UNITED
STATES DISTRICT COURT
WESTERN
DISTRICT OF WASHINGTON
AT SEATTLE
BERTRAM
SACKS,
Plaintiff,
v.
OFFICE OF
FOREIGN ASSETS
CONTROL,
UNITED STATES
DEPARTMENT
OF THE TREASURY, et
al.,
Defendants.
CASE NO.
C04-108JLR
ORDER
I.
INTRODUCTION
This matter
comes before the court on Defendants’ motion to dismiss Plaintiff’s
complaint.
(Dkt. # 8). For the reasons stated below, the court grants Defendants’ motion
in part and
denies it in part. In addition, because there is no further relief to grant to
either
party, the court dismisses this action.
II.
BACKGROUND
Plaintiff is
a member of Voices in the Wilderness (“Voices”), an unincorporated
organization
that provides humanitarian assistance to Iraqi citizens suffering as a result
of
the
worldwide embargo on trade with Iraq in place since 1990. Although Plaintiff
made
several
trips to Iraq to deliver humanitarian aid, it was a November 1997 trip that is
at
issue in
Plaintiff’s current dispute with the Office of Foreign Asset Control (“OFAC”).
ORDER –
1
OFAC, an
agency of the United States Department of the Treasury, had issued two
regulations
governing the activities of United States citizens in Iraq. The first, the
“Travel
Ban,” prohibits travel-related expenditures for travel to or within Iraq:
Except as
otherwise authorized, no U.S. person may engage in any
transaction
relating to travel by any U.S. citizen or permanent resident
alien to
Iraq. . . . This section prohibits the unauthorized payment by a
U.S. person
of his or her own travel or living expenses within Iraq.
31 C.F.R. §
575.207. The second regulation, the “Medicine Restriction,” prohibits the
export of
medicine to Iraq except as licensed by OFAC:
Except as
otherwise authorized, no goods . . . may be exported from the
United
States . . . to any entity operated from Iraq, except donated
foodstuffs
in humanitarian circumstances, and donated supplies intended
strictly for
medical purposes, the exportation of which has been specifically
licensed
pursuant to [other OFAC regulations].
31 C.F.R. §
575.205.
On December
3, 1998, OFAC sent a pre-penalty notice to Mr. Sacks, Voices, and
other
members of Voices. The only allegation specifically directed to Mr. Sacks was
that
he had
violated the Travel Ban by traveling “to/from/within” Iraq and making
incidental
payments for
living expenses. OFAC also alleged that Voices had violated the Medicine
Restriction
by importing medical supplies, toys, and other goods into Iraq.
On January
8, 1999, Mr. Sacks offered a written response to the pre-penalty notice
in which he
admitted to bringing medicine to Iraq. There was no further contact between
the parties
until May 17, 2002, when OFAC issued a penalty notice fining Plaintiff
$10,000 for
his violation of the Travel Ban.
OFAC has
chosen to use a collection agency, Ocwen Federal Bank, to collect the
$10,000
penalty it levied against the Plaintiff. Ocwen Federal Bank has contacted
Plaintiff at
least once in an effort to collect the penalty.
Plaintiff
brought the instant action alleging that OFAC lacked the statutory
authority to
issue both the Travel Ban and the Medicine Restriction. In addition, Plaintiff
seeks a
declaration that the challenged regulations are unconstitutional because they
ORDER –
2
violate
international law. He claims that OFAC’s effort to collect the civil penalty
against
him is
time-barred. He also seeks injunctive relief against OFAC’s collection efforts.
III.
ANALYSIS
OFAC’s
purely legal challenges to Plaintiff’s complaint are appropriately
addressed in
a Fed. R. Civ. P. 12(b)(6) motion to dismiss. The court may dismiss a claim
only if it
appears beyond doubt that the plaintiff can prove no set of facts in support of
his
claim which
would entitle him to relief. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.
2001). In
reviewing the allegations of the complaint, all material allegations are
accepted
as true, as
well as all reasonable inferences to be drawn from them. Id. A motion to
dismiss is
also properly granted where the plaintiff has no “cognizable legal theory” to
tie
the factual
allegations into a claim upon which the court can grant relief. Id.
A. The
Travel Ban Is Valid and Enforceable.
