PROPOSED DRAFT OF BILL RELATING TO PROTECTION OF DEFENSE FACILITIES FROM SABOTAGE AND ESPIONAGE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP59-00882R000200010033-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: November 11, 2016
• Document Release Date: February 27, 2001
• Sequence Number: 33
• Publication Date: April 14, 1954
• Content Type: MF

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-APR 1.4 1954
MEMORAND11 Fit: General Counsel
THRU: Acting Deputy Director (Administration)
SUBJECT: Proposed Draft of Bill Relating to Protection of
Defense Facilities from Sabotage and Espionage
REFERENCE: Memo from Legislative Counsel to D/S dtd 5 April 54 -
Subject as Above
1. The reference requested comments of this Office concerning
the draft bill relating to protection of defense facilities from
sabotage and espionage.
2. At the present time the classified procurement program
of this Agency is protected under a system of security clearances
of employees of contractors engaged on work being performed for CIA
under a classified contract. In.the event CIA fails to clear an
employee of a private contractor for classified information, two re-
courses are open to the contractor; namely, (1) he may place the
employee on unclassified work or (2) if this is not feasible, the
Agency may cancel the contract.
3. It is recognized, however, in time of national emergency
many private plants will be working almost exclusively on classified
contracts of the U. S. Government. Employers will find it difficult,
if not impossible, to segregate an individual employee on unclassi-
fied work. Under these circumstances it would be of benefit to this
Agency to have a procedure in effect under the proposed draft bill
which would remove an employee of a private contractor from working
on classified contracts originated by this Agency.
FOIAb6
e ar
Dire r of Security
Encl.
Draft Bill dtd
25 March 54,.
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5 April 1954
Ate herewith is a draft bill relating to pmtection
facilities frcm sabotage and espionage. This draft
by the Department of J tire, which has sub-
it to the feu or the Budg+ t for mnt. The u
ues ed an expression of our views, on this bill and l am
ceding it to you., together vith an exg1 t1 c of the p -
posed bill, for azy cron rxts irou :fit care to ate.. It
prim z ly a concern to ageueiea Other than aura. WOUld you
please return any a anentr through flD/A to reach mgt by 15 Aril
so th .t I may : ci, 4 tc the Buve to or the Buffet.
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON 25, D. C.
April 1, 1954
My dear Mr. Dulles:
Pursuant to provisions of Budget Circular A-19, and the delegation
of authority from the President referred to therein, the Bureau of the
Budget has received a communication regarding the following legislative
proposal:
Draft bill :submitted by Justice relating to Protection of Defense
Facilities from Sabotage and Espionage.
Before advising the submitting agency of the relationship of the
proposal to the program of the President, the Director of the Bureau of
the Budget would appreciate receiving an expression of your views with
respect thereto.
It would be appreciated if your reply could be received b7 Since
B dgget Bureau has been dire cted to complete action on this draft by
4/25 54, it is very important that your views be received prior to 4/23/54.
If it is desired to confer on this matter, please communicate with
E A. Radley , Bureau of the Budget, 17th and
Pennsylvania Avenue, N. W.,, telephone Code 189, Branch A73 ?
In addition to your agency, requests for views have been transmitted
to the following agencies:
FCDA, FMCS, NMB, NLRB, ODM, AEC, CSC, SBA, Subversive
Activities Control Board, Defense, State, Commerce, Treasury,
Interior, Labor.
Honorable Allen W. Dulles
Director
Central Intelligence Agency
Washington 25, D. C.
Att: Mr. Walter L. Pforzheimer
302 So. Bldg., 2430 E St., N. W.
Sincerely yours,
R r W. Jon
Assis Director,
Legislative Reference
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March 25, 1954
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That (a)
The history of modern warfare has established that the defense of any
country is greatly dependent upon the effective and continued opera-
tion of its civilian economy and the full utilization of its pro-
ductive capacity. In time of war or of preparation for defense from
attack by a potential aggressor, injury to the civilian economy or
impairment of the productive capacity of a country may severely cur-
tail its military effectiveness, and such injury or impairment has be-
come a major objective of aggressor nations in the preparation for and
prosecution of war.
