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Dames & Moore v. Regan
Citations: 69 L. Ed. 2d 918; 101 S. Ct. 2972; 453 U.S. 654; 1981 U.S. LEXIS 44; 49 U.S.L.W. 4969Docket: 80-2078
Court: Supreme Court of the United States; July 2, 1981; Federal Supreme Court; Federal Appellate Court
In the case of Dames & Moore v. Regan, the Supreme Court addressed the constitutionality and statutory authority of actions taken in response to the hostage situation at the American Embassy in Tehran. Following President Carter's declaration of a national emergency on November 14, 1979, the Treasury Department enacted regulations to block the transfer of Iranian assets within U.S. jurisdiction, rendering any judicial process against such property null unless authorized. The President granted a general license permitting certain judicial actions against Iran but prohibited the entry of final judgments. Petitioner Dames & Moore filed a lawsuit in Federal District Court against the Iranian government and associated entities for payment due under a contract. The court ordered attachments of Iranian property but later, following the hostages' release in January 1981, the U.S. was required to terminate ongoing legal actions against Iran through arbitration. The President issued Executive Orders revoking all prior licenses related to Iranian assets, mandating the transfer of such assets to the Federal Reserve. Subsequently, President Reagan ratified these Executive Orders and suspended claims to be presented to the Iran-United States Claims Tribunal, although the suspension would end if the Tribunal found it lacked jurisdiction. The District Court ruled in favor of Dames & Moore, awarding them a judgment but stayed its execution pending appeal and vacated prejudgment attachments. Dames & Moore then challenged the enforcement of the Executive Orders and regulations, arguing that the President and Secretary of the Treasury overstepped their powers and that their actions unconstitutionally infringed on the petitioner's rights to enforce the judgment and continue litigation against the Iranian banks. The District Court dismissed the complaint due to insufficient grounds for relief but issued a temporary injunction preventing the United States from transferring Iranian property subject to any writ of attachment in favor of the petitioner. The Supreme Court granted certiorari to address the case. 1. The President is authorized under the International Emergency Economic Powers Act (IEEPA), specifically 50 U.S.C. 1702 (a)(1)(B), to nullify attachments and order the transfer of Iranian assets. Legislative history supports a broad interpretation of the President's powers, allowing for actions beyond merely freezing assets. The petitioner proceeded with asset attachments after the Treasury issued revocable licenses, making those attachments subordinate to the President's authority under the IEEPA. 2. Blocking orders enable the President to keep foreign assets available for negotiating resolutions to national emergencies, serving as a bargaining chip. Limiting presidential authority could allow claimants to undermine this strategic advantage. 3. The petitioner's interest in the attachments was conditional and revocable; therefore, the President's actions did not constitute a Fifth Amendment taking without just compensation. 4. The President's actions are backed by strong presumptions of legality and broad judicial interpretation, placing a heavy burden of proof on any challengers, which the petitioner did not meet. 5. The legislative context, including the IEEPA and the Hostage Act, indicates congressional support for the President's authority to suspend claims in international crises, although these laws do not explicitly authorize such suspension. The U.S. has historically exercised its authority to resolve claims against foreign countries. Settlements of claims have historically been resolved through executive agreements without Senate approval, a practice still in effect today. Congressional support for this practice is evidenced by the International Claims Settlement Act of 1949, which established the Foreign Claims Settlement Commission to adjudicate claims by U.S. nationals. Legislative history of the International Emergency Economic Powers Act (IEEPA) further indicates congressional acceptance of presidential authority in such agreements. Previous court rulings affirm that the President can enter executive agreements without Senate consent, and the argument against settlements prior to 1952, based on sovereign immunity doctrine, is countered by the occurrence of at least ten settlements since then. The Foreign Sovereign Immunities Act of 1976 (FSIA) did not remove the President's authority to settle claims, as it was meant to address sovereign immunity issues, not limit presidential powers. Long-standing executive practices, recognized by Congress, create a presumption of legislative consent to the President's actions. The President's suspension of the claim in question is supported by the provision of an alternative resolution