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Iran/Arms Transaction: Jay Stephens Files: Legal Analysis (1)
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Iran/Arms Transaction: Jay Stephens Files: Legal Analysis (1)
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Arthur Culvahouse's Office Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Culvahouse, Arthur B.: Files
Folder Title: Iran/Arms Transaction: Jay Stephens
Files: Legal Analysis (1)
Box: CFOA 1132
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
United States Department of State
The Legal Adviser
Washington, D.C. 20520
LIMITED OFFICIAL USE
December 11, 1986
TO:
The White House Counsel
Assistant Attorney General Cooper
The General Counsel, Department of Defense
The General Counsel, Central Intelligence Agency
FROM:
Abraham D. Sofaer
SUBJECT: Validity of Oral Instruction to Initiate Covert Action
This memorandum addresses the following questions in the
context of the Iran arms transactions: (1) whether an oral
instruction by the President to carry out the transactions in
question, if given, would satisfy the requirements of Section
662 of the Foreign Assistance Act (the Hughes-Ryan Amendment)
and other statutory provisions for the authorization of covert
action programs; and (2) if not, what effect that result would
have on the legal validity of actions taken pursuant to such an
oral instruction or the individual responsibility of persons
taking such actions. (Research will continue as necessary on
these questions.)
1. Does an oral finding satisfy the statute?
A. Requirements for initiation of covert action activities.
Section 662 of the Foreign Assistance Act (the Hughes-Ryan
Amendment) provides as follows:
No funds appropriated under the authority of this or
any other Act may be expended by or on behalf of the
Central Intelligence Agency for operations in foreign
countries, other than activities intended solely for
obtaining necessary intelligence, unless and until the
President finds that each such operation is important to
the national security of the United States. Each such
operation shall be considered a significant anticipated
intelligence activity for the purpose of section 501 of
the National Security Act of 1947.
Section 654 of the Act provides in part as follows:
(a) In any case in which the President is required to
make a report to the Congress, or to any committee or
officer of either House of Congress, concerning any finding
or determination under any provision of this Act, ...
that finding or determination shall be reduced to
writing and signed by the President.
LIMITED OFFICIAL USE
also 9/24/14
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- 2 -
(b) No action shall be taken pursuant to any such
finding or determination prior to the date on which that
finding or determination has been reduced to writing and
signed by the President.
(c) Each such finding or determination shall be
published in the Federal Register as soon as practicable
after it has been reduced to writing and signed by the
President. In any case in which the President concludes
that such publication would be harmful to the national
security of the United States, only a statement that a
determination or finding has been made by the President,
including the name and section of the Act under which it
was made, shall be published
Section 501 of the National Security Act does not require a
Presidential finding, but does provide in part as follows:
To the extent consistent with all applicable
authorities and duties, including those conferred by
the Constitution upon the executive and legislative
branches of the Government, and to the extent
consistent with due regard for the protection from
unauthorized disclosure of classified information and
information relating to intelligence sources and methods,
the Director of Central Intelligence and the heads of all
departments, agencies, and other entities of the United
States involved in intelligence activities shall ---
(1) keep the Select Committee on Intelligence of the
Senate and the Permanent Select Committee on Intelligence
of the House of Representatives fully and currently
informed of all intelligence activities which are the
responsibility of, or are engaged in by, or are carried out
for or on behalf of, any department, agency, or entity of
the United States, including any significant anticipated
intelligence activity, except that (A) the foregoing
provision shall not require approval of the intelligence
committees as a condition precedent to the initiation of
any such anticipated intelligence activity, and (B) if the
President determines it is essential to limit prior notice
to meet extraordinary circumstances affecting vital
interests of the United States, such notice shall be limited
to the chairman and ranking minority members of the
intelligence committees, the Speaker and minority leader
of the House of Representatives, and the majority and
minority leaders of the Senate
LIMITED OFFICIAL USE
LIMITED OFFICIAL USE
- 3 -
(b) The President shall fully inform the intelligence
committees in a timely fashion of intelligence operations in
foreign countries, other than activities intended solely for
obtaining necessary intelligence, for which prior notice
was not given under subsection (a) and shall provide a
statement of the reasons for not giving prior notice
Apart from these statutory provisions, procedures for the
initiation of covert actions are spelled out in considerable
detail in Executive Branch directives and in the agreement
between the DCI and the SSCI. Part 3.1 of E.O. 12333 (Dec. 4,
1981) provides in part that:
The requirements of section 662 of the Foreign
Assistance Act
and section 501 of the National
Security Act
shall apply to all special activities
as defined in this Order.
Part 3.4(h) defines "special activities" as:
activities conducted in support of national foreign
policy objectives abroad which are planned and executed so
that the role of the United States Government is not
apparent or acknowledged publicly, and functions in support
of such activities, but which are not intended to influence
United States political processes, public opinion, policies,
or media and do not include diplomatic activities or the
collection and production of intelligence or related support
functions.
Existing NSDDs provide detailed procedures for the initiation
of covert action programs, including the approval by the
President in writing of findings for all "special activities"
(not simply those carried out by the CIA), and the review of
proposed findings (including legal review) by certain
interagency groups prior to their signature.
Finally, the DCI and SSCI reached agreement in 1984, among
other things, that the SSCI would be provided with "the text"
of new covert action findings, together with a "scope paper"
describing planned activities under the finding, prior to
implementation of the planned activity, and that the SSCI would
be briefed at the same time on the finding, including a
discussion of all important elements of the activity, such as
operational and political risks and international or domestic
legal aspects.
LIMITED OFFICIAL USE
LIMITÉD OFFICIAL USE
- 4 -
B. Was a finding required with respect to the Iran arms
transactions? As a matter of statutory requirement, a finding
would only have been required for these activities if they
involved the expenditure of funds by or on behalf of the CIA
for operations in foreign countries, other than activities
intended solely for obtaining necessary intelligence.
Therefore, operations not involving the expenditure of
appropriated funds, or conducted by another U.S. entity (such
as the NSC), or CIA operations conducted within the United
States (such as the payment of funds or the transfer of arms to
foreign recipients), would not by themselves have triggered the
requirement for a finding as a technical matter. The NSDD and
the DCI-SSCI agreement do require a finding in those
circumstances, and this fact must be weighed in any decision to
dispense with a Presidential finding. These documents are not
legally binding, however, and political rather than legal
consequences flow from a decision to disregard them. We do not
know to what extent the facts of the Iran arms situation fit
the above exceptions; therefore the rest of this memo proceeds
on the assumption that Section 662 did in fact apply to the
actions allegedly directed by the President.
C. Would an oral finding by the President satisfy Section
662? Section 662 does not by its terms require that the
finding be in writing. A memo by the Office of Legal Counsel of
October 25, 1977 states that "there is no legal requirement as
to the form by which the President must make his Finding" but
that "as a matter of policy and wise practice we believe
Findings should normally be in writing to eliminate ambiguities
and uncertainties." The reasoning behind these conclusions is
not given, and no mention is made in this context of the other
statutes cited above.
