United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 20, 2006 Decided February 13, 2007
No. 05-5447
ISLAMIC AMERICAN RELIEF AGENCY (IARA-USA),
APPELLANT
v.
ALBERTO GONZALES, IN HIS OFFICIAL CAPACITY AS
ATTORNEY GENERAL OF THE U.S., ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 04cv02264)
Shereef H. Akeel argued the cause for appellant. With him
on the briefs was John Kenneth Zwerling.
Douglas Letter, Litigation Counsel, U.S. Department of
Justice, argued the cause for appellees. With him on the brief
was Peter D. Keisler, Assistant Attorney General. Sharon
Swingle, Attorney, entered an appearance.
Before: SENTELLE and TATEL, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SENTELLE.
2
SENTELLE, Circuit Judge: The Islamic American Relief
Agency (“IARA-USA”), based in Columbia, Missouri,
challenges the district court’s decision upholding the blocking
of its assets. The government concluded that the organization
was a branch office of a Specially Designated Global Terrorist
and invoked its authority under anti-terrorism laws to block
IARA-USA assets. In this appeal, IARA-USA contends that the
district court erroneously held that the record supports the
government’s conclusion, and that it erroneously dismissed and
entered summary judgment for defendants on IARA-USA’s
claims under the Administrative Procedure Act and the
Constitution. IARA-USA also argues that it should have been
permitted to amend its complaint to request access to its blocked
funds for payment of attorneys’ fees. Because we conclude that
the designation was supported by the record and was not
contrary to law, we affirm the district court’s disposition of the
case, but on the question of attorneys’ fees we remand for
further proceedings.
I
In 1985, a Sudanese immigrant founded IARA-USA as the
Islamic African Relief Agency. Since then, the entity has
engaged in humanitarian activities around the world, often in
partnership with similar organizations. In 2000, IARA-USA
changed its name from the “Islamic African Relief Agency” to
the “Islamic American Relief Agency” (emphasis added).
Meanwhile, the entity in Sudan calling itself the Islamic African
Relief Agency (“IARA”) continued to exist under that name.
On October 13, 2004, the Office of Foreign Assets Control
in the Department of the Treasury (“OFAC”) designated IARA
as a Specially Designated Global Terrorist (“SDGT”). The
designation was based on OFAC’s conclusion that IARA
“provides financial support or other services to persons who
3
commit, threaten to commit or support terrorism” in violation of
anti-terrorism laws. Although IARA-USA was not
independently designated, OFAC considered it to be the United
States branch of IARA and included it in the blocking notice.
This meant that none of IARA-USA’s financial assets or
property could be “transferred, withdrawn, exported, paid, or
otherwise dealt in without prior authorization from OFAC.”
IARA-USA could not receive “any contribution of funds, goods,
or services,” nor could it continue to use its offices or remove
any items of corporate property. Any violation of the blocking
notice could subject IARA-USA to criminal and civil penalties.
IARA-USA immediately contested the blocking,
maintaining that it is a separate entity from IARA. It requested
that OFAC review the designation and permit IARA-USA to
access its blocked funds for the limited purpose of paying
attorneys’ fees. In late December 2004, having failed to
persuade OFAC to unblock its assets, IARA-USA filed a
complaint in district court, naming as defendants the Attorney
General, the Secretary of the Treasury, and other unidentified
FBI agents and Treasury personnel.1 Relevant to this appeal, it
claimed that (1) the blocking is unsupported by the record and
thus violates the APA and the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701-1707; (2) the
blocking violates IARA-USA’s constitutional rights of equal
protection, free exercise of religion, and free association; and (3)
IARA-USA should be permitted to pay attorneys’ fees from the
blocked funds. In a memorandum opinion and order issued on
September 15, 2005, the district court dismissed or entered
summary judgment in favor of defendant on all claims. Islamic
Am. Relief Agency v. Unidentified FBI Agents, 394 F. Supp. 2d
34 (D.D.C. 2005) (“IARA-USA”). The district court held that the
1
For simplicity, we refer to the remaining defendants
collectively as “the Government.”
