Memoranda from Milton Kayle to David Stowe

THE WHITE HOUSE WASHINGTON April 1, 1952 MEMORANDUM FOR DAVE STOWE Subject: Meeting with Justice Department Staff on "Section 18 Seizure Authority" As you requested I called Mr. Duggan, Assistant Attorney General, and he arranged for me to meet with Ellis Lyons and certain other Justice staff regarding the seizure authority of Section 18 of the Universal Military Service and Train- ing Act. The results of our meeting may be summarized briefly as follows: 1. Legal authority to invoke section 18 in a labor dispute. The statute and its legislative history are silent on the use of this seizure authority in the case of a production stoppage resulting from a labor dispute. However, it was agreed generally that on the basis of the primary purpose of the provision - namely, maintenance of essential production - the Section 18 authority could be used by the President in such a situation. 2. Practical difficulties of implementation. After consulting with NSRB the President would have to issue an Executive Order authorizing the Department of Defense to place mandatory orders under Section 18. The Defense Department would then have to draw up detailed orders involving complicated decisions with respect to the type of materials and the amounts to be ordered. A tremendous amount of paper work and time consuming evaluation would be involved. After the orders had been placed and delivery of the material was not forthcoming, an Execu- tive Order authorizing seizure would then be required. (It is questionable whether seizure could be invoked prior to an actual work stoppage.) It is quite apparent that this entire process would entail a great deal of effort and consume much time. At least a month was the general guess. 3. Risks involved in invoking Section 18 authority. Over and above the fact that the legal authority for invoking Section 18 authority in a labor dispute would be challenged, there is a real danger that the Court of Claims would interpret the statute to require as "just compensation" a fair rental amount which would be equi- valent to the profits of the operations during the time of seizure. It can be argued, however, that if the Government undertook seizure and actually operated the facilities, the Court would not require a turning over of all the profits. If the Court of Claims ruled otherwise, seizure could in the long run operate to the benefit of the company. Alternative course of action. The President could seize the steel indus- try relying upon the inherent powers of the Executive. This approach would have the advantage of consuming much less time and might not prove so expensive from the