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Philip W. Buchen Files
Philip Buchen's General Subject Files
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California
Nixon, Richard M. (Richard Milhous), 1913-1994
Executive privilege (Government information)
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Monetary systems
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The original documents are located in Box 22, folder "Justice - Court Cases (2)" of the
Philip Buchen Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
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copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 22 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
Justice
WASHINGTON
April 8, 1975
Dear Congressman Pritchard:
I have reviewed the petition of Mr. Loren Berg which you
were kind enough to forward to the President under date of
March 13, 1975. Enclosed is a copy of my letter to the
Attorney General requesting a review of the matter and
report to your office as soon as practicable.
I trust this satisfies your request but please contact me
directly if I may be of further assistance.
Sincerely,
Kenneth A. Lazarus
Associate Counsel
to the President
Honorable Joel Pritchard
U. S. House of Representatives
Washington, D. C.
Enclosure
bcc: Phil Buchen
Vernon Loen
LIBRARY
THE WHITE HOUSE
WASHINGTON
April 8, 1975
Dear Mr. Attorney General:
Enclosed please find a petition and supporting documents
which relate to litigation pending in the U. S. District
Court, Western District of Washington (Seattle). These
materials were forwarded to the, President by Representative
Joel Pritchard on behalf of the petitioner, Mr. Loren Berg.
Kindly arrange for a review of this matter and report to
Representative Pritchard as soon as practicable.
Your cooperation is appreciated.
Sincerely,
Kenneth A. Lazarus
Associate Counsel
to the President
Honorable Edward H. Levi
The Attorney General
Washington, D. C.
Enclosures
bcc: Phil Buchen
Vernon Loen
THE WHITE HOUSE
WASHINGTON
April 22, 1975
MEMORANDUM FOR:
PHIL BUCHEN
FROM:
BARRY ROTH
BR
SUBJECT:
GAO Suit for the Release of
Impounded Section 235 HUD Funds
On April 15, 1975, the Comptroller General brought suit against the
President, the Director of OMB and the Secretary of HUD to compel
the defendants to obligate $264, 117, 000 of impounded budget authority
to carry out Section 235 of the National Housing Act. The Comptroller
seeks a declaratory judgment that the impoundment is unlawful as well
as an order mandating the expenditure of the funds, on the grounds that
expenditure is required pursuant to Title X of the Budget Control Act of
1974. The Attorney General has previously rendered an opinion that
this Act does not affect any funds impounded before its effective date
of July 12, 1974, thus excluding these funds which were impounded by
President Nixon in 1973.
While the Secretary is very pessimistic as to the outcome of this suit,
Justice is still considering this matter. The Secretary has offered the
following options to Jim Cannon and Jim Lynn for their consideration:
"(1) Litigating the lawsuit on the merits and accepting the
likelihood of a judicially mandated expenditure of all
the impounded funds;
(2) Releasing the impounded funds and resuming the program
as originally devised and operated before the suspension
decision; or
(3) Reimplementing Section 235 on a considerably modified
basis, so to moot the lawsuit and the underlying controversy
with Congress while at the same time ameliorating some of
the programmatic defects that led to suspension of the
program in the first instance.
2
The implementation of Section 235 and release of impounded
funds is a difficult policy issue, and turns on the likelihood of our
success in the impending lawsuit. There appears to be a substantial
likelihood that we will lose the lawsuit. Hence, there appears to be
substantial merit in immediately taking the initiative, releasing the
funds, revising the program, and mooting the controversy. "
cc: Ken Lazarus
Dudley Chapman
FORD
OF
HOUSING
THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT
A
AND
WASHINGTON, D.C.. 20410
URBAN
April 18, 1975
MEMORANDUM FOR:
James M. Cannon
Assistant to the President
for Domestic Affairs
James T. Lynn
Director
Office of Management
and Budget
FROM:
Carla A. Hills
Secretary of Housing
and Urban Development
SUBJECT:
GAO Lawsuit for the Release of
Impounded Section 235 Funds
1.
Problem
On April 15, 1975, the Comptroller General filed suit
against the President, the Director of OMB and the Secretary
of HUD to compel the defendants to obligate $264,117,000 of
impounded budget authority to carry out Section 235 of the
National Housing Act. The Comptroller seeks a declaratory
judgment that the impoundment is unlawful and an order
mandating the expenditure of these funds, on the grounds
that the expenditure is required pursuant to Title X of the
Budget Control Act of 1974. The Office of General Counsel
at HUD and the Department of Justice are of the opinion that
GAO is quite likely to prevail in the litigation.
This memorandum addresses the question of whether that
$264 million in Section 235 funding should now be released.
-2-
2.
Recommendation
HUD is considering recommending the release of the
funds under an administratively modified 235 program:
(1) because of our prognosis for the
litigation;
(2) because we believe we have sub-
stantially more flexibility to
modify the 235 program to mitigate
programmatic defects if we act
voluntarily and quickly (thereby
mooting the lawsuit) rather than
under Court mandate;
(3) because we believe that the
political ramifications of having
the Court rule that the President
was wrong on this impoundment
issue, which has received sub-
stantial focus over the past two
years, would be unfortunate,
particularly in context of the
current depression in the home
building industry;
(4) because we believe we have a
chance to limit the expenditure
to less than that which the
Court would be likely to mandate.
3.
A Description of Section 235
Section 235, Lower-Income Home Ownership Program, by
which direct cash payments were provided to a lender on
behalf of a lower income family to enable it to purchase
a home, provided:
--
the payments can reduce amortiza-
tion costs to as low as 1 percent;
--
the homeowner must pay a minimum
of 20 percent of adjusted income
toward regular monthly payments;
-3-
--
the homeowner must provide at least a
3 percent downpayment;
--
the mortgage ceilings are $21,600
($25,200 in high cost areas) or $25,200
($28,800 in high costs areas) for a
family with 5 or more persons; and
--
to be eligible a family's income must
not exceed 80 percent of median income
for the area.
4.
The 235 Impoundment Decision
In January 1973, Section 235 and several other subsidy
programs were suspended. The programs were subsequently
evaluated by the Department and serious deficiencies identified.
See Housing in the Seventies, pages 83-137. As a result, the
programs were permanently suspended. The United States Court
of Appeals for the District of Columbia sustained the suspen-
sion and the impoundment of unexpended funds in Commonwealth
V. Lynn, 501 F.2d 848 (CADC 1974).
5.
Background of the GAO Lawsuit
On July 12, 1974, the provisions of Title X of the Budget
Impoundment and Control Act became effective. On October 4,
1974, the President sent a message to Congress which included
a description of the deferral of obligational authority for
the Section 235 program in the amount of $264,117,000. The
message indicated, however, that the President had been informed
by the Attorney General that the Budget Control Act was not
applicable to impoundments pre-dating the effective date of
that law and that the 235 deferral was being reported for infor-
mational purposes only.
On November 6, 1974, the Comptroller General submitted a
message to Congress purporting to reclassify the Section 235
deferral as a recision on the grounds that since the statutory
authority to obligate 235 funds is due to expire on August 22,
1975, the purported deferral was a "de facto" recision. Under
the Act, if applicable, Congress could disapprove a recision
by inaction, but one House must pass a deferral resolution in
-4-
order to disapprove a deferral of funds. In view of the doubt
regarding the Comptroller General's authority to reclassify a
deferral as a recision, on March 13, 1975, the Senate passed a
resolution disapproving the 235 deferral. Under Title X, the
President has 45 days to begin expending funds after he becomes
legally obligated to do so, and if he fails to abide by the
Act's requirements, the Comptroller General may bring suit 25
days thereafter. The Comptroller General has brought such a
suit claiming that the Section 235 impoundment is subject to
the provisions of the Budget Control Act, which require the
immediate obligation of the impounded funds.
6.
Legal Issues Presented by the
Pending Impoundment Suit
Both the Office of General Counsel and the Civil Division
of the Department of Justice are pessimistic about the likeli-
hood of our prevailing in the pending impoundment suit. The
possible defenses to that suit and their weaknesses are dis-
cussed below.
(1) We can assert that the Comptroller General,
as a representative of the Legislative
Branch, is incapable of suing the Executive
because of the "separation of powers" doc-
trine. The United States V. Nixon,
U.S.
(1974) decision in the Supreme Court
and the congressional standing cases in the
District of Columbia Circuit seriously under-
cut this defense. Moreover, even were we
successful in asserting the Comptroller's
incapacity to sue, the mere intervention of
or filing by a Congressman or a potential 235
recipient (builder or homeowner) would cure
this defect.
