Paradissiotis v. Rubin , 171 F.3d 983 ( 1999 )

Revised April 22, 1999
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-20905
CHRIS PARADISSIOTIS,
Plaintiff-Appellant,
v.
ROBERT E. RUBIN,
SECRETARY OF THE UNITED STATES DEPARTMENT OF TREASURY; ET AL,
Defendants,
ROBERT E. RUBIN,
SECRETARY OF THE UNITED STATES DEPARTMENT OF TREASURY;
R. RICHARD NEWCOMB,
DIRECTOR OF THE OFFICE OF FOREIGN ASSETS CONTROL,
Defendants-Appellees.
Appeal from the United States District Court for the
Southern District of Texas
April 1, 1999
Before JOLLY and JONES, Circuit Judges, and LAKE,* District Judge.
EDITH H. JONES, Circuit Judge:
This case involves enforcement of the Libyan Sanction
Regulations, 31 C.F.R. §§ 550.101-.803 as they relate to the assets
of Chris Paradissiotis, a citizen of Cyprus. Arguing that the
Treasury Department’s Office of Foreign Assets Control (“OFAC”)
*
District Judge for the Southern District of Texas, sitting by
designation.
misapplied the regulations and violated the Constitution,
Paradissiotis sought declaratory, injunctive, and monetary relief
in the district court. We agree with the district court’s
essential conclusions that Paradissiotis was validly labeled as a
Specially Designated National of the Government of Libya and that
his attempt to engage in transactions with property in the United
States was validly regulated by the sanctions.
I. FACTUAL AND PROCEDURAL HISTORY
In order to punish Libyan support for international
terrorism, President Ronald Reagan issued, under the authority of
the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-
06, Executive Orders 12543 and 12544 banning commerce with Libya
and freezing all United States property interests of the Libyan
Government and its agents. See 51 Fed. Reg. 875, 1235 (1986).
Pursuant to the orders, the Secretary of Treasury promulgated the
Libyan Sanction Regulations, which later Presidents have renewed.
Through OFAC, the Treasury Secretary oversees the enforcement of
the sanction regulations and the licensing procedure which permits
covered individuals or entities to avoid the application of the
sanctions to a particular transaction.
In 1991, OFAC labeled Paradissiotis a Specially
Designated National of Libya pursuant to 31 C.F.R. § 550.304(c).
See 56 Fed. Reg. 37156 (1991). This designation was based on his
service as president and member on the Boards of Directors of
2
Holborn Investment Company Limited (“HICL”) and Holborn European
Marketing Company Limited (“HEMCL”). Both HICL and HEMCL are
subsidiaries of Oilinvest (Netherlands) B.V., which, in turn, is a
wholly owned subsidiary of Oilinvest International, N.V., a Libyan
state-controlled holding company. By virtue of his connection to
these and other Libyan-related entities and, therefore, his direct
or indirect actions taken on behalf of Libya, OFAC found that
Paradissiotis constituted the Government of Libya (“GOL”) for
purposes of the sanctions regulations. See 31 C.F.R. § 550.304(c).
As a specially designated national, Paradissiotis’s United States
assets were frozen.
From January 1993 through December 1996, Paradissiotis
applied repeatedly to OFAC for a license under 31 C.F.R.
§ 501.801(b)(2) so that he could sell stock and exercise stock
options in the Coastal Corporation (“Coastal”) and receive the
proceeds. Paradissiotis had received this property as President of
HOTL, a downstream and offshore subsidiary of Coastal, a Delaware
corporation, before the Libyan sanctions went into effect. OFAC
permitted Paradissiotis to retain counsel in this country but
denied his requests to conduct any other prohibited transaction.
Paradissiotis then filed suit seeking declaratory,
injunctive, and monetary relief for being categorized as a
Specially Designated National under the regulations. The district
court denied Paradissiotis’s request for a preliminary injunction
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and granted the government’s motion for summary judgment.
Paradissiotis timely appealed.
II. ANALYSIS
Paradissiotis challenges the scope of the Libyan
Sanctions Regulations, their applicability to his conduct, and
OFAC’s denials of his license requests.1 Paradissiotis contends
that OFAC’s interpretation of the regulations was incorrect and
exceeded the scope of the authorizing statute and Executive Orders
and violated certain constitutional precepts. The Coastal stock
options expired during the pendency of this case. Because,
however, Paradissiotis still owns Coastal stock that he is
prevented from transferring based on OFAC’s interpretation of the
regulations, the agency’s actions have injured him and remain
judicially reviewable. In the Libyan Sanction regulations,
the Government of Libya is defined broadly to include
Any person to the extent such person is, or has been, or
to the extent that there is reasonable cause to believe
that such person is, or has been, since the effective
date, acting or purporting to act directly or indirectly
on behalf of [the GOL].
1
Our review of the district court’s summary judgment is de
novo, employing the same standards as the district court. See
Urbano v. Continental Airlines, Inc., 138 F.3d 204, 205 (5th Cir.),
cert. denied, --- U.S. ---, 119 S. Ct. 509 (1998). Summary
judgment is appropriate when, viewing the evidence in the light
most favorable to the nonmoving party, the record reflects that no
genuine issue of material fact exists, and the moving party is
entitled to judgment as a matter of law. See Celotex Corp. v.
