Holy Land Foundation v. Ashcroft

Decision Date20 June 2003
Docket NumberNo. 02-5307.,02-5307.
Citation333 F.3d 156
PartiesHOLY LAND FOUNDATION FOR RELIEF AND DEVELOPMENT, Appellant, v. John D. ASHCROFT, in his official capacity as Attorney General of the United States, et al., Appellees.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (No. 02cv00442).

John D. Cline argued the cause for appellant. With him on the briefs was John W. Boyd.

Douglas Letter, Terrorism Litigation Counsel, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Roscoe C. Howard, Jr., U.S. Attorney, H. Thomas Byron III, and Elizabeth J. Shapiro, Attorneys, U.S. Department of Justice, and David D. Aufhauser, General Counsel, U.S. Department of Treasury.

Before: GINSBURG, Chief Judge, and SENTELLE and HENDERSON, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

In December 2001, the Office of Foreign Asset Control ("OFAC") designated Holy Land Foundation ("HLF") as a "Specially Designated Global Terrorist" ("SDGT") pursuant to an Executive Order issued under the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq. ("IEEPA"). This designation was accompanied by an order blocking all of the organization's assets. HLF brought an action in the district court challenging this designation and before us now appeals the lower court's decision which affirmed OFAC's actions and dismissed the complaint in substantial part. For the reasons explained below, we hereby affirm the district court's dismissal in part, and order summary judgment for the government.

I. Background

The IEEPA, 50 U.S.C. § 1701 et seq., authorizes the President to declare a national emergency when an extraordinary threat to the United States arises that originates in substantial part in a foreign state. Such a declaration clothes the President with extensive authority set out in 50 U.S.C. § 1702. Under that section he may investigate, regulate, or prohibit transactions in foreign exchange, banking transfers, and importation or exportation of currency or securities by persons or with respect to property, subject to the jurisdiction of the United States. § 1702(a)(1)(A). Of further special concern to the Holy Land Foundation, he may

investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, 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....

§ 1702(a)(1)(B).

In 1995, the President issued Executive Order 12,947 pursuant to the IEEPA. Exec. Order No. 12,947 (60 Fed.Reg. 5079 (Jan. 23, 1995)). That order designated certain terrorist organizations, including the Palestinian organization Hamas, as "Specially Designated Terrorists," or SDTs, and blocked all of their property and interests in property. The order also allowed for additional designations if an organization or person is found to be "owned or controlled by, or to act for or on behalf of" an SDT. Id.

In 2001, as part of his response to the attacks of September 11, the President issued Executive Order 13,224, similar to Order 12,947, pursuant to the IEEPA. Exec. Order No. 13,224 (66 Fed.Reg. 49,079 (Sept. 23, 2001)). Order 13,224 designated specified terrorist organizations, again including Hamas, as "Specially Designated Global Terrorists," or SDGTs, and blocked all of their property and interests in property subject to the jurisdiction of the United States. That order also allowed for additional SDGTs to be designated if organizations or persons are found to "act for or on behalf of" or are "owned or controlled by" designated terrorists, or they "assist in, sponsor, or provide ... support for," or are "otherwise associated" with them. Id.

HLF was originally established as the Occupied Land Fund and incorporated as a tax-exempt organization in California in 1989. In 1991 it changed its corporate name to the Holy Land Foundation for Relief and Development and moved to Texas. It describes itself as "the largest Muslim charity in the United States." In December 2001, OFAC, a division of the Department of the Treasury, acting pursuant to the IEEPA and the two Executive Orders (13,224 and 12,947), designated HLF as both an SDT and an SDGT and blocked all of its assets. The designations were based on information supporting the proposition that HLF was closely linked to Hamas. Soon thereafter, HLF filed a complaint in district court challenging its designations as a terrorist organization and the seizure of its assets, and alleging that its rights under the First, Fourth, and Fifth Amendments, its right to free exercise of religion under the Religious Freedom Restoration Act, 42 U.S.C. § 2000bb et seq. ("RFRA"), and its rights under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. ("APA"), had all been violated. HLF also filed a motion for a preliminary injunction, seeking to enjoin the government from blocking or freezing its assets. In support of the motion, HLF attached exhibits purportedly showing that it was not linked to Hamas and therefore not a terrorist organization. Subsequently, in May 2002, the OFAC redesignated HLF as an SDT and an SDGT, and filed with the district court an administrative record which included HLF's motion for a preliminary injunction with attached exhibits.

