Abdul Waked Fares v. John Smith , 901 F.3d 315 ( 2018 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 9, 2018 Decided August 10, 2018
No. 17-5075
ABDUL MOHAMED WAKED FARES, ET AL.,
APPELLANTS
v.
JOHN E. SMITH, IN HIS OFFICIAL CAPACITY AS ACTING
DIRECTOR, OFFICE OF FOREIGN ASSETS CONTROL OF THE
DEPARTMENT OF THE TREASURY AND OFFICE OF FOREIGN
ASSETS CONTROL OF THE UNITED STATES DEPARTMENT OF
THE TREASURY,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:16-cv-01730)
James E. Gillenwater argued the cause for appellants.
With him on the briefs was Peter J. Kahn. David D. Aufhauser
entered an appearance.
Nicolas Riley, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Jessie K. Liu, U.S. Attorney, Douglas N. Letter, Attorney, and
Lauren Sun, Counsel, U.S. Department of Justice. Benjamin
2
M. Schultz and H. Thomas Byron, Attorneys, U.S. Department
of Justice, entered appearances.
Before: PILLARD and WILKINS, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge PILLARD.
PILLARD, Circuit Judge: The Office of Foreign Assets
Control (OFAC) unilaterally named two Panamanian men and
a business they control as Specially Designated Narcotics
Traffickers. Under the Foreign Narcotics Kingpin Designation
Act, that agency decision froze the designees’ assets in the
United States and forbade anyone here from transacting or
dealing in the frozen property. See 21 U.S.C. § 1904(b), (c).
When the designees asked the agency to turn over the evidence
against them—the administrative record setting out the bases
of the designation—so that they could challenge the
determination, the agency returned a file almost entirely
blacked out with redactions. What lay behind those redactions,
the government represented, could not be disclosed without
compromising ongoing criminal investigations or risking the
lives of key sources.
These designees sued, claiming that, because the
government had failed to produce or describe the underlying
evidence as such, it gave them insufficient post-deprivation
notice of the bases of their designation in violation of the Due
Process Clause of the Fifth Amendment. Plaintiffs
immediately sought summary judgment, arguing that they had
an absolute right to the evidence against them: The
government must choose, plaintiffs urged, between disclosing
the evidence and delisting (un-designating) them. The agency
insisted it faced no such choice. Rather than disclose evidence
that the agency deemed to contain law enforcement sensitive
3
information, it presented plaintiffs two unclassified summaries
describing the factual bases of the designation decision. The
agency then filed its own summary judgment motion, arguing
that the unclassified summaries satisfied due process because
they described the facts supporting plaintiffs’ designations and
thus enabled plaintiffs to challenge them. The district court
granted the government’s motion.
On appeal, plaintiffs maintain that due process requires
more. They insist that the government must choose between
(a) dropping the designation and (b) disclosing the evidence
against them by producing the unredacted underlying
evidentiary record, or, at a minimum, identifying facts about
informants or other evidentiary sources, regardless of the
practical costs. See Appellants’ Br. 22 (“[D]ue process
prohibits OFAC from relying on undisclosed material to
uphold the merits of a sanctions designation.”); Oral Arg. Tr.
7:24-9:7 (plaintiffs’ counsel requesting “a non-privileged
description of sources or where those sources come[] from,
dates, places,” or at least confirmation that the government
used “a confidential source”).
The Foreign Narcotics Kingpin Designation Act’s asset-
freezing provision unquestionably raises many due process
concerns. But plaintiffs have chosen to frame their challenge
in a manner that, by artificially limiting it, presents no tenable
claim. Plaintiffs do not factually challenge the accuracy of the
summaries’ descriptions of their involvement in money
laundering. Nor do they ask the government to make the
allegations against them more specific. They do not challenge
the scope of the government’s sweeping redactions to the
administrative record. Nor do they press the agency with
control over the sensitive evidence to support its assertion of
privilege. Plaintiffs do not ask for in camera examination of
the administrative record for any purpose. Nor do they request
4
cleared counsel who could review the redacted information on
plaintiffs’ behalf. Instead—without questioning the
government’s assertion that disclosing any more of the
underlying evidence or the sources of that evidence would have
calamitous consequences—plaintiffs ask the court to direct the
agency to turn over the evidence itself, or to identify its sources,
compromising the very sensitivity they leave unchallenged.
