Appeal from the United States District Court for the District of Columbia (No. 92cv02781)
Before: Williams and Randolph, Circuit Judges, and Buckley, Senior Circuit Judge.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 15, 1997
Opinion for the Court filed by Circuit Judge Williams.
Bergerco Canada ("Bergerco") applied for a license to allow it to collect payment on a debt from frozen Iraqi assets, under a set of rules that gave it a very good chance of securing the license. The licensing agency-the Office of Foreign Assets Control ("OFAC"), a unit of the United States Treasury Department-then changed the rules, so that Bergerco had no chance whatever. Bergerco says that the new rule-or, more precisely, OFAC's application of the new rule to its pending submission-constituted retroactive rulemaking, and was therefore invalid under Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988), unless Congress had "in express terms" given OFAC "the power to promulgate retroactive rules." Id. at 208. Because we do not think OFAC's application of the new rule was retroactive in the sense in which Bowen uses the term, we reject the claim without considering whether Congress gave OFAC such authority.
Bergerco, a Canadian corporation, together with its U.S. affiliate Bergerco US, contracted with an Iraqi state trading company for sale and delivery of two large shipments of peas and beans, receiving as payment a letter of credit from an Iraqi banking institution, Rasheed Bank, for the total contract price of $4 million. Rasheed named the Royal Bank of Canada as an intermediary for the payment transaction, and designated The Bank of New York as the reimbursing bank. This meant that the Royal Bank would look to The Bank of New York for reimbursement out of Rasheed's account there for any payment Royal Bank made to Bergerco on Rasheed's behalf. But Rasheed never asked The Bank of New York to be a "confirming" bank in the transaction. Had The Bank of New York agreed to such a role it would have substituted its credit for that of the Rasheed Bank, and assumed an obligation to pay Bergerco or the Royal Bank.
Bergerco made both shipments, and received payment for the first. After Bergerco's second shipment, and before payment of the remaining $2 million, Iraq invaded Kuwait. President Bush, using authority under the International Emergency Economic Powers Act, 50 U.S.C. Section(s) 1701-06 (1997), quickly froze all Iraqi property interests in the United States, including Rasheed's funds on deposit with The Bank of New York. Executive Order No. 12,722 (55 Fed. Reg. 31803 (Aug. 2, 1990)); see also Consarc Corp. v. Iraqi Ministry, 27 F.3d 695 (D.C. Cir. 1994) (describing asset freeze). The President soon issued another executive order to the Secretary of the Treasury, Executive Order No. 12,724 (55 Fed. Reg. 33089 (Aug. 9, 1990)), directing him to promulgate regulations governing the frozen assets and providing for their release to appropriate claimants. The Secretary of the Treasury in turn delegated this task to OFAC.
The sequence that concerns us followed. On August 15, 1990, OFAC issued "General License No. 7," which established criteria for the award of licenses essential to payment out of the blocked funds. This initial version said that "[s]pecific licenses may be issued on a case-by-case basis to permit payment, from a blocked account or otherwise, of amounts owed to or for the benefit of a U.S. person for goods or services exported by a U.S. person or from the United States prior to the effective date [of the blocking order] directly or indirectly to Iraq or Kuwait." See Addendum to Appellee's Brief.
On August 21, 1990 Bergerco filed its application for a license under General License No. 7. Although Bergerco is a Canadian corporation (i.e., not itself a "U.S. person") it still had a substantial prospect of securing the license, because its parent was a U.S. corporation and its U.S. affiliate was involved in the transaction.
On October 18, 1990 OFAC issued an amended, more restrictive, General License No. 7 regulation. This regulation-the one at issue here-provided that OFAC would grant licenses, again on a case-by-case basis, only to those creditors who held "an irrevocable letter of credit issued or confirmed by a U.S. Bank, or a letter of credit reimbursement confirmed by a U.S. bank," and who had shipped their goods or performed their services before the freeze. This was incorporated in a more formal set of rules adopted in January 1991. 31 CFR Section(s) 575.510(a) (1996).
On November 20, 1990 OFAC denied Bergerco's application. Because Bergerco's letter of credit was neither issued nor confirmed by a U.S. bank, its application ...