Section 654 applies to "any case in which the President is
required to make a report to the Congress, or to any committee
or officer of the Congress, concerning any finding or
determination under any provision" of the Foreign Assistance
Act and certain other security assistance statutes. A
Presidential finding under Section 662 is, of course, a finding
under the Act, but it is unclear that the President is required
to "report" all such findings.
LIMITED OFFICIAL USE
LIMITED OFFICIAL USE
- 5 -
In its original form, Section 662 did require a report to
the two foreign affairs committees. While there is nothing in
the legislative history to indicate whether the finding was
intended to take a written form, it does indicate that the
President was thought to have discretion as to whether his
report would be written or oral, and one of the Senate sponsors
expressly acknowledged on the floor that oral reporting might
be best in certain circumstances for covert action programs.
Specifically, the following exchange occurred between Senators
Stennis and Hughes:
Mr. STENNIS.
One other matter: the language now
says "appropriate report." As long as it was just as the
rest of the amendment provides, the President, he would
have a matter of discretion whether he would have a written
report or whether it would be an oral report to one of his
men.
Mr. HUGHES. I would think that as long as the matter
was before the committee, the "appropriate report" would be
for the determination of the reporting officer by agreement
of the committee, and I would think in matters of
intelligence or any other necessary covert activity, that
might be the best way under certain circumstances.
Mr. STENNIS. The amendment does not require a written
report?
Mr. HUGHES. No, it does not.
In any event, in 1981 the section was amended to delete the
requirement for a report and substitute the statement that each
such activity was to be considered a significant intelligence
activity for the purpose of Section 501. The legislative
history of this amendment indicates that the intention was not
to affect the requirement for a finding, but to eliminate
reporting requirements on covert action from the Foreign
Assistance Act in deference to the notice provisions of Section
501 of the National Security Act.
It is not clear whether Section 654 applies if the
President is required to report to Congress by another statute,
but not by the Foreign Assistance Act; the language is
ambiguous on this point, and might be read either way. If read
to apply only where a report is required by the Foreign
Assistance Act, it now clearly does not apply to findings under
Section 662. Strong arguments can be made to support this
position.
LIMITED OFFICIAL USE
- 6 -
Even if the language is read to apply where reports are
required by statutes other than the security assistance
statutes, the President is not expressly required to "make a
report" to Congress on covert action findings under Section 501
of the National Security Act. That section requires that the
President keep the intelligence committees "fully and currently
informed", but does not require a "report" as such, or at least
does not require a report concerning the Section 662 finding,
as opposed to a class of intelligence activities. Nothing in
the legislative history of Section 501 supports the view that
the requirement to keep committees "fully and currently
informed" was necessarily to take any particular form, whether
oral or written, and some references suggest that consultation
with the committees was contemplated rather than any formal
report.
More generally, Section 654 was not drafted with covert
action activities in mind. It was intended for security
assistance determinations of the kind that are normally overt
and part of the public record. It does provide for the
possibility of a classified determination, but still requires
that notices be published in the Federal Register that a
determination had been made, identifying the section of the Act
under which it was made. Congress could not have intended that
such a requirement apply to covert action programs, and in fact
Federal Register notices have never been published when covert
actions are initiated. To our knowledge, Congress has never
objected to this practice. The 1981 amendment confirms that
Congress intended that the procedures of Section 501 be the
mechanism by which covert action activities are initiated and
made known to the Congress.
This line of argument is consistent with the general
acceptance by the Congress of the proposition that intelligence
activities conducted pursuant to the National Security Act are
not subject to the requirements of the security assistance
statutes. For example, Section 403 of the Intelligence
Authorization Act of 1986 set up a procedure for the reporting
of arms transfers pursuant to intelligence operations that is
expressly separate and apart from the procedures of the
security assistance statutes, and that recognizes that arms may
be so transferred without reference to the requirements of
those statutes. The House Report on the bill states as follows:
At the same time, covert transfers of military
equipment or services bypass the established statutory
framework for the consideration and approval of security
assistance programs. Being secret, these transfers avoid
public commentary, congressional review and debate.
Therefore, they occur without many of the usual checks
and balances built into the Foreign Assistance Act and
Arms Export Control Act.
LIMITED OFFICIAL
LIMITED OFFICIAL
- 7 -
Accordingly, a reasonable argument can be made that these
statutes do not technically require that such Presidential
findings be in writing. As noted above, the NSDD and the
DCI-SSCI agreement do require written findings. But these
documents have no legal binding effect.
D. If an oral finding is permissible, would an oral
Presidential instruction to carry out such activities satisfy
Section 662? If an oral finding is possible under Section 662,
then it would be satisfied by an oral instruction which
indicates the President's determination that the operations in
question are "important to the national security of the United
States.' Past practice suggests that it is the substance of the
determination that is essential for this purpose, and not the
precise form of words. For example, in satisfying a statutory
requirement for a Presidential proclamation "announcing the
termination" of the Trusteeship Agreement for the Pacific Trust
Territories in connection with the establishment of the
Covenant for the Northern Marianas, the President's
proclamation instead announced (because it was thought
impolitic to announce a unilateral termination as such) that
"the Northern Marianas are no longer subject to the
Trusteeship" and that the proclamation constituted the
statement required by the statutory provision. This was deemed
by the Legal Adviser's Office to satisfy the statutory
requirement.
In the current case, Section 662 would be satisfied if the
President had adequately conveyed his judgment that the
operation in question would be important to U.S. national
security, or words expressing the same substance. It would be a
matter of judgment as to how far the President's affirmation
might stray from the statutory formula and still be effective.
In this case the judgment required is so general and so
inherent in the decision to authorize the operations in
question, that it is relatively easy to satisfy. This is
particularly so in this instance because of the detailed and
formal consideration apparently given by the President to this
particular program, before his alleged oral approval, in which
the importance of the national security objectives involved
were thoroughly examined.
/M/
LIMITED OFFICIAL
- 8 -
2. What are the legal consequences if an oral
finding does not satisfy the statute?
A. Can an oral instruction amount to acceptable
"substantial compliance" with the statute even if a written
finding is technically required? If the statute were found to
require a written finding, one might nevertheless argue that
the President's alleged instruction to carry out the operation,
together with indications that he had determined that they were
important to the national interest, amount to such "substantial
compliance" with the statutory requirement as to render valid
the activities authorized. Difficulties exist, however, with
this line of argument.
In various areas of the law courts have accepted the
doctrine that, under certain circumstances, material
satisfaction of a statutory requirement is sufficient to uphold
the validity of the actions taken notwithstanding failure to
comply with technical requirements. For example, with respect
to the common requirement in state law that certain types of
contracts be in writing (the so-called "statute of frauds"), a
minority of courts and the Uniform Commercial Code have
permitted an exception where there is subsequent recorded
testimony to the oral contract, 5/ and a majority of courts
have permitted an exception in specified circumstances based on
full or partial performance of the oral contract. 6/ These
exceptions are apparently based on the premise that the purpose
of the statute of frauds is to ensure reliable evidence of the
contract, and that where other actions provide that evidence,
the need for a written contract may be dispensed with.