4
record supported OFAC’s conclusion that IARA-USA was a
branch of IARA, and that the blocking was proper under
applicable laws and the Constitution. It also denied the motion
to access blocked funds for attorneys’ fees.
In this appeal, IARA-USA argues that the district court
erred in rejecting the three arguments described above, and that
it erred in failing to ensure that the Government complied with
an internal regulation requiring it to declassify record evidence
and in denying discovery before entering summary judgment.
IARA-USA does not challenge the district court’s ruling on its
other claims.
II
We note at the outset that the designated entity, IARA, is
not a party to this case, and IARA-USA does not challenge the
evidentiary basis for the designation of its alleged parent.
Rather, the question here is whether the record supports OFAC’s
conclusion that IARA-USA is a branch of IARA. If so, as
IARA-USA conceded at oral argument, OFAC’s blocking of its
assets was a proper consequence of the designation.
We review de novo the district court’s entry of summary
judgment in favor of the defendants. We will affirm if, viewing
all evidence in the light most favorable to IARA-USA, “there is
no genuine issue as to any material fact and . . . the moving
party is entitled to judgment as a matter of law.” FED. R. CIV. P.
56(c); see McCready v. Nicholson, 465 F.3d 1, 7 (D.C. Cir.
2006). A dispute over a material fact is “genuine” if the
evidence is “such that a reasonable jury could return a verdict
for the nonmoving party.” Id. at 7 (quoting George v. Leavitt,
407 F.3d 405, 410 (D.C. Cir. 2005)). Under the same de novo
standard, the dismissal of claims under Federal Rule of Civil
Procedure 12(b)(6) will be affirmed if “it appears beyond doubt
5
that [IARA-USA] can prove no set of facts in support of [its]
claim which would entitle [it] to relief.” Conley v. Gibson, 355
U.S. 41, 45-46 (1957). We accept the complaint’s factual
allegations as true and give IARA-USA the benefit of all
inferences that can reasonably be drawn therefrom. Browning
v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). This Court need
not, however, accept inferences that are unsupported by the facts
set out in the complaint, nor will it accept legal conclusions cast
in the form of factual allegations. Kowal v. MCI Commc’ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).
Our review of an SDGT designation falls under the APA,
and thus its highly deferential standard of review applies. See
Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156,
162 (D.C. Cir. 2003). Under that standard, we will set aside
OFAC’s action only if it is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A). We may not substitute our judgment for OFAC’s,
but we will require it to “examine the relevant data and
articulate a satisfactory explanation for its action including a
rational connection between the facts found and the choice
made.” Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal
quotation marks omitted); see also Cellular Telecomms. &
Internet Ass’n v. FCC, 330 F.3d 502, 507 (D.C. Cir. 2003).
Thus, with respect to the APA claims, if OFAC’s actions were
not arbitrary and capricious and were based on substantial
evidence, we must affirm the district court’s decision. 5 U.S.C.
§ 706(2)(A); Holy Land, 333 F.3d at 162.
A
This case is the first in this Court challenging an SDGT
designation based on a branch relationship with an entity that
supports terrorists. Our prior cases involved entities that
6
directly supported terrorists. IARA-USA suggests that because
of this factual difference, we should review the blocking as we
would review an alias designation in a Foreign Terrorist
Organization (“FTO”) case. In those cases, we require evidence
that the designated entity “so dominates and controls” the
alleged alias entity that they can be considered one and the
same. Nat’l Council of Resistance of Iran v. Dep’t of State, 373
F.3d 152, 157 (D.C. Cir. 2004) (“NCRI”). On IARA-USA’s
theory, then, blocking its assets based on the designation of
IARA was proper only if IARA “dominates and controls”
IARA-USA. The Government disagrees, arguing that the alias
test is not applicable here because this blocking was not based
on an alias theory. It urges instead that the blocking may stand
if there is sufficient evidence that IARA-USA and IARA are the
same organization, even in the absence of evidence that one
controls the other.