The Travel
Ban (like the Medicine Restriction) is the result of a series of executive
and
legislative actions that began when Iraq invaded Kuwait in 1990. On August 6,
1990,
the United
Nations Security Council issued Resolution No. 661, which called for member
nations to
restrict all economic transactions with Iraq. S.C. Res. 661(3)(c), U.N. SCOR,
45th Sess.,
2933d mtg., U.N. Doc. S/RES/660 (1990). The Resolution exempted
humanitarian
aid from the scope of the sanctions it imposed. Id. (sanctions do not
“includ[e]
supplies intended strictly for medical purposes, and, in humanitarian
circumstances,
foodstuffs”). President George H.W. Bush then issued Executive Order
12,724,
ordering the Secretary of the Treasury to promulgate regulations enforcing the
sanctions
called for in the Security Council resolution.1 50 Fed. Reg. at 33089. OFAC in
turn issued
regulations that included the Medicine Restriction and the Travel Ban.
1Executive
Order 12,722, which was similar, was superseded by Executive Order
12,724. 50
Fed. Reg. at 33089.
ORDER – 3
In August of
this year, the court in Office of Foreign Assets Control v. Voices in
the
Wilderness upheld the Medicine Restriction against Voices’ contentions that
OFAC
lacked statutory
and constitutional authority to issue it. 329 F. Supp. 2d 71 (D.D.C.
2004).
Although Voices is not precedential authority, the court agrees with its
analysis of
the Medicine
Restriction. The Voices court determined that the Executive Order
authorized
OFAC to issue the Medicine Restriction. Id. at 77-78. It also determined that
the
Executive Order itself was lawful, as it was authorized by the United Nations
Participation
Act (“UNPA”). Id. at 78. UNPA gives the President broad authority to
take
measures necessary to implement Security Council resolutions. It provides that:
Notwithstanding
the provisions of any other law, whenever the United
States is
called upon by the Security Council to apply measures which said
Council has
decided, pursuant to article 41 of said Charter, are to be
employed to
give effect to its decisions under said Charter, the President
may, to the
extent necessary to apply such measures, through any agency
which he may
designate, . . . regulate, or prohibit, in whole or in part,
economic
relations or rail, sea, air, postal, telegraphic, radio, and other
means of
communication between any foreign country or any national
thereof or
any person therein and the United States or any person subject to
the jurisdiction
thereof . . . .
22 U.S.C. §
287c(a). Although other federal statutes provide more limited presidential
authority,
and limit the President’s ability to restrict humanitarian aid (e.g., 50 U.S.C.
§ 1702(b)),
UNPA gives the President the authority to implement Security Council
resolutions
“[n]othwithstanding the provisions of any other law.” 22 U.S.C. § 287c(a).
In short,
the court agrees with the Voices court that the Medicine Restriction was valid.
The Voices
analysis is equally applicable to the Travel Ban.
Plaintiff
Sacks advances one argument that the Voices court did not expressly
consider. He
notes that Resolution No. 661 expressly excludes humanitarian aid from the
scope of the
sanctions to be imposed against Iraq. S.C. Res. 661(3)(c), U.N. SCOR, 45th
Sess., 2933d
mtg., U.N. Doc. S/RES/660 (1990) (sanctions do not “includ[e] supplies
intended
strictly for medical purposes, and, in humanitarian circumstances,
foodstuffs”).
UNPA, in
turn, only authorizes presidential action “to the extent necessary to apply”
ORDER –
4
Security
Council measures. 22 U.S.C. § 287c(a) (emphasis added). Plaintiff argues that
regulations
on travel for humanitarian purposes were not necessary to implement the
Security
Council Resolution, and thus even if the Executive Order authorized such
measures, it
did so without legal authority.
Although
Plaintiff presents a compelling argument, it is an argument that ignores
the decision
of Congress to ratify the Iraqi sanctions regime. In the Iraqi Sanctions Act
of 1990,
Congress directed the President to “continue to impose the trade embargo and
other
economic sanctions with respect to Iraq and Kuwait that the United States is
imposing”
pursuant to Executive Order 12,724. Pub. L. No. 101-513, 104 Stat. 20472054
(codified at 50 U.S.C. § 1701). As Congress ratified the Executive Order on
which
the Travel
Ban and Medicine Restriction were based,2 the court must reject Plaintiff’s
argument
that the Executive Order directed measures that were not “necessary” (under
UNPA) to
enforce Resolution No. 661.
B.
Even if
Plaintiff Has Standing to Challenge It, the Medicine Restriction isValid and
Enforceable.
OFAC
contends that Plaintiff does not have standing to challenge the Medicine
Restriction,
because OFAC has never contended that Plaintiff violated the Medicine
Restriction.