The same doctrine has been applied by courts in several
other areas of the law. However, it is generally not applied to
dispense wholly with a writing requirement, but rather to allow
flexibility in the terms of the precise language of a
statutorily required writing. Examples include statutory
provisions requiring notice by a debtor to a creditor of a
claim for exemption of the debtor's property from garnishment,
requirements for completing a declaration of homestead,
requirements as to the terms and conditions included in an
injunction bond, and requirements regarding the formalities of
a petition for initiative or referendum.
use
- 9 -
In a 1964 Court of Claims case, the Court relied upon a
substantial compliance argument to uphold acceptance of a
contract bid that lacked a required written statement of the
authority of the bidder's agent. Noting that "the purpose
was to alert both the contractor and the Government to the
subject of the agent's authority and to require some
solid proof sufficient to warrant the defendant's entering into
a contractual relationship, the Court determined that the
Government had discovered through other written documents that
the agent had appropriate authority, and it found that there
had thus been substantial compliance with the regulation.
The doctrine of substantial compliance, however, is not
universally applied. In some cases, courts have held that
statutory requirements must be strictly satisfied. Such a rule
has been applied, for example, with respect to statutory
provisions regulating appointments and promotions under civil
service acts, and requirements for notice by publication or
posting of a municipal proceeding to assess the cost of public
improvement projects.
We are aware of some apparent precedent for the application
of a substantial-compliance rule in the security assistance
area. We understand that on at least one occasion funds were
obligated by AID prior to submission of Congressional
notifications which Section 634A of the Foreign Assistance Act
requires to be submitted prior to such obligations. AID has
viewed the obligations as nonetheless lawful and effective
because AID substantially complied with the statute, in that
the notification documents had been completed by the
appropriate officials but simply not communicated to Congress;
we understand that Congress was informed of these facts but did
not further pursue the matter or characterize the
appropriations as unlawful. We suspect that other similar
incidents have occurred, and are searching L and AID files to
find examples.
player
- 10 -
The Department's regulations implementing the Case-Zablocki
Act, 10/ which requires that oral international agreements be
reduced to writing and transmitted to the Senate, provide
specifically that "deviation or derogation from [the
regulations] will not affect the legal validity, under United
States law or international law, of agreements concluded, will
not give rise to a cause of action, and will not affect any
public or private rights established by such agreements. # 11/
Section 654 of the Foreign Assistance Act not only requires
a written determination, but also expressly provides that no
action shall be taken pursuant to any determination prior to
the date on which the determination is reduced to writing and
signed by the President. This statute therefore arguably is
intended not only to provide an accurate evidentiary record of
the determination, but also to provide a clear means of
alerting Congress to the fact and content of the determination
before action is taken under it. Thus, if the requirement of a
writing were applicable to findings under Section 662,
difficulties would be encountered in arguing that oral
Presidential directions, not communicated to Congress until
long after the actions authorized were taken, constitute such
"substantial compliance" as to render valid the actions taken.
B. Could any possible violation of the statute be cured by
a subsequent written finding or ratification? Section 654
requires that certain findings be reduced to writing and signed
by the President before actions are taken to implement them.
Therefore, subsequent compliance with the statute or
ratification of the finding would not logically cure the
failure to do so prior to taking action. The only comparable
instance in the security assistance area of which we are aware
concerns a failure by AID to waive Section 620(g), which
prohibits assistance to countries more than six months in
arrears on certain types of loans to the USG, prior to
obligating certain assistance funds for Jamaica. AID advised
the Secretary that retroactive ratification of these
obligations would be legally ineffective, because:
...
Section 654 (b) of the FAA
,
as well as the
legislative history thereunder, makes clear that the
Congress intended to limit waiver authority under the FAA
to prospective actions rather than to permit retroactive
waivers.
LIMITED OFFICIAL USE
- 11 -
(Instead, AID recommended that no action be taken with respect
to the past violation, and that efforts be focused on avoiding
future violations.)
C. What is the effect of reliance on an oral finding as
regards the possible criminal or civil liability of persons
acting under that finding? Persons acting under an oral finding
may wish to argue that their good-faith reliance on the
President's alleged oral finding or instructions, perhaps
combined with advice from other officials that such actions
were lawful, absolve them from any criminal or civil liability
or at least mitigate the penalties imposed as a result.
In the criminal area, the effect of such good-faith
reliance may depend on the mental state required by the
particular statutes in question. For example, the federal
embezzlement statute applies to persons who "knowingly" convert
U.S. property to their own use or the use of another; 12/ the
federal solicitation statute applies to those who solicit gifts
for the USG with the "intention" of converting them to some
other use; 13/ and criminal penalties under the Antideficiency
Act apply to persons who "knowingly and willfully" authorize
obligations in the absence of sufficient available appropriated
funds for that purpose. 14/ In general, if the individual's
reliance on the oral finding or other representations of
officials with apparent authority was such as to negate the
mental state required by the statute in question, then there
would be relief from criminal liability.
Apart from this, no general exemption from criminal
liability exists for reliance on unlawful "superior orders"
15/ or on advice of counsel. 16/ On the other hand, in many
jurisdictions a person may avoid criminal liability if he
reasonably relies on an official statement contained in a
statute, in a judicial decision, in an administrative order or
grant of permission, or in an official interpretation by the
officer charged with interpretation or enforcement of the law.
17/
UNITED OFFICIAL
- 12 -
With respect to civil penalties under the Antideficiency
Act, it is generally accepted that the good faith of the person
in question does not excuse a violation, 18/ but may mitigate
the consequences of a violation. 19/ Specifically, the GAO is
empowered by statute to grant relief from liability in certain
instances on finding either that: (1) the act in question was
"based on official records" and the individual "did not know,
and by reasonable diligence and inquiry could not have
ascertained, the actual facts,' or (2) that "the obligation was
incurred in good faith, that the payment was not contrary to
any statutory provision specifically prohibiting payments of
the character involved, and that the United States received
value for such payment.' 20/
D. What is the effect of failure to comply with such a
statute on the validity of actions taken pursuant to oral
instructions? The failure to comply with such a statute does
not necessarily render invalid various actions taken pursuant
to it. For example, the courts have held that a contract in
violation of the Antideficiency Act nonetheless remains valid
where the other party did not have notice of the deficiency.
21/ Likewise, the failure to comply with Section 654 would
unlikely invalidate any contract or agreement entered into with
foreign governments or other persons for services, such as air
transport, or for the transfer of funds or items, or affect the
title of funds or items transferred.
UNITED OFFICIAL USE
NOTES
120 Cong. Rec. 33490 (Oct. 2, 1974) (statement of Sen.
Hughes).
2/ The Report of the Senate Select Committee on
Intelligence states that the requirements of Section 501
replace former reporting requirements of the Hughes-Ryan
Amendment. "There is no change in the Hughes-Ryan requirements
for Presidential findings." S. Rep. No. 730, 96th Cong., 2d
Sess. 5 (1980), reprinted in 1980 U.S. Code Cong. & Ad. News
4192, 4196.
3/ SSCI Report (note 2 above) at 9-10, 1980 U.S. Cong. &
Ad. News at 4200 (SSCI quotes comments of Senator Baker [122
Cong. Rec. 7261 (May 13, 1976) ] to describe intent as
requirement for "prior consultation").
