Zevallos v. Obama Ex Rel. United States

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 17, 2015 Decided July 10, 2015
No. 14-5059
FERNANDO ZEVALLOS,
APPELLANT
v.
BARACK HUSSEIN OBAMA, IN HIS OFFICIAL CAPACITY AS
PRESIDENT OF THE UNITED STATES, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:13-cv-00390)
Erich C. Ferrari argued the cause and filed the briefs for
appellant.
Benjamin M. Shultz, Attorney, U.S. Department of
Justice, argued the cause for appellees. With him on the brief
were Ronald C. Machen Jr., U.S. Attorney, and Mark B.
Stern, Attorney.
Before: GRIFFITH and KAVANAUGH, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge GRIFFITH.
2
GRIFFITH, Circuit Judge:
Appellant Fernando Zevallos brought suit challenging the
determination of the Department of the Treasury that the
President had lawfully designated him a significant foreign
narcotics trafficker. The district court rejected his claims, as
do we.
I
This case arises under the Foreign Narcotics Kingpin
Designation Act (Kingpin Act), 21 U.S.C. § 1901 et seq., one
of several statutory mechanisms that enable the President to
block or seize the assets of individuals or entities involved in
international crime or terrorism. The Kingpin Act was
modeled on a specific, successful application of a similar
statute, the International Emergency Economic Powers Act
(IEEPA), 50 U.S.C. §§ 1701-07. See H.R. Rep. No. 106-457,
42 (1999). IEEPA itself is closely analogous to the anti-
terrorism provisions of the Antiterrorism and Effective Death
Penalty Act of 1996, 8 U.S.C. § 1189 (AEDPA). Under all
three statutes, the President can designate individuals or
entities as posing a threat to the security of the United States
or its interests and impose sanctions on them.
The Kingpin Act specifically targets persons that “play[] a
significant role in international narcotics trafficking,” 21
U.S.C. § 1907(7), as “significant foreign narcotics
traffickers,” id. § 1903(b). Narcotics trafficking includes
producing, distributing, selling, financing, or transporting any
illegal narcotic, or conspiring with or assisting others to do so.
Id. § 1907(3). Persons designated as significant foreign
narcotics traffickers under the Kingpin Act—just like persons
designated a threat to the United States under IEEPA and
AEDPA—are added to the “Specially Designated Nationals
3
and Blocked Persons List,” 31 C.F.R. § 501.807(a), and all
their assets in the United States or under the control of
any person who is in the United States are “block[ed],” 21
U.S.C. § 1904(b), or effectively frozen. No citizen or resident
of the United States may transact or deal in blocked property.
Id. § 1904(c).
A designated person may “seek administrative
reconsideration” of his designation and request to be
removed, or “delist[ed],” from the Specially Designated
Nationals and Blocked Persons List. 31 C.F.R. § 501.807. The
same procedure applies irrespective of which statute was
invoked to designate the person in question. 31 C.F.R. Ch. V,
App. A; id. § 501.807. A request for reconsideration—also
sometimes called a delisting request—may include arguments
or evidence rebutting Treasury’s “basis . . . for the
designation,” or “assert that the circumstances resulting in the
designation no longer apply.” Id. § 501.807, 807(a). In other
words, the designated person must argue that whatever
rationale led Treasury to designate him under the appropriate
statute—as relevant here, that the designated person was a
significant foreign narcotics trafficker as defined in the
Kingpin Act—was never true or is no longer true. The Office
of Foreign Assets Control at the Department of the Treasury
will “conduct[] a review of the request for reconsideration”
and “provide a written decision to the blocked person.” Id.
§ 501.807(d). A designated person can request delisting as
many times as he likes. See id. § 501.807.
Petitioner Fernando Zevallos is a Peruvian national who
founded and led Aero Continente, a low-cost airline operating
throughout Latin America. A number of countries, including
the United States, investigated Zevallos for alleged
involvement in narcotics trafficking throughout the 1980s and
1990s. Peru’s investigations culminated in a 1997 indictment
4
of Zevallos on drug trafficking and money laundering charges
based on allegations that he had worked with drug traffickers
to launder some $40 million.