(2) We could suggest that the Budget Control Act
is unconstitutional on the grounds that it
impinges on the Executive's power to execute
the laws. The actual effect of the law is
merely to require a report from the President
and, once that report is made, provide a
mechanism by which Congress can prospectively
-5-
mandate the expenditure of funds. The
Solicitor General implicitly conceded,
and the Supreme Court observed in Train
V. City of New York,
U.S.
(1974), that Congress has the constitu-
tional power to prospectively mandate
the expenditure of appropriated sums.
Hence, this defense is apt to be futile.
(3) The Court of Appeals for the District of
Columbia in Commonwealth V. Lynn, supra,
sustained the suspension of 235 as not
being "unreasonable". That determination
is, however, irrelevant to the pending
suit since the only issue in the pending
case is whether the impoundment of 235
funds is subject to Title X of the new
Budget Control Act. If it is, Congress
has done all that is necessary to mandate
the expenditure of those monies!
(4) We can defend the suit on the grounds
that the 235 impoundment is not governed
by Title X either (a) because that
statute does not cover prior impound-
ments or (b) because it is inapplicable
to impoundment decisions in litigation
on the effective date of the Act.
(a) The Attorney General has given an
opinion indicating that the Budget
Control Act does not affect any
impoundment of funds announced
prior to the statute's effective
date of July 12, 1974. Congress,
by its deferral resolution and
determination to file suit, has
indicated its disagreement with
the Attorney General's opinion as
to the legislative intent. The
language of the statute is ambig-
uous and can be read to support
either conclusion.
-6-
(b)
It has also been suggested that the
Act does not cover impoundments sub-
ject to litigation on its effective
date. The 235 impoundment was in
litigation at that time. In Train
V. City of New York, supra, which
also concerned an impoundment in
litigation on July 12, the Supreme
Court in a footnote found that the
new Act had not rendered the case
moot. The Court relied on the
language of Section 1001, which
provides that nothing
11
in the
Act shall be construed as
(3)
defenses of any party to litigation
concerning any impoundment
"
One can read the Train footnote to
support an argument that the Act
exempts impoundments in litigation
on July 12 from its provisions.
Alternatively, one can read the
footnote to hold that Congress in-
tended by $1001 (3) to enable a
court to render a decision as to
the validity of a challenged impound-
ment before requiring the court to
apply the new Act because the Act's
effect becomes moot if the court
holds impoundment invalid, under the
prior law.
(5) Even if either exemption from the Act were
accepted by the Court as a matter of law,
there are factual reasons why the 235
impoundment could still come within the
coverage of Title X. Two events have
occurred since July 12 which may cause
this impoundment to be treated as if it
occurred after that crucial date.
(a) HUD has continued to utilize 235 roll-
over funds since July 12. When a 235
mortgage is defaulted and the contrac-
tual authority involved recaptured, we
-7-
have utilized that recaptured authority
to place another 235 eligible family
into another unit. Accordingly, it
could be said that we did not finally
suspend the program as of the effective
date of the Budget Control Act.
(b) More importantly, the President signed
the Housing and Community Development
Act of 1974 on August 22, 1974, more
than a month after the effective date
of the Budget Control Act. The 1974
housing law substantially revised
Section 235. In effect, the 1974 Act.
created a new 235 program with very
different requirements concerning (1)
income limits, (2) mortgage limits and
(3) downpayment requirements. See
Section 211 of the 1974 Act. The new
statute also required the Secretary to
allocate 235 funds subject to the
requirements of Section 213. Section
213 (a) (1) provides that when the
Secretary reviews an application for
assistance under Section 235 he must
determine if it is consistent with
applicable housing assistance plans.
And, subsection (d) requires the
Secretary to allocate financial assis-
tance, including Section 235 funds,
with reference to certain formula
items, housing assistance plans and a
limitation on the distribution of
assistance between rural and urban
communities. Finally, the new Act
extended by one year the Secretary's
authority to utilize 235 funds until
August 22, 1975.
By requiring the Secretary to consider
applications for 235 assistance, by
making meaningful substantive changes
in the program and by transferring the
authorization for expending unallocated
funds into another year, Congress, in
effect, created a new program, which
may well be subject to the Budget Control
Act.
-8-
On the other hand, the funds in
question were appropriated before
enactment of the Budget Control
Act, and OMB has issued no sub-
sequent appropriations of the funds.
The case has been assigned at the District Court level
to Judge June Green who is an advocate of lower income sub-
sidized housing programs like 235 and not a careful jurist,
increasing the likelihood that we will lose the case at the
trial level. It is possible that the Court of Appeals would
grant a stay and expedite the decision. We believe it likely
that the Appellate Court would be persuaded by the argument
concerning the 1974 Act and that the Supreme Court would deny
certiorari because of the limited future application of this
issue.
7.
Implications of the Lawsuit
If the suit is lost, it is likely that the Court will
order that all impounded funds be expended regardless of the
August 22, 1975 termination of the statutory authorization.
The courts have done so on several occasions and the Judge
to whom this case has been assigned took exactly that course
in Rooney V. Lynn,
F.Supp.
(D. D.C. 1974).
On the other hand, if the program is reimplemented, we
can argue the suit is moot and that no order should be entered.
If the suit is dismissed, then our authority to expend 235
funds terminates on August 22. It is unlikely we will have
obligated all of the appropriated funds by that time. Moreover,
by the end of August, Section 8 may be operating smoothly,
dispelling some of the Congressional interest in an extension
to 235.
The Comptroller General could argue that our legal obli-
gation, under the Budget Control Act, to begin expending the
impounded 235 funds arose 45 days after the Senate passed its
deferral resolution. Accordingly, the Court might be urged
to enter an order requiring continuation of the program beyond
the August 22 termination date, and until all impounded funds
are expended. To this we could reasonably respond that the
program is underway and funds are being expended, hence we are
complying with our legal obligations under the Budget Control
Act and Section 235, the authority for which ends on August 22.
To the extent Congress wants to extend the authority for ex-
pending the 235 funds, it should do so by legislation not by
judicial order. That argument has some possibility of success.
-9-
8.
The Current 235 Political Controversy
Principal Congressional interest in release of 235 funds
stems from two factors other than the issues posed in the
lawsuit.
(1) We are in a period of serious depression
in the housing industry. Housing starts
are at a depressed level and employment
in the construction industry is over 15
percent. We have projected that the
number of housing starts during calendar
1975 will be no greater than in the dis-
astrous 1974 period. Even that projection
may be too optimistic in view of the
January, February and March 1975 start and
permit statistics. Congress is consider-
ing a panoply of devices to induce housing
starts, running the gamut from interest
subsidies to cash incentive payments.
Accordingly, the housing industry is
generating much of the pressure for a
resurrection of the Section 235 housing
subsidy program.
(2) The Section 235 program was suspended in
1973 with the promise of a rapid replace-
ment. Its successor came in the 1974 Act
as the Section 8 Lower Income Housing
Assistance Program. The implementation
of Section 8, however, has been an extremely
slow process. We cannot expect Section 8
to be producing significant housing starts
until probably a year hence. We have pro-
jected 40,000 contract reservations from
Section 8 this fiscal year and admit to
some optimism even with the low figure.
There has been particular Congressional
interest in a continuation of 235, at least
as an interim measure, until full implemen-
tation of Section 8.
-10-
Historically, the 235 program has been much more popular
in the Senate than the House. In August of 1973, the Senate
added to an FHA extender a mandated reimplementation of Section
235. The Conference Committee accepted the Senate's language.
When the bill went to the floor, the House rejected the
Conference Committee Report by approximately 30 votes. The
House objected not only to the Section 235 mandate but also to
provisions concerning Section 518 and other procedural problems.
Thus, the rejection of the 235 mandate was ambiguous. With the
large turnover in House members and given the current crisis in
the housing industry, we are advised by our Legislative Office
that it is unlikely that the House would reject such a 235
mandate today.
There is substantial support for 235 in the Senate, which
has already voted to reject the President's impoundment of 235
funds. The vocal supporters of the program and those interested
in its resurrection include several members of the Senate
Committee on Banking, Housing and Urban Affairs, such as Senators
Tower, Brooke, Sparkman and Proxmire.
9.
Reasons for Suspension of 235
The Section 235 program was suspended in January, 1973 for
programmatic and budgetary reasons. The programmatic reasons
are identified in Housing in the Seventies, pages 104-110.
(1) There was a perceived inequity to sub-
sidizing ownership in the sense that
poor families with a subsidy could
accrue the benefits of homeownership
at a lower monthly cost than their
middle income neighbors.
(2) There was also a horizontal inequity
in the sense that only one out of fifty
income-eligible families was selected
for homeownership benefits.