forum, the Claims Tribunal, and Congress has not opposed this action. Although the President may not have unlimited power to settle claims, in the context of significant foreign policy matters and congressional acquiescence, such actions are within his authority. The potential for the President's actions to constitute a property taking under the Fifth Amendment raises the question of the petitioner's legal remedies, which can be pursued in the Court of Claims without jurisdictional barriers. The judgment is affirmed. Justice Rehnquist's opinion addresses the fundamental governance questions arising from the case involving executive actions related to Iranian assets in the United States. The Court acknowledges the extensive historical discourse on the Constitution and the complexities of executive power, highlighted by influential commentators and past judicial opinions. The case revolves around various Executive Orders through which the President nullified liens on Iranian assets, transferred these assets, and suspended claims against Iran, aiming to adhere to an Executive Agreement with Iran. The Court expedited its review due to conflicting lower court rulings and a looming deadline that could result in the U.S. being perceived as breaching the agreement. Emphasizing the need for a narrow decision, the Court aims to resolve the specific issues without establishing broad guidelines for other situations. The opinion reflects the challenges of reconciling judicial power with the operational dynamics of Congress and the Executive, noting that past judicial decisions in this realm have been infrequent and of limited precedential value. The Court in United States v. Curtiss-Wright Export Corp. emphasized the President's unique authority in international relations, which is distinct from legislative power and does not require Congressional approval, although it must still conform to the Constitution. Justice Jackson, in a later case, cautioned against interpreting presidential power as virtually unlimited, referencing historical abuses by monarchs. This case highlights the ongoing conflict between Presidential authority and constitutional checks and balances. On November 4, 1979, the American Embassy in Tehran was seized, leading President Carter, under the International Emergency Economic Powers Act (IEEPA), to declare a national emergency on November 14, 1979. He ordered the blocking of all Iranian government properties within U.S. jurisdiction. The Treasury Department then established regulations making any legal actions against such properties void unless authorized. A general license for certain judicial actions against Iran was issued, with clarifications allowing pre-judgment attachments. Subsequently, on December 19, 1979, petitioner Dames & Moore filed a lawsuit in California against the Iranian government and related entities, claiming a breached contract with the Atomic Energy Organization for site studies of a nuclear power plant, which had been terminated by the Organization. Petitioner claimed $3,436,694.30 plus interest for services rendered under a contract before its termination. The District Court ordered attachments against the defendants' property, including assets from certain Iranian banks, to secure potential judgments. Following the release of American hostages by Iran on January 20, 1981, a binding arbitration Agreement was established between the United States and Iran to settle all claims, mandating the creation of the Iran-United States Claims Tribunal. This Tribunal's decisions are final, binding, and enforceable globally. The Agreement required the U.S. to terminate all legal actions involving claims against Iran and its entities, nullify existing judgments, and transfer Iranian assets in the U.S. to designated accounts by July 19, 1981, including one billion dollars for claims settlements. President Carter implemented the Agreement via Executive Orders, revoking permissions regarding Iranian assets and mandating their transfer to the Federal Reserve Bank of New York. On February 24, 1981, President Reagan ratified these Orders and suspended claims pending before the Tribunal, stating such claims would have no legal effect in U.S. courts. Meanwhile, on January 27, 1981, the petitioner sought summary judgment against Iran and the Atomic Energy Organization, which the District Court granted, allowing the petitioner to execute the judgment through garnishment and a sheriff's sale of Iranian property in Washington. On May 28, 1981, the District Court issued an order staying execution of its judgment pending an appeal by the Government of Iran and the Atomic Energy Organization, vacating all prejudgment attachments against the Iranian defendants, and staying further proceedings against bank defendants due to relevant Executive Orders. On April 28, 1981, the petitioner filed a lawsuit in the District Court seeking declaratory and injunctive relief against the U.S. and the Secretary of the Treasury, arguing that the Executive Orders and regulations implementing the Agreement with Iran