In June 2004, President George W. Bush used his
authority under the Kingpin Act to designate Zevallos as a
significant foreign narcotics trafficker. Accordingly, all of
Zevallos’s assets in the United States and the assets of related
companies and individuals were blocked. Around the time he
was designated, Zevallos attempted to illegally transfer
property he owned in Miami to his wife. He was eventually
charged in the Southern District of Florida with violating the
Kingpin Act by attempting this transfer. Those charges are
still pending.
In December 2004, Zevallos asked Treasury to remove
him from the Specially Designated Nationals and Blocked
Persons List and unblock his assets. He submitted to Treasury
a memorandum with exhibits in support of his request (the
2004 Memorandum). Treasury responded in June and
September 2005 by disclosing non-sensitive material relating
to Zevallos’s designation. Zevallos filed a supplemental
submission reiterating his arguments one month later.
Zevallos brought suit in November 2005 in federal district
court in the District of Columbia, seeking an order that would
require Treasury to take his name off the Specially
Designated Nationals and Blocked Persons List and unblock
his assets. However, shortly thereafter, Zevallos was
convicted on all pending charges in Peru. He voluntarily
dismissed his pending lawsuit against Treasury two days after
his conviction, terminating that litigation. Treasury has since
explained to Zevallos and to us that the agency interpreted
Zevallos’s dismissal of his lawsuit as a sign that he was
abandoning his request for delisting, though Treasury did not
5
tell this to Zevallos at the time. At some point thereafter,
Treasury lost the exhibits Zevallos had submitted with the
2004 Memorandum. Those exhibits have never been found.
Zevallos began serving a twenty-year prison sentence in
Peru in 2005. He remains in prison in Peru today. Four years
passed with no communication between Zevallos and
Treasury. Zevallos broke this silence in July 2009 when he
wrote to various U.S. officials, requesting extradition from
Peru so that he could face the charges pending against him in
the Southern District of Florida. Treasury construed this letter
as a request for the agency to reexamine Zevallos’s
designation and wrote back, asking Zevallos to answer a
questionnaire about his financial interests and relationship
with a variety of entities and individuals. Zevallos filed a
response to that questionnaire in November 2009.
Another four years passed with no action from Treasury
on Zevallos’s resuscitated delisting request. In March 2013,
Zevallos filed this action, seeking an injunction that would
force Treasury to act on his long-pending delisting request.
Three months later Treasury at last denied the request.
Treasury acknowledged losing the exhibits attached to
Zevallos’s 2004 request, but tried to make up for this mistake
by assuming that whatever Zevallos said about this evidence
in his 2004 Memorandum was true. Even so, Treasury
concluded that Zevallos was properly designated in 2004 and
that he should remain designated in 2013. Treasury also
produced a number of new pieces of evidence in support of
the designation.
In response, Zevallos amended his complaint in this action
to introduce new claims attacking Treasury’s decision.
Relevant to this appeal, Zevallos argued to the district court
that the denial of his delisting request was arbitrary and
6
capricious and that Treasury had disregarded agency
procedures. He also maintained that Treasury’s decision
should be reviewed de novo. Separately, Zevallos argued that
his designation violated his procedural and substantive due
process rights under the Due Process Clause.