Otherwise, plaintiffs suggest, OFAC must drop the designation
entirely.
That unyielding argument runs counter to precedent. We
therefore affirm the district court’s grant of summary judgment
for the government. Plaintiffs have not made out a viable claim
under the relevant due process framework. We note that other
avenues remain for plaintiffs should they elect to use them to
challenge their designation in the future.
I.
The Foreign Narcotics Kingpin Designation Act (Kingpin
Act), 21 U.S.C. §§ 1901-1908, authorizes the Secretary of the
Treasury—and by delegation the Office of Foreign Assets
Control and its Director, John Smith, (collectively, OFAC,
agency, or government)—to deem foreign persons who
“materially assist[] in . . . international narcotics trafficking
activities” as “specially designated narcotics traffickers”
(Traffickers). Id. § 1904(b)(2)-(4); 31 C.F.R. §§ 598.314,
598.803. Trafficker designations under the Kingpin Act are
analogous to other Executive Branch asset-freezing
designations, such as those authorized by the International
Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1702,
and the Anti-Terrorism and Effective Death Penalty Act
(AEDPA), 8 U.S.C. § 1189. See Zevallos v. Obama, 793 F.3d
106, 110 (D.C. Cir. 2015). Under each scheme, the designated
person (“a specially designated national, specially designated
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terrorist, or specially designated narcotics trafficker”) is added
to the “Specially Designated Nationals and Blocked Persons
List.” 31 C.F.R. § 501.807(a); see Zevallos, 793 F.3d at 110.
All persons on OFAC’s combined list have their “property and
interests in property within the United States” frozen, and no
one may deal in those assets. 21 U.S.C. § 1904(b), (c); see
Zevallos, 793 F.3d at 110.
Individuals designated as traffickers by OFAC may “seek
administrative reconsideration” before the agency. 31 C.F.R.
§ 501.807. Practically, that entails challenging the sufficiency
of the bases of the designation and/or rebutting those bases,
such as by submitting exculpatory materials to the agency. Id.
As part of the agency’s reconsideration process, designated
individuals may request disclosure of the administrative record
supporting the designation decision. The statute provides that,
to support its determinations, OFAC may submit classified
information ex parte and in camera to any court considering a
challenge to a designation. 21 U.S.C. § 1903(i).
This court, in the context of a “foreign terrorist
organization” designation under AEDPA, has “already decided
. . . that due process require[s] the disclosure of only the
unclassified portions of the administrative record.” People’s
Mojahedin Org. of Iran v. Dep’t of State, 327 F.3d 1238, 1242
(D.C. Cir. 2003) (People’s Mojahedin II) (citing Nat’l Council
of Resistance of Iran v. Dep’t of State, 251 F.3d 192, 207-09
(D.C. Cir. 2001) (NCORI)); see Holy Land Found. for Relief &
Dev. v. Ashcroft, 333 F.3d 156, 164 (D.C. Cir. 2003) (Holy
Land). We have countenanced that approach in very limited,
statutorily recognized circumstances when the government has
both exigent reasons for freezing assets and pressing interests
in the nondisclosure of the highly sensitive classified
information. In that narrow category of cases, other procedural
safeguards sufficed to provide meaningful protections of due
6
process interests in adequate notice and accurate decision
making, and prevent government overreach.
II.