(3) There was a geographical inequity as
a result of the very low statutory
mortgage limits and differences in
regional construction costs which
resulted in an over-concentration of
starts in low cost areas like the
South.
-11-
(4)
There was a vertical equity problem in
that higher income groups had a greater
rate of participation and higher sub-
sidies because they tended to have
larger families and purchased more ex-
pensive homes. The program particularly
benefited families in the $6,000 to
$7,000 per year income range.
(5) Concern was expressed that the program
had a substitution effect in that sub-
sidized starts reduced the availability
of mortgage funds and building resources
for non-subsidized starts being delayed
or never undertaken.
(6) Particularly when the minimum downpayment
was only $200, there was concern that
purchasers would not have a sufficient
incentive to care for their property.
The minimum downpayment was increased to
3 percent, by the 1974 Housing and
Community Development Act.
(7) Finally, there has been a significant
problem with defaults on 235 mortgages,
particularly in existing housing and in
large 235 subsidized subdivisions. The
program has too often resulted in abandon-
ment, defaults, foreclosures and signifi-
cant losses to the FHA fund. Currently,
defaults coupled with our losses on ac-
quired mortgages are running at a rate
that makes the program actuarily unsound.
10. Identified Advantages of 235
HUD's study of the 235 program indicated that it was
not without its benefits as well as its costs.
(1) The program did provide lower and
moderate income families with the
stabilizing influence of an oppor-
tunity for home ownership.
-12-
(2) 235 was particularly useful for
minority families and marginally
increased the geographic disper-
sion of inner-city inhabitants to
suburban areas, thereby contrib-
uting to the racial balance of
some communities. However, the
numbers were not great enough to
impact significantly on the racial
complexion of major metropolitan
areas.
(3) Construction costs for 235 units
were no higher than for similar
conventional houses, to some ex-
tent because a Section 235 house
is not actually designated as
such until an eligible buyer is
certified. Thus, the builder is
not always assured of subsidy
benefits and is likely to build
competitively. Also, HUD's
appraisals and cost analyses tend
to keep the selling price of
Section 235 units in the range of
similar priced homes within the
community.
(4) Section 235 has a relatively low
first-year cost but a long run-out
period.
11. Possible Administrative Revisions of 235
There are several ways in which the perceived deficiencies
in the 235 program could be ameliorated, although not eliminated.
The following administrative steps are possible under the statute
and would significantly improve the operation of the program.
(1) To avoid defaults and minimize ultimate
run-out costs, pre-purchase counselling
and a pre-screening process to select
homeowners likely to work themselves
out of eligible subsidy range could be
utilized. A recently reported experiment
with counselling and pre-selection
criteria in the San Francisco area has
proved extremely successful in avoiding
delinquencies.
-13-
(2) The downpayment requirement could be
conformed to Section 203 (b), requiring
3 percent of the purchase price up to
$25,000 and 5 percent of excess, with
the purchaser to pay full closing costs.
This would give the homeowner a greater
cash investment in his home and focus
the program more on moderate income
families.
(3) The interest rate could be changed from
1 percent. The maximum subsidy should
equal the amount necessary to reduce
amortization costs on the highest cost-
eligible unit in the community to 4
percent. Since a recipient is required
to pay 20 percent of adjusted income
towards monthly payments, the depth of
the subsidy would depend on the price
of the house. This approach would have
several benefits:
(a) The shallower subsidy would limit
participation to a higher income
group than under the previous pro-
gram. There would still be over
8 million families within the
relevant income level who could
obtain a 235 mortgage on these
terms.
(b) An incentive would be created to
sell less expensive units, since
doing so would increase the poten-
tial depth of the subsidy. The
possibility of a subsidy to 1
percent for some families would
be retained. However, because of
the program's very low house-
price limits, most construction
would be at the top of the eligible
range, hence most subsidies only
reduce amortization costs to 4
percent.
-14-
(c) Decreasing the interest differential
between FHA and 235 purchasers would
decrease the perceived inequity of
the subsidy.
(d) By making the subsidy shallower,
funding would be available for more
units, increasing the coverage of
the program. Assuming an average
mortgage of $23,000 at an 8-1/2
percent market rate, the available
$260 million would support 210,000
units at 1 percent and 324,000
units at 4 percent.
(4) 235 funds should be made available only
for new construction so as to have the
greatest immediate impact on housing
starts.
(5) 235 funding should only be available for
the lesser of 20 homes or 30 percent of
the total units in a subdivision or other
concentrated development. This would
avoid the large 235 financed subdivisions
which have plagued us in places like
Detroit. It would particularly encourage
rural scattered site development. This
restriction might also encourage non-
subsidized housing starts by, in effect,
assuring a developer of a relatively
quick sale of 30 percent of his stock
when he builds a subdivision. 1/
1/
Condominiums could be covered by a revised 235 program
since they provide a significant amount of the housing in
the relevant price range. Similar strictures could be put
on condominiums as on subdivisions by requiring that no more
than 30 percent of the available units be subsidized and
that the 235 tenants be reasonably dispersed within the
entire development.
Mobile homes should not be included except to the extent
that mobile homes on a permanent foundation would meet minimum
property standards and be insurable by FHA under 203 (b).
-15-
(6) A general requirement for dispersal of the
235 units within the development should be
provided to insure that a developer does
not construct a small 235 subdivision next
to his larger non-subsidized subdivision.
This restriction should be broadly phrased
so as not to prevent the developer from
utilizing construction techniques such as
townhouses for 235 families.
(7) The present utilization of 235 would require
compliance with Section 213 of the 1974
Housing and Community Development Act. That
Section requires the allocation of 235 monies
to be on a geographical eligibility basis and
in conformance with housing assistance plans.
As a result, geographical inequities of the
old 235 program could be mitigated and local
authorities given some control to assure the
rational location of 235 construction.
12.
Reimplementation
(1) Timing. According to our Housing Production
personnel, if regulations were published
simultaneously for effect and comment,
Section 235, with the suggested changes,
could be implemented in 30 to 45 days. Some
processing of larger scale developments,
such as subdivisions, would take 90 to 120
days. Hence, the program would be having
its greatest effect in five to six months or
by the Fall of 1975. Implementation will
divert some manpower resources from other
programs.
(2) Housing Starts. At a 4 percent interest rate,
the available $260 million would cover 324,000
starts. Given the limitations suggested, those
starts would not occur immediately and it is
not clear that the total available funding
would ever be utilized. As to the substitution
effect, given the current market conditions,
where there is sufficient mortgage credit and
little construction activity, it is unlikely
there would be any immediate significant sub-
stitution for unsubsidized starts.
-16-
(3) Total Costs. The 1975 cost of releasing 235
funding, if all of it were utilized, would be
$260 million. If the program is terminated
on August 22, it is unlikely all the available
funding will be obligated by that time. Assum-
ing that few recipients work themselves up to
an income level where they were no longer eli-
gible for the subsidy, the total potential run-
out cost of the program over 30 years would be
(discounted) approximately $3 billion. However,
the higher interest rate and pre-purchase
screening envisioned should insure that a sub-
stantial proportion of the recipients will work
themselves out of the subsidy.
(4) Nature of Development Encouraged. Requiring
that no more than 30 percent of a subdivision
be subsidized will substantially deter immediate
large-scale construction, as a result of re-
implementation of 235. A builder must have
confidence that he can market three non-subsidized
homes for each unit subsidized in order to
undertake a development pursuant to the program.
If he has such confidence, he may often opt to
limit his sales effort to non-subsidized homes
altogether to avoid having the subdivision
stigmatized as being a subsidized lower income
project. Having a shallow 4 percent subsidy,
hence a smaller income gap between subsidized
and non-subsidized buyers should ameliorate
this consideration. Our Housing Production
staff has indicated that a 30 percent of sub-
division limitation and 4 percent interest rate
are an optimal accommodation. Anything below
30 percent would not induce construction and
any percentage significantly above 30 percent
approaches the tipping point, at which un-
subsidized homes in the development become
difficult to market. Nonetheless, the program
will not produce the same level of starts as
the old 235 program. Production will, in all
probability, be rather modest. Also, a larger
proportion of production under the suggested
implementation of 235 would be rural or scattered-
site as opposed to subdivision housing.
