Al Haramain Islamic Foundation, Inc. v. United States Department of the Treasury
2012 WL 603979, 686 F.3d 965 (2011)
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Rule of Law:
The warrantless seizure of a domestic entity's assets by the government, even for national security purposes under the International Emergency Economic Powers Act (IEEPA), violates the Fourth Amendment. Additionally, the Due Process Clause requires the government to provide adequate notice of the reasons for such a designation and to mitigate the unfairness of using classified evidence in the administrative process.
Facts:
- Al Haramain Islamic Foundation, Oregon (AHIF-Oregon), an Oregon non-profit, was incorporated in 1999 and shared some leaders with a larger Saudi Arabian organization, AHIF-Saudi Arabia.
- In 2000, AHIF-Oregon donated over $150,000 to AHIF-Saudi Arabia, stating the funds were intended for humanitarian relief in Chechnya.
- Following the September 11, 2001 attacks, President George W. Bush issued Executive Order 13,224, authorizing the Treasury Department to block the assets of entities suspected of supporting terrorism.
- On February 19, 2004, the Treasury's Office of Foreign Assets Control (OFAC), acting without a warrant, froze all of AHIF-Oregon's assets pending an investigation.
- Over the next several months, OFAC and AHIF-Oregon exchanged documents, but OFAC did not provide a specific statement of reasons for its investigation.
- On September 9, 2004, OFAC formally designated AHIF-Oregon and one of its board members, Solimán Al-Buthe, as 'Specially Designated Global Terrorists,' effectively shutting down the organization.
- Multicultural Association of Southern Oregon (MCASO), another non-profit that had previously partnered with AHIF-Oregon, wished to engage in coordinated advocacy with AHIF-Oregon, such as holding joint press conferences, but was barred from doing so by the designation.
Procedural Posture:
- AHIF-Oregon filed an action in the U.S. District Court against the Department of the Treasury, challenging its designation as a terrorist organization and the freezing of its assets.
- Plaintiffs alleged violations of the Administrative Procedure Act (APA), the Fourth Amendment, and the Fifth Amendment's Due Process Clause. MCASO joined, alleging First Amendment violations.
- The district court granted summary judgment to OFAC on all key claims, holding that the asset freeze was a reasonable seizure under the Fourth Amendment's 'special needs' exception and that any due process violations were harmless.
- AHIF-Oregon and MCASO (Appellants) appealed the district court's grant of summary judgment to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does the government's warrantless seizure of a domestic entity's assets, accomplished by freezing them under an executive order aimed at combating terrorism, violate the Fourth Amendment's prohibition against unreasonable seizures?
Opinions:
Majority - Graber, Circuit Judge
Yes, the warrantless seizure violates the Fourth Amendment. A seizure of property is per se unreasonable without a judicial warrant unless a recognized exception applies. OFAC's asset freeze does not fall under the 'special needs' exception because it is not impracticable for the government to obtain a warrant; concerns about asset flight can be addressed through an initial emergency seizure followed by a proper warrant application. The seizure also fails the 'general reasonableness' test, as it involves a massive intrusion on the privacy interests of a domestic entity, which, unlike parolees or individuals at the border, has a full expectation of privacy that is not diminished. The government’s vital interest in combating terrorism does not create a blanket exception to the warrant requirement for domestic entities. The court also held that OFAC violated AHIF-Oregon's Fifth Amendment due process rights by failing to provide adequate notice of the reasons for the investigation and by not attempting to mitigate the unfairness of using classified information (e.g., by providing an unclassified summary). However, these violations were deemed harmless error because, given the substantial evidence (including classified information), the outcome would not have changed. Finally, the court held that the executive order's ban on providing 'services' to AHIF-Oregon was an unconstitutional, content-based restriction on MCASO’s First Amendment free speech rights as applied to its proposed coordinated advocacy, distinguishing the case from the Supreme Court's decision in Holder v. Humanitarian Law Project because it involved a domestic, rather than foreign, entity whose assets were already frozen.
Analysis:
This decision establishes a significant check on the executive branch's power to freeze the assets of domestic organizations under IEEPA and related anti-terrorism executive orders. By applying the Fourth Amendment's warrant requirement in the national security context, the court rejected the government's argument that its objectives make such seizures automatically reasonable. This creates a critical procedural safeguard, requiring judicial oversight before a U.S. entity can be financially incapacitated. The ruling's distinction of Holder v. Humanitarian Law Project also carves out important First Amendment protections for advocacy involving designated domestic groups, limiting the reach of 'material support' prohibitions in the domestic sphere.