On May 5, 2016, OFAC designated as traffickers several
dozen Panamanian individuals and entities, including plaintiffs
here: Abdul Mohamed Waked Fares, a Panamanian
businessman who owned and operated several companies also
designated; his son, Mohamed Abdo Waked Darwich, who
held an executive position in those businesses; and Grupo
Wisa, S.A., one of Fares’s businesses, which sells duty-free
goods internationally; together with approximately two dozen
other businesses (not parties to this litigation) owned and
operated by Fares or Darwich. Joint App’x (J.A.) 8-9, 111-12;
see Additional Designations, Foreign Narcotics Kingpin
Designation Act, 81 Fed. Reg. 28,937 (May 10, 2016). 1
A few weeks after the designation, plaintiffs requested that
OFAC reconsider its decision. J.A. 104-06. The
reconsideration request did not present exculpatory evidence;
instead, it focused on the “permanent adverse consequences of
the designations,” and proposed an alternative, interim means
of immobilizing plaintiffs’ control of their property: placing
“all affected assets into trusts managed by independent persons
approved by the U.S. government.” J.A. 106; see generally 31
C.F.R. § 501.807(a) (identifying “corporate reorganization” as
a potential alternative to asset blocking). Plaintiffs also asked
for “immediate access to the administrative record upon which
the challenged designations were based.” J.A. 106.
1
Lucia Touzard Romo, a lawyer at Grupo Wisa, was initially a
plaintiff in this action. However, during the pendency of this appeal, OFAC
notified the court that she is no longer designated as a Trafficker and thus
is no longer a party to the suit. See Fares v. Smith, No. 17-5075, Dkt. No.
1711681 (D.C. Cir. Jan. 5, 2018).
7
In June, OFAC denied the request for reconsideration,
noting that plaintiffs had not presented any “evidence or
argument to support a finding that there was an insufficient
basis for the designations.” J.A. 111-13. OFAC rejected the
proposed trust terms because they explicitly provided “for
continuing control by the [traffickers], and otherwise fail[ed]
to sever all ownership and interest by the [traffickers].” J.A.
112. Because the Kingpin Act does not limit the number of
times that a designated individual may seek reconsideration,
see 31 C.F.R. § 501.807, the agency suggested that, if plaintiffs
“further developed or clarified” their request, they could again
seek reconsideration of their trafficker designation, J.A. 111-
12.
OFAC advised plaintiffs that, in the meantime, it was
processing their request for production of the administrative
record underlying their designation. J.A. 113. The agency
warned that it might be some time, however, because of the
“extensive interagency consultation in order to comply with
U.S. government regulations regarding the protection of
classified, privileged, and otherwise protected information”
that constituted much of the evidence. J.A. 112-13.
In July, plaintiffs received the underlying administrative
record in two batches pursuant to “rolling production” of the
record “as it [was] processed.” J.A. 117-18, 207-08. As
produced to plaintiffs, the record was very heavily redacted.
OFAC represented that “law enforcement sensitivity” or other
forms of “privilege” necessitated the near-complete redaction
of the evidence underlying plaintiffs’ designation. J.A. 117,
207. The material was not classified per se, but it nevertheless
could not be released because of its relationship to ongoing
investigations. The redacted information identified details
about investigative targets or informants and its disclosure
8
therefore would frustrate continued law-enforcement efforts or
put individuals in significant, perhaps mortal, danger. See Oral
Arg. Tr. 27:25-29:17. The government specifically affirmed
that all of the redacted information is law enforcement
sensitive, so no more information could be revealed from the
existing record. Id. at 29:8-16. OFAC promised that, “should
additional unclassified, non-privileged, or otherwise releasable
information become available,” the agency would turn over
any such material to plaintiffs. J.A. 117, 207.
Plaintiffs sued the agency on August 25, 2016, and filed
for summary judgment the same day. Fares v. Smith, No. 16-
1730, Dkt. No. 1 (D.D.C. Aug. 25, 2016) (Compl.); Fares v.