4/ H. Rep. 99-106, 99th Cong., 1st Sess. 10 (1985),
reprinted in 1985 U.S. Cong. & Ad. News at 955.
5/ See Farnsworth, Contracts §§ 6.4-6.9 (1982); UCC
§ 2-201.
6/ See Farnsworth, supra at § 6.9.
7/ See 31 Am. Jur. 2d, Exemptions § 144 (1967); 40 Am.
Jur. 2d, Homestead § 85 (1968); 42 Am. Jur. 2d, Injunctions
§ 314 (1969); 42 Am. Jur. 2d, Initiative and Referendum § 22
(1969).
8/ American Anchor & Chain Corporation V. United States,
331 F.2d 860 (Ct. Cl. 1964).
See 15A Am. Jur. 2d, Civil Service § 27 (1976); 25 Am.
Jur. 2d, Drainage § 49 (1966).
10/ 1 U.S.C. § 112b.
11/ 22 CFR § 181.1.
12/ 18 U.S.C. § 641.
13/ 18 U.S.C. § 663.
14/ 31 U.S.C. § 1350.
15/ See Wharton's Criminal Law § 40 (14th ed. 1978).
16/ Id. at § 42.
17/ Id. at § 77; United States V. Barker, 546 F.2d 940, 955
(D.C. Cir. 1976) (opinion of Merhige, District Judge).
18/ See Principles of Federal Appropriations Law 5-12
(United States General Accounting Office, Office of Legal
Counsel, First Edition 1982).
19/ Id. at 5-13.
20/ Id. at 10-46 et seq.; 10-55 et seq..
21/ See Ferris V. United States, 27 Ct. Cl. 542 (1892)
("insufficency does not . . . cancel [the government's]
obligations nor defeat the rights of other parties"). See also
Ross Construction Corp. V. United States, 392 F.2d 984 (Ct. Cl.
1968) (contractor without knowledge can recover since he
"cannot justly be expected to keep track of appropriations
where he is but one of several being paid from the fund");
Anthony P. Miller, Inc. V. United States, 348 F.2d 475 (Ct. Cl.
1965).
DEC
U.S. Department of Justice
Office of Legal Counsel
December 17, 1986
Office of the
Washington, D.C. 20530
Assistant Attorney General
MEMORANDUM FOR THE ATTORNEY GENERAL
Re: Legal Authority for Recent Covert Arms Transfers to Iran
This memorandum responds to your request for a summary of
the legal authorities affecting the recently disclosed arms
transfers to Iran. Because the exact details of the transfers
have apparently not completely transpired, this memorandum will
provide a general framework for analysis, with references only to
the basic facts that have already emerged. Although this
memorandum does not deal with questions arising from the handling
of the monies that Iran paid for the arms in question, the
operation in which weapons were sold to Iran appears in other
respects to have been lawful.
I. General Authority for Arms Transfers to Iran
As you know, there are numerous statutes that regulate the
export of weapons. The principal statutes directly affecting
transfers by the government are the Foreign Assistance Act of
1961 and the Arms Export Control Act. Although both statutes
establish substantially comprehensive regulatory schemes in the
areas of military assistance and military sales, they do not
purport to constitute the sole and exclusive authority under
which the executive branch may transfer weapons to foreign
nations. Thus, the limitations that the Foreign Assistance Act
and Arms Export Control Act impose on arms transfers apply only
to transfers undertaken pursuant to those statutes. If the sales
to Iran were accomplished under other authorities, as we believe
1
Codified, as amended, in relevant part at 22 U.S.C. 2311 et
seq.
2
Codified, as amended, in relevant part at 22 U.S.C. 2751 et
seq.
-1-
3
they were, these restrictions would not apply.
Consistent with the President's constitutional
responsibilities for conducting the foreign policy of the nation,
Congress has recognized that the executive has considerable
discretion to use government resources for a variety of
activities not specifically authorized by statute. Most
conspicuously for present purposes, section 101 of the National
Security Act of 1947 assigns certain functions to the National
Security Council, but expressly acknowledges that that entity may
"perform[] such other functions as the 6 President may direct.
Similarly, section 102 of the same Act assigns certain functions
to the Central Intelligence Agency, while authorizing that Agency
"to perform such other functions and duties related to
intelligence affecting the national security as the National
Security Council may from time to time direct." We believe that
these two provisions may be relied on to support a wide range of
foreign covert activities not otherwise forbidden by law.
The authorities exercised by the NSC and the CIA include the
discretion to transfer arms to foreign recipients in the course
of intelligence or intelligence-related activities. Congress
recently confirmed the existence of such authority in section 403
of the Intelligence Authorization Act for Fiscal Year 1986, Pub.
L. No. 99-169, 99 Stat. 1002, 1006 (1985). That provision
provides in relevant part:
Sec. 403. (a) (1) During fiscal year 1986,
the transfer of a defense article or defense
service exceeding $1,000,000 in value by an
intelligence agency to a recipient outside
that agency shall be considered a significant
3
It should be noted that the Department of State and the
Department of Justice have both taken the position, long before
the operation at issue in this memorandum, that arms may be
transferred to foreign countries outside the context of the Arms
Export Control Act. See Memorandum of Law on Legal Authority for
the Transfer of Arms Incidental to Intelligence Collection, by
David R. Robinson, Legal Adviser, Department of State; Letter
from William French Smith to William J. Casey (Oct. 5, 1981).
4
For a detailed discussion of the President's constitutional
powers and responsiblities, as they relate to the Iran operation,
see our memorandum on section 501 (b) of the National Security
Act.
5
Codified as amended at 50 U.S.C. 402.
6
Codified as amended at 50 U.S.C. 403.
-2-
anticipated intelligence activity for the
purpose of section 501 of the National
Security Act of 1947.
(2) Paragraph (1) does not apply if--
(A) the transfer is being made to a
department, agency, or other entity of the
United States (so long as there will not be a
subsequent retransfer of the defense articles
or defense services outside the United States
Government in conjunction with an
intelligence or intelligence-related
activity); or
(B) the transfer--
(i) is being made pursuant to
authorities contained in part II of the
Foreign Assistance Act of 1961, the Arms
Export Control Act, title 10 of the United
States Code (including a law enacted pursuant
to section 7307 (b) (1) of that title), or the
Federal Property and Administrative Services
Act of 1949, and
(ii) is not being made in conjunction
with an intelligence or intelligence-related
activity.
(3) An intelligence agency may not transfer
any defense article or defense services
outside the agency in conjunction with any
intelligence or intelligence-related activity
for which funds were denied by the Congress.
(b) As used in this section--
(1) the term "intelligence agency" means
any department, agency or other entity of the
United States involved in intelligence or
intelligence-related activities;
This provision, which was made a permanent part of the National
Security Act (new section 503) by the Intelligence Authorization
Act for Fiscal Year 1987, was primarily intended to limit the
executive's discretion to transfer arms in the course of
intelligence-related activities. Its present significance,
however, lies in its unambiguous recognition that the executive
possesses such discretion apart from the Foreign Assistance Act
-3-
and the Arms Export Control Act. 7 Assuming that the arms
transferred to Iran were sold to that country at a legally
justified price, the language of sections 101 and 102 of the
National Security Act is broad enough to encompass the kind of
discretion whose existence is manifestly implied in section 403
of the Intelligence Authorization Act. It follows that the NSC
and/or the CIA had authority to arrange for the sale of arms to
Iran as part of an intelligence or intelligence-related
operation, subject to such other restrictions as Congress may
have imposed by law. The remainder of this memorandum discusses
the applicability of such restrictions.