A plaintiff seeking to challenge a federal statute or regulation must generally
prove that
he has suffered or will suffer an injury, that the challenged statute or
regulation
caused the
injury, and that the court can provide redress for the injury. Lujan v.
Defenders of
Wildlife, 504 U.S. 555, 561-62 (1992). OFAC argues that Plaintiff Sacks
has suffered
no injury as a result of the Medicine Restriction.
2The Iraqi
Sanctions Act also required that any regulations promulgated after the Act
(after
November 5, 1990) were to be submitted to Congress. The challenged regulations
were
issued in
January 1991, and it does not appear that they were submitted to Congress.
Although
OFAC may
have neglected its statutory duties, this is not a basis for invalidating the
challenged
regulations.
In re Surface Mining Regulation Litig., 627 F.2d 1346, 1365 (D.C. Cir. 1980).
ORDER – 5
Plaintiff
does not contest that OFAC has not attempted to penalize him for
violating
the Medicine Restriction,3 but Plaintiff contends that his admitted violation
of
the Medicine
Restriction, coupled with OFAC’s aggressive enforcement policy, means
that the
threat that he will be penalized is sufficient to confer standing. He notes
that in
its
pre-penalty notice, OFAC not only alleged that Plaintiff violated the Travel
Ban, but
also that
Voices, an organization to which Plaintiff belongs, violated the Medicine
Restriction.
Although the
parties present an intriguing argument on the standing issue, the court
finds it
unnecessary to resolve it.4 Whether Plaintiff has standing to contest the
Medicine
Restriction
or not, his challenge fares no better than his challenge to the Travel Ban. The
Court’s
discussion of the statutory authority for the Travel Ban, supra, applies
equally to
the Medicine
Restriction. The Medicine Restriction is a valid exercise of authority
granted to
OFAC through Executive Order 12,724 and the Iraqi Sanctions Act.
C.
International Law Does Not Render the Regulations Unconstitutional.
Plaintiff
cites four sources of international law that he believes render the
challenged
regulations unconstitutional. Plaintiff does not explain how the United States
Constitution
incorporates these principles of international law. Nor does Plaintiff contest
that
international law is not binding on the United States unless the United States
ratifies
the law or
the law is “self-executing.” Whitney v. Robinson, 124 U.S. 190, 194 (1888).
3At oral
argument, Plaintiff suggested that because one must necessarily “travel” in
order
to deliver
food and medicine, the court can conflate the Travel Ban and the Medicine
Restriction
for standing
purposes. The court disagrees. The two regulations proscribe different sets of
conduct, and
Plaintiff was penalized only for his travel-related expenditures in Iraq.
4The court
has considered OFAC’s late-filed motion to file a supplementary brief on the
standing
issue. (Dkt. # 28). The court has granted that motion, and has considered
OFAC’s
arguments in
the supplemental brief. Given the court’s disposition of the issue, the court
finds it
unnecessary
to grant Plaintiff an opportunity to respond to the supplemental brief.
ORDER – 6
The court
finds that the international law upon which Plaintiff relies is not binding
on the
United States. The United Nations Convention on the Rights of the Child is not
self-executing,
and the United States Senate has declined to ratify it. Flores v. Southern
Peru Copper
Corp., 343 F.3d 140, 165 (2d Cir. 2003). The same is true of the Geneva
Convention
Relative to the Protection of Civilian Persons in Time of War. Tel-Oren v.
Libyan Arab
Republic, 726 F.2d 774, 809 (D.C. Cir. 1984). Although the United States
has ratified
part of the Convention on the Prevention and Punishment of the Crime of
Genocide, it
also provided that the Convention creates no “substantive or procedural right
enforceable
by law by any party in any proceeding.” 18 U.S.C. § 1092. Finally, the
Universal
Declaration of Human Rights is aspirational, not binding, and is not recognized
as law in
the United States. Flores, 343 F.3d at 165.
Customary
international law also provides no defense for the Plaintiff. Plaintiff
argues that
even if the international law he cites has not been ratified or enacted in the
United
States, customary international law embodying the same principles is
controlling.
Even if the
court accepts the Plaintiff’s interpretation of the relevant customary
international
law, it cannot overlook the executive and legislative acts that expressly
address
sanctions against Iraq. Customary international law is not binding where there
is
a
controlling legislative or executive act addressing the same subject.
Galo-Garcia v.