Catrett, 477 U.S. 317, 322-24, 106 S. Ct. 2548, 2552-53 (1986); see
also Fed. R. Civ. P. 56(c).
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31 C.F.R. § 550.304(c). Citing the phrase “to the extent” as a
device of limitation, Paradissiotis first maintains that an
individual is included within this regulation only when his actions
benefit the GOL, directly or indirectly. Thus, Paradissiotis
asserts that the regulations do not regulate “personal”
transactions that do not benefit the GOL. The only plain meaning
of the regulation, according to Paradissiotis, is that he is the
government of Libya when he acts for it, and he “retains a personal
sphere of activity free from OFAC regulation” when he does not. As
a result, he may transfer property, like the Coastal stock, free of
OFAC regulation because he retained the stock while in the
“personal sphere.”2
The federal courts’ role in this controversy is
circumscribed at two levels. First, OFAC’s designation of
Paradissiotis as a specially designated national of Libya, being
“an agency’s application of its own regulations, receives an even
greater degree of deference than the Chevron standard, and must
prevail unless plainly inconsistent with the regulation.” Consarc
Corp. v. United States Treasury Dept., Office of Foreign Assets
Control, 71 F.3d 909, 914 (D.C. Cir. 1995) (internal quotation
omitted); see also Thomas Jefferson Univ. v. Shalala, 512, U.S.
2
If Paradissiotis continues to maintain that his acquisition
of property in the United States before the Libyan sanctions were
promulgated insulates the property from controls, he is wrong. The
regulations expressly applied to all property in the United States
at the 1986 effective date. See 31 C.F.R. §§ 550.209(a),
550.301(c).
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504, 512, 114 S. Ct. 2381, 2386-87 (1994). Second, a challenge to
OFAC’s regulation must either demonstrate that the statute clearly
forbids the statue’s interpretation or that the interpretation is
unreasonable. See Chevron U.S.A., Inc. v. Natural Resources
Defense Counsel, Inc., 467 U.S. 837, 843-44, 104 S. Ct. 2778, 2781-
83 (1984).
Granting OFAC the extent of deference that it is due, we
cannot accept Paradissiotis’s argument. Section 550.304(c) is
among the definitional provisions in the Libyan sanctions
regulations. Its purpose is to cast the widest possible net over
individuals who are or have been or are suspected of being actors
directly or indirectly on behalf of the government of Libya.
Unlike Paradissiotis, we do not read the phrase “to the extent” as
a limiting device, whereby individuals who otherwise fall within
the definition may splice their activities and attempt to avoid the
sanctions regulations. Instead, “to the extent” is, in this
context, a proxy for “to whatever extent” or “to any extent” and
includes rather than excludes subjects from the regulations.
Without such language, people might argue that they were
independent contractors or brokers or that mere occasional or
incidental work for the government of Libya would exempt them from
coverage. OFAC’s interpretation of the language to broadly cover
“any person” who has acted or purported to act on behalf of the
government of Libya is therefore a reasonable interpretation of its
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regulation, and even an equally reasonable interpretation by
Paradissiotis would not prevail.
The spuriousness of appellant’s interpretation appears
from the facts of his case. He has been for many years president
and a director of two companies that are controlled by the
government of Libya. In these positions and others he has pursued
Libya’s efforts to expand its presence in European markets. Yet by
semantic casuistry Paradissiotis asserts that even his activities
must be analyzed case-by-case for their coverage by the Libyan
sanction regulations. So applied, the regulations could hardly be
enforced.
This argument also confuses the definitions provision,
where the phrase “to the extent” appears, with the “prohibitions”
section, which contains no such limitation. See 31 C.F.R.
§ 550.209. In the prohibition section, the regulation states that
“no property or interests in property of the government of Libya
that are in the United States . . . may be transferred, paid,
exported, withdrawn or otherwise dealt in” without a specific
license. 31 C.F.R. § 550.209(a). As the district court put it,
Once a person falls within the definition of
the government of Libya, any transaction by
that person is prohibited. The language of
the regulations does not prohibit transactions
only “to the extent” that they benefit the
Government of Libya. There is no exception
for transactions by a person, who falls within
the definition of the “Government of Libya,”
to the extent that a transaction is
characterized as in a “personal sphere.”
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For these reasons, OFAC’s interpretation of its own regulation is
not plainly inconsistent with the regulatory language, nor is it
unreasonable, and in fact it represents the only practical
interpretation.
Paradissiotis’s additional contention, that the Libyan
sanction regulations are inconsistent with governing law and
executive orders, is weak. The IEEPA grants the President sweeping
powers to prohibit “any person[’s]” participation in any
transaction involving or the exercise of any right, power, or
privilege with respect to any “property in which any foreign
country . . . has any interest.” See 50 U.S.C. § 1702(a)(1)(B).