Smith, No. 16-1730, Dkt. No. 3 (D.D.C. Aug. 25, 2016) (Pls.’
Mot. for Summ. J.). They contended that OFAC had violated
their procedural due process rights by failing to give sufficient
post-deprivation notice of the grounds for their designation,
and they asked the court to “[d]eclare” the redacted
administrative record constitutionally insufficient to justify
their designation and “[o]rder” the agency to “provide an
unredacted copy of their administrative record” or otherwise to
provide “adequate post-designation notice.” Compl. at 11.
Plaintiffs brought a parallel challenge under the Administrative
Procedure Act (APA), but argued to the district court that, for
purposes of this case, the APA’s protections are coextensive
with those of the Due Process Clause, so the APA claim rises
and falls with the due process claim. Fares v. Smith, 249 F.
Supp. 3d 115, 129 (D.D.C. 2017). As a consequence, this
opinion discuses only the due process claim, which has been
the focus of the parties’ arguments.
The day after plaintiffs filed suit, on August 26, 2016,
OFAC furnished an unclassified summary of the underlying
evidence that the agency had redacted from the administrative
record. See J.A. 384-85. It was terse, only two paragraphs.
9
Two months later, on October 28, the agency produced a more
substantial summary spanning several pages. See J.A. 387-91.
The summaries together identify several specific allegations
motivating the plaintiffs’ designation.
We present the allegations as if they were fact, but we have
no way of evaluating their veracity—they are wholly untested.
See People’s Mojahedin Org. of Iran v. Dep’t of State, 182 F.3d
17, 19 (D.C. Cir. 1999) (People’s Mojahedin I) (“What follows
. . . may or may not be facts. The information recited is
certainly not evidence of the sort that would normally be
received in court.”). We chronicle these allegations only to lay
out the case the government says it has against plaintiffs, as
explained by the summaries:
First, Grupo Wisa operated stores that were hubs for
“launder[ing] drug proceeds via bulk cash smuggling and false
commercial invoicing.” J.A. 385. Couriers working with
international drug-trafficking organizations “transport[ed] bulk
cash to and through” these stores, and “drug proceeds [we]re
subsequently laundered via the stores using false invoices, in
order to legitimize the illicit funds.” J.A. 385. Specifically, the
company deposited drug proceeds into Panamanian banks, sold
products to businesses in Colombia, and “use[d] false invoices
to deposit cash as payment for merchandise” in Panama. J.A.
391. The company “received bulk drug proceeds” from the
Sinaloa Cartel, as well as other criminal organizations. J.A.
391. Several Grupo Wisa stores were identified as involved.
The stores at the Tocumen Airport in Panama City laundered
millions of dollars in drug proceeds, facilitated by bulk-cash
transfers in suitcases flown there on commercial flights from
around the world. J.A. 391. At that airport, couriers delivered
cash to the stores, and bribed airport officials. J.A. 391. The
Grupo Wisa-owned stores at the La Aurora Airport in
Guatemala City participated in the same scheme; the Public
10
Ministry of Guatemala shuttered those businesses for alleged
customs fraud. J.A. 376.
Second, plaintiffs used commercial real estate
investments, bank loans, and other cash transactions to launder
drug money, including in connection with two specific
commercial real estate developments in Panama, the
Millennium Plaza and the Soho Complex. J.A. 225, 391. Fares
bribed local authorities in connection with these projects. J.A.
391. He also used shell companies and other property holdings
as collateral for loans that helped obscure the money’s
connection to drug trafficking. J.A. 391.
Third, Fares controlled Balboa Bank and Trust, another
organization designated by OFAC but not a party to this case.
J.A. 202, 391. He used the bank to deposit bulk drug proceeds
in Panama, where he controlled accounts for “hundreds” of
companies, some real and others apparently fictional, to move
drug money around. J.A. 391. Fares took commissions from
trafficker-clients for his money-laundering services. J.A. 391.