Treasury insisted that the district court should use the
APA’s conventional arbitrary and capricious standard, not de
novo review. Treasury also asked the district court to dismiss
or grant summary judgment as to every count of Zevallos’s
amended complaint. The district court held in Treasury’s
favor on each point. See Zevallos v. Obama, 10 F. Supp. 3d
111, 119-33 (D.D.C. 2014). 1
Zevallos timely appealed. We have jurisdiction under 28
U.S.C. § 1291. We consider the district court’s ruling de
novo. Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728,
732 (D.C. Cir. 2007). As always, when we examine an
agency’s decision, we apply the APA’s “highly deferential
standard,” meaning that we may set aside Treasury’s action
“only if it is ‘arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.’” Id. at 732 (quoting 5
U.S.C. § 706(2)(A)); see also Holy Land Found. for Relief &
Dev. v. Ashcroft, 333 F.3d 156, 161 (D.C. Cir. 2003). Under
that standard, “we may not substitute our judgment for
[Treasury’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
1
Zevallos also argued that the denial of his delisting request violated
the APA because of undue delay and because blocking his assets violated
the Takings Clause of the Fifth Amendment. The district court dismissed
these claims, finding that the undue delay claim was now moot and that
only the Court of Federal Claims would have jurisdiction to consider his
Takings Clause claim. See Zevallos, 10 F. Supp. 3d at 123-24, 132-33.
Zevallos does not appeal either of those rulings here.
7
the choice made.’” Islamic Am. Relief Agency, 477 F.3d at
732 (quoting Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
Zevallos asks us to take the extraordinary and rare step of
reviewing Treasury’s determination de novo instead of under
the APA’s arbitrary and capricious standard. See Melissa F.
Wasserman, Deference Asymmetries: Distortions in the
Evolution of Regulatory Law, 93 TEX. L. REV. 625, 639 n.44
(2015) (finding only one example where a court applied de
novo review under the APA, in an unusual case in which the
agency decisionmaker had obvious bias against the
petitioner). We will not do so. We have never applied de novo
review in an APA case and have stated in dicta that
“procedures must be severely defective before a court
proceeding under the APA can substitute de novo review for
review of the agency’s record.” Nat’l Org. for Women v.
Social Sec. Admin., 736 F.2d 727, 745-46 (D.C. Cir. 1984)
(Mikva & McGowan, JJ., concurring). These proceedings
were not severely defective. The agency’s fact-finding
procedures were adequate, and Zevallos had ample
opportunity to make his case to agency officials. See id.Therefore arbitrary and capricious review will apply.
II
A
We affirm the district court’s rejection of Zevallos’s claim
that Treasury’s denial of his delisting request was arbitrary
and capricious.
Treasury denied Zevallos’s delisting request by relying on
five different sets of evidence: (1) newspaper articles
discussing the recent seizure of assets he continued to control
8
in Panama; (2) newspaper articles discussing new charges
filed against him in Peru in 2011 and 2012; (3) newspaper
articles discussing his ongoing control of assets in Peru; (4)
newspaper articles discussing the recent discovery of an illicit
cellphone and memory stick in his prison cell in Peru; and (5)
his 2007 criminal indictment in the Southern District of
Florida.
Zevallos argues that Treasury is not entitled to rely on
“[u]nverified open source materials” like news media reports
to justify designation decisions under the Kingpin Act.
However, as Zevallos acknowledges, we have approved the
use of such materials as part of the unclassified record
supporting the decision to designate an individual or entity for
inclusion on the Specially Designated Nationals and Blocked
Persons List under closely analogous statutes. See, e.g., Holy
Land, 333 F.3d at 162 (explaining that, under IEEPA, “it is
clear that the government may decide to designate an entity
based on a broad range of evidence, including intelligence
data and hearsay declarations”); People’s Mojahedin Org. of
Iran v. U.S. Dep’t of State, 182 F.3d 17, 19 (D.C. Cir. 1999)
(noting that “nothing in [AEDPA] restricts [the Department of
State] from acting on the basis of third hand accounts, press
stories, material on the Internet[,] or other hearsay regarding
the organization’s activities”). 2 There are good reasons to
permit Treasury to rely on such materials that apply equally in
all these contexts. The designation decision may be based in
part on classified information. Treasury may face logistical or
2
Though elsewhere Zevallos argues that our past decisions examining
closely related statutes like IEEPA and AEDPA cannot help guide our
assessment of the Kingpin Act, see infra at 15, he did not make that
argument in this regard. To the contrary, his brief acknowledged the
relevance of those cases here. As Zevallos has not argued to the contrary,
we will assume our precedents under IEEPA and AEDPA provide useful
guidance on this score.
