Separation of powers at issue in special-prosecutor challenge. Federal judge will consider arguments on constitutionality by lawyers for Col. Oliver North

A federal judge will be asked today to consider whether Iran-contra independent counsel Lawrence Walsh is constitutionally mandated to investigate Lt. Col. Oliver North and his associates in the Iran-contra affair. But it is unclear whether United States District Court Judge Barrington D. Parker will attempt to address the constitutional questions raised in the case in the wake of a recent effort by Attorney General Edwin Meese to resolve the issue before today's scheduled hearing.

Last week Mr. Meese appointed Mr. Walsh to a new ``Office of Independent Counsel'' within the Justice Department to head off legal challenges made by attorneys representing Colonel North, a former National Security Council aide who is one of the targets of Walsh's investigation.

North's lawyers argue that Walsh's authority and actions as special Iran-contra prosecutor violate the Constitution's doctrine of separation of powers, because Walsh was not appointed by President Reagan and therefore cannot be held accountable to the administration.

Meese moved to resolve possible constitutional ambiguities by appointing Walsh to the special Justice Department post. This position includes identical authority to that conferred by the special federal appeals court panel of judges that selected Walsh and outlined his jurisdiction in the Iran-contra probe more than two months ago.

North's lawyers responded with charges that Meese's appointment was itself unconstitutional because it was not made with the ``advice and consent of the Senate.''

Under the 1978 Ethics in Government Act, independent prosecutors are appointed by a three-judge panel that acts following a preliminary investigation conducted by the attorney general.

Walsh, who was appointed special prosecutor Dec. 19, welcomed Meese's action Thursday, but he noted that he is confident that his original appointment by the appeals court panel is constitutional. He said that in 1974 the Supreme Court of the US upheld the authority and mandate of the Watergate special prosecutor when that post was under attack from President Richard Nixon.

Lawyers for the Senate, House of Representatives, the American Bar Association, and Common Cause have filed friend-of-the-court briefs arguing that Walsh's original appointment is constitutional. The constitutional issue in the North case is significant because it threatens to dismantle a series of legal mechanisms established by Congress to aid impartial investigations of senior administration officials. Attorneys say the matter may ultimately be resolved in the Supreme Court.

Walsh has complained that North's lawsuit has threatened to bog down his case in sophisticated legal arguments just at the point when he and his staff were beginning to make major strides in their investigation.

The suit was filed a few days after press reports that North's secretary, Fawn Hall, had given testimony before a grand jury in exchange for a grant of immunity from prosecution. She reportedly told the grand jury that she helped North shred papers and alter key White House documents related to the secret Iran and contra operations.

``The very filing of this complaint has threatened the expeditious completion of the work of the grand jury in this matter. While any question exists as to the authority of independent counsel, the grand jury investigation cannot proceed with maximum effectiveness and speed,'' Walsh said in his brief.

``As long as this complaint remains pending, it invites potential witnesses to withhold cooperation, and to challenge the validity of grand jury process served upon them,'' Walsh wrote.

The North suit created a dilemma for the Justice Department as well. On one hand, President Reagan and Meese have repeatedly pledged their support for a full and aggressive investigation by Walsh of the Iran-contra affair.

But some Justice Department officials, including Meese, have long held - just as North's lawyers are arguing - that the 1978 independent counsel statute was an impermissible intrusion by the courts and Congress into a president's authority.

Meese decided to oppose the North lawsuit strictly on technical grounds, leaving the constitutional issues unaddressed in a Justice Department brief. Then on Thursday, the attorney general announced the creation of the new Justice Department office to be headed by Walsh. The attorney general termed the move an ``insurance policy'' in an effort to keep the Iran-contra probes moving forward.

According to a Justice Department spokesman, department officials have decided to offer similar parallel appointments to other special prosecutors faced with potential constitutional challenges.

Attorneys representing former senior White House aide Michael Deaver are expected to argue the same constitutional issue in a hearing scheduled for Wednesday. It is unclear whether the special prosecutor in that case will accept a parallel appointment from Meese.

Last month, US District Court Judge Thomas P. Jackson issued a temporary restraining order blocking Whitney North Seymour Jr., the special prosecutor in the Deaver case, from seeking a grand jury indictment of Mr. Deaver on perjury charges.

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