Pursuant to this broad authority, President Reagan authorized a
freeze on all property and interests in property of the GOL and its
agencies, controlled entities and instrumentalities that are in the
United States or hereafter come into the possession or control of
U.S. persons. See Executive Order No. 12544, 51 Fed. Reg. 1235.
The Secretary of Treasury, through OFAC, promulgated such
regulations, “including regulations prescribing definitions,” as
necessary to exercise the President’s authority under the Act. See
50 U.S.C. § 1704. OFAC was authorized to include individuals like
Paradissiotis within its definition of instrumentalities in order
to serve the purposes of the Executive Orders. See also Consarc
Corp., 71 F.3d at 913-14 (all payments by government of Iraq -- not
merely those in which Iraq maintains an interest -- blocked by
analogous OFAC sanctions). In matters like this, which involve
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foreign policy and national security, we are particularly obliged
to defer to the discretion of executive agencies interpreting their
governing law and regulations. See Haig v. Agee, 453 U.S. 280, 292
(1981); see also Miranda v. Secretary of Treasury, 766 F.2d 1, 3-4
(1st Cir. 1985).
Paradissiotis raises several constitutional challenges to
OFAC’s actions. It is not clear whether, as a foreign national
residing outside the U.S., he can assert these claims, but we shall
assume arguendo that he can.
First, he complains that his placement on the SDN list
constituted a bill of attainder. No circuit court has yet held
that the bill of attainder clause, U.S. Const. art. I, § 9, cl. 3,
applies to regulations promulgated by an executive agency. See
Walmer v. United States Dep’t of Defense, 52 F.3d 851, 855 (10th
Cir. 1995) (“The bulk of authority suggests that the constitutional
prohibition against bills of attainder applies to legislative acts,
not to regulatory actions of administrative agencies.”); Korte v.
Office of Personnel Management, 797 F.2d 967, 972 (Fed. Cir. 1986);
Marshall v. Sawyer, 365 F.2d 105, 111 (9th Cir. 1966). Even if we
were inclined to apply the bill of attainder clause to OFAC’s list
of Specially Designated Nationals, however, the regulatory list
would not be invalid.
A bill of attainder must “inflict[] punishment on an
identified individual without provision of a judicial trial.” SBC
Communications, Inc. v. FCC, 154 F.3d 226, 233 (5th Cir. 1998).
9
OFAC’s list does not inflict such punishment. See id. at 233-35.
The list identifies a group of individuals that OFAC has deemed
subject to various sanction programs and whose business activities
with U.S. persons will be regulated as long as they are agents of
a target country. Even if he were not on the list, Paradissiotis
would still be subject to the generally applicable prohibitions of
the Libyan sanction regulations, as OFAC ultimately determined that
he fell within the regulatory definition of the GOL. The mere
publication of his name in the list did not evince an “intent to
punish.” Selective Serv. Sys. v. Minnesota Pub. Interest Research
Group, 468 U.S. 841, 851, 104 S. Ct. 3348, 3355 (1984). The SDN
list reported Paradissiotis’s status under the regulations; no
concomitant burden was imposed based solely on his inclusion in the
SDN list. The compilation does not violate the Constitution.
Second, Paradissiotis argues that OFAC’s application of
the Libyan sanction regulations is void for vagueness and does not
provide adequate notice to the public of prohibited conduct.
Whatever might be true in marginal cases, this challenge is
meaningless for Paradissiotis. He knows he is an SDN and is part
of the “Government of Libya” and is clearly aware of the
consequences of that status.
Third, although Paradissiotis persists in contesting
OFAC’s regulations requiring the issuance of a license before a SDN
may retain legal counsel, he lacks standing. OFAC granted his only
request for a license to obtain counsel, and Paradissiotis has not
10
shown that he will be deprived of legal services in the future
based on the regulations. See Lujan v. Defenders of Wildlife, 504
U.S. 555, 560, 112 S. Ct. 2130, 2136 (1992) (unless plaintiff can
show evidence of concrete, actual or imminent future injury, courts
lack standing to consider claims). The district court properly
rejected the Sixth Amendment claim for lack of standing.
Fourth, Paradissiotis alleged a Fifth Amendment takings
claim because, he asserted, the Coastal Stock options expired in
March 1997 while his access to them remained frustrated by OFAC,
and he was not compensated. The district court held against him,
but it was without jurisdiction. Under the Tucker Act, 28 U.S.C.
§§ 1346(a)(2) and 1491(a)(1), the Court of Federal Claims has
exclusive jurisdiction for all claims for monetary relief against
the United States greater than $10,000. Paradissiotis’s monetary
damages exceed this jurisdictional amount. Consequently, we must
vacate this portion of the district court’s judgment. See
Wilkerson v. United States, 67 F.3d 112, 118 (5th Cir. 1995); Amoco
Prod. Co. v. Hodel, 815 F.2d 352, 358-59 (5th Cir. 1987).
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III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
grant of summary judgment on all points except the takings claim,
and VACATE with respect to the takings claim.
AFFIRMED in part, VACATED in part.
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