Fourth, another, earlier-designated trafficker, Ali Harb,
was one of Fares’s major clients. J.A. 391. The conduit for
their money-laundering transactions in 2014 was a supplier of
“home appliances that [were] paid for in Panama.” J.A. 391.
These specific allegations (rather than the summaries’
more general atmospherics) appear to describe the entire basis
of plaintiffs’ designation, such that if plaintiffs could rebut all
of these particular allegations in submissions to OFAC,
plaintiffs would be entitled to be delisted. See Holy Land, 333
F.3d at 163 (citing NCORI, 251 F.3d at 209). The parties
acknowledge that plaintiffs have already begun to do exactly
that: In March 2017, they submitted to the agency an
independent audit—completed by a professional-services and
11
auditing firm—which focused on “specific transactions at
some of these duty-free stories.” Oral Arg. Tr. 46:5-18.
After producing the unclassified summaries, the
government moved for summary judgment on the ground that
plaintiffs now had sufficient information about the basis of
their designation to substantively challenge it. See Fares v.
Smith, No. 16-1730, Dkt. No. 14 at 11-13 (D.D.C. Nov. 4,
2016). Plaintiffs adhered to their initial, broad position, despite
the government’s intervening production of the unclassified
summaries. Plaintiffs maintained that the summaries simply
were not good enough because they did not disclose or
sufficiently detail the sources and nature of the underlying
evidence. See Fares v. Smith, No. 16-1730, Dkt. No. 17 at 1
(D.D.C. Nov. 22, 2016).
The district court granted the government’s summary
judgment motion. Fares, 249 F. Supp. 3d at 118. The court
held that, for due process purposes, OFAC’s unclassified
summaries gave sufficient detail about the factual bases of the
government’s conclusion that plaintiffs laundered money for
international drug cartels, including the relevant time period
and the businesses involved, to allow plaintiffs to understand
and contest the designation. Id. at 127-29. This appeal
followed.
III.
This case is unlike other legal challenges leveled by
individuals designated under the Kingpin Act or other asset-
freezing statutes, such as the IEEPA and AEDPA. Typically,
individuals and businesses designated on the basis of redacted
or withheld evidence not only bring procedural due process
claims, but also substantively challenge their designation as
unsupported in fact. See, e.g., Zevallos, 793 F.3d at 112-14;
12
Holy Land, 333 F.3d at 160-61; NCORI, 251 F.3d at 198-99;
Al Haramain Islamic Found., Inc. v. Dep’t of Treasury, 686
F.3d 965, 976-79 (9th Cir. 2012) (Al Haramain); KindHearts
for Charitable Humanitarian Dev., Inc. v. Geithner, 647 F.
Supp. 2d 857, 916-18 (N.D. Ohio 2009) (KindHearts I); see
also People’s Mojahedin I, 182 F.3d at 24.
Designees may also challenge the legitimate scope of the
redactions. See, e.g., KindHearts I, 647 F. Supp. 2d at 868-69,
903. And they may press the government to substantiate its
claim of privilege. See Tuite v. Henry, 98 F.3d 1411, 1417
(D.C. Cir. 1996) (explaining that, where an individual
challenges an agency’s claim of privilege, this court requires:
“(1) a formal claim of privilege by the head of the department
having control over the requested information; (2) assertion of
the privilege based on actual personal consideration by that
official; and (3) a detailed specification of the information for
which the privilege is claimed with an explanation why it
properly falls within the scope of the privilege”).
Designees can contest that agency disclosure of some but
not all of the allegations against them impairs their ability to
fully clear their names for delisting, leaving them “stumbl[ing]
towards a moving target.” Zevallos, 793 F.3d at 118; see
NCORI, 251 F.3d at 209 (requiring that designees have “the
opportunity to present . . . such evidence as those entities may
be able to produce to rebut the administrative record or
otherwise negate the proposition” supporting the government’s
designation); Al Haramain, 686 F.3d at 986 (holding that
OFAC’s disclosure of “only one of three reasons for its
investigation and designation” rendered the notice
“incomplete” such that it did “not meet the requirements of due
process”).