9
political difficulties obtaining judicial or law enforcement
records from other countries. Diplomatic concerns may limit
what Treasury or its agents can say publicly in connection
with individual designations. And the safety of investigators
or informants might be put at hazard were their testimony
made available as part of the administrative record. Those
same considerations apply with equal force here. We see no
reason to disapprove the use of such materials in delisting
proceedings under the Kingpin Act when we have approved
their use in nearly identical circumstances.
Zevallos suggests instead that relying on open source
materials was inappropriate here because Treasury gathered
the articles immediately before deciding his delisting request
and therefore lacked adequate time to develop a more
complete record that corroborated their content. But our
previous IEEPA and AEDPA decisions approved the use of
media reports to support a designation decision without regard
to the recency of those reports or the presence of
corroboration. See, e.g., Holy Land, 333 F.3d at 162.
Zevallos also argues that the news reports on which
Treasury relied do not support its determination. To the extent
he has preserved his arguments, they fail; where they have
been forfeited, we do not consider them. Treasury relied in
part on articles revealing the discovery of an illicit cellphone
and memory stick in Zevallos’s jail cell, as well as articles
discussing the use of such devices by incarcerated drug
traffickers to continue managing their affairs. Zevallos points
out that the Kingpin Act only permits designating an
individual who “plays a significant role” in narcotics
trafficking, not someone who merely has the capacity to do
so. See 21 U.S.C. § 1907(7). Evidence that he possessed an
illicit cellphone in prison, he argues, does not show that he
used that cellphone to participate in narcotics trafficking. Fair
10
enough. Perhaps these articles, standing alone, might not have
provided enough to justify Zevallos’s designation. But this
evidence at a minimum shows that Zevallos had the capacity
to communicate with others outside his prison. And Zevallos
does not argue that Treasury could not rely on this evidence in
combination with other evidence of illegal activity to
conclude that he still represents a threat and should remain
designated.
And there was no shortage of additional evidence. For
example, Treasury relied on a set of articles discussing the
seizure of Panamanian bank accounts that Zevallos continued
to control from prison through his sister, as well as another set
of articles discussing his family’s ongoing control of a
number of properties in Peru that were ostensibly seized by
the Peruvian government years ago in connection with
Zevallos’s conviction. Zevallos argued below that this
evidence was irrelevant because it showed only that his
family continued to control assets derived from narcotics
trafficking. On appeal he argues that Treasury may not rely on
evidence that he owns such assets because he cannot legally
or practically relinquish control of them, given that they are
blocked under the Kingpin Act and that he is incarcerated.
Because these arguments were not made below, they have
been forfeited. See Potter v. District of Columbia, 558 F.3d
542, 549-50 (D.C. Cir. 2009). But even if not forfeited, they
miss the point. Treasury does not fault Zevallos for nominally
owning assets he is somehow obstructed from abandoning. 3
Instead, Treasury relied on this evidence, as it was entitled to
3
It is by no means clear that Zevallos is correct that any legal or
practical impediment would prevent him from abandoning any assets. But
we need not decide that question because his ability to abandon bank
accounts or other property is irrelevant to Treasury’s decision to continue
his designation.
11
do, to show that Zevallos remains in contact with his family
and continues to manage his assets from prison.
Treasury also pointed to articles reporting new charges
filed against Zevallos in Peru in 2011 and 2012 alleging more
recent money laundering activity. Zevallos did not address
this evidence at all except as part of his categorical argument
that Treasury should not have relied on any news reports. But
as we explained above, Treasury was entitled to rely on
evidence of this kind to conclude that Zevallos remains of
concern to law enforcement.