We conclude that the Government has the better argument.
To determine whether the evidence is sufficient, we must
employ a test that reflects the theory on which the assets were
blocked. The “dominates and controls” test is appropriate for
reviewing the existence of a principal-agent relationship
because, where there is sufficient evidence to find an agency
relationship, substantial evidence of the principal’s unlawful
activity is sufficient to justify the designation or blocking of the
agent. See NCRI, 373 F.3d at 157 (concluding that the
“dominates and controls” test is an appropriate basis for
upholding an alias designation, because of the “ordinary
principle[] of agency law” that “where a corporate entity is so
extensively controlled by its owner that a relationship of
principal and agent is created . . . one may be held liable for the
actions of the other”) (internal quotation marks and citation
omitted). In this case, however, OFAC’s theory was that IARA-
USA and IARA, along with other branch offices, comprised a
single global organization. The Government argues that their
7
relationship, therefore, is more accurately described as one
between different offices of the same entity. It follows that, if
the record contains substantial evidence that IARA-USA is a
branch of IARA, then it was proper for OFAC to subject IARA-
USA to the blocking as a result of IARA’s designation.
The district court applied the proper standard. It entered
summary judgment on the APA claims, concluding that the
record contained “substantial evidence” to support OFAC’s
conclusion that IARA-USA “is related and connected to the
IARA,” and accordingly that the designation was not arbitrary
and capricious. IARA-USA, 394 F. Supp. 2d at 45-46. As did
the district court, we shall limit our review of the designation to
the administrative record. Holy Land, 333 F.3d at 162.
With this framework in mind, we turn to the unclassified
record. While the record contains a great number of documents,
we discuss here only a sampling of the most pertinent. IARA-
USA was founded by an immigrant from Sudan, the site of
IARA’s offices, and was incorporated with a name identical to
IARA’s from its founding until 2000, when IARA-USA made
the minor change of replacing “African” in its name with
“American.” IARA-USA’s Articles of Incorporation describe
it as “Islamic African Relief Agency United States Affiliate”
and include the purpose of “effect[ing] the Objectives and
Means of the Islamic African Relief Agency as set forth in its
Constitution.” In the event of IARA-USA’s dissolution, the
Articles of Incorporation provided that IARA, among other
entities, should receive its assets.
Since its founding, IARA-USA has continued to engage in
conduct that evinces a branch relationship with IARA. In 1998,
for example, IARA-USA applied to the Treasury Department for
a license to transfer funds to “Islamic African Relief Agency,
Sudan,” in which it described itself as “The Islamic African
8
Relief Agency, United States Affiliate.” It described “the
Islamic African Relief Agency, Sudan” as its “partner in
Sudan.” In a letter to the Washington Times on October 10,
1995, IARA-USA’s Executive Director identified himself as
speaking on behalf of “IARA and its partners,” implicitly
accepted the newspaper’s characterization of IARA as the
“Khartoum-based ‘Islamic Relief Agency,’” and acknowledged
IARA’s “branch offices in the United States” and other
countries. Solicitation materials used by IARA-USA stated that
its “international headquarters are in Khartoum, Sudan.”
Additionally, IARA-USA maintained financial connections with
at least one other IARA branch and its address was listed on
IARA websites as a United States branch office.
IARA-USA denies that this evidence reveals a branch
relationship. The initial identity and current similarity in the
entities’ names, it claims, is purely coincidental: the founder of
IARA-USA, though aware of IARA’s existence, chose the name
because it was descriptive of the organization’s mission.
Although IARA-USA offers no explanation for the references to
IARA in its Articles of Incorporation, it nonetheless
categorically denies that the organization was founded as a
branch.