7
Because subsection (a) (2) states that subsection (a) (1) does
not apply to transfers made pursuant to authorities contained in
the Foreign Assistance Act or the Arms Export Control Act, the
clear implication is that the restriction in subsection (a) (1)
applies to transfers made pursuant to some other authority.
The same implication can be drawn from other congressional
actions that have imposed restrictions on covert arms transfers
without suggesting that such transfers were subject to existing
restrictions under the Foreign Assistance Act or the Arms Export
Control Act. For example, a provision was enacted in 1974
precluding funding for military assistance to Laos outside the
confines of the Foreign Assistance Act and the Arms Export
Control Act. See Pub. L. No. 93-559, sec. 12, 88 Stat. 1798
(1974) (repealed by Pub. L. No. 97-113, title VII, sec.
734 (a) (1), 95 Stat. 1560 (1981)).
8
Our point here is that the charters of the CIA and NSC appear
to recognize that those entities may use their facilities to
arrange an arms sale to Iran. Whether these or other
governmental agencies would be authorized to spend the sums of
money necessary to procure and give arms to Iran is a distinct
question, which need not be addressed at this time.
Because we have not seen the classified Schedule of
Authorizations referred to in section 102 of the Intelligence
Authorization Act for Fiscal Year 1986 or the similar schedule
referred to in the FY 1985 authorization legislation, we do not
know whether anything in those schedules would affect the issues
addressed in this memorandum.
This memorandum does not address the legal questions that may
arise from arms having been sold to Iran at prices higher than
the prices at which they were made available to the CIA or NSC.
9
Whether the ultimate source of this discretion is the
President's inherent constitutional authority in foreign affairs,
or the cited statutes, or some other statute, is a question that
need not be resolved. The crucial point is that section 403 of
the Intelligence Authorization Act clearly recognizes the
existence of the authority, whatever its source.
-4-
II. Section 501 of the National Security Act
Under section 403 of the Intelligence Authorization Act for
Fiscal Year 1986 (which has now been made permanent as new
section 503 of the National Security Act), an arms transfer by
either the NSC or the CIA exceeding $1 million in value is
subject to the congressional oversight provisions of Section 501
of the National Security Act. We have prepared a separate
memorandum in which we concluded that the requirements of section
501 were satisfied as to the recent arms shipments to Iran. We
will not repeat that discussion here.
III. The Hughes-Ryan Amendment
The so-called Hughes-Ryan Amendment, section 662 of the
Foreign Assistance Act, (codified as amended at 22 U.S.C. 2422),
provides in its present form:
10
The NSC clearly falls within the definition of an intelligence
agency given in section 403(b) (1) of the Intelligence
Authorization Act: "any department, agency or other entity of
the United States involved in intelligence or intelligence-
related activities."
11
Covert intelligence operations are subject to the
congressional reporting requirements of section 501 of the
National Security Act, whether they are conducted by the CIA, the
NSC, or some other agency. Section 501 (a), 50 U.S.C. 413(a),
imposes reporting requirements not only on the Director of
Central Intelligence, but also on "the heads of all departments,
agencies, and other entities of the United States involved in
intelligence activities" (emphasis added). Furthermore, the
reporting requirements apply to "all intelligence activities
which are the responsibility of, are in engaged in by, or are
carried out for or on behalf of, any department, agency, or
entity of the United States (emphasis added). This
language is broad enough to encompass the NSC. Finally, even if
activities carried out by the NSC could somehow escape the broad
language of section 501 (a), section 501 (b) contains unqualified
language requiring the President to "fully inform the
[congressional] intelligence committees in a timely fashion of
intelligence operations in foreign countries, other than
activities intended solely for obtaining necessary intelligence,
for which prior notice was not given under subsection (a) of this
section
Thus, unlike the Hughes-Ryan Amendment
(discussed in Part III of this memorandum), section 501 of the
National Security Act applies to all intelligence operations in
foreign countries, whether conducted by the CIA, the NSC, or some
other governmental entity.
-5-
No funds appropriated under the authority of
this chapter or any other Act may be expended
by or on behalf of the Central Intelligence
Agency for operations in foreign countries,
other than activities intended solely for
obtaining necessary intelligence, unless and
until the President finds that each such
operation is important to the national
security of the United States. Each such
operation shall be considered a significant
anticipated intelligence activity for the
purpose of section 413 of title 50 [i.e.
section 501 of the National Security Act].
The original version of this provision, Pub. L. No. 93-559, sec.
32, 88 Stat. 1804 (1974), contained identical language
pertaining to the President's national security finding and also
required him to "report[], in a timely fashion, a description
and scope of such operation to the appropriate committees of the
Congress
In 1980, the reporting requirement was
replaced with the current 12 reference to section 501 of the
National Security Act.
The current version of Hughes-Ryan, which recognizes the
President's authority to conduct covert operations abroad,
applies by its terms only to activities involving the CIA and
requires only that the President make the requisite finding
before funds are expended on the operation. Thus, any transfer
of arms to Iran in which the CIA was not involved (for example,
an operation conducted by NSC staff members without the aid of
the CIA) is exempt from Hughes-Ryan. Thus, based on what we know
at this time, it appears that no presidential finding was
required under Hughes-Ryan with respect to the September 1985
arms transfer to Iran.
Further, the President's written finding of January 17, 1986
sufficed to satisfy Hughes-Ryan as to CIA-assisted transfers that
occurred after that date. Because the Iran project appears to
have been a single, ongoing operation and because the January 17,
12
The statutory language requiring a presidential finding was
not amended, and the legislative history indicates that no change
in this requirement was intended. See S. Rep. No. 730, 96th
Cong., 2d Sess. 5 (1980), reprinted in 1980 U.S. Code Cong. &
Admin. News 4192, 4196.
13
Cf. 120 Cong. Rec. 33,489 (1974) (colloquy between Senators
Humphrey and Hughes).
-6-
1986 finding was drafted broadly enough to cover multiple arms
shipments in the course of that ongoing operation, we do not
believe that separate presidential findings were required for
each of the shipments that took place after that date.
Thus, the main issue under Hughes-Ryan concerns the November
1985 arms shipment. Robert McFarlane, formerly Assistant to the
President for National Security Affairs, has publicly testified
that shipments prior to January 17, 1986 were carried. 14 out
pursuant to an oral authorization from the President. And it
appears that CIA resources were used to facilitate the November
shipment. 15 The question, then, is whether the President's oral
authorization of arms transfers to Iran could have implied or
constituted a Hughes-Ryan "finding" that would allow the CIA to
participate or aid in the transfer.
