U.S. v. Dhafir

• Citation: 461 F.3d 211
• Decision Date: 24 August 2006
• Docket Number: Docket No. 05-4770-cr.
• Parties: UNITED STATES of America, appellee, v. Rafil DHAFIR, also known as Sealed Deft # 1, Maher Zagha, also known as Sealed Deft # 2, Ayman Jarwan, also known as Sealed Deft # 3, Help The Needy, also known as Sealed Deft # 5, Help The Needy Endowment Inc., also known as Sealed Deft # 6, Sealed Witness, Defendants, Osameh Al Wahaidy, also known as Sealed Deft # 4, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

461 F.3d 211

UNITED STATES of America, appellee, v. Rafil DHAFIR, also known as Sealed Deft # 1, Maher Zagha, also known as Sealed Deft # 2, Ayman Jarwan, also known as Sealed Deft # 3, Help The Needy, also known as Sealed Deft # 5, Help The Needy Endowment Inc., also known as Sealed Deft # 6, Sealed Witness, Defendants, Osameh Al Wahaidy, also known as Sealed Deft # 4, Defendant-Appellant.

Docket No. 05-4770-cr.

United States Court of Appeals, Second Circuit.

Argued: March 16, 2006.

Decided: August 24, 2006.

Steven Ward Williams, Smith, Sovik, Kendrick & Sugnet, P.C., Syracuse, New York City, for Defendant-Appellant.

Michael C. Olmsted, Assistant United States Attorney (Glenn T. Suddaby, United States Attorney for the Northern District of New York; Brenda K. Sannes, Stephen C. Green, Assistant United States Attorneys, on the brief), Syracuse, New York City, for Appellee.

Before JACOBS, LEVAL, Circuit Judges, RAKOFF, District Judge.^*

DENNIS JACOBS, Circuit Judge.

The sole issue on this appeal is whether the International Emergency Economic Powers Act ("IEEPA") constitutes an appropriate delegation of congressional authority to the executive. The IEEPA authorizes the President to regulate financial transactions with foreign countries or nationals in a time of security crisis, and prescribes criminal penalties for violations of the president's regulations. Defendant-Appellant Osameh Al Wahaidy pled guilty to transferring money into Iraq on three specific occasions in 1999 and 2000, in violation of Executive Orders and regulations issued pursuant to the IEEPA, but preserved his right to bring a constitutional challenge to the statute. Al Wahaidy now appeals from the July 3, 2003 Memorandum Decision and Order of the United States District Court for the Northern District of New York (Mordue, J.) denying his motion to dismiss the indictment on the ground that the IEEPA improperly delegates Congress' authority to define criminal offenses. We affirm.

BACKGROUND

A. The IEEPA

The IEEPA, enacted in 1977 and codified at 50 U.S.C. § 1701 et seq., confers on the President certain powers to respond to any threat to the national security, foreign policy or economy of the United States that is "unusual and extraordinary" and that "has its source in whole or substantial part outside the United States." 50 U.S.C. § 1701(a). The President is granted the power to "investigate, regulate, or prohibit" various commercial activities, including: [i] "any transactions in foreign exchange," [ii] "transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof," and [iii] "the importing or exporting of currency or securities, by any person, or with respect to any property, subject to the jurisdiction of the United States...." 50 U.S.C. § 1702(a)(1)(A). The President is also authorized to block transactions involving 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...." 50 U.S.C. § 1702(a)(1)(B). These powers may be exercised only if and when the President declares a national emergency with respect to the threat, 50 U.S.C. § 1701(a), in which event "[t]he President may issue such regulations, including regulations prescribing definitions, as may be necessary for the exercise of the authorities granted by this title." 50 U.S.C. § 1704. The violation of an Executive Order or regulation promulgated pursuant to the IEEPA is punishable by a fine of not more than $50,000 and imprisonment for not more than twenty years. See 50 U.S.C. § 1705(b).¹ The IEEPA provides, however, that no person shall be held liable for acts or omissions conducted "in good faith." 50 U.S.C. § 1702(a)(3).

The IEEPA reserves a continuing role for Congress. Thus, the IEEPA provides that "[t]he President, in every possible instance, shall consult with the Congress before exercising any of the authorities granted," that he "shall consult regularly with the Congress so long as such authorities are exercised," and that he shall report periodically concerning any actions taken in the exercise of the delegated authority. 50 U.S.C. § 1703. Congress can terminate the President's declaration of emergency "by concurrent resolution pursuant to section 202 of the National Emergencies Act [50 USCS § 1622]." 50 U.S.C. § 1706(b) (emendation in original).

