courts generally look to the common understanding of a word in order to interpret it within a statute, which includes referring to dictionary definitions. Id. Thus, the meaning of “proceeds” within EO 13303 seems to include all sums of money or items of other value resulting from petroleum sales or marketing transactions.

“Financial instruments of any nature whatsoever”: In its practice manual and in regulations it has promulgated with respect to sanctions, OFAC has defined “property and property interests” to include “financial instruments” such as “money, checks, drafts, bullion, bank deposits, savings accounts, debts, indebtedness, obligations, notes, guarantees, debentures, stocks, bonds, coupons, any other financial instruments.” 844 PLI/Comm.105, 129; see also 68 F.R. 34196, 34200. The term “financial instrument” has been construed by courts to include a bond (“an agreement whose basic terms are negotiated between two industries”), F.D.I.C. v. Insurance Co. of North America, 105 F.3d 778, 786 (1st Cir. 1997); a certificate of deposit, U.S. v. Oates, 122 F.3d 222 (5th Cir. 1997); and securities and commodities, Abrams v. Oppenheimer Government Securities, Inc., 737 F.2d 582 (7th Cir. 1984). It is not clear whether, under IEEPA, “financial instruments” would include financial documents such as tax returns.

III. Authority under IEEPA to issue EO 13303

The President’s authority to issue an order is derived either from the Constitution or from a statute. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952). In some cases, a president may derive his power to act from multiple sources of express or implied power. The International Emergency Economic Powers Act (IEEPA) is a statutory authorization enabling a president to engage in a broad range of activities in the case of a national emergency. International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706 (1976 ed., Supp. III). Whether IEEPA authorizes the President to nullify the instruments and processes addressed in EO 13303 (“any attachment, judgment, decree, lien, execution, garnishment, or other judicial process”) is unclear.

Despite acknowledging that “the authority of the President to settle claims of American nationals is clear,” Am. Ins. Ass’n v. Garamendi, 2003 U.S. LEXIS 4797 (U.S. June 23, 2003, the Supreme Court has consistently refused to label the President’s power as plenary in this area. See, e.g., Dames & Moore v. Regan, 453 U.S. 654, 688 (1981). In Dames & Moore, the Court upheld a series of executive orders implementing the terms of the Algiers Accords, an executive agreement between the U.S. and Iran to free U.S. citizens held hostage in Iran. Id. The orders nullified all non-Iranian interests in Iranian assets and suspended all settlement claims, establishing an international claims tribunal for the arbitration of the suspended claims. The Court in Dames & Moore stressed the narrowness of its decision, holding that the President has the power to settle claims against foreign governments “where the settlement of the claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between our country and another, and where . . . [the Court] can conclude that Congress acquiesced in the President’s action.” Id. at 945. The Court also emphasized the importance of the alternative forum established by the executive orders. Id. at 687. Because of the narrowness of the Court’s holding in Dames & Moore, there are a number of questions remaining regarding the scope of the President’s power with respect to claims settlement, many of which must be resolved in order to assess the legitimacy of EO 13303.

First, the Supreme Court has not yet decided a case where the executive order at issue does not provide for an alternative forum for claim settlement, and the lower courts have only addressed the issue with respect to plaintiffs who in fact benefit from the extinguishment of their claims. A wholesale waiver of claims without compensation could constitute a taking in violation of the Due Process clause of the Fifth Amendment, assuming the claims constitute “property” within the meaning of the Fifth Amendment.

A cause of action is a property right subject to the protection of the Due Process Clause of the Fourteenth Amendment. See, e.g.,Logan v. Zimmerman Brush Co., 455 U.S. 422, 428. Individuals “cannot be deprived of their right to pursue legal claims . . . which are a form of property, without due process of law.” Miller v. USAA Cas. Ins. Co., 44 P.3d 663, 674 (Utah 2002). However, a right to due process is not violated simply because a new statute or a change in existing law extinguishes the cause of action. Aicher ex. rel. LaBarge v. Wisconsin Patients Compensation Fund, 613 N.W. 2d 849, 872 (Wis. 2000). The cause of action must have accrued in order for the plaintiff to have a vested property interest that may not be constitutionally divested. Id. The party must have acquired a right to assert the cause of action prior to the change in law. Walls v. American Optical Corp., 740 So.2d 1262, 1268 (La. 1999).

In Belk v. United States, another case relating to the Iranian Hostage Crisis, the Court of Appeals for the Federal Circuit did hold that the extinguishment of the hostages’ injury claims against Iran by the Algiers Accords did not constitute a compensable taking. Belk v. United States, 706 F.2d 706 (Fed. Cir.1988). Even though the hostages were not permitted to bring suit against Iran even in an alternative tribunal, there was no taking because “the President’s action in implementing the Algiers Accords was primarily designed to benefit the hostages.” Id. at 709. Compensation is only necessary where the government has attempted to obtain a governmental or public benefit at the expense of a private party, not where the benefit to the public is only incidental to the benefit to the private party. Abrahim-Youri v. United States, 139 F.3d 1462 (Fed. Cir. 1997). In our case, potential plaintiffs against private corporations are hardly the primary beneficiaries of President Bush’s action; certainly none will be hostages whose freedom from captivity has been secured by Executive Order 13303.