exceeded statutory and constitutional powers, adversely affecting the petitioner's judgment against the Iranian entities. The District Court denied the petitioner’s motion for a preliminary injunction and dismissed the complaint for failure to state a claim. Prior to this ruling, appellate courts had upheld the President's authority regarding the challenged Executive Orders. Following the District Court's dismissal, the petitioner appealed to the Ninth Circuit. On June 4, 1981, the Treasury Department amended its regulations to require the transfer of Iranian assets by June 19, which led the District Court to issue an injunction preventing the U.S. from enforcing transfers of Iranian property under any judicial liens favoring the petitioner. The petitioner sought a writ of certiorari, citing the case's public importance, prompting the Court to grant the petition, expedite briefing, and set oral arguments for June 24, 1981. The parties acknowledged the relevance of *Youngstown Sheet & Tube Co. v. Sawyer* in considering the President’s authority, emphasizing that such authority must derive from Congress or the Constitution, and noting that executive actions supported by Congressional authorization carry a strong presumption of validity. When the President acts without congressional authorization, he may operate in a "zone of twilight" where both he and Congress may possess concurrent authority, leading to complexities in analyzing the validity of his actions under separation-of-powers principles. The circumstances surrounding the President's actions, including congressional inaction or indifference, are essential to understanding the Legislative Branch's stance. When the President acts against Congress's will, his authority is significantly diminished, and the Court may only uphold his actions if Congress is effectively prevented from addressing the matter. Justice Jackson's framework for categorizing executive actions into three general categories is acknowledged as useful but overly simplistic, recognizing that these actions often exist on a spectrum from clear congressional support to outright prohibition. This complexity is particularly relevant in unexpected international crises. In the context of President Carter’s actions following the Iranian crisis, he cited multiple sources of power, primarily relying on Section 203 of the International Emergency Economic Powers Act (IEEPA) as his authority for nullifying attachments of Iranian assets and directing their transfer to the Federal Reserve Bank. The IEEPA allows the President to regulate transactions involving foreign interests, including blocking or transferring assets. The Courts of Appeals that reviewed the matter supported the government's position, affirming that the President's actions were authorized by the IEEPA. The President's actions align with the International Emergency Economic Powers Act (IEEPA), which grants him the authority to prevent and prohibit the transfer of Iranian assets and later to compel their withdrawal, effectively nullifying rights associated with those assets. Main contends that IEEPA does not allow the President to override judicial remedies or extinguish interests in foreign assets held by U.S. citizens. However, IEEPA's language is broad, permitting the President to void any rights or privileges concerning property with foreign interests. In *American Int'l Group, Inc. v. Islamic Republic of Iran*, the Court upheld President Carter's revocation of licenses for prejudgment restraints on Iranian assets, reinforcing that such actions fall within IEEPA's scope. Petitioner argues against this interpretation, citing legislative history suggesting that the President’s powers are limited to continuing or discontinuing asset freezes. The court disagrees, asserting that the terms "transfer, compel, or nullify" within IEEPA carry significant meaning, and that both legislative history and case law support a broad executive authority during national emergencies. Despite Congress's intention to limit the President's peacetime powers, the enactment of IEEPA did not diminish his authority in this context. By the time the petitioner acted, the President had already issued a freeze order, and any attachments to the blocked assets were subject to Treasury Department regulations indicating they could be revoked at any time. The petitioner was aware that its interest in the frozen assets was contingent upon the President’s authority under IEEPA. The purpose of blocking orders is to allow the President control over foreign assets, which can be used as leverage in negotiations during national emergencies. Petitioner's argument is challenged as it would allow individual claimants to undermine a statutory "bargaining chip" through property encumbrances, contrary to the statute's intent and language. The President's action to nullify these attachments and transfer assets, backed by congressional authorization, carries a strong presumption of validity, placing a heavy burden on any opposition. The court cannot conclude that this burden has