IARA-USA’s arguments fail in the face of clear and
substantial evidence in the record. The evidence supports the
conclusion that, at its founding, IARA-USA considered itself a
branch of IARA. An entity’s “genesis and history” may
properly be considered by OFAC in making the designation or
blocking, at least where the ties have not been severed. Holy
Land, 333 F.3d at 162. Although it is true that IARA-USA
subsequently amended its name, there is no indication that it
severed the relationship, particularly in light of the more recent
evidence discussed above. Indeed, since IARA-USA itself does
not concede that it was ever a branch of IARA, it cannot argue
9
that the name change effected a severance of the relationship.
Rather, IARA-USA would have us believe that the amended
name, as the initial name, was chosen simply because it was
descriptive, without any intention of aligning with IARA. We
need not pass on the credibility of this explanation, however,
because we hold that the other evidence in the record is
sufficient to support OFAC’s interpretation of the evidence.
We acknowledge that the unclassified record evidence is
not overwhelming, but we reiterate that our review – in an area
at the intersection of national security, foreign policy, and
administrative law – is extremely deferential. Cf. Holy Land,
333 F.3d at 166 (noting the unique nature of reviewing an SDGT
designation as “involving sensitive issues of national security
and foreign policy”); Humanitarian Law Project v. Reno, 205
F.3d 1130, 1137 (9th Cir. 2000) (noting that, where a
“regulation involves the conduct of foreign affairs, we owe the
executive branch even more latitude than in the domestic
context” and stating that the high degree of judicial deference to
the decision to designate an entity as an FTO “is a necessary
concomitant of the foreign affairs power”). Under that standard,
the record – containing various types of evidence from several
different sources, and covering an extended period of time –
provides substantial evidence for the conclusion that IARA-
USA is part of IARA. Furthermore, although we deem it
unnecessary to sustain OFAC’s actions, the classified record
contains extensive evidence that IARA-USA is a branch of
IARA.
OFAC’s conduct was also lawful under the relevant statute
and Executive Orders. In the wake of the attacks of September
11, 2001, the President invoked the authority of the International
Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1707
(“IEEPA”) by declaring a national emergency with respect to
the “unusual and extraordinary threat to national security” posed
10
by terrorists. Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support
Terrorism, Exec. Order No. 13,224, 66 Fed. Reg. 49,079 (Sept.
23, 2001), as amended by Exec. Orders No. 13,268, 67 Fed.
Reg. 44,751 (July 2, 2002) and No. 13,372, 70 Fed. Reg. 8499
(Feb. 16, 2005). In that Order, the President described the types
of conduct that could subject an entity to blocking of its assets,
such as providing financial support to terrorists. He named a
number of entities whose assets would be blocked immediately,
and authorized the Treasury Department to designate additional
entities that it determines are within the purview of the Order.
Exec. Order No. 13,224, §§ 1, 7, 66 Fed. Reg. at 49,079, 49,081.
IARA-USA argues that OFAC cannot block an entity’s
assets unless it determines that the entity itself poses an
“unusual and extraordinary threat to national security.” The
district court rejected this argument, holding that the threat need
not be found with regard to each individual entity. IARA-USA,
394 F. Supp. 2d at 46. We agree with the district court. The
President may exercise his authority under the IEEPA “to deal
with any 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, if the President declares a national emergency with
respect to such threat.” 50 U.S.C. § 1701(a). Thus, once the
President has declared a national emergency, the IEEPA
authorizes the blocking of property to protect against that threat.
Id. § 1702(a)(1)(B). It is that authority OFAC invoked when it
blocked IARA-USA’s assets. We hold that the district court
correctly dismissed this claim because IARA-USA could prove
no set of facts that would entitle it to relief.
