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OFFICE OF FOREIGN ASSETS CONTROL v. VOICES IN THE WILDERNESS

August 9, 2004.

OFFICE OF FOREIGN ASSETS CONTROL, UNITED STATES DEPARTMENT OF THE TREASURY, Plaintiff,
v.
VOICES IN THE WILDERNESS, Defendant.



The opinion of the court was delivered by: JOHN BATES, District Judge

MEMORANDUM OPINION

The Office of Foreign Assets Control ("OFAC") seeks judicial enforcement of civil monetary penalties assessed against Voices in the Wilderness ("Voices") for violations of the Iraqi Sanctions Regulations (the "Regulations"), 31 C.F.R. Part 575 (1991). Voices admits that it delivered medical supplies to Iraq in July and September 1998 without obtaining a license as required by the Regulations. Indeed, Voices has acknowledged its actions since at least December 1998, when it first received a warning from OFAC. However, OFAC waited three years and eleven months, until November 2002, to levy a $20,000 penalty against Voices. Voices defends on the grounds that the Regulations are illegal, that its conduct is privileged by principles of international law, and that OFAC's delay forecloses its pursuit of civil penalties under the relevant statutes. Voices also counterclaims for injunctive relief against OFAC's allegedly wrongful civil enforcement action, and for malicious and selective prosecution. OFAC has moved for judgment under FED. R. CIV. P. 12(c), and to dismiss defendant's claims for lack of subject matter jurisdiction and for failure to state a claim under Rules 12(b)(1) and 12(b)(6).

BACKGROUND

  A. Facts

  OFAC, a division of the Department of the Treasury, administers and enforces economic and trade sanctions. Voices is an unincorporated association of individuals based in Chicago, Illinois. Since 1996, Voices has "campaigned to end economic and military warfare against the Iraqi people . . . by organizing over seventy delegations to Iraq in deliberate violation of UN economic sanctions and US law." http://vitw.us/who_we_are/ (last visited June 29, 2004).

  In January 1996, Voices sent a letter to U.S. Attorney General Janet Reno stating its intent to "publicly challenge" the Iraqi sanctions regime. Ans. & Countercl. ¶ 12. OFAC responded with a warning letter, but Voices "declared an intention to continue with the medical supplies campaign." Ans. & Countercl. ¶ 13. Voices delegations delivered medical supplies to Iraq in July and September 1998. Ans. & Countercl. ¶¶ 14-16. For neither of these trips did Voices obtain a license from OFAC, despite a Regulation requiring them to do so. See 31 C.F.R. § 575.205 (1991); 31 C.F.R. § 575.211 (1991).

  On December 3, 1998, OFAC issued a prepenalty notice to Voices pursuant to the Regulations. Compl. ¶ 17; Ans. & Countercl. ¶ 17. The prepenalty notice described the two alleged violations and warned of an impending fine. On December 30, 1998, Voices responded with a written presentation admitting the violations and denouncing OFAC's licensing regime. Compl. ¶ 18; Ans. & Countercl. ¶ 18. The Regulations required OFAC to respond "promptly" to Voices' written presentation:
If, after considering any presentations made in response to the prepenalty notice, the Director determines that there was a violation by the person named in the prepenalty notice, he promptly shall issue a written notice of the imposition of the monetary penalty to that person.
31 C.F.R. § 575.704(b). OFAC, however, took no further discernible action in 1998, 1999, 2000, or 2001.

  On October 26, 2002, Voices participated in a protest against recent United States military activities in Iraq. Voices members rallied in Washington, D.C. and organized a demonstration outside United Nations Headquarters in Baghdad. Ans. & Countercl. ¶ 43. Nine days later, on November 4, 2002, OFAC issued a penalty notice for the two 1998 violations. Voices was charged $10,000 per violation, to be paid within 30 days. Voices notified OFAC that it did not intend to comply with the penalty notice, and it has not paid the $20,000 fine. OFAC referred the matter to the Department of Justice for adjudication pursuant to Section 575.705, and later filed its complaint in this Court on June 20, 2003.

  B. The Iraqi Sanctions Regime

  The Regulations have been in effect since January 1991. See Iraqi Sanctions Regulations, 56 Fed. Reg. 2112 (January 18, 1991). The Regulations implemented several Executive Orders issued by President George H.W. Bush in the wake of Iraq's invasion of Kuwait. Id. They froze Iraqi assets in the United States and prohibited American business transactions with Iraq. Id. The Regulations cite several sources of authority, including Exec. Order No. 12724, 55 Fed. Reg. 33089 (Aug. 9, 1990)*fn1 ("the Order"), the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et. seq. (1977) ("IEEPA"), and the United Nations Participation Act, 22 U.S.C. § 287c(a) (1949) ("UNPA").

  Both the Order and the Regulations reference UNPA as a source of authority. See Pl.'s Mem. for J. at 5-6, 16-17. Congress passed UNPA in 1945 and amended it in 1949, see United Nations Participation Act of 1945, 81 Pub.L. No. 341, 63 Stat. 734 (1949), to give the President wide-ranging authority to comply with United Nations Security Council Resolutions. 22 U.S.C. § 287c(a). Under UNPA, the President may:
through any agency which he may designate, and under such orders, rules, and regulations as may be prescribed by him, investigate, regulate, or prohibit, in whole or in part, economic relations . . . between any foreign country or any national thereof or any person therein and the United States or any person subject to the jurisdiction thereof, or involving any property subject to the jurisdiction of the United States.
Id.
  Additionally, the Order and Regulations purport to be authorized by IEEPA, which enables the President to identify and respond to national emergencies. See 50 U.S.C. § 1701(a). However, it excepts some activities from presidential authority:
(b) . . . The authority granted to the President by this section does not include the authority to regulate or prohibit, directly or indirectly . . . (2) donations, by persons subject to the jurisdiction of the United States, of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering, except to the extent that the President determines that such donations (A) would seriously impair his ability to deal with any national emergency declared under section 202 of this title . . . (B) are in response to coercion against the proposed recipient or donor, or (C) would endanger Armed Forces of the United States which are engaged in hostilities or are in a situation where imminent involvement in hostilities is clearly indicated by the circumstances . . .
50 U.S.C. § 1702(b)(2). ANALYSIS

  A. Applicable Legal Standards

  Under FED. R. CIV. P. 12(c), a motion for judgment on the pleadings shall be granted if the moving party demonstrates that "no material fact is in dispute and that it is entitled to judgment as a matter of law." Peters v. Nat'l R.R. Passenger Corp., 966 F.2d 1483, 1485 (D.C. Cir. 1992) (internal quotation omitted). The appropriate standard for reviewing a motion for judgment on the pleadings is "virtually ...


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