13
Courts have also held that effective judicial review may
necessitate examination of the full administrative record in
camera, either ex parte or with the designee’s lawyer present
as cleared counsel (able to verify the government’s grounds but
not report them back to the client). See, e.g., Al Haramain, 686
F.3d at 983-84; KindHearts for Charitable Humanitarian Dev.,
Inc. v. Geithner, 710 F. Supp. 2d 637, 660 (N.D. Ohio 2010)
(KindHearts II); see also Bismullah v. Gates, 501 F.3d 178,
187-88 (D.C. Cir. 2007), judgment vacated, 554 U.S. 913
(2008), dismissed for lack of jurisdiction, 551 F.3d 1068 (D.C.
Cir. 2009). That review can prompt a court, having looked at
the classified material, to find that the “use of the undisclosed
information . . . would constitute a due process violation.” Am.-
Arab Anti-Discrimination Comm. v. Reno, 70 F.3d 1045, 1054
(9th Cir. 1995) (ADC); see Bismullah, 501 F.3d at 187 (“[T]his
court cannot discharge its responsibility . . . unless a
petitioner’s counsel has access to as much as is practical of the
classified information regarding his client.”).
But plaintiffs here pressed none of these arguments. They
have not substantively challenged their designation as
traffickers or asked for more detail regarding the nature of the
allegations they face. They have not claimed that the extensive
redactions to the administrative record are legally
impermissible or that these withholdings exceed the scope of
the government’s asserted law enforcement interest. Plaintiffs
have not pressed for a formal claim of privilege by the relevant
agency head. In fact, they have not urged the district court or
this court to review the unredacted record in camera for any
purpose.
Instead, plaintiffs present a single claim on a single theory.
They insist that the court must order the agency to turn over the
actual underlying evidence (or details regarding that evidence
that would aid them in identifying its sources), or else require
14
the agency to delist plaintiffs. Plaintiffs’ all-or-nothing
argument fails.
To determine whether OFAC’s designation of a plaintiff
provides constitutionally adequate notice—enabling him
meaningfully to avail himself of his opportunity to be heard—
courts weigh three factors under the familiar Mathews v.
Eldridge balancing test: (1) “the private interest that will be
affected by the official action”; (2) “the risk of an erroneous
deprivation of such interest through the procedures used, and
the probable value, if any, of additional or substitute procedural
safeguards”; (3) and “the Government’s interest, including the
function involved and the fiscal and administrative burdens that
the additional or substitute procedural requirement would
entail.” 424 U.S 319, 335 (1976); see NCORI, 251 F.3d at 206-
09 (applying Mathews to this court’s evaluation of the
designation process under AEDPA); Al Haramain, 686 F.3d at
979-80 (similarly applying Mathews in reviewing a
designation).
As a general matter, the effect of an OFAC designation on
the designee’s private interests is “dire.” NCORI, 251 F.3d at
196; see Al Haramain, 686 F.3d at 979-80. “By design, a
designation by OFAC completely shutters all domestic
operations of an entity” and can render it “indefinitely . . .
financially defunct.” Al Haramain, 686 F.3d at 979-80.
Plaintiffs here represent that their “business was effectively
destroyed with the stroke of a pen when OFAC designated
Appellants as drug money launderers under the Kingpin Act.”
Oral Arg. Tr. 3:16-19.
When the government freezes assets based on redacted
evidence—thereby limiting the designee’s opportunity to
probe or cross-examine on that evidence—the risk of erroneous
deprivation is especially high. See NCORI, 251 F.3d at 196-
15
97; Al Haramain, 686 F.3d at 980; ADC, 70 F.3d at 1069 (“As
judges, we are necessarily wary of one-sided process [because]
. . . . there is an exceptionally high risk of erroneous deprivation
when undisclosed information is used. . . .”). But we have
rejected the argument that a designation violates due process
simply because the agency “rel[ies] upon . . . classified
information that [the government] refused to disclose.”