In response to HLF's pleadings, the government moved for summary judgment on the APA claim and to dismiss the remaining claims for failure to state a claim. HLF then filed an opposition to the government's motion, attaching additional exhibits and seeking discovery. The government moved to strike all of HLF's exhibits that were not part of the administrative record and to bar an evidentiary hearing.

The district court conducted a hearing, consisting entirely of oral argument by counsel, on the motions. The court then issued its decision. It granted summary judgment on the HLF's APA claim; dismissed, under Rule 12(b)(6), the remaining claims except for one aspect of the Fourth Amendment claim; and granted the government's motion to strike HLF's exhibits. Holy Land Found. for Relief & Dev. v. Ashcroft, 219 F.Supp.2d 57 (D.D.C.2002).

II. The District Court's Opinion

The Holy Land Foundation attempted to supplement the record before the district court by the addition of exhibits attached to its opposition to the defendants' motion to dismiss. The government moved in limine to strike the supplemental material. The district court granted the government's motion, holding that APA review "must ordinarily be confined to the administrative record." Id. at 65 (citing Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973)). The court further rejected HLF's argument that the IEEPA authorizes the blocking of property only where a foreign country or foreign national has a legally enforceable interest in that property, by recognizing that the text of the statute and the cases which have interpreted it impose no restraint on the broad phrase "any interest" and that the Treasury Department's regular interpretation of that term to mean "an interest of any nature whatsoever, direct or indirect" had been repeatedly upheld by the courts. See Holy Land, 219 F.Supp.2d at 67 (citing Regan v. Wald, 468 U.S. 222, 224, 225-26, 233-34, 104 S.Ct. 3026, 3029, 3029-30, 3033-34, 82 L.Ed.2d 171 (1984)). The court then commenced a detailed review of the administrative record and reiterated the evidence on which the Treasury Department relied in making its determination to designate HLF as an SDGT. See Holy Land, 219 F.Supp.2d at 69-75. It found that the record contained "ample evidence that (1) HLF has had financial connections to Hamas since its creation in 1989; (2) HLF leaders have been actively involved in various meetings with Hamas leaders; (3) HLF funds Hamas-controlled charitable organizations; (4) HLF provides financial support to the orphans and families of Hamas martyrs and prisoners; (5) HLF's Jerusalem office acted on behalf of Hamas; and (6) FBI informants reliably reported that HLF funds Hamas." Id. at 69. The court concluded, based on the substantial evidence in the record, Treasury's determination that HLF acts for or on behalf of Hamas was not arbitrary and capricious, and therefore, upheld the agency's reasonable determination.

The court then turned to the remainder of HLF's claims, and dismissed all but one under Federal Rule of Civil Procedure 12(b)(6). First, the court rejected HLF's contention that its due process rights had been violated because the government failed to provide notice and a hearing before its assets were blocked. The court found that postponement of notice and hearing were justified in this case, under factors previously articulated by the Supreme Court. See id. at 76-77 (citing Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 679-80, 94 S.Ct. 2080, 2089-90, 40 L.Ed.2d 452 (1974)). The district court also rejected HLF's claim under a substantive due process theory, holding that the designation and blocking were not arbitrary and capricious and "did not rise to the level of a constitutional violation." See id. at 77. The court dismissed HLF's constitutional claims finding that the designation and blocking order did not violate the entity's First Amendment right to freedom of association, stating that they "do not prohibit membership in Hamas or endorsement of its views, and therefore do not implicate HLF's associational rights." Id. at 81. Additionally, the court found that HLF's freedom of speech First...

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