Basengezi v. Smith

1

MARCELLIN MUKOLO BASENGEZI, Plaintiff, v. BRADLEY T. SMITH, et al., Defendants.

Civil Action No. 23-1249 (JEB)

United States District Court, District of Columbia

March 11, 2024

MEMORANDUM OPINION

JAMES E. BOASBERG CHIEF JUDGE

The United States believes that Plaintiff Marcellin Mukolo Basengezi was involved in efforts to undermine the Democratic Republic of the Congo's national elections. Defendant Office of Foreign Assets Control thus placed him on its Special Designated Nationals and Blocked Persons List in 2019. Displeased with that designation, Plaintiff filed a delisting petition two years later, asking to be removed. He argued that he never should have been on the list to begin with and, in any event, that there had been a change in circumstances since he was added that negated the initial basis for his designation. OFAC denied the petition.

In this suit against OFAC and its Director, Bradley T. Smith Basengezi challenges both the agency's decision to deny his delisting petition and the notice that OFAC provided him of the reasons for such denial. Specifically, he contends that the Government's decision was arbitrary and capricious under the Administrative Procedure Act and that its notice was inadequate under both the APA and the Fifth Amendment's Due Process Clause. Defendants have now filed a Motion to Dismiss Plaintiff's Amended Complaint or, in the alternative, for Summary Judgment. Plaintiff opposes that Motion while filing a Cross-Motion for Summary Judgment. Having conducted in camera review of the classified administrative record, the Court concludes both that OFAC's denial was not arbitrary or capricious, and that it provided Basengezi with sufficient notice. It thus will grant the Government's Motion.

I. Background

A. Statutory Scheme

Since our nation's infancy, many of its leaders have viewed economic sanctions as “the most likely means of obtaining our objects without war.” James Madison, “Political Observations,” National Archives (Apr. 20, 1795). In 1977, amidst the Cold War, Congress passed the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., which grants the President broad discretion to impose economic sanctions on foreign entities and individuals in the event of a national emergency. See Fulmen Co. v. OFAC, 547 F.Supp.3d 13, 17 (D.D.C. 2020) (citing 50 U.S.C. § 1702(a)(1)(B)); see also Dames & Moore v. Regan, 453 U.S. 654, 677 (1981). The President may declare such a national emergency “when an extraordinary threat to the United States arises that originates in substantial part in a foreign state.” Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 159 (D.C. Cir. 2003).

In 2006, President Bush issued Executive Order 13413, “declaring] a national emergency to deal with” the threat posed by “the situation in . . . the Democratic Republic of the Congo, which has been marked by widespread violence and atrocities” and “constitutes an unusual and extraordinary threat to the foreign policy of the United States.” E.O. 13413, 71 Fed.Reg. 64,105 (Oct. 27, 2006). Eight years later, President Obama amended that Executive Order in light of the “continuation of activities that threaten the peace, security, or stability of the Democratic Republic of the Congo and the surrounding region, including operations by armed groups, widespread violence and atrocities, human rights abuses, recruitment and use of child soldiers, attacks on peacekeepers, obstruction of humanitarian operations, and exploitation of natural resources to finance persons engaged in these activities.” E.O. 13671, 79 Fed.Reg. 39,949 (Jul. 8, 2014).

As amended, Executive Order 13413 authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to designate persons determined “to be responsible for or complicit in, or to have engaged in, directly or indirectly . . . actions or policies that undermine democratic processes or institutions in the Democratic Republic of the Congo” in order to “block” those persons' “property and interests in property” in the United States. See E.O. 13413, as amended, §§ 1(a), 1(a)(ii)(C)(2); see also 31 C.F.R. § 547.201(a)(2)(iii)(B). The Executive Order also authorizes the Secretary of the Treasury to “take such actions, including the promulgation of rules and regulations . . . as may be necessary to carry out the purposes of [E.O. 13413].” E.O. 13413, § 5; see also E.O. 13671, § 4. The Secretary has delegated this implementation authority to OFAC. See 31 C.F.R. § 547.802. When OFAC designates a person under E.O. 13413, she is added to the Specially Designated Nationals and Blocked Persons List (SDN List), and “all [her] assets in the United States or under the control of any person who is in the United States are ‘blocked,' or effectively frozen.” Zevallos v. Obama, 793 F.3d 106, 110 (D.C. Cir. 2015) (cleaned up). The regulations also prohibit U.S. people or entities from engaging in transactions with a designee. See 31 C.F.R. § 547.201.

