On Aug. 24, 2009, the U.S. Court of Appeals for the Ninth Circuit upheld a lower court decision that declined to consider the constitutionality of the President's authority to designate terrorists under the International Emergency Economic Power Act (IEEPA) because plaintiff Humanitarian Law Project (HLP) has not been designated. The Department of Treasury (Treasury) licensing regulations were not considered for similar reasons. However, the court found the Secretary of Treasury's authority to designate organizations is constitutional because it "is adequately constrained by criteria in the Executive Order." The term "services" in IEEPA's description of prohibited material support to terrorist was also upheld.
In a series of lawsuits and appeals HLP has challenged the constitutionality of two laws authorizing counterterrorism measures that can be taken against charities: IEEPA and the Antiterrorism and Effective Death Penalty Act (AEDPA). HLP wants to provide human rights training and other humanitarian services to two groups listed as Specially Designated Global Terrorists (SDGT) under IEEPA, but says it has declined to do so because it fears it will be designated and have its assets frozen under IEEPA and Bush Executive Order (EO) 13224.
The court held that HLP cannot challenge the President's designation authority because it has not been designated itself, saying "We disagree with HLP's contention that self-censorship suffices for injury-in-fact because IEEPA on its face does not regulate speech, but conduct."
The court also said that "Enforcement was neither threatened nor imminent." The ruling raises a serious question about what level of risk a charity must assume in order to have sufficient injury or threat of injury to have standing to sue. The only sanction Treasury has used against charities is freezing and seizing assets, effectively shutting them down. There is not a preliminary phase where enforcement is threatened, since Treasury applies full sanctions "pending investigation" (see KindHearts case information). The court's opinion ignores this fact.
The court also declined to consider the constitutionality of Treasury's licensing regulations that allow it to grant exceptions to IEEPA's ban on transactions with terrorist organizations because HLP had not applied for or been denied a license to carry out its human rights programs.
The Secretary of Treasury's designation authority grant by EO 13224 was held not unconstitutionally vague because it is "aimed at stopping aid to terrorists," a purpose "unrelated to the content of the expression." The court also notes that a Treasury designation "is subject to reconsideration, after which a written decision must be furnished… and are subject to judicial review." (These minimal legal processes were held to be a denial of due process by the court in KindHearts.)
The court found that including the term "services" in the definition of prohibited material support is sufficiently clear because Treasury regulations provide examples. These include "legal, accounting, financial, brokering, freight forwarding, transportation, public relations, educational, or other services." (31 CFR 594.406(b)) The court goes on to say that "The examples take out the guesswork that troubled us in HLP III" which considered the term service as defined in AEDPA and found it to be unconstitutionally vague.
In language that may provide some comfort to nonprofits the court said that "HLP is concerned that the term could ensnare independent advocacy undertaken for the benefit of the PKK and LTTE. It would undoubtedly offend the First Amendment if the regulations were to prohibit independent advocacy. However, they don't. And we see no basis for supposing that they might." (emphasis added) Further on court notes that "The government's position is that the term "services" in Executive Order 13224 does not reach independent advocacy."
The court's summary of IEEPA explains that it empowers the President to declare that a national emergency because of an "unusual and extraordinary threat" to national security from a foreign source. It also notes that the President "must consult Congress" before declaring such an emergency, and "the President's actions are to be reviewed periodically by Congress." Once the emergency is declared, the President can "block" all the property of the foreign source of the threat. A provision important to charities bars the President from blocking "donations of food, clothing and medicine, intended to be used to relieve human suffering, unless the President determines that such donations would 'seriously impair his ability to deal with any national emergency." By declaring an emergency based on the 9/11 attacks on Sept. 23, 2001, President George W. Bush specifically included humanitarian aid in the list of prohibited transactions with designated terrorist organizations.