-17-
(5) A Focus on Rural Development. Because of
the 1974 amendments to the 235 program, we
cannot construct a program explicitly
limited to rural areas. Section 235 is
now subject to the requirements of Section
213 of the 1974 Act. Subpart (d) (1) of 213
specifically provides that as to the
enumerated categories of assistance, which
includes 235, not less than 20 nor more
than 25 percent can be allocated to non-
metropolitan areas in any fiscal year. The
Act defines "metropolitan area" as a
"standard metropolitan statistical area as
established by OMB." $102 (a) (3) Thus
the program cannot be limited to purely
rural areas. On the other hand, SMSA's
include relatively sparsely populated areas
around metropolitan cities. As the program
is intended to be structured, even the 75
percent of funding which would have to be
allocated SMSA's would most likely be used
in their more rural, hence, less costly
areas.
13. Conclusions
a.
Benefits of Releasing 235 Funds
"Turning on" 235 now would have several benefits:
(1) If Congress is successful in its suit, the
President will not only be embarrassed by
having been found in violation of the law,
but also, (i) the Court may require imple-
mentation of 235 in its original 1 percent
form, limiting our discretion to adminis-
tratively improve the program and (ii) the
program may be extended beyond its statutory
termination date of August 22, 1975. By
releasing 235 funds now, we moot the lawsuit.
(2) We would be defusing a rancorous test of
wills between Congress and the Executive
Branch over the impoundment decision.
-18-
(3) Release of impounded funds could relieve
legislative interest in a new 235 program.
By August 22 (or the time the existing
funding runs out), Section 8 will be in
place and we can justly look to that pro-
gram as an appropriate successor to 235.
(4) We might relieve some of the criticism
about dilatory implementation of Section
8 by pointing to 235 as an interim measure.
(5) Particularly if, as appears likely, the
FHA interest rate must be raised, it would
be useful to be able, at the same time, to
announce reimplementation of a low-interest
housing program like 235.
(6) Finally, we can respond to questions about
what we are doing for the severely depressed
housing industry by noting that we are using
all our available tools, including Section
235, as temporary catalysts for housing starts.
b.
Costs of Implementation
(1) Since the program, as we suggest it be revised,
may produce comparatively few housing starts
before the statutory termination date, the
Administration may be criticized for gutting
235 as a means of providing home ownership
opportunities for lower income families.
As a result, legislative pressure may be brought
to bear to suspend the higher (4 percent)
interest rate and the subdivision limitations.
(2) Legislative pressure may also be brought to
bear to extend the program to rehabilitated
or existing housing. The pressure from realtors
to cover existing housing will be intense.
(3) If 235 is implemented in our revised form and
appears successful, it may add to the pressure
for a continuation of the program.
-19-
(4) The 235 program is philosophically inconsistent
with two doctrines which we are currently
espousing:
(a) that the Government should sub-
sidize housing but not home-
ownership; and
(b) that existing stock rather than
new construction should be
emphasized in meeting the housing
needs of lower income families.
14. Options
The following are the possible options to GAO's lawsuit
for the release of impounded 235 funding.
(1) Litigating the lawsuit on the merits
and accepting the likelihood of a
judicially mandated expenditure of
all the impounded funds;
(2) Releasing the impounded funds and
resuming the program as originally
devised and operated before the
suspension decision; or
(3) Reimplementing Section 235 on a
considerably modified basis, so
to moot the lawsuit and the under-
lying controversy with Congress
while at the same time ameliorating
some of the programmatic defects
that led to suspension of the program
in the first instance.
The implementation of Section 235 and release of impounded
funds is a difficult policy issue, and turns on the likelihood
of our success in the impending lawsuit. There appears to be a
substantial likelihood that we will lose the lawsuit. Hence,
there appears to be substantial merit in immediately taking the
initiative, releasing the funds, revising the program, and
mooting the controversy.
Justice
THE WHITE HOUSE
WASHINGTON
May 8, 1975
MEMORANDUM FOR:
JIM LYNN
FROM:
PHILIP BUCHEN P.W.B.
Last month at a staff meeting you suggested that our
office request from the Office of Legal Counsel in the
Department of Justice what changes in the law may be
necessary as a result of the decision of the Supreme
Court in Weinberger V. Wiesenfeld, 43 USLW 4393
(March 19, 1975) in which the Court held unconstitu-
tional a gender-based distinction under Sec. 202 (g)
of the Social Security Act of 1935 as amended
(42 USC, Sec. 402 (g) )
Attached is a copy of Nino Scalia's memo to me dated
April 28, 1975, along with attachments A & B. He also
included reports of the Advisory Council on Social
Security which are referred to in his memo, but due
to the bulk of these reports, I am not furnishing
them with this memo.
I suggest that you or someone in your office to whom
you assign the matter get in touch with me to discuss
what steps should be initiated by the Administration.
I am sending a copy of this memo with enclosures to
Richard Parsons of the Domestic Council staff for his
consideration as well.
Attachments
CC: Richard Parsons
Justice
THE WHITE HOUSE
WASHINGTON
May 30, 1975
MEMORANDUM FOR:
DUDLEY CHAPMAN
JAY FRENCH
FROM:
PHILIP BUCHEN T.W.B.
Attached is a copy of a letter received
by the President which is signed by
nine members of Congress. The letter
was acknowledged by Vern Loen to
Congressman Traxler on May 26, copy
attached.
Please suggest what further reply, if
any, we should send.
Attachments
CORD
LIBRARY
May 26, 1975
Dear Mr. Traxler:
This is to acknowledge receipt of
the May 21 letter to the President
from you and several of your col-
leagues regarding the case of
Bradley V. Milliken. I shall see
that your letter is called to the
President's attention as soon as
possible.
with kind regards,
Sincerely,
Vernon C. Loen
Deputy Assistant
to the President
The Honorable Bob Traxler
house of Representatives
Washington, D.C. 20515
VCL:EF:ah
bcc: w/inc to Dick Parsons - FYI
bcc: w/inc to Philip Buchen - for further handling
LIBRARY GERALD = FORD
LUCIEN N. NEDZI
14TH DISTRICT, MICHIGAN
serie
COMMITTEE ON ARMED
SERVICES
CHAIRMAN
COMMITTEE ON
SELECT COMMITTEE
ON INTELLIGENCE
Congress of the United States
HOUSE ADMINISTRATION
Setrois
house of Representatives
Mashington, D.C. 20515
May 21, 1975
juit
The President
The White House
Washington, D.C. 20500
In re: Justice Department
intervention in
mE
Bradley V. Milliken
Dear Mr. President:
We are writing to ask that the Executive, in con-
sultation with the Justice Department, express its op-
position to a busing remedy in the case of Bradley V.
Milliken, the so-called "Detroit busing case.
It is our view that busing in a school district
which is more than 70% black would be futile and self-
defeating.
Indeed, the facts have so dramatically altered since
the case began in 1970 that a busing remedy is neither
sensible nor legally appropriate.
Ironically, however, there is no representation at
the trial court level of the majority view of parents
and public officials. Knowing of your interest in the
issue in the past, we are asking that the White House
become actively engaged in opposing a busing "remedy"
in this case.
Pursuit of the will-of-the-wisp of racial balance
will lead to chaos for an already economically distressed,
demoralized Detroit.
FORD
We further note that in the city of Inglewood, Cali-
fornia, the judge who in 1970 imposed the first busing
LIBRARY
Page 2
order in California for racial balance has now abandoned
it. White enrollment had gone from 62% to 19% in that
period and "there weren't enough white children left to
integrate."
In Detroit, white enrollment has fallen from 51%
to 29% in the five years since Bradley V. Milliken
began. If busing for racial balance, hitherto sought
but not yet attained by the lawsuit, is now imposed,
then a further sharp decline is predictable.
Regrettably, the active litigants on one side, and
the School Board on the other, both favor large-scale
busing, while the majority view of parents, the public,
and public officials is ignored or unrepresented.
Accordingly, on April 10, 1975, in a bi-partisan
letter signed by eight Michigan Members of Congress,
we asked Attorney General Edward Levi to intervene at
the trial court level. We urged that the Justice De-
partment assert the key provisions of P.L. 93-380,
which reflect the carefully considered congressional
view on the issue. We believe that the "neighborhood
school" concept is not only desegregated, but workable,
equitable, and widely acceptable to all parts of the
community.
To date we have not received a written response
from the Justice Department. Meanwhile, the trial court
hearing grinds toward a climax which may be based on
data which is incomplete and on arguments which do not
reflect important and critical points of view.
We would, accordingly, appreciate your personal
involvement in this highly important matter.
