The burden of economic sanctions on Iranian-Americans.

Author:Meshkat, Kian Arash
Position:VI. Grounds for Challenging the Iranian Transactions and Sanctions Regulations through VIII. Conclusion, with footnotes, p. 949-972

    Constitutional grounds exist for challenging the administration and enforcement of the ITSR by the OFAC. These constitutional concerns may be framed in a variety of ways under the Due Process Clause of the Fifth Amendment and potentially under the First Amendment caused by regulation of informational materials and humanitarian aid to and from Iran. (198) Procedural due process, in concerns to a deprivation of the right to property, is applicable to the ITSR adjudication procedures because it is the government's legal basis for the freezing and blocking of assets or transactions of U.S. persons. (199) The procedural safeguards under the TWEA are compared and contrasted here with those of IEEPA in order to elicit a better standard for the process due to Iranian-Americans by the OFAC in adjudicating alleged ITSR violations.

    Federal courts exercise a principal of judicial deference to other branches of government in cases concerning foreign policy and national security (200) which can have alarming Due Process consequences. However, in light of judicial deference, the OFAC's administration and enforcement of ITSR provisions may be challenged under the void for vagueness doctrine of the Due Process Clause, (201) and as discrimination against Iranian-Americans based on their ethnic or national origin. (202) Finally, the bases for challenging congressional delegation and oversight over the Executive will be examined.

    1. Framing the Issue under the Constitution

      Any broad challenges to the OFAC's authority (vis-a-vis the Executive) in implementing sanctions programs have typically failed for a variety of reasons. A plethora of legal challenges, based on the First, Fourth, and Fifth Amendments, have been brought against the OFAC to no avail. (203) If Iranian-Americans seek to challenge executive authority because they are in effect treated differently as a class from other U.S. persons, or because they are subject to the administration of vague regulations when engaging in the transactions listed above, redress would be expected through the Due Process Clause of the Fifth Amendment to the Constitution. However, a fortress built by the jurisprudence of federal courts, with walls of judicial deference to the Executive in cases concerning foreign policy and national security, stands in the way. The inability to challenge the Executive on these grounds creates undesirable precedent against U.S. citizens and residents who are of Iranian descent, and potentially other ethnic diasporas affected by U.S. sanctions programs. (204)

      Under the Fifth Amendment, "No person shall be ... deprived of life, liberty, or property without due process of law.... " (205) The Iranian sanctions regime, by means of its administration, arguably deprives Iranian-Americans as a class from their due process of law by indirectly blocking a variety of otherwise legally permissible transactions and remaining silent or vague as to their legitimacy. Family members are deprived of the ability to legally transfer funds to one-another. Iranian-Americans are left with legal uncertainty while dealing with their affairs in Iran. The law remains unclear as to whether a passive act, such as a share in a family business or bank account in Iran, created before the sanctions regime even commenced, constitutes a violation of the ITSR. Meanwhile the OFAC and FBI are increasingly investigating transactions made by Iranian-Americans performed under legal exceptions to the ITSR.

      Furthermore, Iranian-Americans are effectively denied the ability to engage in personal communications, humanitarian donations, and transactions relating to informational materials that would otherwise be protected under the First Amendment. (206) For example, the OFAC's regulation of "informational materials", all First Amendment protected works, has been longstanding, and legal scholars had identified problems with the regulations even before two congressional acts removed the executive branch's power to regulate informational materials. (207) Although the relevant OFAC regulations are now clearer on the issue, Iranian-Americans are still unable to perform transactions relating to "information" and "informational materials" because of the inability to transfer necessary funds to effectuate the transaction as discussed above.

      A federal court upheld the OFAC's restricting a monetary contribution for religious reasons to a relief fund for non-combatants in North and South Vietnam because it did not violate the First Amendment's guarantee of free exercise of religion. The court reasoned that the TWEA unquestionably served a legitimate government purpose, and any incidental restriction on the defendant's exercise of religion did not withdraw from Congress the power to fully carry out that purpose. (208) Iranian-Americans attempting to make contributions for religious reasons to Iranians in Iran could encounter similar OFAC restrictions that are held as constitutionally valid.