People’s Mojahedin II, 327 F.3d at 1241-42. Instead, in narrow
circumstances, we have authorized strictly necessary
adaptations of ordinary administrative and judicial process to
ensure a designee’s notice and process via alternative means,
while respecting compelling national security interests.
Plaintiffs here—challenging only the sufficiency of the
post-deprivation notice provided by OFAC’s summaries—rest
their case on a faulty and fatal assumption that, under this
court’s precedent, “whether OFAC’s blanket redactions are
appropriate is irrelevant.” Pls.’ Mot. for Summ. J. at 12
(emphasis added). Plaintiffs mischaracterize precedent.
Contrary to their argument, courts treat as a critical factor
whether the government can disclose more and, if so, at what
practical cost to the governmental interests at stake.
Excluding parties from directly accessing the evidence
against them is strongly disfavored, Rafeedie v. INS, 880 F.2d
506, 516 (D.C. Cir. 1989), so reliance on undisclosed classified
evidence is permissible “[o]nly [in] the most extraordinary
circumstances,” ADC, 70 F.3d at 1070. We have countenanced
the use of undisclosed classified evidence to form the basis of
a designation and freeze an individual’s assets in extraordinary
circumstances, where the government’s withholding is justified
by “the privilege and prerogative of the executive” in
protecting vital national security interests. NCORI, 251 F.3d at
208; People’s Mojahedin II, 327 F.3d at 1242; Holy Land, 333
F.3d at 164.
16
Forcing the executive branch to disclose information that
it has validly classified would “compel a breach in the security
which that branch is charged to protect.” NCORI, 251 F.3d at
208-09; see Holy Land, 333 F.3d at 164; People’s Mojahedin
II, 327 F.3d at 1242; see also Jifry v. FAA, 370 F.3d 1174, 1183
(D.C. Cir. 2004). We have “already decided . . . that due
process required the disclosure of only the unclassified portions
of the administrative record.” People’s Mojahedin II, 327 F.3d
at 1242. As the Ninth Circuit explained, “[g]iven the extreme
importance of maintaining national security, we cannot accept
[plaintiff]’s most sweeping argument—that OFAC is not
entitled to use classified information in making its designation
determination.” Al Haramain, 686 F.3d at 980-81 (collecting
cases). As a consequence, in certain limited circumstances, in
lieu of classified evidence the government may provide
designees with sufficiently specific “unclassified summaries
. . . ensuring that neither the [government]’s sources nor
national security were compromised, . . . [that] provide
[plaintiffs] with the ‘who,’ ‘what,’ ‘when’ and ‘where’ of the
allegations.” Kiareldeen v. Ashcroft, 273 F.3d 542, 548 (3d
Cir. 2001); see Al Haramain, 686 F.3d at 982-83.
In light of precedent countenancing the use of summaries
under the most pressing circumstances, plaintiffs’ all-or-
nothing argument is untenable. As a threshold matter, the
relevant precedent speaks in terms of the executive’s
prerogative to withhold “classified information,” see, e.g., Holy
Land, 333 F.3d at 164; NCORI, 251 F.3d at 208-09, while the
underlying evidence here was withheld instead as unclassified
“law enforcement sensitive” information, see, e.g., J.A. 119.
There may well be relevant differences between withholding
information on these two grounds, cf. Al-Aqeel v. Paulson, 568
F. Supp. 2d 64, 72 (D.D.C. 2008); see generally Tuite, 98 F.3d
1411 (discussing “law enforcement investigatory privilege”),
17
but plaintiffs fail to press any such distinction. Instead, they
have invited us to assume that the information withheld here is
as protected as classified information. See Pls.’ Mot. for
Summ. J. at 12 & n.5. As a consequence, we treat the
underlying evidence at issue here as if it were classified.