Respectfully,
Mr.
the
BOB TRAXLER
Member of Congress
Member of Congress
LIBRARY BERALD FORD
Page 3
5 Jmm Member JAMES I 3. of BLANCHARD Congress Blanchard William Member WILLIAM of D. Congress Word FORD
Bill Wm Broomkeld
WILLIAM S. BROOMFIELD
Member of Congress
Jams Member JAMES Is. G. of 0 Congress HARA Collara
Maw MARVIN L. ESCH
The William Brodhead
WILLIAM M. BRODHEAD
Member of Congress
Member of Congress
Mr. JOHN D. DINGELL
Member of Congress
LISA GERALD /
THE WHITE HOUSE
WASHINGTON
June 13, 1975
Dear Mr. Lee:
The enclosed Complaint with respect to the case of Smith V. National
State Bank of Boulder, et. al., in the United States District Court for
the District of Texas, C.A. -3-75-0695 was served on a member of
my staff on June 12, 1975.
This is to request that the Department of Justice handle this matter
on behalf of the President. If additional information or assistance
is required, please contact Mr. Barry Roth of this office. I would
appreciate very much your sending this office copies of any materials
that you may file in this matter.
Sincerely,
ThilyW.Buchen
Counsel to the President
The Honorable Rex Lee
Assistant Attorney General
Civil Division
Department of Justice
Washington, D.C. 20530
THE WHITE HOUSE
WASHINGTON
June 25, 1975
Re:
United States V. Mobil Oil
Company, District of Colorado,
Civil No. C-4135
Dear Mr. Miller:
This is in response to your letter of June 11, 1975, regarding
interrogatories in the above-captioned case.
As you discussed with Mr. Roth of my staff, this matter concerns the
time period of 1958-1965. With the exception of employee personnel
records, it is my understanding that the papers of Presidents Eisenhower,
Kennedy and Johnson, along with those of their staffs, were removed from
the White House at the end of each Administration. This was in accordance
with the historical treatment then afforded to Presidential papers.
Generally, these materials have been returned to Government custody by
deed, will or similar method of transfer, by these Presidents or their
families. For specific information with respect to the contents of the
materials and the restrictions on access imposed by the donor, I
recommend that you contact the Office of Presidential Libraries within
the National Archives and Records Service of the General Services
Administration, which operates the facilities in which these papers
are now maintained.
The papers of certain offices, e.g., the then Bureau of the Budget or the
National Security Council, have not been considered to be Presidential
papers, and instead are treated in accordance with the Federal Records
Act. Information with respect to the materials that agencies within the
Executive Office of the President, other than the White House, may have,
should be obtained by contacting these agencies directly. This office has
no knowledge of either the matters or papers needed to respond to the
defendant's interrogatories.
2
The only materials that the White House has with respect to the subject
matter of these interrogatories are the personnel records. On the basis
of these records, the following persons have been identified as working
in the Special Counsel's Office during the relevant period of time:
Name
Title
Dates
Theodore C. Sorensen
Special Counsel to
1/21/61 - 2/29/64
the President
Myer Feldman
Deputy Special Counsel
1/21/61 - 2/28/65
to the President
Lee C. White
Assistant Special Counsel
1/21/61 - 4/26/64
to the President
Associate Counsel
4/27/64 - 2/28/65
to the President
Special Counsel to
3/1/65 - 3/2/66
the President
Hobart (NMN) Taylor, Jr.
Associate Counsel
5/10/64 - 9/20/65
to the President
We do not have current addresses for these individuals.
I trust that this is responsive to your request. If my office can be of
further assistance to you in this regard, please don't hesitate to contact
Mr. Roth.
Sincerely,
ThilipW.Buchen
Counsel to the President
Mr. David W. Miller
Land and Natural Resources Division
Department of Justice
Washington, D.C. 20530
June 11, 1975
FLF:DWM
90-1-18-813
Philip W. Buchen, Esquire
Counsel for the President
The White House
Washington, D.C. 20050
Dear Mr. Buchen:
Re: United States V. Mobil 011 Corporation,
District of Colorade, Civil No. C-4135.
Enclosed is a set of interrogatories which are
due forresponse by June 30. We would hope that you could
give the information available to you by June 25 so that
we will have time to put it in the proper form for response.
Those questions as to which we need your assistance
are:
1. a-d, e, 1. As to these questions you may
not know the authors of the various
documents, copies of which are
enclosed, but if you doknow them,
the indentifécation procedures
data respecting those persons
should be supplied. The indenti-
fication procedure required for
each person named in the interrogatory
or named in the response to the
interrogatory is that set out in
paragraph 5 enclosure (2) hereto.
These are the instructions with
Mobil's first set of imrrogatories.
LIBRARY GERALD = rose
90-1-18-813
-2-
2. (a), (b), and (e).
3, 4.
5, 6.
7, 8.
12,
13, 14.
15.
38, 40.
We will be pleased to work with you in connection
with these interrogatories. It may be that some of these
requests are too burdensome vis-a-vis the needs of Mobil,
and we can discuss this with you if you think such might
be the case. Insofar as question 15 is concerned, we
intend to object to producing such records unless Mobil
can show some need, but we would like for you to advise
if there are such records. If we can help please contact
Gerald Fish, 739-3796.
Sincerely,
Assistant Attorney General
Land and Natural Resources Division
By:
David W. Miller
Attorney
Enclosures
THE WHITE HOUSE
WASHINGTON
Justice
July 3, 1975
Dear Mr. Martindale:
Your letter of May 8 to Donald Rumsfeld requesting the
President's assistance in your contemplated suit against
the Secret Service has been referred to me for response.
I have referred your correspondence to the Department
of Justice for appropriate consideration in connection with
your intention to litigate this matter.
Sincerely,
ThilyW.Buden Philip W. Buchen
Counsel to the President
Mr. Michael D. Martindale
209 Braddock Street
Bay City, Michigan 48706
FORD LISTARY
THE WHITE HOUSE
WASHINGTON
October 14, 1975
Dear Mr. Lee:
The attached civil complaint for a declaratory judgment and
injunction in the case of Johnson V. Ford, et al., D.N.D.CA.,
C.A. No. C 75-2076 LHB, was received by mail in my office
on October 10, 1975.
This is to request that the Department of Justice handle this
matter on behalf of President Ford. If additional information
or assistance is required, please contact Barry N. Roth of my
staff. I would appreciate your providing this office copies of
any materials that are filed with the Court in this matter.
Sincerely,
Thely W.Buchen Philip W. Buchen
Counsel to the President
The Honorable Rex Lee
Assistant Attorney General
Civil Division
Department of Justice
Washington, D. C. 20530
VORD
Justice
THE WHITE HOUSE
WASHINGTON
October 24, 1975
Dear Mr. Thornburgh:
In accordance with your conversation with a
member of my staff, enclosed is a copy of the
subpoena directed to the President with respect
to United States V. Fromme, E. D. Cal.,
CR. No. S-75-451, for appropriate handling.
Sincerely,
Counsel to the President
The Honorable Richard Thornburgh
Assistant Attorney General
Criminal Division
Department of Justice
Washington, D. C. 20530
Enclosure
FORD
LIBRARY
10/24/75
Form No. USM-52 (Rev. 6-1-65)
SUBPOENA TICKET
District Court of the United States
Eastern
DISTRICT OF California
Gerald R. Ford, President
of The United States
Washington, D .C.
To
BY VIRTUE OF A SUBPOENA issued out of the District Court of the United States, you are re-
quired to be and appear before the said Court at
at
o'clock
m., on the
day of
, 19
then and there to testify on behalf of the
in the case of
United States of America
vs. Lynette Alice Fromme
CR. No. S-75-451
xymxandr produce
YOU ARE HEREBY REQUIRED TO APPEAR AT A LOCATION TO BE
DETERMINED BY YOU AT ANY TIME CONVENIENT TO YOU ON OR BEFORE
OCTOBER 31, 1975, TO TESTIFY IN THE ABOVE ENTITLED CASE BY WAY
OF A VIDEO TAPED DEPOSITION.
and not to depart without leave. If you fail to obey such subpoena, you may be fined and imprisoned,
as the Court may direct.
6.KMYS
George McKinney
U.S. Murshal.
John E. Virga
FORD
Attorney for defendant
721 11th St.
Sacramento, California 95814
it LIBRARY GENALD
Tel: (916) 444-6595
U. S. GOVERNMENT PRINTING OFFICE : 1971 o - 449-064
THE WHITE HOUSE
WASHINGTON
October 29, 1975
Dear Mr. Palm:
By this letter, I hereby acknowledge receipt of your letter
dated September 24, 1975, concerning your "Petition for
Writs of Mandamus" in the matter of Palm V. United States,
et al.
By law, the Department of Justice is responsible for handling
suits against the United States. Accordingly, I have referred
this correspondence to the Office of the Attorney General for
appropriate handling.