    2. Challenging the ITSR for the Process Due

      Within the OFAC's administration of its various sanctions programs, some have more rights guaranteed for persons affected under their respective regulations than others. Of concern is a procedural right under the Cuban Assets Controls Regulations (CACR), which were grandfathered in when IEEPA supplanted TWEA, (209) with regulations continuing in force under TWEA. (210) Any sanctions programs enforced under TWEA authority must contain a right for suspected violators to request an administrative hearing before an administrative law judge. (211) All other sanctions programs enforced by the OFAC under IEEPA authority have no such right, only written responses to the Director of the OFAC in challenging a violation. (212) Therefore, a U.S. person of Cuban descent who is charged for a violation under the CACR has a right to an administrative heating. Contrarily, a U.S. person of Iranian decent has no such tight under the ITSR or any other regulations of the Iran sanctions regime.

      TWEA contains a plethora of provisions concerning the administration of a hearing which are applicable to the CACR. (213) Even without such provisions in IEEPA programs, courts have upheld the OFAC's use of written presentations alone, with no administrative hearing right. In Karpov v. Snow, the Second Circuit held that imposition on an Iraqi-American (a U.S. citizen) of a civil penalty based on a finding that her travel to Iraq violated the Iraqi Sanctions Regulations (under IEEPA authority) did not amount to a deprivation of due process under the Administrative Procedure Act (214) where the administrative proceedings were conducted through written presentations alone. (215) The court reasoned that the individual was informed of the tentative assessment, offered an opportunity to respond in a written presentation, and the arguments in her presentation were considered by the OFAC. (216)

      Although written presentations themselves for IEEPA purposes may satisfy the scrutiny of due process, one class of persons are in effect given more rights under the same circumstances than others: Iranian-Americans charged with violations have no tight for an administrative hearing, whereas Cuban-Americans do. Administrative hearings present a number of advantages over the more formal judicial process in the event the alleged violator seeks judicial review of a written presentation. A full heating before an administrative body is available without waiving any further tights of judicial review under the CACR. (217) Also, an administrative hearing is less formal, more expeditious, less expensive and less publicized than a judicial process, (218) should a person charged with violation wish to challenge the OFAC's decision through the courts. The likelihood of a tarnished reputation resulting from an adverse administrative decision is less than the more certain damage to reputation that would result from an unfavorable judicial decision. (219)

      Where an individual is facing a deprivation of life, liberty, or property, procedural due process entitles adequate notice and some form of a hearing. (220) In the U.S. Supreme Court decision of Mathews v. Eldridge, the amount of due process required when there has been a deprivation of property was determined under a three-part balancing test: (1) the interest of the individual in retaining their property, and the injury threatened by the government action; (2) the risk of error through the procedures used and the value of additional or substituted procedural safeguards; and (3) the cost and administrative burden on the government of additional process, and the interest of the government in efficient adjudication. (221) In comparing the CACR and the ITSR with their respective processes, the procedural safeguards of the CACR elicit a standard for comparison under the Mathews balancing test. The Mathews test is applicable to the ITSR procedures because it is the government's legal basis for the freezing and blocking of assets or transactions of U.S. persons (i.e. a persons property).

      Under the first factor of Mathews, individuals whose assets or transactions are blocked once the OFAC commences an investigation typically have imminent likelihood of financial injury. The threat of injury is high when an individual is financially dependent on the transfer of a family remittance, pension, or other monetary transactions as discussed above that require a general or specific license, but which may be blocked by the OFAC. For example, many Iranian-American youth are dependent on financial support from their parents in Iran. Further, Iranian-Americans who chose to retire in Iran, or who have retired in the states, may have their pensions blocked upon an investigation by the OFAC. Thus, under the first Mathews factor, many Iranian-American individuals are at great risk of financial injury by the OFAC's freezing of...

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