11
B
We turn next to IARA-USA’s claims that the blocking
violated its rights under the Constitution. As an initial matter,
we note that IARA-USA’s constitutional claims rest on a
misinterpretation of OFAC’s basis for the designation. IARA-
USA argues that the blocking was unconstitutional because the
Government has not shown that IARA-USA is controlled or
dominated by IARA. But as explained above, OFAC’s basis for
the blocking was that IARA-USA functions as a branch of
IARA. Thus, the “dominates and controls” test is not relevant
to whether the blocking was constitutional. And since we have
concluded that there was substantial evidence that IARA-USA
was a branch of IARA, these constitutional claims lose their
footing. As we have noted previously, “there is no First
Amendment right nor any other constitutional right to support
terrorists.” Holy Land, 333 F.3d at 166; see also Humanitarian
Law Project, 205 F.3d at 1133 (“[T]here is no constitutional
right to facilitate terrorism” with materials or funding.).
Our analysis of IARA-USA’s constitutional arguments is
informed by our recent decision in Holy Land, 333 F.3d at 164-
67. In that case, Holy Land Foundation (“HLF”) challenged its
designation as an SDGT under the First, Fourth, and Fifth
Amendments. Id. The district court rejected HLF’s First and
Fifth Amendment claims, and we affirmed, on the basis that “the
law is established that there is no constitutional right to fund
terrorism.” Id. at 165. Thus, where an organization is found to
have supported terrorism, government actions to suspend that
support are not unconstitutional. Id. (noting that HLF could not
have “produced evidence upon which a reasonable trier of fact
could have found that the designation and the blocking of assets
violated its First or Fifth Amendment rights” because “there is
no constitutional right to fund terrorism” and the record
evidence established that HLF did fund a terrorist organization).
12
IARA-USA contends that OFAC violated its right to equal
protection under the Fifth Amendment by singling it out as a
Muslim organization. As evidence that OFAC treated it
differently than similar organizations, IARA-USA notes that
UNICEF’s funds were not blocked even though it also provided
financial support to IARA. The district court entered summary
judgment after concluding that IARA-USA had not shown that
it was similarly situated to UNICEF. IARA, 394 F. Supp. 2d at
50-51. As the district court noted, to survive summary judgment
IARA-USA must show that it was treated differently than a
similar organization with similar ties to an SDGT. Cf. Plyler v.
Doe, 457 U.S. 202, 216 (1982) (“[T]he Constitution does not
require things which are different in fact or opinion to be treated
in law as though they were the same.” (quoting Tigner v. Texas,
310 U.S. 141, 147 (1940))). IARA-USA asserts that UNICEF
entered into a contract in which it agreed to provide financial
support to IARA. But a single contact of this nature does not
begin to approximate the extensive relationship between IARA-
USA and IARA. As the district court held, IARA-USA and
UNICEF are not similarly situated, and as a result their disparate
treatment by OFAC cannot itself support a claim that IARA-
USA has been denied equal protection of the law. IARA-USA’s
equal protection claim thus was properly rejected by the district
court.
IARA-USA also argues that OFAC violated its rights of
association and free exercise of religion under the First
Amendment. Its freedom of association claim is that the
blocking inhibits its ability to engage in the associational
activity of making financial contributions and that its
association, even with an unpopular entity, cannot form the basis
of the decision to block its assets. Following Holy Land, the
district court dismissed the claim, concluding that the blocking
did not implicate IARA-USA’s association rights because it did
not prevent or punish the associational activity of IARA-USA,
13
but rather was directed at its funding of terrorists, as a branch of
IARA. IARA-USA, 394 F. Supp. 2d at 54. We agree with the
district court. Our decision in Holy Land relied on the Ninth
Circuit’s recent decision in Humanitarian Law Project. Holy
Land, 333 F.3d at 166 (holding, with regard to HLF’s freedom
of association claim, “that there is no First Amendment right nor
any other constitutional right to support terrorists” with funding)
(citing Humanitarian Law Project, 205 F.3d at 1133). In
Humanitarian Law Project, entities designated as FTOs argued
that preventing them from making donations in support of
humanitarian and political activities violated their First
Amendment right of association, at least where it was not shown
that they intended their donations to support unlawful activities.
