TABLE OF CONTENTS I. INTRODUCTION II. LEGISLATIVE AUTHORITY FOR U.S. ECONOMIC SANCTIONS A. Trading with the Enemy Act B. The International Emergency Economic Powers Act C. The International Security and Development Cooperation Act of 1985 III. HISTORY OF SANCTIONS AGAINST THE ISLAMIC REPUBLIC OF IRAN IV. U.S. TREASURY DEPARTMENT--OFFICE OF FOREIGN ASSETS CONTROL A. Overview of the OFAC B. Enforcement by the OFAC V. THE BURDEN OF THE IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS A. The Iranian-American Community: A "Class" of U.S. Persons B. The "Burden" Imposed by the ITSR on the Iranian-American "Class" C. Non-Commercial Family Remittances and the Hawala System D. Liquidation of Real Property and Transmittance of Sale Proceeds to the United States E. U.S. Banks and Refusal to Process Legitimate Transactions under the ITSR F. Legal Uncertainty Concerning Passive Investments in Iran G. Inability to Engage in Personal Communications, Humanitarian Donations, Information, and Informational Materials Transactions VI. GROUNDS FOR CHALLENGING THE IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS A. Framing the Issue under the Constitution B. Challenging the ITSR for the Process Due C. Judicial Deference to U.S. Foreign Policy and National Security Objectives D. Challenging on the Basis of Vagueness in ITSR Administration E. Challenging on the Basis of Ethnic-Discrimination by the Government F. Challenging Congressional Delegation and Oversight Over the Executive VII. LESSONS FROM HISTORY: OVER-BROAD EXECUTIVE AUTHORITY AND JUDICIAL DEFERENCE VIII. CONCLUSION I. INTRODUCTION
"Fear is static that prevents me from hearing myself."-Samuel Butler
The purpose of this Article is to examine and discuss the effects of the Iranian Transactions and Sanctions Regulations (ITSR) and the overall Iran sanctions regime effect on the sizable Iranian-American community living in the United States. The Article will address the domestic implications of an aggressive foreign policy against the Iranian regime, and the potentially unconstitutional dimensions of the sanction regulations administered by the Office of Foreign Asset Controls (vis-a-vis the Executive). In addressing these concerns, various grounds that Iranian-American individuals may have for challenging the administration of the ITSR are articulated. It is important to note at the outset that the efficacy of the Iran sanctions in realizing the U.S. agenda against the Iranian regime is not at issue here. However, the U.S. government needs to remain conscious that in addressing and executing its foreign policy agenda, domestic repercussions have already occurred to the detriment of U.S. persons. The Iranian sanctions regime of the United States has placed a burden on the Iranian-American community that serves as an example of how aggressive U.S. foreign policy can have disturbing domestic repercussions.
Part I of the Article discusses the primary legislative authorities for nearly all U.S. economic sanctions programs currently in effect, and in particular those that are the impetus for the ITSR. In addition, the legislative history and constitutional foundations of both the Trading with the Enemy Act (TWEA) and the International Emergency Economic Powers Act (IEEPA) are examined. Part II reviews the history of U.S. sanctions against the Islamic Republic of Iran, leading up to the most current form of the ITSR. Part III introduces the Office of Foreign Assets Controls (OFAC) of the U.S. Treasury Department that administers U.S. economic sanctions, including the ITSR. Part IV is a study on the cluster of burdens imposed by the overall Iran sanctions regime, especially the ITSR, on the Iranian-American community. Part V examines various grounds the Iranian-American community and individuals may have for challenging the administration of the ITSR, especially under the Fifth Amendment to the U.S. Constitution. Part VI discusses the lessons from history and implications of the judicial doctrine of deference towards national security and foreign policy decisions made by the Legislative and Executive branches of government. Part VII concludes the Article.
LEGISLATIVE AUTHORITY FOR U.S. ECONOMIC SANCTIONS
The sanctioning of economic transactions has been a common instrument of United States foreign policy since colonial times. (1) Dur ing the American Civil War, economic sanctions in the form of a blockade of the Confederate States provided the resource-rich North with a significant strategic advantage. (2) To this day, the United States has continued to use economic sanctions against targeted nations, entities, and persons as an instrument of foreign policy. No country in the world has employed sanctions as often as the United States. (3) The far-reaching and overly extensive modern day U.S. economic sanctions regime, administered by the Executive branch, was incepted at the beginning of the 20th Century with the advent of TWEA, and culminated with IEEPA.