INS, 86 F.3d
916, 918 (9th Cir. 1996). International law does not provide Plaintiff with a
legally
cognizable claim against the challenged regulations.
D. OFAC’s
Effort to Collect Its Penalty From Plaintiff is Not Time-Barred.
Plaintiff
contends that OFAC’s effort to collect its $10,000 penalty is barred by the
five-year
statute of limitations in 28 U.S.C. § 2462, which provides that:
Except as
otherwise provided by Act of Congress, an action, suit or
proceeding
for the enforcement of any civil fine, penalty, or forfeiture,
pecuniary or
otherwise, shall not be entertained unless commenced within
five years
from the date when the claim first accrued . . . .
ORDER –
7
Plaintiff
argues that OFAC’s penalty arises from Plaintiff’s November 1997 trip to Iraq,
which was
more than five years before OFAC initiated efforts to collect its penalty
through
Ocwen Federal Bank in August 2003.
Both parties
assume that the phrase “proceeding for the enforcement of any . . .
penalty”
applies exclusively to proceedings to collect penalties like the one that OFAC
imposed
against him. The phrase has been interpreted to include any proceeding for the
imposition
of a penalty. 3M Co. v. Browner, 17 F.3d 1453, 1457-59 (D.C. Cir. 1994).
The Browner
court held that an agency’s effort to impose a penalty is itself a “proceeding
for the
enforcement” of the penalty. Id. at 1459 (holding that a contrary result would
be
“inconceivable”);
Federal Election Comm. v. Williams, 104 F.3d 237, 240 (9th Cir. 1996)
(adopting
the Browner view of 28 U.S.C. § 2462). OFAC commenced its proceeding to
enforce its
penalty against Plaintiff in December 1998, when it sent its pre-penalty notice
to the
Plaintiff. That proceeding concluded in May 2002, when OFAC issued its final
penalty
notice against Plaintiff. Regardless of which date is relevant, the court finds
that
OFAC
commenced its enforcement proceeding within the five-year statute of
limitations
(which would
not have run until November 2002).
E.
OFAC’s
Regulations Bar the Use of a Collection Agency to Collect Its PenaltyFrom
Plaintiff.
Although
OFAC met the applicable statute of limitations for enforcing its penalty
against
Plaintiff, the court asked the parties to provide supplemental briefing to
address
whether OFAC
is subject to restrictions on its effort to collect on that penalty. In
particular,
OFAC’s own regulations provide that in the event that a person does not pay
or make
arrangements to pay an OFAC penalty within 30 days of its issuance, “[T]he
matter shall
be referred to the United States Department of Justice for appropriate action
to recover
the penalty in a civil suit in a Federal district court.” 31 C.F.R. § 575.705.
ORDER –
8
OFAC has not
referred the matter to the Department of Justice; it has chosen to use a
collection
agency to collect its penalty.5
Plaintiff
argues that 31 C.F.R. § 575.705 unambiguously bars any method of
penalty
collection except reference to the Department of Justice for a civil suit.
Although
a court
should ordinarily defer to an agency’s interpretation of its own regulations,
deference is
not necessary where the language of the regulation is unambiguous. Ward’s
Cove Packing
Corp. v. Nat’l Marine Fisheries Serv., 307 F.3d 1214, 1219 (9th Cir. 2002).
OFAC argues
that the regulation is ambiguous, because while it might mandate a
referral of
a penalty to the Department of Justice, it is silent as to the availability of
other
remedies.
Moreover, OFAC points out that both statutes and regulations generally
applicable
to the Treasury provide that multiple collection remedies are usually
encouraged.
31 U.S.C. § 3718(a); 31 C.F.R. § 5.2(e). OFAC thus contends that the
meaning of
31 C.F.R. § 575.705 is that OFAC may refer penalties to the Department of
Justice or
it may refer them to a collection agency.
Given the
substantial deference owed to OFAC in interpreting its regulations, the
court might
be inclined to accept OFAC’s position. See Alhambra Hosp. v. Thompson,
259 F.3d
1071, 1076 (9th Cir. 2001) (recognizing limitations on deference to agency
interpretation).
To do so, however, would be to ignore the 13 other regulatory
subchapters
that expressly state what OFAC asks the court to read into 31 C.F.R.
§ 575.705.