Second, the Dames & Moore Court did not address claims by U.S. nationals against private entities, rather than just foreign governments; both of the lower courts to address such a case, the District Court for the Northern District of California and the New Jersey District Court, focused on the benefits to plaintiffs of the instrument extinguishing their claims. In In re World War II Era Japanese Forced Labor Litig., the plaintiffs, former service members with forced labor claims against Japanese corporations, argued that 1951 Treaty of Peace with Japan, in which the U.S. government waived all war-related claims against private Japanese companies, effected a taking. In re World War II Era Japanese Forced Labor Litig. 114 F. Supp. 2d 939 (N.D. Cal. 2000). The district court, using reasoning that echoes Belk and Abrahim-Youri, concluded that there was no taking because of the benefit to the plaintiffs in the form of “the immeasurable bounty of life for themselves and their posterity in free society and in a more peaceful world,” which “services the debt . . . [even though] full compensation, in the purely economic sense, has been denied [them]” Id. at 949. In our case, the executive order potentially immunizes U.S. and Iraqi corporations, but there would not be even such an attenuated and non-concrete benefit to potential plaintiffs.

The second case against private companies rather than a foreign sovereign dealt with claims against German companies arising from conduct occurring during the Nazi era. In re Nazi Era Cases Against German Defendants Litigation, 129 F.Supp. 2d 370 (D.N.J. 2001). The court upheld the transfer of claims to a foundation, “designed to provide some measure of compensation to surviving victims of the Nazi era whose claims rest on the conduct of German industry during that period,” Id. at 372, because it deemed the Foundation not only an adequate alternative forum, but a better forum than the courts could provide. Id. at 385, 386. The Court observed that recovery, “regardless of how modest,” Id., would be more likely from the Foundation and noted also that the Foundation represented “acceptance of moral accountability by German Industry . . . sought by a number of plaintiffs, [which] may have its own remedial value.” Id. This case, too, is distinguishable from ours, in that (a) there is an alternative forum provided of some kind, and (b) settlement of plaintiffs’ claim in that forum may be beneficial to the plaintiffs.

IV. Overturning Executive Orders

Repealing an executive order by legislation: Congress may overturn an executive order by legislation. Tara L. Branum, President or King? The Use and Abuse of Executive Orders in Modern-day America, 28 J. Legis. 1, 78 (2002) (citing Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 635-38 (1952)); see also President Clinton’s News Conference, 29 Weekly Comp. Pres. Doc. 108 (Jan. 29, 1993) (“any President’s Executive Order can be overturned by an act of Congress. The President can then veto the act of Congress and try to have his veto sustained”). However, it should be noted that overturning a presidential order requires more than enactment of legislation according to the normal legislative process. It is not enough for Congress to simply pass a statute overturning the presidential order. It must also have enough votes to overcome the probable presidential veto. Branum at 71.

Revoking an executive order by subsequent executive order: The president can issue an executive order to revoke an earlier executive order. For example, executive orders 12,818, and 12,800 of George H. Bush (requiring Federal contractors to post a notice that workers are not required to join unions) were revoked by President Clinton in executive order 12,836. 58 FR 7045. Presidents regularly revoke other presidents’ executive orders by issuing new executive orders. Presidents also revoke their own orders with new orders.

Challenging an executive order in the courts: The judiciary rarely uses its power to overturn a presidential order. In fact, only three executive orders have been overturned in their entirety. Branum, supra, at 37. Plaintiffs often bring suit to enjoin the implementation of an executive order or seeking judgments declaring the order invalid. Common issues encountered by plaintiffs include standing, executive orders that overstep a statutory grant of authority, and presidential discretion in exercising authority granted by congress.

V. Major Issues to be Considered in Contemplating a Judicial Challenge

A plaintiff must have standing to challenge an executive order in court. An executive order must actually injure or threaten injury to a potential plaintiff. In Ozonoff v. Berzak, 744 F.2d 224 (1st Cir. 1984), a plaintiff sought declaratory judgment prohibiting the implementation of an Executive Order authorizing loyalty background checks for persons applying to work at the WHO. The circuit court affirmed the district courts invalidation of the order, finding it contrary to the First Amendment. A key questions in the case was whether plaintiff Ozonoff had standing to challenge the order. The Court found that the order threatened Ozonoff with injury because he could reasonably believe he had to conform his conduct to the standards of the Order. Id. at 230. A court would only grant standing to a person challenging executive order 13303 if that person suffered actual or threatened injury by those to whom the order grants immunity. Such a person might include a victim of human rights abuses suffered in association with a petroleum project or a victim of an oil spill.