Finally, Zevallos argues that Treasury should not have
considered his 2007 criminal indictment. He made no
argument at all regarding the 2007 indictment below and so
he has forfeited any argument he might make on appeal on
this score. See Potter, 558 F.3d at 549-50.
All this evidence together provides adequate basis to
justify Treasury’s determination. There is no doubt, as
Zevallos argues, that Treasury marshalled less evidence now
than existed to support his original designation in 2004. And
we agree that much of this evidence could be viewed in a light
more beneficial to Zevallos. However, when we evaluate
agency action, “we do not ask whether record evidence could
support the petitioner’s view of the issue, but whether it
supports the [agency’s] ultimate decision.” Fla. Gas
Transmission Co. v. FERC, 604 F.3d 636, 645 (D.C. Cir.
2010) (citation omitted). Under that deferential standard, we
find that this record supports Treasury’s denial of Zevallos’s
delisting request.
B
12
Zevallos argues that Treasury reached the decision to deny
his request “without observance of procedure required by
law.” 5 U.S.C. § 706(2)(D). His claim rests on two grounds.
He criticizes the agency for losing the exhibits he submitted in
support of the 2004 Memorandum as part of his original
delisting request. He also asserts that the agency should have
notified him that dismissing his lawsuit in 2005 would, in
Treasury’s view, also effectively withdraw his delisting
request.
We will not invalidate Treasury’s decision based on
procedural error unless the errors alleged could have affected
the outcome. See Ozark Auto. Distributors, Inc. v. NLRB, 779
F.3d 576, 582 (D.C. Cir. 2015) (“‘In administrative law, as in
federal civil and criminal litigation, there is a harmless error
rule.’” (quoting PDK Labs. Inc. v. U.S. D.E.A., 362 F.3d 786,
799 (D.C. Cir. 2004)). Zevallos has failed to argue that either
error was anything more than harmless. First, though losing
the binders full of evidence Zevallos submitted in 2004 was
without question a serious error, Treasury remediated that
mistake by assuming that everything Zevallos said about what
was in the missing evidence was true. Zevallos insists
nonetheless that Treasury “arguably would have reached a
different conclusion” had the agency reviewed the actual
evidence instead of accepting his word for what the evidence
showed. We fail to see how. The evidence would either have
supported or contradicted the factual claims Zevallos made in
the 2004 Memorandum. If the former, Zevallos would have
been no better off because Treasury already assumed
everything he said about the evidence was true. On the other
hand, he would have been much worse off if examining the
evidence showed that Zevallos had lied about what it showed.
Because Zevallos cannot show any injury from the loss of his
evidence, this error provides no basis to invalidate Treasury’s
determination.
13
Nor has Zevallos suggested that he was harmed by the
long delay after Treasury interpreted Zevallos’s request as
withdrawn in 2005. To be sure, Treasury should notify
individuals when disregarding their pending requests. And
Zevallos is correct that no statute or regulation allows
Treasury to disregard pending requests, as happened here. But
Zevallos must show that a different process would have led
Treasury to a different decision. He has not done so. Though
Treasury took a long time, the agency ultimately considered
and denied the delisting request. Zevallos was designated as a
significant foreign narcotics trafficker in 2004. He remained
so designated for the next eight years. He is still so designated
today. Nothing would have changed had Treasury denied his
delisting request in 2006 or 2010. Zevallos insists that the
delay harmed him because his ongoing designation imposed
serious burdens on him and his family. But Zevallos has not
and cannot argue that he would have avoided that harm had
Treasury made its decision earlier. Therefore any error on this
score is harmless as well.