For example, the Iraqi sanctions’ closest neighbor in the Code of Federal
Regulations
is at 31 C.F.R. subchapter 585. That subchapter establishes sanctions for
prohibited
transactions with the Federal Republic of Yugoslavia. At 31 C.F.R. § 585.705,
OFAC
provides that if a person does not pay an OFAC penalty within 30 days, “[T]he
5Plaintiff
urges the court to hold that the Federal Debt Collection Procedure Act
(“FDCPA”)
(28 U.S.C. §§ 3001-3015) prevents OFAC from using a collection agency. OFAC
correctly
points out that 31 U.S.C. § 3718 authorizes OFAC to use a collection agency,
although
that agency must follow the FDCPA.
ORDER – 9
matter shall
be referred for administrative collection measures or to the United States
Department
of Justice for appropriate action to recover the penalty in a civil suit in a
Federal
district court.” This provision, or its substantial equivalent, is repeated in
three
other
subchapters relating to OFAC prohibitions on transactions with regions in the
Baltics (31
C.F.R. §§ 586.705, 587.705, 588.705), six other OFAC regulations on
transactions
with Angola (31 C.F.R. § 590.705), Iran (31 C.F.R. § 560.706), Afghanistan
(31 C.F.R. §
545.705), the Sudan (31 C.F.R. § 538.705), Burma (31 C.F.R. § 537.705),
and Cuba (31
C.F.R. § 515.718), as well as OFAC prohibitions on transactions in
weapons of
mass destruction (31 C.F.R. § 539.705), highly enriched uranium (31 C.F.R.
§ 540.705),
and narcotics (31 C.F.R. § 536.705). The only regulations dictating that
penalty
collections “shall be referred” to the Department of Justice without mentioning
administrative
collection measures are the Iraq sanctions regulations at issue here, older
regulations
on transactions with Iran (31 C.F.R. § 535.705), and regulations on
transactions
with Libya (31 C.F.R. § 550.706).6
The court
does not dispute that OFAC was authorized to enact regulations that
permit it to
use extra-judicial means of collection. The statute and regulation that
authorize
such means, however, are merely permissive. 31 U.S.C. § 3718(a) (“Under
conditions
the head of an executive . . . agency considers appropriate, the head of the
agency may
enter into a contract with a person for collection service to recover
indebtedness
owed”); 31 C.F.R. § 5.2(e) (“Use of multiple collection remedies
allowed.”).
A review of OFAC regulations shows that OFAC often chooses to exercise
that
authority by issuing regulations that allow multiple avenues for penalty
collection.
For the
Iraqi regulations in question, OFAC chose not to do so. Even giving substantial
6The court
recognizes that changes in the political climate may have caused OFAC to
rescind or
amend some of the regulations listed above, or at least adopt different
enforcement
policies.
Those changes would not, however, affect the court’s analysis of the regulation
in
question.
ORDER – 10
deference to
OFAC’s interpretations of its regulations, the court finds that 31 C.F.R.
§ 575.705
requires OFAC to use the Department of Justice to collect penalties for
violations
of the Iraqi Travel Ban.
IV.
CONCLUSION
For the
foregoing reasons, the court GRANTS Defendants’ motion to dismiss (Dkt.
# 8) in
part, and DENIES it in part.
The only
claim remaining in Plaintiff’s complaint is its request for injunctive relief
against
OFAC’s unlawful attempts to collect a penalty against him. It is not clear
whether
OFAC has any
continuing control over Ocwen Federal Bank’s efforts to collect OFAC’s
penalty from
Plaintiff. To the extent that OFAC continues to exercise such control, the
court ORDERS
that OFAC is enjoined from using any means of collecting its penalty
against
Plaintiff that is inconsistent with this order. As Ocwen Federal Bank is not a
party to
this action, the court cannot enter an order enjoining it.
The court
also notes that Plaintiff in his supplemental brief, and at oral argument,
suggests
that he has brought a claim contesting the amount of the penalty that OFAC
levied.
Although Plaintiff could possibly bring this challenge in the form of a claim
under the
Administrative Procedures Act or otherwise, the court finds that even a
generous
reading of the complaint shows that Plaintiff has brought no such claim. Even
if
there were
such a claim, the court’s decision that OFAC cannot use extrajudicial means to
collect its
penalty means that Plaintiff’s objection to the amount of that penalty is not
yet
ripe for
consideration by this court.
As there is
no further relief to grant to either party, this action is DISMISSED.
Dated this
22nd day of October, 2004.
s/James L.
Robart
JAMES L.
ROBART
United
States District Judge
ORDER – 11