Delegation of Authority to Approve Suspension
of Securities leading on a National Market
T h e P resident is authorized by the general delegation authority in 3 U .S .C . § 301 to delegate to the
S ecretary o f the Treasury his authority to approve the suspension of securities trading by the
S ecurities and E xchange Com m ission under § 12(k) o f the Securities Act of 1934, since nothing in
that section affirm atively prohibits delegation or specifically designates another officer to receive
deleg atio n o f the function.
N o thing in the legislative history of § 12 (k ) suggests that C ongress expected the President to exercise
his approval authority personally. Indeed, Congress m ay have felt it necessary to make explicit the
§ 12(k) approval authority at all only because of the independence otherw ise given the SEC . Thus
the co ngressional intent could have b e e n sim ply to give the President the option, which he m ight
not o therw ise have enjoyed, to supervise the agency’s decisions in this im portant area.
June 23, 1982
MEMORANDUM OPINION FOR THE DEPUTY COUNSEL
TO THE PRESIDENT
You have requested the views o f this Office regarding the President’s power to
delegate to the Secretary of the Treasury his responsibility, under § 12(k) of the
Securities Exchange Act of 1934, 15 U.S.C. § 78/(k) (1982) (the Act), to
approve the agency’s summary suspension of securities trading on a national
market for periods of up to 90 days.' For the reasons set forth below, we conclude
that the President may delegate his § 12(k) approval authority to the Secretary of
the Treasury.2
The President is generally authorized under 3 U.S.C. § 301 to delegate
functions to “ the head of any department or agency in the executive branch,” 3
1 Section 12(k) provides in pertinent part as follows
If in its opinion the public interest and the protection of investors so require, the Commission is
authonzed summarily to suspend trading in any security (other than an exempted security) for a
period not exceeding ten days, or with the approval c f the President, summarily to suspend all
trading on any national securities exchange or otherwise, in securities other than exempted
securities, fo r a period not exceeding ninety days. (Emphasis added )
2 We have not considered the legal issues raised by delegation to other government officials.
3 Section 301 provides in full*
The President of the United States is authonzed to designate and empower the head of any
department or agency in the executive b ranch, or any official thereof who is required to be appointed
by and with the advice and consent of the Senate, to perform without approval, ratification, or other
action by the President (1) any function which is vested in the President by law, or (2) any function
which such officer is required or authorized by law to perform only with or subject to the approval,
ratification, or other action of the President: Provided, That nothing contained herein shall relieve the
President o f his responsibility in office for the acts of any such head o r other official designated by
him to perform such functions Such designation and authorization shall be in writing, shall be
published in the Federal Register, shall be subject to such terms, conditions, and limitations as the
President may deem advisable, and shall be revocable at any time by the President in whole or in
part.
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including, of course, the Secretary of the Treasury. This general authorization,
however, is qualified in 3 U.S.C. § 302, which provides that:
The authority conferred by this chapter shall apply to any
function vested in the President by law if such law d o es not
affirm atively proh ibit delegation c f the perform ance c f such fu n c
tion a s herein provid ed for, o r specifically designate the officer or
cfficers to whom it m ay be delegated. This chapter shall not be
deemed to limit or derogate from any existing or inherent right of
the President to delegate the performance of functions vested in
him by law, and nothing herein shall be deemed to require express
authorization in any case in which such an official would be
presumed in law to have acted by authority or direction of the
President. (Emphasis added.)
The issue, therefore, is whether § 12(k), the law investing the approval
authority in the President, either “ affirmatively prohibits] delegation” or “ spe
cifically designated] the officer or officers to whom [the function] may be
delegated.” Nothing in § 12(k) specifically designates a subordinate officer to
receive delegation of the function. Nor, we believe, does § 12(k) affirmatively
prohibit delegation.
The category of statutes which affirmatively prohibit delegation is very nar
row. Statutes may prohibit delegation either by their terms or by express state
ments in the legislative history. In addition, in extremely limited circumstances,
the function involved might be of such fundamental gravity as to render inescapa
ble the conclusion that Congress would not have created the function but for the
assumption that the President would exercise it personally. Although the con
gressional purpose underlying § 301 was primarily to relieve the President of
routine paperwork, the Congress rejected a proposal to limit the delegable
functions to administrative duties4 and chose instead generally to permit delega
tion of even sensitive and discretionary matters.5 The bill’s sponsor stated that
delegation would be permitted except when a function or responsibility was
“ especially imposed by law” upon the President.6
The power to suspend trading on a national market is of course a grave
responsibility with important economic, political, and diplomatic consequences.
The Supreme Court has characterized as “ awesome” the narrower authority
under § 12(k) summarily to suspend trading in a single security for up to 10 days.
SEC v. Sloan, 436 U.S. 103, 112 (1978). The authority to suspend trading on an
entire market for up to 90 days is obviously of far greater magnitude.
Nevertheless, § 12(k) does not on its face preclude delegation. Nor have we
found any indication in the legislative history that Congress would not have
provided for a market suspension power but for the assumption that the President
4 95 Cong. Rec. 11396 (1949)
5 See 3 U.S C § 303, defining delegable functions to include “ any duty, power, responsibility, authority or
discretion vested in the President or other officer concerned.”
6 95 Cong. Rec. 11395-96 (1949) (remarks of Rep McCormack). See also id. (“the President’s express duty” );
id. at 11396 (“expressly delegated to the President” )
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would personally exercise his approval authority.7 It is significant in this regard
that Congress established the agency to be relatively free of executive oversight
or supervision. Congress could well have believed that, without the explicit
§ 12(k) approval authority, the President would have had no power to disapprove
the agency’s decision to suspend market trading. The congressional intent could
have been simply to give the Executive the option, which he might not otherwise
have enjoyed, to supervise the agency’s decisions in this important area. Such an
intent would not be frustrated by the President’s determination not to exercise the
approval power personally but to delegate it elsewhere within the Executive
Branch, especially to an officer intimately involved with monetary and financial
matters. Because § 12(k) is silent regarding the President’s authority to delegate
his approval authority, and because a plausible explanation for a congressional
decision to vest approval authority in the President exists apart from the pos
sibility that Congress would not have created the suspension power but for the
assumption that the President would exercise it personally, we conclude that
§ 12(k) is not a statute that affirmatively prohibits delegation. The President is
therefore empowered to delegate that authority to the Secretary of the Treasury
under § 301.
T h e o d o r e B . O lso n
A ssistan t A ttorney G en eral
Office c f L egal Counsel
7 Section 12(k) was originally enacted as §§ 15(c)(5) and 19(a)(4) of the Act and was recodified, with
insubstantial changes, by the Securities Acts Amendments of 1975. 89 Stat. 118
Delegation of Authority to Approve Suspension of Securities leading on a National Market
Combined Opinion