B. The Iraqi Sanctions Executive Orders & Regulations

Following the Iraqi invasion of Kuwait in August, 1990, President George H.W. Bush issued four emergency Executive Orders declaring a national emergency, and prohibiting trade, transportation and financial transactions with Iraq and Kuwait. See Exec. Order No. 12722, 55 Fed.Reg. 31803 (August 2, 1990); Exec. Order No. 12723, 55 Fed.Reg. 31805 (August 2, 1990); Exec. Order No. 12724, 55 Fed.Reg. 33089 (August 9, 1990); and Exec. Order No. 12725, 55 Fed.Reg. 33091 (August 9, 1990). Executive Orders 12722 and 12724 blocked the Iraqi government's property and interests in property in the United States and prohibited transactions with entities in Iraq or controlled by the Iraq government. Executive Orders 12723 and 12725 correspondingly blocked the property of the Kuwaiti government and prohibited various transactions with entities in Kuwait or controlled by the Kuwaiti government.

To implement the Executive Orders, the Office of Foreign Assets Control ("OFAC") promulgated regulations providing (in relevant part) that "no U.S. person may commit or transfer, directly or indirectly, funds or other financial or economic resources to the Government of Iraq or any person in Iraq." 31 C.F.R. § 575.210; see also 31 C.F.R. § 575.211 (prohibiting the evasion or avoidance of the regulations and any attempt to violate the prohibitions).

The day the President signed Executive Order 12722 declaring a national emergency, the Senate passed a resolution commending the measures taken and urging the President to act immediately to enforce the IEEPA and to impose sanctions against Iraq. See S. Res. 318, 101st Cong. (1990). Several days later, the House passed its version of the Sanctions Against Iraq Act of 1990, authorizing economic sanctions under the authority of the IEEPA. H.R. 5431, 101st Cong. (2d Sess. 1990). In November 1990, Congress passed "The Iraqi Sanctions Act", declaring that Congress "supports the actions that have been taken by the President ... [and] supports the imposition and enforcement of multilateral sanctions against Iraq," and requiring that the President "continue to impose the trade embargo and other economic sanctions with respect to Iraq and Kuwait ..., pursuant to Executive Orders Numbered 12724 and 12725 (August 9, 1990) and, to the extent they are still in effect, Executive Orders Numbered 12722 and 12723 (August 2, 1990)." Iraqi Sanctions Act, Pub.L. 101-513 § 586, 104 Stat.1979, 2047-48 (1990).

C. Al Wahaidy's Plea and Conviction

On February 19, 2003, Al Wahaidy was charged in an Indictment, which was superseded on April 23, 2003, by an Information charging three specific instances of "willfully attempt[ing] to violate and evade Executive Order Numbers 12722 and 12724 and the regulations issued under those Executive Orders and under the [IEEPA]" by transferring "funds and other economic resources to one or more persons" in Iraq. The Information alleged that the violations occurred on October 25, 1999, November 9, 1999, and February 23, 2000, and that they involved a total amount of $100,000.² On April 4, 2003, Al Wahaidy moved to dismiss the charges on the ground that the IEEPA unconstitutionally delegated legislative authority to the executive branch. On April 23, 2003, Al Wahaidy pled guilty to the charges in the Information, but he preserved his right to challenge the statute's constitutionality. On July 3, 2003, the district court denied Al Wahaidy's motion to dismiss the indictment and upheld the constitutionality of the IEEPA. On August 12, 2005, Al Wahaidy was sentenced to two years probation, 100 hours of community service, and a $5000 fine. This appeal ensued.

DISCUSSION

Al Wahaidy argues [i] that the IEEPA is an improper delegation to the President of the Congressional authority to create criminal offenses, and [ii] that, in any event, the delegation fails on its own terms because the government has not shown that the executive has complied with the statutory reporting requirements.

A. Constitutionality of the IEEPA

We review the constitutionality of a federal statute de novo. United States v. Awadallah, 349 F.3d 42, 51 (2d Cir.2003).

The Constitution vests in Congress the legislative power to define criminal conduct; but "our jurisprudence" has reached a "practical understanding that . . . Congress simply cannot do its job absent an ability to delegate power under broad general directives." Mistretta v. United States, 488 U.S. 361, 372, 109 S.Ct. 647, 102 L.Ed.2d 714 (1989). Delegations of congressional authority are upheld "[s]o long as Congress `shall lay down by legislative act an intelligible principle to which the person or body authorized to [exercise the delegated authority] is directed to conform.'" Id. (emendation in original) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 406, 48 S.Ct. 348, 72 L.Ed. 624 (1928)). Under that standard, impermissible delegation has been rarely found. Since the articulation of the "intelligible principle" test in J.W. Hampton, Jr., the Supreme Court has struck down only two statutes as impermissible delegations. See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570 (1935) (striking down delegation to industry associations comprised of private individuals to create legally binding codes of "fair competition"); Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446 (1935) (...