A designee may “seek administrative reconsideration” of her designation by filing a so-called delisting petition. Id. § 501.807; see also id. § 547.101 (incorporating OFAC's generally applicable administrative-reconsideration procedures into regulations specifically applicable to DRC). Such a petition may include “arguments or evidence that the person believes establishes that insufficient basis exists for the designation” or “propose remedial steps on the person's part, such as corporate reorganization, resignation of persons from positions in a blocked entity, or similar steps, which the person believes would negate the basis for designation.” Id. § 501.807(a); see also Zevallos, 793 F.3d at 110 (describing process). After reviewing a delisting petition and requesting further information if necessary, see 31 C.F.R. § 501.807(b), OFAC “provide[s] a written decision to the blocked person.” Id. § 501.807(d). “If OFAC denies a request for reconsideration, the blocked person may challenge that determination under the APA” in federal court or file another administrative petition. See Sulemane v. Mnuchin, 2019 WL 77428, at *2 (D.D.C. Jan. 2, 2019); see also Rakhimov v. Gacki, 2020 WL 1911561, at *1 (D.D.C. Apr. 20, 2020). As the D.C. Circuit has noted, a designee may “request delisting as many times as he likes.” Zevallos, 793 F.3d at 110 (citing 31 C.F.R. § 501.807).

B. Factual Background

In March 2019, OFAC announced that it had added to the SDN List three senior officials within the DRC's National Independent Electoral Commission (CENI) - which runs the country's elections - who had acted to undermine democratic processes or institutions in the DRC by “obstruct[ing] and delay[ing] preparations for credible and inclusive elections.” Treasury Dep't, Press Release of Mar. 21, 2019, https://perma.cc/2Y9U-E8PB. Those officials were CENI President Corneille Yobeluo Nangaa, Vice President Norbert Basengezi Katintima, and Plaintiff, whom the agency described as “a CENI advisor and the son of Vice President Katintima.” Id.

In its press release, OFAC presented a laundry list of democracy-undermining activities that it found Basengezi had engaged in. Specifically, it stated that he had: “embezzled and misappropriated state assets from CENI”; “undertaken actions that slowed registration”; “inflated costs for an election-related contract with the intent to use surplus funds for personal enrichment, bribes, and campaign costs to fund the election campaign” of a particular candidate; “awarded a separate election-related contract and doubled the award amount on the understanding that the winning company would award the extra funds to a DRC company controlled by CENI leadership”; and “purchased and sold gasoline for profit at the expense of CENI.” Id. Those actions, OFAC concluded, had “delayed voter registration in Kasai, an opposition stronghold, and meant that many voters were unable to register” for the 2018 elections. Id.

Seeking to understand why the agency believed that he had done each of those things, Plaintiff asked OFAC to provide him with the administrative record underlying his designation. When it refused, he filed suit in 2019, arguing, inter alia, that OFAC's failure to do so violated the APA. See Basengezi v. Gacki, No. 19-3414, ECF No. 1 (Compl.) (D.D.C. Nov. 12, 2019). During the course of litigation, the Government produced a redacted version of the administrative record. Glad to have the record, albeit with classified and privileged information redacted, Basengezi entered into a settlement agreement with OFAC. See ECF No. 16-3 at 215- 21 (Settlement Agreement); see also Katintima v. Gacki, No. 19-3412, ECF No. 15 (Stipulation of Dismissal) (D.D.C. July 22, 2020). He agreed to dismiss his case, and the agency agreed to adjudicate a delisting petition on a swift timeline. See Settlement Agreement.

In April 2021, Plaintiff filed such a petition, asking OFAC to rescind his designation and remove his name from the SDN List. See ECF No. 16-1 at 17-46 (Delisting Petition). His 29-page petition made “two separate and distinct arguments” for delisting. Id. at 35. First, he asserted that there had been an insufficient basis for his designation in the first place. Id. at 35-41. Second, Basengezi contended that even if there had been a sufficient basis for his designation initially, a subsequent “change in circumstances” had “negat[ed] [that] basis” - namely, he had left his position at CENI and the 2018 elections had occurred successfully. Id. at 35, 41-43.

He provided more than 1,000 pages of exhibits to buttress his petition. See ECF Nos. 11 & 12 (Pl. MSJ) at 8.

To aid its consideration of Plaintiff's submission, OFAC issued him two questionnaires seeking additional information regarding, among...