205 F.3d at 1133. The Ninth Circuit noted that freedom of
association is implicated where people are punished merely for
“membership in a group or for espousing its views, whereas the
statute in question only prohibited the act of giving material
support.” Id. (citing NAACP v. Claiborne Hardware Co., 458
U.S. 886, 920 (1982)). Similarly, it held that the requirement to
show intent to aid unlawful acts was not applicable in the
context of donations to terrorist groups, because the money
could be used for unlawful activities regardless of donor intent.
Id. at 1133-34.
Here, as in Holy Land, we adopt the Ninth Circuit’s
reasoning. The blocking was not based on, nor does it prohibit,
associational activity other than financial support. The blocking
of IARA-USA’s assets does not punish advocacy of IARA’s or
any other entity’s goals. See Humanitarian Law Project, 205
F.3d at 1133-34 (distinguishing financial support from advocacy
and noting that, just as “there is no constitutional right to
facilitate terrorism by giving terrorists the weapons and
explosives with which to carry out their grisly missions,” neither
is there any “right to provide resources with which terrorists can
buy weapons and explosives”). We hold that OFAC’s blocking
14
of IARA-USA’s assets does not implicate IARA-USA’s First
Amendment right of association.
Nor is the Government required to show that IARA-USA
funded terrorist organizations with an intent to aid their unlawful
activities. Although the Supreme Court has previously imposed
such an intent requirement, it is limited to cases in which
liability was imposed by reason of association alone. See Healy
v. James, 408 U.S. 169, 186 (1972) (noting that where First
Amendment rights are denied based on “guilt by association
alone, without (establishing) that an individual’s association
poses the threat feared by the Government . . . [t]he government
has the burden of establishing a knowing affiliation with an
organization possessing unlawful aims and goals, and a specific
intent to further those illegal aims”) (internal quotation marks
and citations omitted). In this case, however, OFAC’s decision
to block IARA-USA’s assets was not based on association.
Rather, as we have explained above, the decision was based on
OFAC’s finding that IARA-USA is a branch of an SDGT. Thus
we do not require a showing that IARA-USA intended its
funding to support terrorist activities. Cf. Humanitarian Law
Project, 205 F.3d at 1133-34 (“We therefore do not agree . . .
that the First Amendment requires the government to
demonstrate a specific intent to aid an organization’s illegal
activities before attaching liability to the donation of funds.”).
As to IARA-USA’s free exercise of religion claim, we
conclude that the district court properly entered summary
judgment for defendants. IARA-USA argues that the blocking
“substantially burdens” the religious exercise of its members
because they intended their donations to fulfill their religious
obligation to engage in humanitarian charitable giving.
Blocking those funds before they could be distributed, IARA-
USA contends, interfered with that religious expression. As we
explained in Holy Land, “[a]cting against the funding of
15
terrorism does not violate the free exercise rights protected by
. . . the First Amendment. There is no free exercise right to fund
terrorists.” 333 F.3d at 167. We have already concluded that
there was sufficient evidence in the administrative record that
IARA-USA did, through its relationship with IARA, support
terrorism. We thus affirm the district court’s dismissal of
IARA-USA’s free exercise claim.
IARA-USA argues that, had it been permitted to engage in
additional discovery on its constitutional claims, it might have
found evidence sufficient to survive summary judgment. The
district court held that discovery was not warranted because,
based on the record presented, discovery would not have
produced any evidence to create a genuine factual dispute and
thus could not have changed its disposition of the claims. IARA-
USA, 394 F. Supp. 2d at 43 n.9. “The district court has broad
discretion in its handling of discovery, and its decision to allow
or deny discovery is reviewable only for abuse of discretion.”
Brune v. IRS, 861 F.2d 1284, 1288 (D.C. Cir. 1988) (quoting
FED. R. CIV. P. 26(b)(1) (internal quotation marks and citation
omitted)). The district court’s review of the APA claims were
limited to the administrative record, but IARA-USA “had ample
opportunity” to – and indeed did – come forward with additional
evidence during the administrative proceeding to support its
other claims. IARA-USA, 394 F. Supp. 2d at 43 n. 9. See Holy
Land, 333 F.3d at 166 (noting that there was an adequate record
where the designated entity had “every opportunity and
incentive to produce the evidence sufficient to rebut” the
evidence supporting the designation in order to create a genuine
factual dispute). We thus conclude that the district court did not
abuse its discretion in denying discovery.
