Facts
- After the September 11, 2001 attacks, President Bush issued Executive Order 13,224 under the International Emergency Economic Powers Act (IEEPA), authorizing the Treasury Department’s Office of Foreign Assets Control (OFAC) to block property and designate persons or entities as Specially Designated Global Terrorists (SDGTs).
- Al Haramain Islamic Foundation, Oregon (AHIF–Oregon), an Oregon nonprofit, described itself as a charity and religious organization that sought to advance understanding of Islam through prayer houses, publications, and charitable activity.
- In February 2004, the United States suspected AHIF–Oregon of supporting terrorism. OFAC blocked AHIF–Oregon’s assets pending investigation and designated it as an SDGT under EO 13,224.
- OFAC later redesignated AHIF–Oregon as an SDGT, relying in part on classified information.
- AHIF–Oregon sued the United States Department of the Treasury and related officials and agencies, alleging statutory and constitutional violations, including that OFAC used classified material without adequate unclassified disclosure and denied AHIF–Oregon a meaningful chance to respond.
- The Multicultural Association of Southern Oregon (MASO), which the government did not accuse of terrorism support, also sued, alleging that restrictions on providing “services” to an SDGT chilled its ability to engage in coordinated advocacy and joint communications with AHIF–Oregon.
- The district court granted summary judgment to the government on all but one claim not at issue on appeal, and plaintiffs appealed.
Issues
- Whether IEEPA and EO 13,224 authorized OFAC’s SDGT designation/redesignation of a domestic nonprofit, and whether substantial evidence supported OFAC’s redesignation of AHIF–Oregon.
- Whether OFAC’s notice-and-response process—particularly its reliance on classified information without an adequate substitute—violated AHIF–Oregon’s Fifth Amendment due process rights, and if so whether any error required vacatur.
- Whether OFAC’s blocking order freezing AHIF–Oregon’s U.S.-located assets constituted a Fourth Amendment seizure, and whether the seizure required a warrant supported by probable cause.
- Whether restrictions barring MASO from providing “services” or engaging in coordinated advocacy and communications with AHIF–Oregon violated the First Amendment as applied.
Decision
- Affirmed that substantial evidence supported OFAC’s redesignation of AHIF–Oregon as an SDGT under IEEPA and EO 13,224.
- Affirmed the judgment against AHIF–Oregon on its due process challenge, holding that any due process deficiencies were harmless on this record.
- Reversed the rejection of AHIF–Oregon’s Fourth Amendment claim, holding the domestic asset freeze was a “seizure,” and remanded for the district court to determine what judicial relief, if any, was available.
- Reversed the dismissal of plaintiffs’ First Amendment claim and remanded for further proceedings on MASO’s coordinated-advocacy theory.
- Limited the Fourth Amendment holding to the facts before the court: OFAC’s seizure of assets of a United States entity located within the United States, arising from the original designation order.
Legal Principles
- OFAC SDGT designations and redesignations under IEEPA and EO 13,224 are reviewed under a deferential “substantial evidence” standard, taking account of national-security context while still requiring an adequate evidentiary basis in the record.
- Fifth Amendment due process generally requires notice of the reasons for designation and a meaningful opportunity to respond; heavy reliance on classified material without an adequate unclassified substitute can violate due process.
- Even when due process error is shown, the court may apply harmless-error analysis and affirm if the record shows additional process would not have changed the outcome.
- A blocking order that freezes a domestic entity’s assets and bars their use constitutes a Fourth Amendment seizure because it is a meaningful interference with possessory interests.
- In the domestic context addressed (U.S. entity and U.S.-located assets), the seizure required a warrant supported by probable cause; the case was remanded to determine remedies rather than automatically invalidating the government action.
- Restrictions that criminalize or forbid coordinated advocacy and joint communications can raise First Amendment concerns; the analysis may differ from material-support cases involving designated foreign terrorist organizations, depending on the record and context.
Conclusion
The Ninth Circuit largely sustained OFAC’s SDGT action against AHIF–Oregon by holding that substantial evidence supported redesignation and that any due process defects were harmless, but it ruled that freezing a domestic organization’s assets is a Fourth Amendment seizure requiring a warrant and probable cause in the circumstances presented and it reinstated MASO’s First Amendment challenge to limits on coordinated advocacy with the designated domestic entity.