(b) There exists in the United States a limited number of in-
dividuals as to whom there is reasonable ground to believe they may en-
gage in sabotage of the civilian economy and productive capacity of
the United States, espionage, or other subversive acts, in the event of
actual or threatened war, invasion, insurrection, or serious disturbance
of international relations.
(c) In such circumstances it is essential that such indi-
viduals be barred from access to facilities injury to which would be
harmful to the civilian economy and productive capacity of the United
States, and, therefore, to its military effectiveness.
Sec. 2 (a). Whenever the President finds (i) that the se-
curity of the United States is endangered by reason of actual or threat-
ened war, invasion, insurrection, or serious disturbance of international
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relations, and (ii) that its military effectiveness may be impaired by
acts of sabotage, espionage, or other subversive acts affecting its
civilian economy or productive capacity, the President is authorized
to institute such measures and issue such rules and regulations as may
be necessary to bar from access to defense facilities individuals as to
whom there is reasonable ground to believe they may engage in sabotage,
espionage, or other subversive acts. The President may perform any
function vested in him by this Act through or with the aid of such
officers or agencies as he may designate.
(b) Except as provided in subsection (c) of this section, no
measure instituted, or rule or regulation issued, pursuant to subsection
(a) of this section shall operate to deprive any individual of access
to or employment on or in connection with any defense facility or
facilities unless such individual shall first have been notified of
the charges against him and given an adequate opportunity to defend
himself against such charges. Such opportunity shall include an ex-
peditious hearing, if the individual so desires, and the charges shall
be sufficiently specific to permit the individual to respond to them;
provided, however, that nothing contained in this Act shall be deemed
to require any investigatory organization of the United States Govern-
ment to disclose its informants or other information which in its
judgment would endanger its investigatory activity. Nor shall the
Administrative Procedure Act be applicable to proceedings under
this Act.
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(c) The measures instituted, or rules or regulations issued,
pursuant to subsection (a) hereof may operate to bar summarily any in-
dividual from access to or employment on or in connection with any de-
fense facility, provided that such individual shall be notified in
writing, of the charges against him within fifteen days from the time
he is so barred and given an adequate opportunity to defend himself
against such charges, including, if he so requests, a hearing within
thirty days of the date of such request. Reasonable continuances may,
however, be permitted if both parties to the proceeding concur. A
determination shall be made and transmitted to the individual affected
within thirty days from the date of the termination of the hearing or
if no hearing is requested, of the submission of the individual's de-
fense to the charges. If administrative appellate proceedings are
provided by the rules or regulations they shall be expeditiously de-
termined. In the event that the summary bar against such individual
is removed as a result of any proceeding', the individual shall be
compensated by the United States for his loss of income during the
period he was so barred.
(d) As used in this section the term "defense facility"
has the same meaning as it has in Title I of the Internal Security
Act of 1950, as amended, but shall not include vessels, piers, or
waterfront facilities.
See. 3. Whoever wilfully violates any rule, regulation,
or order issued pursuant to the provisions of this Act, or knowingly
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obstructs or interferes with the exercise of any power conferred by
this Act shall, upon conviction thereof, be punished by a fine of
not more than $10,000 or by imprisonment for not more than five
years, or both.
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VCH
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EXPLANATION OF THE PROPOSED BILL
The purpose of the proposed bill is to provide the Federal
government with legal authority not presently existing to bar from
access to certain facilities the limited number of individuals who
are subversive. It is understood that a definite number of such in-
dividuals has already been identified. Some of these individuals are
known to be employed in facilities, sabotage of which in time of war
or threatened war would seriously impair the military effectiveness
of the United States.