On its face, Hughes-Ryan requires only that the President
find each CIA foreign operation "important to the national
security of the United States" before such operation is
undertaken. The Hughes-Ryan Amendment contains no requirement
that this finding be reduced to I6 writing or indeed that it be
articulated in so many words.
We believe that the main purpose
of the presidential finding requirement is to ensure that the
14
Because there is some reason to believe that Mr. McFarlane's
recollection was not wholly accurate, this Office is preparing a
separate analysis of the legal issues that would arise from the
absence of an oral authorization by the President for the
September and/or November shipments.
15
There may have been pre-existing written "omnibus" Hughes-Ryan
findings that would cover whatever tasks the CIA performed in
connection with the November shipment. Further research into the
exact nature of the CIA's participation and into the existence of
such findings will be needed in order to resolve this issue.
Although the facts are not clear at this time, it appears
possible that the only significant CIA involvement in the
November shipment was through the use of one its proprietaries.
If the proprietary was paid for its services with non-CIA funds,
then CIA appropriations may not have been used at all. If that
is true, Hughes-Ryan would not be applicable to the November
shipment. Alternatively, the CIA's involvement in the November
shipment may have been so peripheral that it should be treated in
terms of a de minimis exception to Hughes-Ryan; such an analysis
would require further research.
16
There are other statutory provisions requiring that findings
or determinations by executive branch officials be committed to
writing. See e.g., 20 U.S.C. 2836 (c) (3).
-7-
President himself 17 decides, before each operation, whether the
national security justifies its being carried out. Such a
decision, which can be inferred from an oral authorization,
satisfies this purpose, and an oral authorization I8 therefore
satisfies the Hughes-Ryan finding requirement.
So far as we know, the only legal provision suggesting that
the President's finding under Hughes-Ryan might have to be in
written form is found in section 654 of the Foreign Assistance
Act:
(a) Report to Congress
In any case in which the President is
required to make a report to the Congress, or
to any committee or officer of either House
of Congress, concerning any finding or
determination under any provision of this
chapter
that finding or determination
shall be reduced to writing and signed by the
President.
17
The President could, presumably, delegate this function to any
executive branch official who had been confirmed by the Senate.
3 U.S.C. 301. Such a delegation would have to be published in
the Federal Register, which would give Congress the opportunity
to object or enact new legislation if it were felt that such
delegation was inadvisable.
18
The legislative history of the Hughes-Ryan Amendment, which
focuses mostly on the reporting requirement and congressional
oversight generally, contains little discussion of the
presidential finding requirement itself. On the floor of the
Senate, Senator Humphrey mentioned in passing that national
security "would be the only reason we would want to have covert
operations
The bill's sponsor, Senator Hughes,
interrupted to remark, "I hope that is the only reason." 120
Cong. Rec. 33,489 (1974). We interpret this exchange to confirm
our conclusion that the requisite finding could be inferred from
the President's having personally authorized a particular
operation. We know of nothing in the legislative history of
Hughes-Ryan suggesting that Congress meant to disallow oral or
implied "findings" by the President. Indeed, Senator Hughes
stated on the floor of the Senate that even the congressional
report itself, which was regarded as the more important
requirement of the Amendment, could be delivered orally by a
presidential aide. 120 Cong. Rec. 33,490 (1974) (colloquy
between Sen. Hughes and Sen. Stennis).
19
Codified at 22 U.S.C. 2414.
-8-
(b) Action prohibition prior to execution of
report
No action shall be taken pursuant to any
such finding or determination [prior to the
date on which that finding or determination]
has been reduced to writing and signed by the
President.
(c) Publication in Federal Register
Each such finding or determination shall
be published in the Federal Register as soon
as practicable after it has been reduced to
writing and signed by the President. In any
case in which the President concludes that
such publication would be harmful to the
national security of the United States, only
a statement that a determination or finding
has been made by the President, including the
name and section of the Act under which it
was made, shall be published.
(d) Information accessible to Congress prior
to transmission of report
No committee or officer of either House of
Congress shall be denied any requested
information relating to any finding or
determination which the President is required
to report to the Congress, or to any
committee or officer of either House of
Congress, under any provision of this
chapter, the Foreign Military Sales Act [22
U.S.C. 2751 et seq.], or the Foreign
Assistance and Related Programs Appropriation
Act for each fiscal year, even though such
report has not yet been transmitted to the
appropriate committee or officer of either
House of Congress.
Because Hughes-Ryan and this provision are both in chapter 32 of
title 22, the President would be required to reduce the required
finding to writing before each covert operation if he were
required to make a report concerning that finding to Congress or
to any congressional committee or officer. Hughes-Ryan,
however, has never required the President to make any such
report concerning his findings: (1) in its present version,
Hughes-Ryan requires compliance with section 501 of the National
Security Act, which demands certain reports about "intelligence
-9-
activities 20 and "intelligence operations 21 but requires no
reports about presidential findings; ZZ (2) as originally
enacted, Hughes-Ryan required the President to report "a
description. 23 and scope" of the operation to certain congressional
committees;
(3) as originally introduced by Senator Hughes,
the Hughes-Ryan Amendment would have required that the President
provide Congress with both a report of his finding and₂ą
description of the nature and scope of each operation; the
first of these requirements would have made the requirements of
section 654 applicable, but this requirement was dropped from
the final version of the bill; thus, Congress deliberately
rejected the language that might have brought section 654 into
play and substituted language that made section 654
20 50 U.S.C. 413 (a) (1) (requiring that executive branch officials
keep certain congressional committees "fully and currently
informed of all intelligence activities" within their
jurisdiction).
21 50 U.S.C. 413(b) (requiring that the President "fully inform
the [congressional] intelligence committees in a timely fashion
of intelligence operations in foreign countries for which
prior notice was not given under subsection (a) of this
section ...").
22
Section 501 (a) (2), 50 U.S.C. 413(a) (2), might require certain
executive branch officials to provide information about
presidential findings, if the information is in their "possession
custody, or control," to a congressional intelligence committee
upon that committee's request, but it does not require that the
President himself make any such report. Section 654 applies only
to findings as to which the President himself is required to
report to Congress.
23
As originally enacted, Hughes-Ryan forbade the CIA to spend
appropriated funds for covert foreign operations unless and until
the President had made the requisite national security finding
and had "report[ed], in a timely fashion, a description and scope
of such operation to the appropriate committees of the
Congress
24
See 120 Cong. Rec. 33,490 (1974), reproducing Senator Hughes'
proposed amendment, which would have permitted the President to
authorize covert operations "if, but not before, he (1) finds
that such operation is vital to the defense of the United States,
and (2) transmits an appropriate report of his finding, together
with an appropriate description of the nature and scope of such
operation" to certain congressional committees.
-10-
25
inapplicable.
We therefore conclude that section 654 26 by its
own terms does not apply to the Hughes-Ryan Amendment.
This conclusion is reinforced by the structure of the
Foreign Assistance Act and long-standing practice. This Act
deals primarily with overt foreign aid, including military
assistance. To subject covert operations, including covert arms
transfers, to the requirements of section 654(c), which requires
publication in the Federal Register, would not make much sense,
especially now that the National Security Act contains an
elaborate mechanism by which Congress is kept informed of covert
25 The language ultimately adopted by Congress was taken from the
House of Representatives' version of the proposed amendment. See
120 Cong. Rec. 39,135 (1974); H.R. Conf. Rep. No. 1610, 93d
Cong., 2d Sess. (1974), reprinted in 1974 U.S. Code Cong. &
Admin. News 6734, 6744-6745.