Sincerely,
W.Buchen
Philip W. Buchen
Counsel to the President
Mr. Herbert L. Palm
Bahnpostlagernd
6 Frankfurt/Main 11
Germany
THE WHITE HOUSE
WASHINGTON
October 29, 1975
Palma Herbert L.
Dear Mr. Palm:
By this letter, I hereby acknowledge receipt of your letter
dated September 24, 1975, concerning your "Petition for
Writs of Mandamus" in the matter of Palm V. United States,
et al.
By law, the Department of Justice is responsible for handling
suits against the United States. Accordingly, I have referred
this correspondence to the Office of the Attorney General for
appropriate handling.
Sincerely,
They W. W.Buchen
Philip W. Buchen
Counsel to the President
Mr. Herbert L. Palm
Bahnpostlagernd
6 Frankfurt/Main 11
Germany
FORD is LIBRARY
Herbert L. Palm
Bahnpostlagernd
6 Frankfurt/Main 11
Germany
September 24, 1975
AIR MAIL-REGISTERED RETURN RECEIPT REQUESTED
Mr. Philip W. Buchen
Counsel to the President
The White House
Washington, D.C. 20500, USA
Dear Mr. Buchen:
I take the liberty of enclosing herewith
1. My Letter of Petition dated September 24, 1975
addressed to the President;
2. My Affidavit dated September 9, 1974,
with the request that after examination you hand these
documents over to the President for his consideration.
With best thanks, I remain
Sincerely yours,
2 Enclosures
Herbert L. Palm
FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
November 10, 1975
Forfiling
Dear Mr. Lee:
On behalf of Richard Ober, I today accepted service of
process of a summons and complaint in the case of
Mary Chandler, et. al. V. Richard Helms, et. al., Civil
Action No. 75-1773, United States District Court for the
District of Columbia.
Transmitted herewith for appropriate handling is a copy of
the summons and complaint. By copy of this letter, I am
also providing these materials to Mr. Ober.
Sincerely yours,
s/
James A. Wilderotter
Associate Counsel
to the President
Honorable Rex E. Lee
Assistant Attorney General
Civil Division
U.S. Department of Justice
FORD
Washington, D. C. 20530
Enclosures
bcc: Mr. Buchen
CIV. la (2-64)
SUMMONS IN A CIVIL ACTION
(Formerly D.C. Form No.45a Rev. (6-49))
United States District Court
FOR THE
District of Columbia
CIVIL ACTION FILE No. 72-1773
Mary Chandler, et al.
Plaintiff
SUMMONS
V.
Richard Helms, et al.
Defendant
To the above named Defendant : Richard Ober
You are hereby summoned and required to serve upon
Jerry J. Berman
122 Maryland Avenue, N.E.
plaintiff's attorney , whose address
Washington, D.C. 20002
an answer to the complaint which is herewith served upon you, within 60 days after service of this
summons upon you, exclusive of the day of service. If you fail to do so, judgment by default will be
taken against you for the relief demanded in the complaint.
JAMES F. DAVEY
Clerk, Court.
OCT 28 1975
Evely W Deputy of Clerk.
Date:
[Seal of Court]
LIBRARY
NOTE:-This summons is issued pursuant to Rule 4 of the Federal Rules of Civil Procedure.
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
X
MARY CHANDLER
11042 Newport Mill Road
Silver Spring, Maryland 20902;
ADELE HALKIN
56 E. Bellevue Place
Chicago, Illinois 60611;
STEVE HALLIVELL
CIVIL ACTION
c/o Goddard College
NO. 45-1773
Plainfield, Vermont 05667;
DON LUCE
COMPLAINT-CLASS
c/o Clergy and Laity Concerned
ACTION FOR
235 East 49th Street
DECLARATORY AND
New York, N.Y. 10017;
INJUNCTIVE RELIEF
JONATHAN MIRSKY
AND MONEY DAMAGES
Thetford, Vermont 05074;
SIDNEY PECK
15 Farrar
Cambridge, Mass. 02138;
NANCY ANN RAMSEY
1826 Varnum Street, N.W.
Vashington, DC 20011;
DANIEL SCHECHTER
5005 Prudential Tower
Boston, Mass. 02199;
ETHEL TAYLOR
41 Conshohocken State Road
Apt. 714
Bala Cynwyd, Pa. 19004;
EDITH VILLASTRIGO
10216 Sutherland Road
Silver Spring, Maryland 20901;
CORA WEISS
5022 Waldo Road
Riverdale, New York 10471;
AMERICAN INDIAN MOVEMENT
704 University Avenue
St. Paul, Minnesota 55101;
AMERICAN FRIENDS SERVICE COMMITTEE, INC.
1501 Cherry Street
Philadelphia, Pennsylvania 19102;
CLERGY AND LAITY CONCERNED
235 East 19th Street
New York, New York 10017;
COMMITTEE OF CONCERNED
ASIAN SCHOLARS, c/o Angus
McDonald, National Coordinator,
614 Social Science Building,
University of Minnesota,
Minneapolis, Minn. 55455;
COMMITTEE OF LIAISON WITH
FAMILIES OF SERVICEMEN
DETAINED IN VIETNAM
365 West 42nd Street
New York, New York 10036;
WOMEN STRIKE FOR PEACE
145 South 13th Street, Room 407
FORD i LIBRARY GERALD
Philadelphia, Pa. 19107;
on behalf of themselves and all other persons
and organizations similarly situated,
Plaintiffs,
V.
RICHARD HELMS
Department of State
2201 C Street, N.W.
Washington, DC 20520;
JAMES R. SCHLESINGER
Department of Defense
The Pentagon
Washington, DC 20301;
RUFUS N. TAYLOR
90-A North Lake View Drive
Whispering Pines, North Carolina 28389;
ROBERT E. CUSHMAN, JR.
Commandant of the Marine Corps,
Navy Department, Washington, D.C. 20380;
VERNON A. WALTERS
22955 Ocean Boulevard
Palm Beach, Florida 33480;
WILLIAM E. COLBY
Central Intelligence Agency
Washington, DC. 20505;
CORD MEYER, JR.
Central Intelligence Agency
Washington, DC 20505;
JAMES J. ANGLETON
4814 33rd Road
North Arlington, Va. 22210;
WILLIAM HOOD
Central Intelligence Agency
Washington, DC 20505 ;
RAY ROCCA
Central Intelligence Agency
Washington, DC 20505;
RICHARD OBER
Old Executive Office Building
Washington, DC 20505;
HOWARD 'OSBORN
Central Intelligence Agency
Washington, DC 20505;
JAMES MURPHY
Central Intelligence Agency
Washington, DC 20505;
MARSHALL CARTER
2120 Hill Circle
Colorado Springs, Colo. 80904;
NOEL GAYLER
Department of the Navy
The Pentagon
Washington, DC. 20301;
SAMUEL C. PHILLIPS
Department of the Air Force
The Pentagon
Washington, DC 20301;
LEV ALLEN
National Security Agency
Fort Meade, Maryland;
WESTERN UNION TELEGRAPH COMPANY
60 Hudson Street
New York, N.Y. 10013;
GERALD FORD LIBRARY
-2-
RCA GLOBAL COMMUNICATIONS, INC.
60 Broad Street
New York, N.Y. 10004;
AMERICAN CABLE AND RADIO CORPORATION
67 Broad Street
New York, New York 10004;
ITT WORLD COMMUNICATIONS, INC.
67 Broad Street
New York, New York 10004,
Defendants.
X
Plaintiffs, by their attorneys, allege as follows:
JURISDICTION
1. This is a civil action for declaratory and injunctive
relief and money damages, arising under the First, Fourth, Fifth
and Ninth Amendments to the Constitution, and Title 18, United States
Code, Sections 2510-2520. The jurisdiction of this court is pre-
dicated on Title 28, United States Code, Sections 1331 (a), 1343 (4)
Title 42, United States Code, Section 1985 (3) ;
and 1361; Title 5, United States Code, Section 702;/ Title 50, United
States Code, Section 403 (d) (3); and the First, Fourth, Fifth, and
Ninth Amendments to the Constitution.
2.
The matter in controversy, exclusive of interests and costs,
exceeds $10,000.
PARTIES
3.
Plaintiffs:
a. MARY CHANDLER is an American Citizen and a member of
Women Strike for Peace.
b. ADELE HALKIN is an American citizen and a member of
Women Strike for Peace.
C. STEVE HALLIWELL is an American citizen, a former officer
of Students for a Democratic Society and a founding member of the
Committee for Liaison with Families of Servicemen Detained in Viet-
nam.
d. DON LUCE is an American citizen and Executive Director
of Clergy and Laity Concerned.
e. JONATHAN MIRSKY is an American citizen and from 1963 to
to the present he has been a leader of anti-war activities.
