United States v. Akova

• Decision Date: 28 October 2016
• Docket Number: CRIMINAL ACTION NO.: 1:12-cr-00220-ELR-JKL-2
• Parties: UNITED STATES OF AMERICA, v. ERDAL AKOVA, Defendant.
• Court: U.S. District Court — Northern District of Georgia

UNITED STATES OF AMERICA, v. ERDAL AKOVA, Defendant.

CRIMINAL ACTION NO.: 1:12-cr-00220-ELR-JKL-2

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

October 28, 2016

FINAL REPORT AND RECOMMENDATION

Defendant Erdal Akova, a Turkish national, is charged with participating in a scheme to export an epoxy manufactured in the Northern District of Georgia to the Islamic Republic of Iran in violation of U.S. trade sanctions against Iran. According to the indictment, the Iranian government uses the epoxy to repair helicopters it acquired before the Iranian Islamic Revolution in 1979. Absent license and authorization from the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), it is illegal under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701, et seq., and the Iranian Transaction Regulations ("ITR"), 31 C.F.R. Part 560, to export such goods from the United States to Iran. [Doc. 1 at 1-6.]

Count One of the indictment charges Akova with conspiracy to violate the IEEPA and the ITR in violation of the general conspiracy statute, 18 U.S.C. § 371. [Doc. 1 at 1-19.] Count Two charges Akova with exporting the epoxy to Iran through Turkey in violation of the IEEPA and the ITR, and aiding and abetting the same.¹ [Doc. 1 at 19.]

On September 8, 2016, Akova filed a "Motion to Declare 18 [sic] U.S.C. § 1705 Unconstitutional Due to Vagueness and as an Improper Delegation of Congressional Authority" (the "motion to dismiss"), in which Akova moves the Court to dismiss all counts of the indictment against him. [Doc. 34.] Akova contends that 50 U.S.C. § 1705, which imposes criminal penalties for violations of the IEEPA, is unconstitutional because (1) Congress's delegation of authority to the executive branch to issue regulations that define what constitutes criminal conduct violates the non-delegation doctrine; (2) the statute is impermissibly vague; and (3) Congress did not intend for the statute to apply extraterritorially. [Doc. 34 at 3-8.] Akova also moves to dismiss the conspiracy charge on the grounds that the general conspiracy statute, 18 U.S.C. § 371, does not applyextraterritorially. [Id. at 8.] The government has responded to the motion [Doc. 36], and Akova has filed a reply [Doc. 37]. For the following reasons I RECOMMEND that Akova's motion be DENIED.

I. Overview of the IEEPA and the ITR

A. The IEEPA

Enacted in 1977, the IEEPA grants the President certain powers to "deal with any unusual and extraordinary threat . . . to the national security, foreign policy, or economy of the United States" that "has its source in whole or substantial part outside the United States[.]" 50 U.S.C. § 1701(a). If the President declares a national emergency with respect to such a threat, he is authorized to regulate certain types of economic activities "under such regulations as he may prescribe, by means of instructions, licenses, or otherwise." Id. § 1702(a).

The IEEPA requires the President to report to Congress when exercising power granted to him under the Act. The President must consult with Congress "in every possible instance" before exercising powers granted under IEEPA and "immediately" provide Congress with a report detailing:

(1) the circumstances which necessitate such exercise of authority;(2) why the President believes those circumstances constitute an 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;

(3) the authorities to be exercised and the actions to be taken in the exercise of those authorities to deal with those circumstances;

(4) why the President believes such actions are necessary to deal with those circumstances; and

(5) any foreign countries with respect to which such actions are to be taken and why such actions are to be taken with respect to those countries.

50 U.S.C. § 1703(a)-(b).

Then, after the President executes his or her authority under the IEEPA, he must "consult regularly with the Congress so long as such authorities are exercised." 50 U.S.C. § 1703(a). "At least once during each succeeding six-month period" following the initial exercise of any authority granted by the IEEPA, the President is required to report to Congress the actions taken since the last report and update any information previously reported to Congress. Id. § 1703(c). Congress also reserves the authority to terminate presidential authority under the IEEPA. Id. §§ 1622(b), 1706(b).