26 This analysis does not leave section 654 without any
applications. Chapter 32 of title 22 contains numerous
provisions requiring both a presidential finding or determination
and a report to Congress concerning such finding or
determination. See, e.q., 22 U.S.C. 2364(a); 2370(f); 2371 (b);
2414a(b); 2428b(b); 2429(b) (1); 2429a (b) (2) (A). Furthermore,
chapter 32 also contains numerous provisions requiring
presidential findings or determinations without also requiring a
congressional report. See, e.q., 22 U.S.C. 2179 (a); 2183
2199 (b); 2314 (b); 2357(a); 2360(a); 2370(a); 2775. Thus, there
is a meaningful distinction, reflected in the language of section
654, between findings concerning which the President must report
to Congress and findings concerning which no such report is
required.
It should be noted that the legislative history of section 654
suggests that it was enacted in response to incidents in which
(1) the Nixon Administration provided military aid to Cambodia
and obtained the presidential determination required by the
Foreign Assistance Act after the fact; and (2) President Nixon
orally determined to authorize military aid to Ceylon, but did
not put the determination in writing or inform Congress until
some weeks later. S. Rep. No. 431, 92d Cong., 1st Sess. (1971),
reprinted in 1972 U.S. Code Cong. & Admin. News 1883, 1895-1896.
The legislative history of section 654 cannot properly be used to
draw inferences about the subsequently enacted Hughes-Ryan
Amendment, especially if those inferences would be contrary to
the language and legislative history of Hughes-Ryan itself.
-11-
27
operations.
We are informed by the General Counsel of the CIA
that presidential findings made pursuant to Hughes-Ryan have
never been published in the Federal Register, and that Congress
has never objected to this practice. This confirms our
conclusion, based on the language and legislative history of the
statutory provisions at issue, that section 28 654 does not apply to
presidential findings under Hughes-Ryan.
Our conclusion, that Hughes-Ryan findings may take the form
of an oral authorization for a particular operation, agrees with 30
previous opinions by Attorney General Bell, 29 by this. 31 Office,
and by the Legal Adviser at the Department of State.
27 The anomalous nature of publishing notice of covert operations
in the Federal Register is reduced, but not completely
eliminated, by the following provision in section 654(c): "in
any case in which the President concludes that such publication
would be harmful to the national security of the United States,
only a statement that a determination or finding has been made by
the President, including the name and section of the Act under
which it was made, shall be published." 22 U.S.C. 2414(c). Some
covert operations could well be so sensitive that the mere
publication of the section of the act under which a presidential
finding was made could in some circumstances serve to alert a
foreign intelligence agency to the possible existence of the
operation.
28
This conclusion is further strengthened by the nature of
section 654 (d), which requires the executive branch to respond to
inquiries about presidential findings before the report
concerning them has been transmitted to Congress. Such a
provision would make no sense as applied to the covert operation
findings required by Hughes-Ryan.
29
In a classified memorandum of Oct. 20, 1977, for the Assistant
to the President for National Security Affairs, which dealt with
a particular proposed covert operation, Attorney General Bell
opined that the President's decision that the operation was
important to the national security constituted the finding
required by Hughes-Ryan "notwithstanding the fact that his
Finding has not been reduced to writing."
30 OLC Memorandum for the Attorney General, Oct. 25, 1977, on
Requirements of the Hughes-Ryan Amendment, 22 U.S.C. 2422, at 6 &
n.9.
31 Memorandum of Dec. 11, 1986, to the White House Counsel et al.
on Validity of Oral Instruction to Initiate Covert Action.
-12-
IV. Other Legal Objections to the Arms Shipments
A number of other legal provisions have been mentioned as
possibly raising problems about the arms transfers to Iran. None
of them raises serious questions, and they warrant only a brief
discussion.
A. Omnibus Diplomatic Security and Antiterrorism Act of 1986.
Section 509 of the Omnibus Diplomatic Security and
Antiterrorism Act of 1986, Pub. L. No. 99-399, 100 Stat. 853, 874
(1986), which became effective August 27, 1986, amended the Arms
Export Control Act by adding a new section providing:
(a) Prohibition. Except as provided in
subsection (b), items on the United States
Munitions List may not be exported to any
country which the Secretary of State has
determined, for purposes of section
6(j) (1) (a) of the Export Administration Act
of 1979 (50 U.S.C. App. 2405 (j) (1) (A)), has
repeatedly provided support for acts of
international terrorism.
(b) Waiver. The President may waive the
prohibition contained in subsection (a) in
the case of a particular export if the
President determines that the export is
important to the national interests of the
United States and submits to the Congress a
report justifying that determination and
describing the proposed export. Any such
waiver shall expire at the end of 90 days
after it is granted unless the Congress
enacts a law extending the waiver.
The Secretary of State has identified Iran as a country that has
repeatedly 32 provided support for acts of international
terrorism.
The same reasons that require treating the covert arms
shipments to Iran as outside the ambit of the Arms Export Control
Act also require that this new amendment to the same Act be
treated as inapplicable to covert arms shipments. The President
32
49 Fed. Reg. 2836 (1984).
-13-
has independent authority, recognized in the National Security
Act, for transferring arms in the course of covert intelligence-
related operations; the congressional notification requirement in
the above-quotèd provision is at odds with the congressional
oversight process established in section 501 of the National
Security Act; and the sparse legislative history of this new
provision gives no indication of an intent to override section
501. We therefore conclude that this new provision was not
violated by the covert shipment of arms to Iran.
B. Export Administration Act of 1979.
Section 6(j) of the Export Administration Act of 1979, 50
U.S.C. App. 2405(j), limits the issuing of licenses for the
export of goods or technology to countries that the Secretary of
State has identified as having repeatedly provided support for
acts of international terrorism. This statute does not apply to
items on the United States Munitions List, which are covered
instead by the Arms Export Control Act. Nor does the statute
apply to shipments by the United States government, for which no
"license" is required. The Export Administration Act is
therefore inapplicable to the Iran project.
C. Executive Order 12333
It has been suggested that the Iran project in some way
violated the provisions of E.O. 12333, which is the executive
order dealing with the structure and conduct of the nation's
intelligence effort. E.O. 12333, however, like all executive
orders is a set of instructions from the President to his
subordinates in the executive branch. Activities authorized by
the President cannot "violate" an executive order in any legally
meaningful sense, especially in a case where no private rights
are involved, because his authorization creates a valid
modification of, or exception to, the executive order.
V. Three-way Transactions Involving Israel
Robert McFarlane, formerly Assistant to the President for
National Security Affairs, in the public testimony previously
mentioned, has said that the arms transfers that took place
before January 17, 1986 were accomplished by inducing Israel to
ship weapons, which she had obtained from the United States, to
Iran on the understanding that our government would replenish
Israeli stocks; we also gather that the commitment to resupply
Israel was kept. As a legal matter, we believe that such a
transaction is equivalent to one in which the United States sells
the weapons directly to Iran.