The facilities involved are privately-owned and are primarily
engaged in what is regarded as normal civilian production, for example,
power plants, producers of basic materials required by defense contrac-
tors, and the like. It is obvious that sabotage of such facilities
could materially curtail the production of war materials. The possi-
bility of espionage in this area is also a factor. Although there is
authority for barring subversive individuals from facilities directly
engaged in the performance of defense contracts, there is no similar
authority with respect to the facilities here involved, except as to
vessels, piers, and waterfront facilities. As to the latter, the
Magnuson Act (50 U.S.C 191) furnishes exclusionary authority.
The Magnuson Act has served as a model for the proposed
bill. Although the bill has a potentially broader coverage than
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the Magnuson Act, by reason of the procedures provided by the bill
its operations will in fact be confined to the screening; of a rela-
tively small number of persons.
Section 1 is a statement of legislative policy. Subsection
(a) recites the well-knoiri7 dependence of the military effectiveness
of any country upon its civilian economy and productive capacity,
and the fact that injury or impairment or such economy and capacity
has become a major objective of aggressor nations. Subsection (b)
contains a finding that there exists in the United States a limited
number of subversive individuals as to whom there is reasonable
ground to believe they may engaged in sabotage or espionage in the
event of actual or threa*~ened war serious disturbance of interna-
tional relations, invasion, or insurrection. Subsection (c) re-
cites the necessity of barring such individuals from access to
facilities injury to which would be harmful to this country's
civilian economy and productive capacity, and therefore to its
military effectiveness.
SECTION -2
This section authorizes the President to take the necessary
measures to protect the facilities in question from sabotage and
espionage within a framework satisfying requirements of due process
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and with as little inconvenience to both employers and employees
as the circumstances permit. Subsection (a) contemplates that the
President will take appropriate steps under the conditions specified.
These conditions are two-fold: First, that the security of the
United States is endangered by reason of actual or threatened war,
invasion, insurrection, or serious disturbance of international re-
lations, and second, that the military effectiveness of the United
States may be impaired by acts of sabotage, espionage, or other
subversive acts affecting its civilian economy or productive ca-
pacity.
Subsection (a) contains a customary provision authorizing
the President to act through subordinate officials. He may entrust
administration of the Act to a single official or divide it among
several, as he sees fit. It is anticipated that the Act will be
put into effect by the issuance of an Executive order reciting the
conditions mentioned above and naming an official or officials who
shall take the necessary steps to accomplish its objectives. These
steps would include the issuance of rules and regulations consistent
with the limitations of subsections (b) and (c) of section 2.
Subsection (b) provides that, except as authorized in
subsection (c), no measure or rule or regulation shall operate to
bar an individual from access to or employment on or in connection
with a defense facility (as later defined) unless he shall have
first been notified of the charges against him and given an oppor-
tunity to defend himself against such charges. He is to be granted
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an expeditious hearing if he requests it, and the charges are to
be sufficiently specific so as to pernit him to respond to them.
However, no hearings under the Act require any Government investiga-
tive organization to disclose its informants or other information
which in its judgment would endanger its investigatory activity.
The combination of charges specific enough to enable a defense to
be made and protection of security information would, on the basis
of recent decisions involving the Magnuson Act, meet the require-
ments of due process. United States v. qEM, 207 F (2d) 237, 241-
242 (C.A. 9th, 1953); Parker v. Lester, 112 F. Supp. 433, 443-444
(N.D. Calif., 1953). See also United States v. Nugent, 346 U.S. 1,
involving hearing procedures under the Selective Service Act.
Failure to afford an opportunity to cross-examine confi-
dential informants would, however, probably be inconsistent with
section 7(c) of the Administrative Procedure Act (5 U.S.C. 1006(c)).
Accordingly, Section 2(b) expressly provides that the Administrative
Procedure Act shall not be applicable to proceedings under the bill.