-3-
LIBRARY
f. SIDNEY PECK is an American citizen, a former Co-chair-
person of the National Mobilization Committee to End the War in Viet-
nam and the former National Coordinator of People's Coalition for
Peace and Justice.
g. NANCYANN RAMSEY is an American citizen and a member
of Women Strike for Peace.
h. DANIEL SCHECHTER is an American citizen formerly assoc-
iated with Ramparts Magazine and the Africa Research Group, and a
participant in various anti-war activities over the last decade.
i. ETHEL TAYLOR is an American citizen and the National
Coordinator of Women Strike for Peace.
j. EDITH VILLASTRIGO is an American citizen, a member of
Women Strike for Peace and a delegate to the 1973 World Congress of
Peace Forces.
k. CORA WEISS is an American citizen, a leader of Women
Strike for Peace, a former Co-chairperson of the New Mobilization
Committee to End the War in Vietnam, a member of the Board of Direct-
ors of Clergy and Laity Concerned and a former Co-chairperson of
the Committee of Liaison with Families of Servicemen Detained in
Vietnam.
I THE AMERICAN INDIAN MOVEMENT (AIM) is a nonprofit corp-
oration dedicated to advancing the well being, self-determination and
cultural preservation of the native peoples of the American continents.
m. The AMERICAN FRIENDS SERVICE COMMITTEE, INC. (AFSC) is
a non-profit corporation dedicated to furthering the historic peace
testimony and the social aims of the several branches of the Religious
Society of Friends.
n. CLERGY AND LAITY CONCERNED (CALC) is a non-profit inter-
faith peace organization which protested U.S. involvement in the
Indochina Mar beginning in 1965.
O. The COMMITTEE OF CONCERNED ASIAN SCHOLARS (CCAS) is a
non-profit organization dedicated to opposing American intervention
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in the internal affairs of countries in Southeast Asia.
p. The COMMITTEE OF LIAISON WITH FAMILIES OF SERVICEMEN
DETAINED IN VIETNAM (COLIAFAM) is a non-profit organization which
worked for an end to U.S. involvement in the War in Vietnam and the
release of prisoners of war.
q. WOMEN STRIKE FOR PEACE is a non-profit organization
dedicated to anti-war activities, including activities to end the
war in Vietnam.
4. Defendants:
a. Defendant RICHARD HELMS is the United States Ambassador
to Iran and was Director of the Central Intelligence Agency from
1966 to 1973.
b. Defendant JAMES R. SCHLESINGER is Secretary of Defense
and was Director of the CIA from February to July 1973.
C. Defendant RUFUS N. TAYLOR is a Vice Admiral in the U.S.
Navy and was Deputy Director of the CIA from 1966 to 1969.
d. Defendant ROBERT E. CUSHMAN, JR. is a General in the
U.S. Marine Corps and a member of the Joint Chiefs of Staff, and was
Deputy Director of the CIA from 1969 to 1971.
e. Defendant VERNON A. WALTERS is a Lieutenant General in
the U.S. Army and was Deputy Director of the CIA in 1972.
f. Defendant WILLIAM E. COLBY is Director of Central In-
telligence and of the CIA, and was Executive Director of the CIA
from 1972 to 1973, and Deputy Director for Operation of the CIA
in 1973.
g. Defendant CORD MEYER, JR. was, at times material to this
complaint, Assistant Deputy Director for Plans of the CIA.
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h. Defendant JAMES J. ANGLETON was, at times material to
this complaint, Chief of the Counterintelligence Staff of the CIA.
i. Defendant WILLIAM HOOD was, at times material to this
complaint, Deputy Chief of the Counterintelligence Staff of the CIA.
j. Defendant RAY ROCCA was, at times material to this
complaint, Assistant to the Chief of the Counterintelligence Staff of
the CIA.
k, Defendant RICHARD OBER was, at times material to this
complaint, in charge of a domestic surveillance operation of the
Counterintelligence Staff of the CIA designated as CHAOS.
1. Defendant HOWARD OSBORN was, at times material to this
complaint, Director of Security of the CIA.
m. Defendant JAMES MURPHY was, at times material to this
complaint, Director of the Office of Operations of the CIA.
n. Defendant MARSHALL CARTER, a retired Lieutenant-General
in the U.S. Army, was Director of the National Security Agency from
1967 to 1969.
o: Defendant NOEL GAYLER, Vice Admiral in the U.S. Navy,
was Director of the NSA from January 1969 to July 1972.
P: Defendant SAMUEL C. PHILLIPS, a Lieutenant-General in
the U.S. Air Force, was Director of the NSA from August 1972 to July
1973.
q. Defendant LEW ALLEN, a Lieutenant-General in the U.S.
Air Force, is Director of the NSA.
r. All the foregoing individual defendants are sued in their
cindividual and official or former official capacities.
S. Defendant WESTERN UNION TELEGRAPH COMPANY, a communica-
tions common carrier, is incorporated in New York and provides over-
seas cable and telegraph service.
t. Defendant RCA GLOBAL COMMUNICATIONS, INC., à communica-
tions common carrier, is incorporated in Delaware and provides over-
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seas cable and telegraph service.
U. Defendant AMERICAN CABLE AND RADIO CORPORATION, a
communications common carrier, is incorporated in Delaware and pro-
vides overseas telegraph and cable service.
V. Defendant ITT WORLD COMMUNICATIONS, INC., a communica-
tions common carrier, is incorporated in Delaware and provides over-
seas telegraph and cable service.
CLASS ACTION ALLEGATIONS
5. This suit is brought as a class action pursuant to Rule
23 (a) of the Federal Rules of Civil Procedure, and is maintainable
under Rule 23 (b) (1) (A), 23 (b) (2) and 23 (b) (3).
6. Plaintiffs represent a class of all domestic United States
organizations and United States citizens who, as a result of their
activities in opposition to the War in Indochina and other lawful
political activities, became the subject of "watch files" or organi-
zation "subject files" maintained by the CIA. An undetermined number
of the members of this class were also placed on a "watch list"
supplied by the CIA to the NSA, as a result of which the NSA inter-
cepted their international wire or oral communications and supplied
information derived therefrom to the CIA, in violation of the con-
stitutional and statutory rights of the class.
7. The class is so numerous as to make joinder of all members
impossible. The total number and identity of the class members is
known only to the CIA and the NSA, but plaintiffs estimate, on
information and belief, that the class numbers at least 7,200 persons
and 1,000 organizations.
8. The common questions of law and fact affecting all members
of the class predominate over any questions affecting only individual
members to such a degree that a class action is the only method
available for the fair and efficient adjudication of this controversy.
The prosecution of separate claims by the members of the class
GERA would FORD LIBRARY
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constitute an undue burden on the vindication of their rights and
create the risk of inconsistent or varying adjudications, and could
establish incompatible standards for the defendants' conduct.
9. The claims of the representative parties have the ame
legal and factual bases as the claims of the members of the class,
the defendants have acted on identical grounds with respect to all
members of the class, common relief is sought, and plaintiffs will
fairly and adequately protect the interests of the class.
FACTS
10. On information and belief, in and after August 1967 defend-
ants HELMS, TAYLOR, COLBY, MEYER, ANGLETON, HOOD, ROCCA, OBER, OSBORN,
SCHLESINGER, CUSHMAN, WALTERS and MURPHY [hereinafter sometimes "the
CIA defendants"] established and administered a Special Operations
Group, known as Operation CHAOS [hereinafter "CHAOS"], within the
CIA's counterintelligence staff.
11. On information and belief, the purpose of the CIA defendants
in establishing CHAOS was to collect, coordinate, evaluate, file and
report information on "foreign contacts" of American citizens re-
sident in the United States who expressed in various forms their
political and moral opposition to the war in Indochina and other
policies of the national government.
12. On information and belief, reports prepared by CHAOS and
other units of the CIA between 1967 and 1974 concluded that the
domestic opposition to the Indochina war had no significant foreign
connection.
13. On information and belief, CHAOS gathered information
from other units of the CIA and from other agencies, including the
FBI, much of which related to the constitutionally protected assoc-
iational and domestic political activities of the plaintiff class.
14. On information and belief, CHAOS recruited and trained
FORD
approximately 40 undercover agents who infiltrated domestic organi-
zations, and reported on their constitutionally protected associa-
LIORARY
tional and domestic political activities, which reports, or informa-
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tion derived from them, were filed with CHAOS and disseminated to
other units of the CIA and to other agencies.