A court may overturn an executive order that is outside the statutory grant of authority. It is not immediately clear if President Bush’s grants of immunity in executive order 13303 are outside the authority granted by IEEPA. In Liberty Mut. Ins. Co. v. Friedman, 639 F.2d 164 (4th Cir. 1981), plaintiff insurers challenged a determination by federal administrators that plaintiffs were subcontractors as defined by federal regulations and thus subject to an executive order. The Court found that plaintiffs were indeed subcontractors as defined by federal regulations. However, the Court held that the “application of the Executive Order to plaintiffs is not reasonably within the contemplation of any statutory grant of authority.” Id. at 172. The Court therefore enjoined the application of the order to plaintiffs.

It is possible that IEEPA does not reasonably contemplate the scope and purpose of the immunity granted by EO 13303. However, the “burden of persuasion would rest heavily upon any who might attack it [the authority to issue the executive order].” Dames & Moore, supra at 668 (quoting Youngstown Sheet & Tube Co. v. Sawyer, supra at 637.).

Another problem encountered when challenging executive orders is that courts will not review an order that was based on a statute that commits a decision to the discretion of the president. In Dalton v. Specter, 511 U.S. 462 (1994), plaintiffs sought to enjoin the closing of the Philadelphia Naval Shipyard pursuant to a presidential order that was made pursuant to statute. Plaintiffs argued that in making his decision to close the shipyard, the president exceeded the scope of authority granted by the statute. The Court held that review was not available because the statute in question committed the decision on which shipyards to close to the discretion of the President. Id. at 475. The National Emergencies Act does not explicitly grant the president exclusive discretion in declaring national emergencies for the purposes of IEEPA but such discretion is implied. Furthermore, IEEPA does not explicitly grant the president discretion in what kind of action he can take when implementing the statute, but such discretion is also implied. And courts are more likely to defer to the president’s decisions in matters of foreign policy. See United States v. Curtiss-Wright Corp., 299 U.S. 304 (1936) (stating that the court must often accord to the president a degree of discretion and freedom in matters of foreign affairs). This typical judicial deference in the realm of foreign policy makes the challenge to EO 13303 more difficult, but not impossible.

VI. Judicial Review of Implementing Regulations

Administrative action pursuant to an Executive Order is invalid if it exceeds the scope of the Executive Order. Contractors Asso. of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 159, 175 (3rd Cir. 1971). However, the courts should give “more than ordinary deference” to the agency’s interpretation of an executive order which it is charged to administer. Id. The implementing agency, then, is free to give “reasonable scope” to the terms conferring its authority. Peters v. Hobby, 349 U.S. 331, 342 (1955). Thus while the agency’s interpretation of the executive order may not be the only reasonable one, or even the result the court would have reached had the issue first arisen there, Udall v. Tallman, 380 U.S. 1, 16 (1965), the agency “may not ignore plain limitations on its authority.” Peters, 349 U.S. at 345. Peters involved regulations set forth by the Department of Health, Education, and Welfare (DOHEW) pursuant to an executive order that required the heads of every executive agency or department to develop a program to ensure that all of their employees were loyal to the U.S. government and established a Loyalty Review Board (LRB). Under the order, the Loyalty Review Board was to review the appeals of persons recommended for removal on grounds of disloyalty by each agency or department. The DOHEW regulations, however, provided that the LRB could undertake reviews on its own initiative, without waiting for an appeal from an agency or department. The Supreme Court struck down the regulation because “the board sought to do by regulation precisely what it was not permitted to do under the [Executive] Order.” Id. at 342.

An agency’s interpretation of an executive order also must be consistent with the statute authorizing the order (such as IEEPA). If the statute clearly forbids the agency’s interpretation or if the interpretation is unreasonable, the regulations will be invalid. see, e.g. Comet Enters. v. Air-a-Plane Corp., 128 F.3d 855 (4th Cir. 1977). If the Executive Order is “firmly rooted in congressionally delegated authority . . . it is but a short step to the conclusion that the [implementing] regulation is also within the contemplation of that grant of authority.” United States v. Mississippi Power & Light Co., 638 F.2d 899, 905 (5th Cir. 1981). Even if the authorizing statute is ambiguous, courts will defer to the administering agency’s interpretation as long as it is based on a “permissible reading of the statute.” United States v. Lindh, 212 F.Supp.2d 541, 563 (E.D. Va. 2002). In IEEPA cases, courts have generally held that IEEPA’s plain language is “clearly broad enough to authorize the regulations . . . even if IEEPA were deemed ambiguous.” Id. at 562; see Comet Enters., 128 F.3d at 914 (“IEEPA grants broad powers to the president . . . in order to conclude that OFAC’s regulations exceed the authority delegated to it by the plain meaning of the statute, we would have to narrow the language of IEEPA to an extent that itself would be unreasonable.”).

It remains to be seen whether the regulations on EO 13303 will clarify or further obfuscate the President’s purpose in issuing the Executive Order. Unless the regulations significantly narrow the scope of protected proceeds and instruments as described in the EO, the question as to EO 13303’s legality still remains.

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