Bazzi v. Gacki, Case No. 1:19-cv-01940 (TNM)

• Decision Date: 24 June 2020
• Docket Number: Case No. 1:19-cv-01940 (TNM)
• Citation: 468 F.Supp.3d 70
• Parties: Wael Muhammad BAZZI, Plaintiff, v. Andrea M. GACKI, in her official capacity as Director of the U.S. Department of the Treasury, Office of Foreign Assets Control, et al., Defendants.
• Court: U.S. District Court — District of Columbia

468 F.Supp.3d 70

Wael Muhammad BAZZI, Plaintiff,

v.Andrea M. GACKI, in her official capacity as Director of the U.S. Department of the Treasury, Office of Foreign Assets Control, et al., Defendants.

Case No. 1:19-cv-01940 (TNM)

United States District Court, District of Columbia.

Signed June 24, 2020

Erich C. Ferrari, Ferrari & Associates, P.C., Washington, DC, for Plaintiff.

Kevin Matthew Snell, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

TREVOR N. McFADDEN, U.S.D.J.

The U.S. Department of Treasury suspects that Wael Bazzi is conducting business on behalf of his father, Mohammad Bazzi—a Specially Designated Global Terrorist ("SDGT") and a key financier of the terrorist organization, Hizballah. As a result, the Treasury Department's Office of Foreign Assets Control ("OFAC") has also designated Wael Bazzi as a SDGT. It issued a press release outlining its reasons for this designation and published a notice in the Federal Register.

Wael Bazzi sued, arguing that OFAC violated his rights under the Fifth Amendment Due Process Clause and the APA by providing insufficient notice of the evidence and reasons supporting OFAC's designation. But the Court finds that Bazzi—a Belgian citizen with no connections to the United States—lacks due process rights under the Fifth Amendment and the APA. Thus, the Court will grant OFAC summary judgment on all counts.

I.

A.

In the aftermath of the September 11 terrorist attacks, President George W. Bush exercised his authority under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701 et seq. , by issuing Executive Order 13224. See Exec. Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) (" E.O. 13224"). IEEPA authorizes the President to "deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat." 50 U.S.C. § 1701(a). If the President declares this national emergency, IEEPA permits him to:

"investigate, block during the pendency of an investigation ... prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation 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 by any person, or with respect to any property, subject to the jurisdiction of the United States ...."

Id. § 1702(a)(1)(B). This is a capacious and formidable authority.

President Bush's executive order declared a national emergency, finding that "grave acts of terrorism and threats of terrorism committed by foreign terrorists" and "the continuing and immediate threat of further attacks ... constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States." E.O. 13224. Invoking IEEPA, the President delegated authority to the Treasury Secretary to block "all property and interests in property" of persons who, as relevant here, the Treasury Secretary determines (i) "assist in, sponsor, or provide financial, material, or technological support for, or financial or other services to or in support of, such acts of terrorism or those persons listed in the Annex [of E.O. 13224 ] or determined to be subject to this order," or (ii) those who "act for or on behalf of" those designated persons. Id. § 1(d)(i), (c).

The executive order also authorized the Treasury Secretary, in consultation with the Attorney General and the Secretary of State, to promulgate rules and regulations to "carry out the purposes of this order." Id. § 7. Based on that authorization, the Treasury Secretary issued the "Global Terrorism Sanctions Regulations," which outline procedures for designating and blocking the property of "Specially Designated Global Terrorists." See generally 31 C.F.R. pt. 594.

Under these procedures, once the Treasury Department determines that persons or entities fall within E.O. 13224, it designates them as "Specially Designated Global Terrorists." 31 C.F.R. § 594.201 n.2 to ¶ (a). Following their designation, it adds their names to a "Specially Designated Nationals" List ("SDN List"), published in the Federal Register. Id.

This is not the end of the matter though. A designated person may pursue "administrative reconsideration" or seek rescission of the designation by "assert[ing] that the circumstances resulting in the designation no longer apply[.]" 31 C.F.R. § 501.807. The reconsideration or rescission process allows the designated person to "submit arguments or evidence that the person believes establishes that insufficient basis exists for the designation" or "propose remedial steps ... which the person believes would negate the basis for designation." Id. § 501.807(a). OFAC then reviews this information and provides a "written decision to the blocked person or person seeking the unblocking of a vessel." Id. § 501.807(b), (d).

B.