14a. On information and belief, the CIA defendants authorized
and directed their CHAOS agents and employees to discredit and dis-
rupt the constitutionally protected associational and domestic poli-
tical activities of the plaintiffs and their class through the actions
of undercover agents who infiltrated the plaintiff organizations and
through other counterintelligence actions.
15. On information and belief, between 1967 and 1974 CHAOS
opened and maintained "201" or "personality" files on approximately
7,200 individual United States citizens engaged in constitutionally
protected associational and domestic political activities, including
each of the named individual plaintiffs.
16. On information and belief, between 1967 and 1974 CHAOS
opened and maintained approximately 1000 separate subject files on
domestic organizations, including each of the named plaintiff organi-
zations.
17. On information and belief, the information in the personality
and organization files related to constitutionally protected assoc-
iational and domestic political activities of the plaintiffs and their
class.
18. On information and belief, information on the plaintiffs
and their class which was gathered by CHAOS was conveyed by the CIA
defendants to the White House, the FBI, and to other government
agencies.
19. On information and belief, sometime after September 1969
CHAOS supplied a "watchlist" of United States citizens, including
plaintiffs and their class, to another unit of the CIA, as a result
of which first class mail from and to individuals on the watchlist
was opened without any warrant or other form of judicial authorizations
and copies of the opened letters or information derived from them were
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FORD is LIBRARY 07VN30
supplied to CHAOS, made a part of the CHAOS files and used by the
CIA defendants.
20. On information and belief, sometime after September 1969
CHAOS also supplied a "watchlist" to agents and employees of
the NSA, which included the names of all the named plaintiffs.
21. On information and belief, for- a period of time not known to
plaintiffs, defendants, CARTER, GAYLÈR, PHILLIPS, TORDELLA and ALLEN
[hereinafter sometimes"the NSA defendants"], have authorized and
directed the monitoring or interception, by their agents and employ-
ees, of international communications, including cable channels between
the United States and foreign countries, selected telephone channels
between the United States and foreign countries, and selected tele-
phone channels between foreign countries, all without warrants or
any other form of judicial authorization.
22. On information and belief, at various times after September
1969, the NSA defendants, without any warrant or other form of
judicial authorization, authorized and directed their agents and em-
ployees to intercept or procure the interception of wire or oral
communications of, or relating o,individuals and organizations on
the CHAOS "watchlist" provided to NSA by the CIA.
23. On information and belief, agents and employees of the NSA
defendants procured the assistance and cooperation of defendants
WESTERN UNION TELEGRAPH COMPANY, RCA GLOBAL COMMUNICATIONS INC.,
AMERICAN CABLE AND RADIO CORPORATION and ITT WORLD COMMUNICATIONS, INC.
[hereinafter sometimes "the company defendants"] in intercepting,
using and disclosing, without warrants or any other forms of judicial
authorization, the wire or oral communications of, or relating to,
individuals and organizations on the CHAOS "watchlist", including
the plaintiffs.
QUALO FORD VIBRARY
24. On information and belief, as a result of the warrantless
and judicially unauthorized interception, use and disclosure of the
wire or oral communications of plaintiffs and their class by the NSA
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and company defendants, at the request of the CIA defendants, NSA
supplied CHAOS and the CIA defendants with approximately 1100 pages
of summarized communications [hereinafter "the NSA materials"], which
related for the most part to anti-war activities, travel abroad and
other constitutionally protected movements and activities of various
members of the plaintiff class between 1967 and 1974.
25. On information and belief, information derived from the NSA
materials was made a part of the Operation CHAOS files.
26. On information and belief, in November 1974 the NSA
materials were returned by the CIA defendants to NSA.
27. On information and belief, the CIA defendants caused the
NSA materials to be returned to NSA because they knew the materials
were the products of illegal and unconstitutional interceptions of
the plaintiffs' wire or oral communications.
28. On information and belief, the NSA materials are intact
in the possession of NSA, and all other CHAOS materials are intact in
the possession of CIA.
and company
29. On information and belief, the individual^defendants have
engaged in an extended conspiracy unlawfully to conceal the acts
complained of in paragraphs 10-28, supra, from the named plaintiffs
and members of their class, from Congress, and from the public.
30. On information and belief, each of the individual defendants
knew of and participated in, and/or concealed the illegal and unconsti-
tutional activities described in paragraphs 10-28, supra.
31. On information and belief, the CIA continues to maintain
and disseminate files containing information about the plaintiffs'
constitutionally protected associational and domestic political
activities, including information illegally and unconstitutionally
obtained from plaintiffs' private mail and wire or oral communications.
32. On information and belief, each of the individual defendants
knew that the CIA and NSA actions described above were taken in
violation of the agencies' charters, and none of the individual de-
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fendants who participated in these actions had a good faith belief
that his conduct was lawful.
FIRST CAUSE OF ACTION
33. The defendants' procurement of interception, disclosure and
use, and their interception, disclosure and use of the plaintiffs'
wire or oral communications originating or terminating in the United
States were unreasonable and illegal, and were not made in good faith
reliance on any judicial, legislative or other valid authorization, or
other reasonable belief in their legality.
34. The defendants' procurement of interception, disclosure
and use, and their interception, disclosure and use of the plaintiffs'
wire or oral communications violated Title 18, United States Code,
Sections 2511 and 2520.
35. The defendants' procurement of interception, disclosure
and use, and their interception, disclosure and use of plaintiffs'
wire or oral communications deprived plaintiffs of their rights of
free speech and association under the First Amendment, and their
right to privacy and security against unreasonable searches and
1
seizures guaranteed by the Fourth Amendment.
SECOND CAUSE OF ACTION
36. Plaintiffs repeat and reallege each allegation in para-
graphs 1-35, supra.
37. The defendants' maintenance and dissemination of files on
the plaintiffs' constitionally protected associational and domestic
political activities deprived plaintiffs of their rights of free
speech and association under the First Amendment.
38. Defendants' infiltration of the plaintiff organizations and
members of their class by the use of undercover agents with false or
concealed identities who disrupted, discredited and reported on the
plaintiffs' constitutionally protected associational and domestic
political activities deprived plaintiffs of their freedom of speech
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and association protected by the First Amendment.
39. The activities of the defendants set forth above continue
to interfere with, discourage and deter the plaintiffs in the ex-
ercise of their rights of free speech, assembly and association, and
their right to petition the government for redress of grievances,
guaranteed by the First Amendment.
THIRD CAUSE OF ACTION
40. Plaintiffs repeat and reallege each allegation in - para-
graphs 1-35, supra.
41. Defendants' actions described above are in violation of
Title 50, United States Code, Section 403 (d) (3).
WHEREFORE, plaintiffs request that the Court grant the following
relief:
A. A declaratory judgment that the course of conduct and
activities of the defendants set forth above are illegal and un-
constitutional;
B.
Preliminary and permanent injunctions enjoining the
defendants from engaging in the activities declared to be illegal
and unconstitutional;
C.
A mandatory injunction or writ of mandamus ordering the
defendants to produce before the Court, for delivery to the plaintiffs
and members of their class for destruction, all files, reports, re-
cords, photographs, data computer tapes and cards, and all other
materials derived from defendants' illegal and unconstitutional act-
ivities relating to plaintiffs and all other persons similarly
situated;
D. Each named plaintiff and member of the plaintiff class have
judgment against each defendant in the sumrof $100.00 per day of pro-
curement of, interception, disclosure and use, and interception, ;
disclosure and use of the plaintiffs' wire or oral communications, as
liquidated damages pursuant to Title 18, United States Code Section
$2520.
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E. Each named plaintiff and member of the plaintiff class
have judgment against each defendant in a sum to be determined by
the Court for violation of plaintiffs' First, Fourth, Fifth and Ninth
Amendment rights.
F. Recovery in the amount of $50,000 punitive damages for the
willful violation of constitutional rights for each plaintiff and
each member of the plaintiff class.
G. The reasonable costs of this action and attorneys' fees
of plaintiffs.
H. Such other and further relief as the Court shall deem just
and proper.
Respectfully submitted,
JOHN H.F. SHATTUCK
MELVIN L.WULF
American Civil Liberties Union
Foundation
22 East 40th Street
New York, New York 10016
(212) 725-1222
HOPE EASTMAN
American Civil Liberties Union
Foundation
410 First Street, SE
Washington, DC 20003
(202) 544-1681
Ben
JERRY BERMAN
122 Maryland Avenue, NE
Washington, D.C. 20002
(202) 544-5380
WALTER SLOCOMBE
1101 17th Street, N.W.
Washington, D.C. 20036
(202) 293-3900
Dated: October 1975
Attorneys for Plaintiffs
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