been met. Additionally, while the International Emergency Economic Powers Act (IEEPA) permits the nullification of attachments, it does not extend to suspending claims in U.S. courts. Such claims exist independently of property attachments and are fundamentally efforts to establish liability rather than targeting specific property. This interpretation aligns with the consensus among various courts. The Hostage Act, although providing certain presidential powers regarding unjust imprisonment of U.S. citizens, does not explicitly authorize the suspension of claims in American courts, leading to reluctance in interpreting it as such. The Hostage Act's broad language raises complexities regarding its application to the Iranian crisis. Legislative history indicates that the Act was enacted in response to other nations' refusal to acknowledge the citizenship of naturalized Americans abroad, primarily concerned with repatriating these citizens rather than exchanging them for ransom. This context clarifies the Act's focus on imprisonment that violates American citizenship rights, contrasting with the Iranian hostage situation, where hostages were taken specifically because of their citizenship. Moreover, the legislative history presents ambiguity regarding whether Congress intended for the President to take actions like suspending claims or merely to pursue reprisals against offending countries. While neither the International Emergency Economic Powers Act (IEEPA) nor the Hostage Act explicitly authorize presidential actions in this context, both statutes highlight Congress's acceptance of broad executive authority during national emergencies. The IEEPA grants the President extensive powers concerning foreign property during crises, while the Hostage Act reflects Congress's intent for the President to have discretion in responding to hostile foreign actions. This was emphasized by Senator Williams, who noted the necessity for executive discretion in addressing various international circumstances. Proponents acknowledged that the Act conferred "loose discretion" to the President, arguing that the executive should be empowered to act according to the needs of the situation to rescue imprisoned citizens. An earlier version of the Act that permitted more aggressive retaliatory measures was rejected in favor of a more measured approach. The excerpt articulates that while the International Emergency Economic Powers Act (IEEPA) or the Hostage Act do not explicitly empower the President to suspend claims, Congress's legislative history suggests an implicit acceptance of presidential actions in foreign policy and national security. The lack of explicit congressional delegation of authority does not equate to disapproval of executive actions. The text references case law indicating that Congress has historically acquiesced to presidential conduct in these areas. It also highlights that international claims by nationals often create tensions between countries, which have been resolved through agreements recognizing the authority of nations to settle claims of their nationals. The U.S. has a precedent of resolving such claims, either through treaties or executive agreements, sometimes without the involvement or consent of the affected nationals. This includes instances where the President has settled claims against foreign governments, underscoring a longstanding practice that persists in contemporary governance. Since 1952, the President has entered into at least ten binding settlements with foreign nations, notably including an $80 million agreement with China. Congress has implicitly endorsed the practice of claim settlements via executive agreements, as evidenced by the International Claims Settlement Act of 1949. This Act aimed to allocate funds from executive settlements with Yugoslavia and to establish a distribution process for future settlements. It led to the creation of the International Claims Commission, now the Foreign Claims Settlement Commission, which has the authority to make binding decisions on claims by U.S. nationals against settlement funds. Legislative history indicates that the Act anticipated future settlements beyond Yugoslavia, reflecting Congress's approval of executive agreements. Over time, Congress has amended the Act to address issues related to these settlements, demonstrating ongoing support for the President's settlement authority. For example, Congress established an allocation formula for funds from the settlement with China and authorized the Foreign Claims Settlement Commission to evaluate claims against East Germany prior to negotiations. Recent amendments have also facilitated settlements regarding claims against Vietnam, aiming to create an inventory of U.S. property losses there for future negotiations. Additionally, the legislative history of the International Emergency Economic Powers Act (IEEPA) indicates that while it limits certain presidential emergency powers, it does not restrict the President's authority to settle claims with foreign nations or block assets. Congress has