Section 2(c) authorizes the summary suspension of indi-
viduals from access to defense facilities without prior charges or
hearing. However, if such a procedure is followed the individual
involved must be notified of the charges against him within fifteen
days, and, if he requests it, must be granted a hearing within
thirty days, from the time he is barred. A determination must be
made and transmitted to hiin within thirty days from the date of
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termination of the hearing or, if no hearing is requested, of the
individual's submission of his defense to the charges. The sub-
section provides that administrative appellate proceedings, if
made available, shall be determined expeditiously. However, it
should be noted that neither subsection (c) nor any other part of
the Act requires administrative appeals. Whether or not they will
be provided will depend upon the discretion of the officials ad-
ministering the Act. It is not believed that absence of an ad-
ministrative appeal presents any constitutional problem.
It should be emphasized at this point that the require-
ment of specific charges and hearings either before an employee is
barred (subsection (b)) or, if summarily barred, immediately there-
after (subsection (c)), is itltended to prevent any procedure in-
volving the screening of the general body of civilian employees
or placing a burden upon them to prove their loyalty. However,
the procedure is believed to be adequate to eliminate the known
subversives expeditiously.
Finally, subsection (c) provides for compensation by the
United States for the loss of income resulting to anyone barred from
employment without a prior hearing and thereafter cleared. The in-
herent fairness of such a provision and its desirability from the
standpoint of due process are self-evident.
siubsett Ion :(&),:ppovi4es that the term "defense facility"
shall have the same meaning as it has in Title I of the Internal
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Security Act of 1950. Section 3 (7) of Title I of that Act (50
U.S.C. 782(7)) defines the term "facility" broadly, and the term
"defense facility" as a facility designated and proclaimed by the
Secretary of Defense pursuant to section 5(b) of Title I (50 U.S.C.
781+(b)) and included on the list published and currently in effect
thereunder. Section 5(b) directs the Secretary of Defense to
designate and proclaim a list of "defense facilities" with respect
to which he finds and determines that the security of the United
States requires the exclusion of members of Communist organizations;
such list must be published in the Federal Register and the manage-
ment of any listed facility notified. The management must post
notice of designation in such a manner as to give reasonable notice
thereof to all employees and applicants for employment.
The proposed bill, therefore, contemplates the publication
of a list of defense facilities. It has been suggested that such
publication might be unwise for security reasons. Use of a secret
list has been suggested as an alternative. However, without such
publication individuals barred from defense facilities would have
no way of knowing where they could and could not be employed. This
would appear to raise a serious question of due process.
In addition, the Internal Security Act now authorizes
and directs the Secretary of Defense to publish a list of defense
facilities. Such a list has been prepared but has not been divulged,
because no final order has yet been issued under the Internal
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Security Act against any Communist organization. Until such an
order is entered publication of the list would serve no purpose
under the Internal Security Act. However, at such time as a final
order is issued the list must be published. Accordingly use of
the list in the proposed bill might hasten its publication, but
would in itself impose no new requirement for the preparation and
issuance of a list.
Section 3
This section authorizes the imposition of penal sanctions
for wilful violations of any regulation, rule, or order issued pur-
suant to the Act or for knowing obstructions or interference with
the exercise of any power conferred by the Act. Such offenses are
made punishable by a fine of not more than $10,000 or by imprison-
ment for not more than five years or both. The penalties provided
by the Magnuson Act for violations thereof are imprisonment for not
more than ten years, and, within the discretion of the court, a
fine of not more than $10,000 (50 U.S.C. 192). On the other hand,
lesser penalties are provided by the Internal Security Act for
similar offenses. Under that Act it would appear that violation of
any of its provisions which would have the effect of barring mem-
bers of Communist action organizations from defense facilities
(50 U.S.C. 784) is punishable by a fine of not more than $10,000,
or imprisnnment for not more than five years, or both (50 U=,.
794(c)). It is believed that such penalties are adequate punish-
ment for violation of the proposed Act.
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