Finally, we note that any discussion of procedural error in
this context is academic. Even if Zevallos proved a procedural
error sufficient to invalidate Treasury’s decision, at most we
would vacate Treasury’s determination and remand for
Treasury to rule again. But Treasury’s procedure governing
requests for reconsideration of designation decisions imposes
no limit on the number of times a designated person can
request delisting. See 31 C.F.R. § 501.807. Zevallos is free to
file a new request and obtain a new ruling from Treasury, just
as he would if we vacated and remanded the decision before
us. In fact, it seems Zevallos has already taken advantage of
this procedure. He filed another delisting request with
Treasury after he noticed this appeal, which the agency has
held in abeyance while this matter is pending. If anything,
14
Zevallos is better off for having read Treasury’s 2013
decision. He now knows all of Treasury’s newest and best
arguments justifying his ongoing designation and can respond
to them in a future request for reconsideration.
C
Zevallos also insists that Treasury violated his procedural
and substantive due process rights under the Constitution. He
faults Treasury for failing to afford him the chance to
challenge his designation beforehand and for providing
inadequate process to challenge his designation after the fact.
And he argues that denying his delisting request was so
gravely unfair as to infringe his substantive due process
rights. He is wrong on all counts.
“[D]ue process is flexible and calls for such procedural
protections as the particular situation demands.” Morrissey v.
Brewer, 408 U.S. 471, 481 (1972). Though the Due Process
Clause generally requires the Government to afford
individuals notice and an opportunity to be heard before
depriving them of their property, there are “extraordinary
situations where some valid governmental interest is at stake
that justifies postponing the hearing until after the event.”
Boddie v. Connecticut, 401 U.S. 371, 379 (1971). “[W]here a
State must act quickly, or where it would be impractical to
provide predeprivation process, postdeprivation process
satisfies the requirements of the Due Process Clause.” Gilbert
v. Homar, 520 U.S. 924, 930 (1997). This is especially true
where the seizure is aimed at “property . . . of a sort that could
be removed to another jurisdiction, destroyed, or concealed, if
advance warning of confiscation were given.” Calero-Toledo
v. Pearson Yacht Leasing Co., 416 U.S. 663, 679 (1974). In
that circumstance, “[t]he ease with which an owner could
frustrate the Government’s interests in the forfeitable property
15
create[s] a ‘special need for very prompt action’ that
justifie[s] the postponement of notice and hearing until after
the seizure.” United States v. James Daniel Good Real Prop.,
510 U.S. 43, 52 (1993) (quoting Calero-Toledo, 416 U.S. at
678).
This is just such a case. There is no doubt that blocking
Zevallos’s assets deprived him of his property. But providing
notice before blocking the assets of international narcotics
traffickers would create a substantial risk of asset flight. Just
as in Calero-Toledo, that risk creates a “special need for very
prompt action.” 416 U.S. at 678. To say that offering
predeprivation process in this circumstance would prove
“impractical,” Gilbert, 520 U.S. at 930, understates the case;
such process would likely cripple the Kingpin Act.
The only response Zevallos offers is to critique the district
court for relying on a line of cases under IEEPA that
approved blocking assets without predeprivation process.
Zevallos insists that the district court was wrong to employ
IEEPA precedent. We need not decide whether he is right.
The due process analysis here is straightforward without
analogizing the Kingpin Act to any other statute. As we have
explained, the circumstances of this case justified Treasury’s
decision to designate Zevallos and block his assets without
affording him notice and the opportunity to be heard
beforehand. See Calero-Toledo, 416 U.S. at 679.
Nor can Zevallos complain of the adequacy of the
postdeprivation process he received. He was given notice and
a meaningful opportunity to be heard, which is what the Due
Process Clause requires. Holy Land, 333 F.3d at 163. 4
4
Though Zevallos insisted that IEEPA cases cannot provide any
guidance for determining whether predeprivation process is required under
the Kingpin Act, see supra at 15, his discussion of the adequacy of the
16
Treasury provided Zevallos several times with the
unclassified evidence on which it relied to designate him;
Zevallos not only had the chance to contest the propriety and
adequacy of that evidence but did so on more than one
occasion. And he remains free now to continue contesting his
designation by filing new delisting requests, meaning that he
can make any new arguments that occur to him and reiterate
and expand any arguments he felt received short shrift on
Treasury’s last review. Due process does not require more.