Invoking E.O. 13224, the Secretary of State—in consultation with the Treasury Secretary and the Attorney General—has designated Hizballah as a foreign organization which has "committed, or [ ] pose[s] a significant risk of committing, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States." See J.A. at 52–53, ECF No. 18.¹ Indeed, over the past forty years, "Hizballah has been involved in numerous anti-US terrorist attacks, including the suicide truck bombings of the US Embassy in Beirut in April 1983, the US Marine barracks in Beirut in October 1983, and the US Embassy annex in Beirut in September 1984, as well as the hijacking of TWA 847 in 1985 and the Khobar Towers attack in Saudi Arabia in 1996." See Defs.’ Mot. at 10 (quoting National Counterterrorism Center, Counter Terrorism Guide , https://www.dni.gov/nctc/groups/hizballah.html (last visited June 22, 2020)).

OFAC believes that Mohammad Ibrahim Bazzi is a "key Hizballah financier." J.A. at 44. In 2018, it designated him and five of his companies—including a "Belgian energy services conglomerate," Global Trading Group NV ("GTG")—as Specially Designated Global Terrorists, based on evidence that for "many years" he had provided Hizballah with "millions of dollars ... generated from his business activities." Id. at 43–44. Because of that designation, OFAC blocked all Mohammad Bazzi's property and interests in the United States. Id. at 43. U.S. persons and entities were also prohibited from dealing with or transacting with him and his businesses. Id. These actions and determinations by OFAC are not questioned in this case.

Now, OFAC believes that Mohammad Bazzi is evading U.S. sanctions by having his son, Wael Bazzi, conduct business on his behalf. Id. at 11. About one year after designating his father, OFAC announced that it was also designating Wael Bazzi and three of his companies as SDGTs because he was "acting for or on behalf of his father[.]" Id. at 8. The press release specifically identified four justifications for this designation, though it did not explain the source of these allegations or the underlying evidence. Id. at 11.

A few weeks later, OFAC published a notice in the Federal Register announcing Bazzi's designation as an SDGT. Id. at 21. The notice explained that Bazzi was "[d]esignated pursuant to section 1(c) of E.O. 13224 for acting for or on behalf [of Mohammad Bazzi], an individual whose property and interests in property are blocked pursuant to E.O. 13224." Id.

Bazzi sued OFAC and its Director, Andrea Gacki (collectively, "OFAC"), challenging the adequacy of the evidence supporting his designation. Compl. ¶¶ 30–35, ECF No. 1. After filing an answer, OFAC filed the administrative record for Bazzi's designation, including the "evidentiary memorandum" explaining the reasons for designating him as an SDGT. See Certification of A.R., ECF No. 10-1. But OFAC withheld classified and privileged information from the administrative record. Id. ¶ 4. Under the heading "Basis for Determination," OFAC redacted the entirety of the nine paragraphs explaining its reasons for designating Bazzi. See J.A. at 25–28.

Upon receiving the administrative record, Bazzi amended his Complaint. See Am. Compl., ECF No. 11. Importantly, he is no longer challenging that OFAC erred by designating him as an SDGT. See Pl.’s Cross-Mot. for Summ. J. at 29, ECF No. 13 ("Pl.’s Mot."). Instead, he now contends that OFAC violated his due process rights and the APA by failing to provide adequate notice of the basis for his designation. Id. ¶¶ 24–34.

OFAC moved to dismiss and for summary judgment. Defs.’ Mot. to Dismiss, or, in the Alternative for Summ. J., ECF No. 12-1 ("Defs.’ Mot."). In response, Bazzi filed a cross-motion for summary judgment. See Pl.’s Mot. These motions are now ripe for the Court's review.

II.

OFAC moves to dismiss Bazzi's Amended Complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). See Defs.’ Mot. to Dismiss 1, ECF No. 12. To survive a 12(b)(1) motion, a plaintiff must establish the predicates to jurisdiction, including standing, by a preponderance of the evidence. See Lujan v. Defs. of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). When ruling on this motion, a court must "assume the truth of all material factual allegations in the complaint and construe the complaint liberally, granting plaintiff the benefit of all inferences that can be derived from the facts alleged." Am. Nat'l Ins. Co. v. FDIC , 642 F.3d 1137, 1139 (D.C. Cir. 2011) (cleaned up). When "considering whether a plaintiff has Article III standing, a federal court must assume arguendo the merits of his or her legal claim." Parker v. District of Columbia , 478 F.3d 370, 377 (D.C. Cir. 2007). If a court determines that it lacks jurisdiction for any claim,...