implicitly supported the President's authority to resolve claims through executive agreements, a power recognized by prior court cases. In *United States v. Pink*, the Supreme Court validated an executive agreement with the Soviet Union that facilitated the settlement of claims, linking the resolution of these claims to the normalization of diplomatic relations. Similarly, Judge Learned Hand acknowledged the President's constitutional power to settle claims with foreign governments, emphasizing its historical significance in maintaining amicable relations. The petitioner challenges the notion of congressional acquiescence by arguing that prior claims settlements should be disregarded due to the evolution of the doctrine of sovereign immunity, asserting that the shift to a more restrictive interpretation in 1952 diminished the President's authority. However, this claim is countered by evidence of multiple executive agreements post-1952, indicating ongoing congressional support for such settlements. Additionally, the petitioner contends that the enactment of the Foreign Sovereign Immunities Act (FSIA) in 1976 limited the President's power to settle claims by establishing federal jurisdiction over commercial suits against foreign states, which previously fell under Executive Branch discretion. The petitioner argues that the Foreign Sovereign Immunities Act (FSIA) was intended to remove commercial lawsuits from foreign affairs and ensure they fall under the exclusive jurisdiction of U.S. courts, contending that the President's suspension of claims violates Article III of the Constitution. However, it is stated that the President's action does not divest federal courts of jurisdiction; rather, it only suspends claims, which may become enforceable again if not under the Claims Tribunal's jurisdiction. The distinction is made between altering jurisdiction and modifying the applicable law. The President is seen as exercising a power, acknowledged by Congress, to settle claims, without undermining federal court jurisdiction. The FSIA was designed to codify current views on sovereign immunity, removing the President's authority to make binding determinations regarding it, but does not prohibit the President from settling claims against foreign governments. Legislative history shows that Congress, after enacting the FSIA, explicitly supported the President's authority to enter into claims settlement agreements, as evidenced by the enactment of the International Emergency Economic Powers Act (IEEPA), which emphasized that it would not impede such settlements. Ultimately, the President is deemed authorized to suspend claims under Executive Order No. 12294, with a long-standing executive practice, recognized and unchallenged by Congress, providing a presumption of consent for such actions. The President's action in suspending claims is deemed appropriate, with Congress implicitly consenting to this action. The establishment of the Claims Tribunal provides an alternative forum for American nationals, which may enhance their chances of recovering claims by alleviating jurisdictional and procedural barriers present in U.S. courts. Although there are reservations about the effectiveness of the Claims Tribunal, the provision of this forum signifies that claimants receive compensation in exchange for the suspension of their claims. Congress has not disapproved of the Presidential action, as there have been no legislative measures against the Agreement, and the Senate Committee expressed the Tribunal's importance to the U.S. The ruling emphasizes the limited scope of the decision, clarifying that it does not grant the President broad authority to settle claims against foreign governments. The settlement of claims in this context is linked to resolving a significant foreign policy issue, with Congressional acquiescence suggesting a mandate for the President's actions. The issue of whether the suspension constitutes a Fifth Amendment taking is not currently ready for review, as both parties acknowledge this matter is not ripe for adjudication. However, it raises the question of whether the petitioner can seek a remedy under the Tucker Act if such a taking occurs. The taking's fact and extent are deemed speculative but not relevant, as there must be "reasonable, certain and adequate provision for obtaining compensation" at the time of taking. The Government acknowledged that 28 U.S.C. § 1502, which may limit the Court of Claims' jurisdiction, does not preclude the petitioner’s claims. As such, the petitioner can pursue compensation for any alleged unconstitutional taking related to claim suspensions under the Tucker Act. The District Court's judgment is affirmed, and the mandate will be issued. Justice Stevens concurs but believes the potential for an unconstitutional taking due to forum change is unlikely, while Justice Powell concurs with the overall opinion but dissents regarding the treatment of nullified attachments, arguing that this issue should be assessed on a case-by-case basis. Powell emphasizes that valid claims not