Fulmen Co. v. Office of Foreign Assets Control

547 F.Supp.3d 13

FULMEN COMPANY, et al., Plaintiffs,

v.OFFICE OF FOREIGN ASSETS CONTROL, et al., Defendants.

Civil Case No. 18-2949 (RJL)

United States District Court, District of Columbia.

Filed March 31, 2020

Saeid B. Amini, The Law Office of Saeid B. Amini, Washington, DC, for Plaintiffs.

Stuart Justin Robinson, U.S. Department of Justice, Civil Division, San Francisco, CA, for Defendants.

MEMORANDUM OPINION [## 16, 19]

RICHARD J. LEON, United States District Judge

Fulmen Company and Fulmen Group ("Fulmen") brings this suit against the Office of Foreign Assets Control ("OFAC"), the United States Department of the Treasury, and Steven T. Mnunchin, in his official capacity as Secretary of the United States Department of the Treasury (collectively, "the Government"), seeking to challenge OFAC's decision to place Fulmen on its list of Specially Designated Nationals and Blocked Persons ("SDN List"). Compl. ¶ 1 [Dkt. # 1]. Fulmen alleges the Government violated the Fifth Amendment of the United States Constitution and the Administrative Procedure Act ("APA"). Id. at ¶¶ 35-69. The Government moves to dismiss, contending this Court lacks subject-matter jurisdiction to adjudicate Fulmen's constitutional claims and that OFAC's decision did not violate the APA. Fulmen cross moves for summary judgment. Upon consideration of the briefing, the relevant law, the entire record, and for the reasons stated below, the Government's motion to dismiss is GRANTED and Fulmen's cross-motion for summary judgment is DENIED .

BACKGROUND

I. Relevant Law

The United States has long relied on economic sanctions to further its foreign policy and national security interests. See, e.g. , Trading with the Enemy Act of 1917, 40 Stat. 411 (codified as amended at 50 U.S.C. app. §§ 1 - 44 ); 50 U.S.C. app. § 4305(b)(1) (as amended in 1933). In 1977, Congress passed the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701 et seq. , which grants the President broad discretion to sanction foreign entities and individuals in the event there is a national emergency. Specifically, it authorizes the President to:

... direct and compel, nullify, void, prevent or prohibit, any ... transfer ... of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest ... with respect to any property, subject to the jurisdiction of the United States ....

Id. § 1702(a)(1)(B). Since IEEPA's passage, the President has imposed sanctions on countries and foreign individuals engaged in terrorism, narcotics trafficking, and the proliferation of weapons of mass destruction. See, e.g. , Exec. Order No. 12978, 60 Fed. Reg. 54579 (Oct. 21, 1995) (blocking assets of persons who "play a significant role in international narcotics trafficking centered in Colombia"); Exec. Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) (blocking assets of persons determined "to have committed, or to pose a significant risk of committing, acts of terrorism that threaten" national security); Exec. Order No. 13382, 70 Fed. Reg. 38567 (June 28, 2005) (blocking assets of persons who have engaged in transactions that have materially contributed to the proliferation of weapons of mass destruction and their supporters).

As relevant here, the President issued Executive Order No. 12938 ("EO 12938") in 1994, which concluded that the "proliferation of nuclear, biological, and chemical weapons (‘weapons of mass destruction’) and of the means of delivering such weapons, constitute[d] an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States." 59 Fed. Reg. 58099 (Nov. 14, 1994). EO 12938 further declared a national emergency to address that threat. Id. In 2005, the President issued Executive Order No. 13382 ("EO 13382") to take further action in response to the national emergency declared in the 1994 order. 70 Fed. Reg. 38567 (June 28, 2005). In addition to the individuals and entities specifically identified in the order, EO 13382 blocked all property and interests in property of:

any foreign person determined by the Secretary of State, in consultation with the Secretary of the Treasury, the Attorney General, and other relevant agencies, to have engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery (including missiles capable of delivering such weapons), including any efforts to manufacture, acquire, possess, develop, transport, transfer or use such items, by any person or foreign country of proliferation concern ... [;]

any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, and other relevant agencies, to have provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, any activity or transaction described in paragraph (a)(ii) of this section, or any person whose property and interests in property are blocked pursuant to this order; and ...

any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, and other relevant agencies, to be owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.