Congress also limited the types of transactions and economic activities that the President is authorized to regulate. For example, the President may not issue regulations that impinge on personal communications, humanitarian aid, transactions incident to travel, or the free exchange of "information or informational materials." 50 U.S.C. § 1702(b). Congress also limited criminal penalties under IEEPA to persons who "willfully commit[], willfully attempt[] to commit, or willfully conspire[] to commit" a violation of a regulation issued under the IEEPA. 50 U.S.C. § 1705(c). The IEEPA also exempts those who act in "good faith" reliance on Act, or on "any regulation, instruction, or direction" issued under IEEPA. Id. § 1702(a)(3).

B. The Iranian Transactions Regulations

The Iranian Transactions Regulations, codified at 31 C.F.R. part 560, implement a series of Executive orders that began with Executive Order 12613, which President Ronald Reagan issued on October 29, 1987, prohibiting the importation of Iranian-origin goods and services. See Exec. Order No. 12613, 52 FR 41940 (Oct. 29, 1987). In 1995, President William J. Clinton declared that "the actions and policies of the Government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of theUnited States," and ordered sanctions prohibiting the export to, financing of, and investment in Iran. Exec. Order No. 12957, 60 Fed. Reg. 14615 (Mar. 15, 1995); Exec. Order No. 12959, 60 Fed Reg. 24757 (May 6, 1995); Exec. Order No. 13059, 62 Fed. Reg. 44531 (Aug. 19, 1995).

Pursuant to those orders, the Secretary of the Treasury issued the ITR. Section 560.204 of the ITR prohibits "the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran." 31 C.F.R. § 560.204 (2012). The version of Section 560.203 in effect during the time relevant to the conduct alleged in the indictment prohibited: "Any transaction by any United States person or within the United States that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions contained in this part."² 31 C.F.R. § 560.203 (2012).

II. Analysis

A. The IEEPA Does Not Unconstitutionally Delegate Power to the Executive Branch.

Akova argues that the IEEPA is unconstitutional under the non-delegation doctrine because Congress improperly delegated authority to the executive branch to define the elements of criminal offenses by regulation. [Doc. 34 at 3, 7-8.] The government counters that Congress's delegation of authority was proper because the IEEPA limits the President's power and imposes procedural limitations that meaningfully constrains the President's discretion to define criminal conduct. [Doc. 36 at 4-7.]

The government has the better argument. "The non-delegation doctrine is the constitutional principle that prevents Congress from delegating its legislative authority to another body with 'unfettered discretion to make whatever laws' the body sees fit." Eternal Word Television Network, Inc. v. Sec. of U.S. Dept. of Health & Human Servs., 818 F.3d 1122, 1137 n.15 (11th Cir. 2016) (quoting A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 537-38 (1935)). Rooted in the principle of preserving the separation of powers between thecoordinate branches of government, the doctrine is derived from Article 1, Section 1 of the Constitution, which states that "[a]ll legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives." U.S. Const. art. I, § 1; United States v. Ambert, 561 F.3d 1202, 1212-13 (11th Cir. 2009).

To determine the constitutionality of Congress's delegation of authority to another branch of government, a court must consider whether "Congress has provided an 'intelligible principle' for the recipient of the delegated authority to conform to, the legislative action will not amount to a forbidden delegation of legislative power." Ambert, 561 F.3d at 1213 (citing J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394 (1928)). Relevant factors under this test include whether Congress delineated the general policy to be served, identified the public agency which is to apply it, and set boundaries of the delegated authority. Id. (citing Am. Power & Light Co. v. Sec. & Exch. Comm'n, 329 U.S. 90, 105 (1946)). Non-delegation challenges are rarely successful. "Indeed, since 1935, the Supreme Court has not struck down a single statute as an impermissible delegation of legislative power." Id.

It appears that although the U.S. Court of Appeals for the Eleventh Circuit has not addressed whether the IEEPA violates the non-delegation doctrine, all the courts of appeal that have considered a non-delegation challenge to the IEEPA have upheld the constitutionality of the Act. See United States v. Mirza, 454 F. App'x 249, 255-56 (5th Cir. 2011) (unpublished); United States v. Amirnazmi, 645 F.3d 564, 575-77 (3d Cir. 2011); United States v. Dhafir, 461 F.3d 211, 215-17 (2d Cir. 2006); United States v. Arch Trading Co., 987 F.2d 1087, 1092-94 (4th Cir. 1993). A number of district courts have similarly rejected non-delegation challenges under the IEEPA. See, e.g., United States v. Nazemzadeh, No. 11 CR 5726 L, 2014 WL 310460,...