adjudicated or fully compensated can lead to taking claims in the Court of Claims, asserting that the Government must provide just compensation when it uses these claims for foreign policy, regardless of the extraordinary powers of the President and Congress. The petitioner does not challenge the President's declaration of national emergency under Title 50 U.S.C. § 1701. The President is empowered to investigate, regulate, and control various dealings involving property with foreign interests, as outlined in Title 31 CFR 535.805 (1980). This authority includes the ability to amend or revoke any related rules or licenses. In a dispute related to a contract with the Atomic Energy Organization of Iran, the petitioner claimed that the organization consistently delayed a meeting aimed at resolving contractual issues. The petitioner argued that under the Trading with the Enemy Act (TWEA), the President possesses two key powers: to temporarily freeze foreign-owned assets and to permanently seize them. It was contended that only the latter power was granted by TWEA, and that the International Emergency Economic Powers Act (IEEPA) of 1977 did not confer similar authority. However, the court disagreed, stating that the President is authorized to permanently dispose of assets under both TWEA and IEEPA, despite the fact that IEEPA does not grant the power to vest title. The court emphasized that Section 1702 of the TWEA allows the President to compel the transfer or exportation of property in which a foreign country has an interest. Additionally, the court rejected the petitioner's reliance on past cases (Orvis v. Brownell and Zittman v. McGrath), asserting that attachments on Iranian assets are subordinate to the President's power under IEEPA. The petitioner’s argument that allowing attachments conferred property interests was also dismissed, with the court noting that only the licenses for attachments were revocable, not the attachments themselves. The January 19, 1981, order revoking all licenses impacts the petitioner's ability to secure future attachments, contrary to the petitioner's interpretation. The regulations state that any attachment is void unless licensed, and all licenses can be revoked at any time. It is argued that the President would not intend for claimants to control frozen assets, and thus, attachments are deemed revocable and subordinate to the President's authority under the International Emergency Economic Powers Act (IEEPA). This interpretation addresses the petitioner's assertion that nullifying attachments would constitute an unconstitutional taking without compensation under the Fifth Amendment. The conclusion reached is that the President's authority to prevent or condition attachments negates any property interest the petitioner might claim in the attachments, undermining any constitutional compensation claim. Additionally, Judge Mikva’s opinion in American Int'l Group, Inc. v. Islamic Republic of Iran is referenced, highlighting that the term “Hostage Act” was created for litigation purposes, but the focus remains on the statutory language of 22 U.S.C. 1732. Historical context is provided regarding presidential powers to settle claims via executive agreements, noting that such practices have occurred consistently since at least 1799, with over eighty agreements made between 1817 and 1917. Congress has historically refrained from obstructing this practice, only requiring significant agreements to be reported to Congress. The case Haig v. Agee is cited to emphasize the Executive's authority in national security matters, illustrating that Congress has left the President's claim settlement authority unchallenged, thereby affirming the understanding that the President retains such power. Senator Case, the Act's sponsor, highlighted the President's authority to settle claims of American nationals against foreign countries through diplomatic channels. The legislative context included discussions on the necessity of congressional approval for executive agreements, which had been proposed but not enacted, as seen in various hearings from the 1970s. A notable instance of congressional disapproval occurred with a 1973 Executive Agreement with Czechoslovakia, where Congress mandated renegotiation due to dissatisfaction over settlement terms. While the President has settled claims against Iran, the implications for the petitioner's potential takings claim against the United States remain unresolved. The document raises concerns regarding whether the Executive Orders, which conditioned attachments related to claims, might have constituted a taking under the Fifth Amendment. This right to attachment is considered a property right, and the revocability of the license under which the petitioner obtained attachments may not invalidate the attachments themselves. The excerpt references key cases, including *Armstrong v. United States* and *Agins v. City of Tiburon*, which reinforce the principle that the government cannot impose public burdens unfairly on individuals without providing just compensation.