Id. § 1(a)(i)-(iv). EO 13382 also authorized the Secretary of the Treasury to "take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order." Id. § 6. The Secretary in turn delegated that authority to OFAC. See 31 C.F.R. §§ 539.802 & 544.802.

Pursuant to that delegation, OFAC determines whether individuals and entities qualify under EO 12938 or EO 13382. See id. Individuals and entities that qualify under those orders ("Specially Designated Nationals" or "SDNs") are placed on a list ("SDN List") and blocked. See EO 13382, § 1(a) ; 31 C.F.R. § 501.807. An entity designated by OFAC as an SDN may "seek administrative reconsideration" or "assert that the circumstances resulting in the designation no longer apply." 31 C.F.R. § 501.807. In either case, OFAC's regulations permit the designated SDN to "submit arguments or evidence that [it] believes establishes that [an] insufficient basis exists for the designation" and "propose remedial steps ... [to] negate the basis for designation." Id. § 501.807(a). Under OFAC's regulations, an SDN may also request a meeting with OFAC. Id. § 501.807(c). Any information submitted by an SDN "will be reviewed by [OFAC], which may request clarifying, corroborating, or other additional information." Id. § 501.807(b). After reviewing a request for reconsideration, OFAC "provide[s] a written decision" to the SDN. Id. § 501.807(d).

II. Factual Background

On November 21, 2011, OFAC designated Fulmen as an SDN under EO 13382, concluding it had "engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery" by Iran. See EO 13382, § 1(a)(ii) ; see Admin. R. ("AR") at 75, 76-77, 79. Specifically, OFAC determined that Fulmen "was involved in procuring goods for the covert uranium enrichment facility at Qom while the facility was still an undeclared site from 2006 through 2008." AR at 76. OFAC further found that "[f]rom May 2006 until at least September 2008, Fulmen was involved in many facets of the construction of Qom" and "worked with the U.S.- and UN- designated firm Kalaye Electric on the construction of elements of the Natanz Uranium Enrichment Plant." Id. In OFAC's view, because Iran had not yet "established full and sustained suspension of all enrichment-related and reprocessing activities, ... Fulmen's activities at both Qom and Natanz ... material[ly] contribut[ed] to those facilities’ gas centrifuge plant for uranium enrichment." Id. OFAC's designation decision briefly noted that the European Council, which administers the European Union's sanctions program, had also designated Fulmen on its sanction list. Id. at 77.

Prior to OFAC's designation on the SDN List, Fulmen requested that the European Council remove Fulmen from its sanctions list. AR at 476. The Council denied that request. Id. at 476-77. Fulmen then sought relief in the EU General Court, which, in November 2013, annulled the sanctions designation because the Council refused to disclose its evidence to Fulmen. Id. at 471, 477. On December 17, 2013, the Council ultimately removed Fulmen from its sanction list. Id. at 490.

On October 20, 2014, Fulmen requested OFAC's reconsideration of its SDN List designation. Id. at 83. Fulmen asserted that it had "no link to the Iranian government" and was not "involved in any nuclear projects, including, as accused, at the sites of Qom and Natanz." Id. On February 6, 2015, OFAC acknowledged receipt of Fulmen's request. Id. at 293. On July 19, 2015, Fulmen wrote to OFAC again, reiterating its request for removal and emphasizing that the European Council had removed Fulmen from its sanctions list. Id. at 294-95. In Fulmen's view, "the only reason that OFAC placed Fulmen Co. on its SDN list was because this company was already on the European Union (EU) sanction list." Id.

On October 6, 2015, OFAC requested additional information from Fulmen, including information regarding its relationship with two Iranian firms, Kalaye Electric and Arya Niroo Nik; its involvement in the construction of the nuclear site at Qom; and whether Fulmen had—in the last five years—provided any goods or services to Iran, Iranian entities identified on the SDN list, or...