Wald v. Regan

Decision Date16 June 1983
Docket NumberNo. 82-1695,82-1695
Citation708 F.2d 794
PartiesRuth WALD, et al., Plaintiffs, Appellants, v. Donald REGAN, et al., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

Leonard B. Boudin, with whom Eric Lieberman, Jules Lobel, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., Michael Ratner, Sarah Wunsch, Margaret L. Ratner, Robert Boehm, Charles S. Sims, Harold A. Mayerson, Debra Evanson, Victor Goode, Deborah Jackson, New York City, Dorian Bowman, Judith Farris Bowman, and Bowman & Bowman, Cambridge, Mass., were on brief, for plaintiffs, appellants.

Ralph A. Child, Asst. U.S. Atty., with whom William F. Weld, U.S. Atty., Boston Mass., was on brief, for defendants, appellees.

Before BOWNES and BREYER, Circuit Judges, and PETTINE, * Senior District Judge.

BREYER, Circuit Judge.

Appellants are American citizens who want to travel to Cuba. They cannot do so because of a Treasury Department regulation that prohibits them (and many other American travelers) from paying for "transportation-related" expenses "ordinarily incident to travel to and from Cuba" and for any other expenses "ordinarily incident to travel within Cuba, including payment of living expenses and the acquisition in Cuba of goods for personal consumption there." 31 C.F.R. Sec. 515.560 (1982). Appellants attacked the lawfulness of this regulation on constitutional and statutory grounds and asked the district court for a preliminary injunction against its enforcement. The court refused to issue the injunction and this appeal followed.

We need not reach the appellants' constitutional argument, for we believe that the challenged regulation lacks statutory authority. The Treasury Department, in promulgating the regulation, concededly did not follow the "consultative" procedures mandated by the 1977 International Emergency Economic Powers Act (IEEPA), 50 U.S.C. Secs. 1701-1706--procedures aimed at focusing the attention of Congress as well as the President on the need for the restrictions of the sort at issue here. Rather, the Department relied for its authority on a "nonconsultative" predecessor statute--Sec. 5(b) of the Trading with the Enemy Act of 1917, (TWEA), 50 U.S.C.App. Sec. 5(b)--the relevant part of which had been repealed by the time it promulgated this regulation. The Department argues that a "savings clause" in the new law, Pub.L. No. 95-223, Sec. 101(b), 91 Stat. 1625, 1625 (1977), allows it to rely on the old law, and thereby validates its regulation. Our review of the language and legislative history of the "savings clause," however, convinces us that this is not so. Rather, the old law does not apply and the new law's procedures were not followed. The regulation thus lacks statutory authorization, and the district court improperly denied the appellants' motion for a preliminary injunction.


Between 1917 when the Trading with the Enemy Act was enacted and 1977 when it was modified, TWEA provided statutory authority for the President to restrict, without congressional approval, financial transactions with foreign nations during both times of war and times of "national emergency." See, e.g., Exec. Order No. 11940, 41 Fed.Reg. 43707 (1976) (export controls); Exec. Order No. 11810, 39 Fed.Reg. 35567 (1974) (same); Exec. Order No. 11796, 39 Fed.Reg. 27891 (1974) (same); Exec. Order No. 11677, 37 Fed.Reg. 15483 (1972) (same); Exec. Order No. 11387, 33 Fed.Reg. 47 (1968) (balance of payments program); Proclamation No. 2038, 48 Stat. 1689 (1933) (bank holiday); Note, The International Emergency Economic Powers Act: A Congressional Attempt to Control Presidential Emergency Power, 96 Harv.L.Rev. 1102, 1104, 1114 n. 61 (1983) [hereinafter cited as Harv. Note]. In 1977, however, Congress and the President modified the statute in order to narrow the President's power to impose these restrictions without first consulting with Congress. Congress did so by passing IEEPA and amending TWEA. These statutes now limit the President's power to impose economic restrictions in two ways. First, they separate his authority to regulate during war from his authority to regulate during a "national emergency." Second, they permit him to invoke the provisions of the statutes to deal with an "unusual and extraordinary threat" not involving a state of war only if he declares "a national emergency with respect to such threat," 50 U.S.C. Sec. 1701(a), reports to Congress on the emergency every six months, 50 U.S.C. Sec. 1703(b) & (c), and allows Congress to vote by concurrent resolution on the validity of his declaration of emergency, 50 U.S.C. Secs. 1621(a), 1622(a).

