## Facts

- Federal law (IEEPA) authorizes the President, during a declared national emergency, to block property and restrict transactions subject to U.S. jurisdiction when linked to foreign threats.
- Executive Order 12947 (1995) and Executive Order 13224 (2001) authorized designation of terrorists and supporters and the blocking of their property.
- The Holy Land Foundation for Relief and Development (HLF), a U.S.-based Muslim charity, raised funds in the United States for overseas charitable projects.
- In December 2001, the Treasury Department (through OFAC) designated HLF as a Specially Designated Global Terrorist and Specially Designated Terrorist and blocked all HLF assets.
- OFAC concluded HLF acted for or on behalf of Hamas and provided material support by channeling funds to zakat committees and charitable entities controlled by or affiliated with Hamas, thereby supporting Hamas’s infrastructure.
- OFAC relied on both unclassified material and classified intelligence; some evidence was withheld from HLF on national security grounds.
- HLF sued, challenging the designation and blocking order under the First, Fourth, and Fifth Amendments, RFRA, the APA, and related statutory theories.
- The district court largely rejected HLF’s claims and entered judgment for the government on key issues; HLF appealed, also challenging denial of preliminary relief from the asset freeze.

## Issues

1. Whether IEEPA and the implementing Executive Orders authorized OFAC to designate HLF and block all its assets based on an “interest” connected to terrorism.
2. Whether the designation and asset blocking violated procedural due process because of no pre-deprivation hearing and the government’s use of classified evidence ex parte and in camera.
3. Whether the designation and blocking order violated the First Amendment by restricting HLF’s speech and association through prohibitions on funding and charitable activity.
4. Whether the asset freeze and designation substantially burdened religious exercise in violation of RFRA.
5. Whether OFAC’s designation was arbitrary or capricious under the APA given the evidentiary record and the agency’s reasoning.
6. Whether summary judgment for the government was improper because disputes of material fact existed regarding HLF’s alleged connections to Hamas.

## Decision

- The D.C. Circuit upheld OFAC’s designation of HLF and the blocking of its assets.
- The court held IEEPA and the Executive Orders authorized blocking based on any relevant “interest” in property, not only a legally enforceable interest held by a foreign national.
- Applying deferential APA review, the court concluded the administrative record supported OFAC’s finding that HLF provided material support to Hamas, including by funding Hamas-linked charitable entities.
- The court held due process was satisfied in the national security context by post-deprivation procedures, including notice, an opportunity to submit written responses, and access to a redacted record.
- The court approved judicial and agency reliance on classified evidence reviewed ex parte and in camera, given the government’s interest in protecting intelligence sources and methods.
- The court rejected the First Amendment claim, reasoning that restricting financial support to terrorist organizations is a permissible regulation of conduct, and there is no constitutional right to provide material support to terrorism.
- The court rejected the RFRA claim, finding no sufficient showing of a substantial burden on specific religious exercise and, in any event, a compelling government interest addressed through the challenged measures.
- The court affirmed judgment for the government and found any procedural errors in the district court’s handling of dismissal versus summary judgment harmless because HLF failed to produce evidence creating a genuine factual dispute.

## Legal Principles

- Under IEEPA, the Executive may block property and prohibit transactions involving property in which a sanctioned foreign person or entity has any relevant interest, including beneficial interests, when authorized by emergency powers.
- OFAC terrorism designations are reviewed under the APA’s arbitrary-and-capricious standard with substantial deference, especially where national security judgments are involved.
- Material support findings need not be limited to direct financing of violent acts; funding a terrorist organization’s controlled or affiliated charitable infrastructure can constitute support.
- Procedural due process in asset-blocking and designation actions may be satisfied by post-deprivation notice and an opportunity to submit written materials, where pre-deprivation process would risk dissipation of assets and implicate national security.
- Courts may consider classified evidence ex parte and in camera in reviewing terrorism-related administrative actions without necessarily violating due process.
- The First Amendment does not protect providing material support to designated terrorist organizations; restrictions on financial transactions may be upheld even if they incidentally affect expressive or associative activity.
- Under RFRA, a claimant must show a substantial burden on religious exercise; even if shown, measures may be sustained when they further a compelling governmental interest through appropriately tailored means.

## Conclusion

The D.C. Circuit sustained OFAC’s designation of HLF as a terrorist-related entity and the resulting asset freeze, holding that the government acted within IEEPA and the Executive Orders and that the APA, due process, First Amendment, and RFRA challenges failed, including where classified evidence was used and only post-deprivation process was provided.


Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156 (D.C. Cir. 2003)