16
C
IARA-USA also argues that the district court erred in
failing to ensure that the Government complied with an internal
regulation governing the declassification of record material in
judicial proceedings. The regulation, promulgated by the
Department of Justice, states in relevant part that when that
agency is required “to produce classified information” in
litigation, it “shall immediately determine from the agency
originating the classified information whether the information
can be declassified.” 28 C.F.R. § 17.17(a)(1). In a hearing in
early 2005, the district court accepted DOJ’s representation that
it had complied with the regulation. Even if it had not, the
regulation provides no private right of action, as IARA-USA
itself conceded at oral argument before this Court. Cf.
Alexander v. Sandoval, 532 U.S. 275, 285-86 (2001) (noting, in
the context of anti-discrimination legislation, that a regulation
does not make actionable conduct that is not prohibited by the
statute). We thus find no basis on which we could conclude that
the district court erred with respect to the agency’s compliance
with its internal regulation.
***
Finally, IARA-USA maintains that the district court erred
in denying its motion to compel payment of attorneys’ fees. The
blocking notice stated that OFAC would consider “requests for
specific licenses to ameliorate the effects” of the blocking,
including permitting “the payment from blocked funds . . . of
attorneys’ fees and expenses related to legal representation of
the organization in this matter.” In its motion, IARA-USA
argued that OFAC acted arbitrarily and capriciously in denying
its request to access the blocked funds for the purpose of paying
attorneys’ fees connected with the litigation. The district court
denied the motion, concluding that the motion raised a new
17
claim that was collateral to the complaint and thus that the issue
was not properly before the court. IARA-USA, 394 F. Supp. 2d
at 39 n.4. On appeal, IARA-USA concedes that the issue was
not raised in its complaint, but argues that the district court
should have permitted it to amend its complaint. Indeed, it
notes, it requested leave to amend its complaint in its motion to
compel attorneys’ fees: “If the Court adopts Defendants’
argument, then by virtue of this Motion, Plaintiff seeks leave to
appeal to amend its Complaint for OFAC’s wrongful denial of
its attorney fees, in violation of APA.” The district court
nowhere addressed the request for leave to amend, though this
is hardly surprising as this one sentence was buried in an eight-
page motion. IARA-USA, 394 F. Supp. 2d at 39 n.4 (denying the
motion to compel without reference to its alternative request for
leave to amend the complaint).
Leave to amend one’s complaint is liberally permitted.
FED. R. CIV. P. 15(a) (leave to amend a pleading “shall be freely
given when justice so requires”); Foman v. Davis, 371 U.S. 178,
182 (1962). We also note that there is some evidence in the
record suggesting that IARA-USA’s decision to omit the issue
from its complaint and the district court’s decision to deny the
motion may have been based on communications by OFAC
implying that it intended to grant the request. IARA-USA’s
request for leave to amend, therefore, should be considered. We
express no opinion on how the district court should rule, but we
believe it should consider the motion. We therefore remand on
this issue in order to give the district court an opportunity to
consider the motion for leave to amend.
III
As the district court held, the blocking of IARA-USA’s
assets was not unlawful. OFAC’s determination that IARA-
USA functions as a branch of IARA was supported by
18
substantial evidence in the unclassified record, and was proper
under the relevant anti-terrorism laws, the APA and the
Constitution. Accordingly, IARA-USA’s claims are without
merit and were properly dismissed or disposed of on summary
judgment by the district court. The judgment of the district
court is affirmed in all respects except that portion relating to
IARA-USA’s motion for leave to amend its complaint. On that
issue, the case is remanded to the district court for further
proceedings.
So ordered.