Trading with the Enemy Act
Modern economic sanctions were enacted, under TWEA the same year the United States entered the First World War in 1917. (4) Originally the TWEA gave the President broad powers, only in times of a declared state of war, to regulate or prohibit transactions involving property in which a foreign country or national thereof had any interest. (5) The TWEA made it unlawful for any person in the United States, except with a license granted by the President, (6) to trade or attempt to trade with an enemy of the United States in times of War. (7) In 1933, section 5 (b) of the TWEA was amended with the passage of the Emergency Banking Relief Act giving the President even broader authority. (8) The President was given the means to exercise his powers in response to peacetime national emergencies and not solely in times of war. (9) The peacetime national emergency language remained in the section until December of 1977. (10)
Under the TWEA, the United States imposed sanctions against Germany during the First World War and Japan prior to the U.S. entry to the Second World War. (11) Later the TWEA targeted economic sanctions at China (1950-1971), North Korea (1950-present), Cuba (1963-present), North (1964-1994) and South Vietnam (1975-1994), and Cambodia (1975-1992). (12) When the International Emergency Economic Powers Act later supplanted the TWEA, the existing TWEA based sanctions were grandfathered in (e.g. North Korea and Cuba). (13)
The Supreme Court upheld the constitutionality of the TWEA in 1921, before the section 5 (b) amendments, claiming it was strictly a war measure that found its validity in Article 1, section 8, clause 11 of the Constitution of the United States, (14) empowering Congress to declare war and make rules concerning captures on land and water. (15) The authority to regulate during a "peace-time" national emergency (i.e. not during a declaration of war) was upheld by the Supreme Court, which reasoned that Congress could authorize a prohibition upon transactions in foreign exchange, by executive order of the President under the 1933 amendments made to the TWEA. (16) However, the Court did not directly address the constitutionality of the President's section 5(b) authority. In 1977, Congress returned the authority of the President under the TWEA to its status as an exclusively wartime statutory authority through enactment of Public Law No. 95-223. (17)
Tide I of the enacted Public Law No. 95-223 removed national emergency authority from section 5 (b) of the TWEA. (18) The congressional motivation behind the enactment of Public Law No. 95-223 was to curb the authority of the President with respect to non-war time, international emergency economic powers. The Senate had already established the Special Committee on the Termination of the National Emergency because of its concern that Executive authority under the various declared states of national emergency since 1933 had disrupted the separation of powers and threatened constitutional liberties. (19) In its report to the Senate, the Special Committee stated:
These hundreds of statutes delegate to the President extraordinary powers, ordinarily exercised by the Congress, which affect the lives of American citizens in a host of all-encompassing manners. This vast range of powers, taken together, confer enough authority to rule the country without reference to normal Constitutional process.... Because Congress and the public are unaware of the extent of emergency powers, there has never been any notable congressional or public objection made to this state of affairs. Nor have the courts imposed significant limitations. (20) In reaction to the Special Committee's Report, Congress attempted to address the non-war time, international emergency economic powers of the Executive in Title II of Public Law No. 95-223, (21) codified as IEEPA. (22)
The International Emergency Economic Powers Act
The authority granted to the President under IEEPA essentially parallels the authority previously available under the pre-1977 section 5(b) of TWEA. (23) Although the substance of peacetime emergency sanctions was not substantially changed, (24) new procedural requirements were created in order to ensure that Congress would be more involved. (25) Under IEEPA, the President may investigate, regulate, or prohibit a broad variety of foreign monetary transactions, transfers, and assets subject to the jurisdiction of the United States. (26) This authority may be exercised when he declares a "national emergency" with respect to an "unusual and extraordinary" foreign policy or national security threat, which has its source in whole or substantial part outside the United States. (27)
Federal courts, in various cases challenging the legislative authority of the President under IEEPA, have upheld its constitutionality. For example, the Third Circuit upheld the delegation of legislative authority to the President under IEEPA as Constitutional. (28) The court held that the statutory...