The government concedes that, in promulgating the regulations here at issue nearly five years after the TWEA amendments and IEEPA became law, it did not follow the new procedures. The President did not declare a "national emergency," transmit appropriate reports to Congress, or grant Congress the opportunity to "veto" his actions through a resolution. The government, however, relies upon a "savings clause" in the amendment to TWEA which states:

[T]he authorities conferred upon the President by [the old version of] section 5(b) of the Trading With the Enemy Act, which were being exercised with respect to a country on July 1, 1977, as a result of a national emergency declared by the President before such date, may continue to be exercised with respect to such country ....

91 Stat. at 1625. The government argues that, because TWEA "authorities ... were being exercised" with respect to Cuba "on July 1, 1977," this language makes the old law still applicable; and the new IEEPA "consultative" requirements therefore do not apply.

In fact, on July 1, 1977--the relevant "savings clause" date--the government was not restricting travel to Cuba. Although the Treasury Department regulated travel to Cuba by means of regulations of the sort here at issue from 1963 to early 1977, on March 29, 1977, the Department repealed those travel restrictions and issued a broad, general license allowing all persons traveling to Cuba to pay for their transportation and living expenses. 42 Fed.Reg. 16621 (1977); see also 42 Fed.Reg. 25499 (1977) (further liberalization). The State Department, which had restricted travel to Cuba through passport regulations under 22 U.S.C. Sec. 211a, eliminated those regulations during the same month. See Emergency Controls on International Economic Transactions: Hearings before the Subcommittee on International Economic Policy & Trade of the House Committee on International Relations, 95th Cong., 1st Sess. 15 n. 7 (1977) [hereinafter cited as Emergency Controls Hearings ] (statement of Prof. Andreas F. Lowenfeld, N.Y.Univ.). Hence, from March 1977 until May 1982, travel to Cuba was fully allowed. It is difficult to see, looking at the words of the statute alone, how the government can claim that the Treasury's "authorit[y]" to restrict travel-related financial transactions was "being exercised with respect to" Cuba "on July 1, 1977." Thus, it is difficult to see how the language of the "savings clause" exempts the Treasury Department from IEEPA and "saves" its power to promulgate these regulations without consulting Congress.

The government's response, and its most important argument, is that the words "authorities ... being exercised" in the savings clause were meant to have a very broad meaning. In the government's view, as long as some TWEA authority was being exercised with respect to a country, say Cuba, on July 1, 1977, the clause saves the power to exercise every TWEA authority or at least every authority of the same broad type (e.g., exchange control authority). Thus, if Treasury had imposed controls, for example, on the purchase of Cuban machinery, sugar, or cigars on July 1, 1977, the clause would "save" its power to impose controls on the payment of travel expenses to Cuba as well. Although this is not what the clause says, we have nonetheless investigated the new Act's legislative history and related administrative practice to see if there is support for the government's position. We have found none.

First, as a matter of common sense and common English, restricting, say, commodity purchases and restricting travel purchases would seem to be very different "exercises" of authority--different enough at least not to count as the exercise of the same authority. The direct effects of such restrictions are likely to differ. Most TWEA commercial restrictions seem designed simply to keep money or valuable commodities out of the hands of an unfriendly power. But Cuban travel restrictions may have only a small monetary impact, while effectively eliminating "tourist and business travel to that country." Treasury Dept. Press Release (submitted to this court).

Moreover, administrative practice suggests that the government, historically speaking, has always considered travel restrictions different from other, more typical TWEA rules and regulations. The Justice Department and the State Department for many years after the enactment of the TWEA did not even consider TWEA an important source of "travel restriction" powers. The Justice Department consistently told Congress that the President did not have the power to control travel by Americans to and from the United States. See Control of Travel from and into the United States, H.R.Rep. No. 485, 65th Cong., 2d Sess. 2-3 (1918); Annual Report of the Attorney General of the United States 39-40 (1918); Annual Report of the Attorney General of the United States 16 (1917); Hearings Regarding H.R. 16742: Restraints on Travel to Hostile Areas, Hearings before the House Committee on Internal Security, 92d Cong., 2d Sess. 7539, 7561 (1972) (statement of Asst. Attorney General A. William Olson) ("there is no statute with which a person can be effectively prevented from traveling to an unauthorized area") [hereinafter...

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