More fundamentally, plaintiffs contend that the legitimate
scope of the government’s withholdings is “irrelevant,” Pls.’
Mot. for Summ. J. at 12—a contention that virtually concedes
their case. The government represents that uncovering any
additional increment of the redacted information or its sources
would compromise ongoing law enforcement efforts,
potentially even risking bodily harm or death to individuals.
See Oral Arg. Tr. 27:24-29:17. Plaintiffs, meanwhile, have
functionally told us to accept this representation by treating
each and every redaction as legitimately classified. Pls.’ Mot.
for Summ. J. at 12; see Oral Arg. Tr. 4:4-7 (“[W]e’re not
challenging here the Executive’s privilege or prerogative to
enforce law enforcement’s sensitive privileged information,
and withhold that.”); id. at 32:11-13 (government counsel
asserting that “the Plaintiffs here have not ever sought to
challenge the basis for those law enforcement privileged
redactions”). We must therefore assume, without deciding,
that the full extent of the withholding of evidence and its
sources was justified by national security interests of the
highest order. See NCORI, 251 F.3d at 208. It follows from
that assumption that the government simply could not disclose
more, under Mathews’s third prong—at least not without
compromising ongoing enforcement efforts, endangering
people’s lives, and undermining national security. That
logical, albeit hypothetical, conclusion is fatal to plaintiffs’
procedural due process claim.
The case comes to us in a posture that is both theoretical
and extreme. We must treat the undisclosed portion of the
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administrative record as if it contained the most highly
sensitive classified information and assume that any more
specificity about the evidentiary sources supporting the
designation would certainly and necessarily compromise
national security. Demanding a choice between “declin[ing] to
designate the entity or . . . reveal[ing] the classified
information” to the designee is “overreaching.” Al Haramain,
686 F.3d at 980-81 (collecting cases). No court faced with such
a cabined choice has held in favor of plaintiffs. See id.
Perhaps recognizing the error of their ways, plaintiffs at
oral argument appeared to retreat from the position staked out
in their briefing. For the first time, they faulted the government
for failing to have “made an affirmation that it cannot make a
non-privileged evidentiary disclosure.” Oral Arg. Tr. 25:16-
18. But that argument fails because it is the product of
plaintiffs’ own litigating tactics. The government represented
that it was prepared to justify its withholdings via affidavits
from agency personnel and to go forward with in camera
review; but plaintiffs simply never challenged the scope or
extent of the redactions. Oral Arg. Tr. 32:9-17; 33:25-34:11;
36:13-18. Plaintiffs never pressed any argument that called for
justifications from the government or engagement by the court
regarding the scope or legitimacy of the specific record
withholdings.
Plaintiffs declined to take the multiple routes open to them
to challenge their designation in a way that could have
enhanced their procedural protections without compromising
the government’s and public’s interest in withholding
classified information. Instead, plaintiffs chose to mount an
all-or-nothing challenge seeking the particular evidence
against them or more information about the sources of that
evidence. And plaintiffs pressed this sole claim without
questioning the appropriateness or scope of the agency’s
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extensive redactions of the record or asking the court to review
them in camera. We thus affirm the district court’s grant of the
government’s motion for summary judgment.
Conclusion
Designating individuals as traffickers unquestionably
implicates serious due process concerns. But plaintiffs here
have pursued a single, artificially extreme argument—one that
is unsupported by precedent. For that reason, we affirm the
district court’s grant of summary judgment for the government.
As this court has emphasized, there is “no limit on the
number of times a designated person can request delisting.”
Zevallos, 793 F.3d at 115 (citing 31 C.F.R. § 501.807). We
recognize that this is not plaintiffs’ last or only chance to
contest their designation.
So ordered.