-14-
Assuming that the weapons shipped to Iran were originally
supplied to Israel under the Foreign Assistance Act or the Arms
Export Control Act, Israel would have been forbidden to
retransfer them to Iran without the consent of the President. 33
These statutes permit the President to consent to retransfers,
but they also require him to comply with a number of formalities.
(1) Under the Arms Export Control Act, the President must not
consent to a retransfer "unless the United States itself would
transfer the 34 defense article under consideration to that
country.
(2) Furthermore, retransfer of Munitions List items
is not permitted under this Act unless "the proposed recipient
foreign country [i.e. Iran] provides a commitment in writing to
the United States Government that it will not transfer such
defense articles
to any other foreign country or 35 person
without first obtaining the consent of the President.
(3)
Finally, the President must "promptly submit a report to the
Speaker of House of Representatives and to the Committee on
Foreign Relations of the Senate on the implementation of each
[retransfer] agreement. So far as we know, the second and
third of these requirements were not complied with.
The President also has special statutory authority to
authorize military assistance and arms export sales, but the
33
22 U.S.C. 2314(a); 2753 (a) (2).
34
22 U.S.C. 2753(a). The Foreign Assistance Act contains a
similar provision. 22 U.S.C. 2314(e). This language appears to
allow presidential approval if the United States would itself
transfer the defense article under some authority other than the
Arms Export Control Act (e.g., as part of a covert operation
undertaken pursuant to the National Security Act). If this
interpretation is correct, the requirement would have been
satisfied as to the Iranian project. As we point out in the
text, however, there appear to be other formalities that were not
satisfied.
35
22 U.S.C. 2753(a). The Foreign Assistance Act contains a
similar provision. 22 U.S.C. 2314(e).
36
22 U.S.C. 2753 (a). The Foreign Assistance Act does not
contain a similar provision.
It should also be noted that the Arms Export Control Act imposes
additional congressional notification requirements for
retransfers of "major defense equipment" valued at $14 million or
more and for other retransfers valued at $50 million or more. 22
U.S.C. 2753 (d). "Major defense equipment" is defined as "any
item of significant military equipment on the United States
Munitions List having a nonrecurring research and development
cost of more than $50,000,000 or a total production cost of more
than $200,000,000. 22 U.S.C. 2794(6).
-15-
exercise of this authority is contingent upon prior consultations
with certain congressional committees, which again does not
seem to have been done.
Assuming that the formalities and congressional notification
requirements discussed in the previous paragraph were not
complied with, the arrangement with Israel cannot be regarded as
a retransfer specifically authorized by the Foreign Assistance
Act or the Arms Export Control Act. We do not believe, however,
that these statutes are the only authorities that could justify
the transaction. Nor do we believe that the three-way
transactions involving Israel and Iran are properly analyzed
under these statutes.
In evaluating the legal significance of the shipment to Iran
of weapons from Israeli stocks, one must focus on the nature of
the three-way transaction as a whole. According to Mr.
McFarlane's testimony, the transaction was designed to expedite
the arrival in Iran of arms that could lawfully have been
supplied directly from American stocks; further, Israel
participated in the transaction as an accommodation to the
American government, and did not itself gain or lose any weapons
as a result. Seen in this light, it is apparent that the real
nature of the transaction was a bilateral sale between the United
States and Iran, with Israel serving solely 38 as a conduit or
facilitator in the execution of that sale.
We see no reason to treat the legality of Israel's
participation differently than we would treat the participation
of any other party that served as a conduit in a lawful covert
operation. Had the United States consigned weapons from American
stocks to Israel for shipment to Iran, Israel's role would have
been exactly equivalent to the role that common carriers or
public warehouses play in overt transactions. Because, so far as
we know, the weapons that Israel shipped to Iran and received
from the United States were completely fungible, a similar
equivalence is present here. Just as an illegal sale of arms to
Iran could not be made legal by using Israel as a conduit, so too
a legal transaction could not become illegal by Israel being used
37
22 U.S.C. 2364.
38
This memorandum does not deal with the financing of the
transaction, the details of which are apparently not yet clear.
If Israel retained some of the funds that the Iranians paid for
the weapons, the analysis might change, depending on whether the
retained funds were viewed as a fee in the nature of a brokers'
commission or as profit on a resale. Without now deciding how
the analysis would differ, we can note that retention of some
funds by Israel would make it less obviously appropriate to treat
the whole transaction as essentially a bilateral sale of U.S.
weapons to Iran.
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39
in the same way.
Several features of the relevant statutes support this
analysis. First, the statutes restricting retransfers of
American-supplied weapons clearly contemplate situations in which
the transferring country, not the United States itself, is the
source of the request to make the transfer. The Arms Export
Control Act, for example, requires the recipient of American arms
(in this case, Israel) to agree not to transfer the arms to 40
third country (e.q., Iran) without the President's approval,
and then goes on to specify certain factors that the President
must look to "[i]n considering a request for approval of any
transfer
a
Clearly, the statute is not aimed at
situations in which the President is considering requests from
himself for his own approval. The Foreign Assistance Act
contains 41 similar provisions, to which the same analysis
applies.
The Arms Export Control Act also makes an express
distinction between arms exports by private parties in the United
States (which ordinarily require an export license) and exports
by such private parties "by or for an agency of the United States
Government
...
(B) for carrying out any foreign assistance or
sales program authorized by law and subject to the control of the
President 4 by other means" (which do not require an export
license).
Analogously, a distinction should be made between
Israel's transferring American-supplied arms for her own benefit
(which would be subject to the retransfer requirements of the
Foreign Assistance Act or the Arms Export Control Act) and such
transfers "by or for an agency of the United States Government"
(which were not contemplated by the retransfer provisions of
those statutes). That Israel's shipments of arms to Iran were
"by or for an agency of the United States Government" is clear
from (1) the fact that the Israeli shipments were made at the
request of American authorities, and (2) the fact that Israel was
promised and given identical replacements for the arms that she
shipped to Iran.
39
So far as we know, there is no legal bar to the use of Israeli
help in American intelligence operations.
40
22 U.S.C. 2753 (a).
41
See 22 U.S.C. 2314 (a) (1) (B); 2314 (e).
42
22 U.S.C. 2778 (b) (2). Note that this provision appears to
assume that there may be arms sales programs carried out pursuant
to legal authorities other than the Arms Export Control Act.
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Conclusion
For the foregoing reasons, we conclude that a covert
intelligence or intelligence-related operation, authorized by the
President and conducted by members of the NSC staff and/or the
CIA, could lawfully have included the sale of arms to Iran. Such
an operation would have been carried out pursuant to presidential
powers recognized in sections 101 and 102 of the National
Security Act. An oral authorization by the President would have
sufficed to allow CIA participation under the Hughes Ryan
Amendment. The use of Israel's American-supplied weapons, under
an arrangement by which Israeli stocks were later replenished,
appears not to have violated the conditions under which American
weapons are supplied to Israel.
X Charles J. Koge Cooper
Assistant Attorney General
Office of Legal Counsel
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