Zevallos makes four equally deficient responses, two of
which we consider and reject and two of which we do not
reach because they have been forfeited. First, he complains
that Treasury waited far too long before deciding his request
and failed to communicate with him during these delays.
True, other courts have held that extremely prolonged delays
while considering such requests can violate the Due Process
Clause. See Al Haramain, 686 F.3d at 985 (finding a due
process violation when Treasury never produced the entire
unclassified administrative record justifying a designation
decision, explained only some of the reasons for the
designation via a press release months later, and waited years
to respond to a delisting request); KindHearts, 647 F. Supp.
2d at 905 (same, where Treasury only produced a “scanty,”
partial record thirty-four months after the designation). This
case is quite different. Though Treasury took several years to
decide Zevallos’s request, Treasury did promptly provide
postdeprivation process he received is based almost entirely on three
IEEPA cases: Holy Land, 333 F.3d at 163, Al Haramain Islamic Found.,
Inc. v. U.S. Dep’t of Treasury, 686 F.3d 965, 984 (9th Cir. 2012), and
KindHearts for Charitable Humanitarian Dev., Inc. v. Geithner, 647 F.
Supp. 2d 857, 905 (N.D. Ohio 2009). Thus, as we did when discussing the
permissibility of news media reports as a basis for designation decisions,
see supra at 8 n.2, we will assume that Zevallos accepts the relevance of
these cases on this question.
17
Zevallos with the unclassified administrative record justifying
his designation and allowed him to respond to it on multiple
occasions. Unlike the petitioners in Al Haramain and
KindHearts who never fully understood why they had been
designated, Zevallos was fully equipped to rebut Treasury’s
rationale by the time it finished disclosing information to him
in September 2005. Cf. Al Haramain, 686 F.3d at 984-85
(finding that Treasury had violated due process by “refus[ing]
to disclose its reasons for investigating and designating [the
petitioner], leaving [the petitioner] unable to respond
adequately to the agency’s unknown suspicions”);
KindHearts, 647 F. Supp. 2d at 904 (same, because the
petitioner “remain[ed] largely uninformed about the basis for
the government’s actions”). Because Zevallos knew the basis
for his designation, no comparable due process violation
existed here. In any event, if there was error, it was harmless.
We have already held that the administrative record supports
Treasury’s conclusion that Zevallos should remain
designated, and Zevallos does not suggest that reviewing his
delisting request at a faster pace would have changed that
outcome.
Zevallos disagrees. He was harmed by Treasury’s due
process violations, he argues, because he has been forced to
respond to his designation “in a post hoc manner” and “to
decipher the administrative process by trial and error.” There
is no support for this claim in the record. Zevallos has known
from the beginning how to attack Treasury’s case against him.
He has done so several times, and he can continue to do so
now in new requests for delisting. Nothing about the history
of this case suggests that Zevallos has been forced to stumble
towards a moving target. And once again, because no
procedural error Zevallos alleges played a role in the denial of
his delisting request, none provides a basis to vacate
Treasury’s determination.
18
Second, Zevallos maintains that Treasury’s loss of the
binders of evidence he submitted with his original delisting
request in 2004 prevented the agency from giving his
argument a fair hearing. Again, we disagree. As we have
already explained, Treasury rendered any arguable error
harmless by simply accepting what Zevallos said about the
missing evidence in his 2004 submission. Treasury’s
bumbling was no more harmful with respect to Zevallos’s due
process rights than it was under the APA’s requirement that
Treasury follow appropriate agency procedure.
Zevallos has forfeited his last two due process arguments.
He argues that Treasury did not disclose the basis for
continuing to designate him until the final decision regarding
his delisting request issued in 2013. Because Zevallos had not
previously seen this evidence, he insists he could not
adequately contest his ongoing designation. Zevallos forfeited
this argument by not raising it in the district court. Potter, 558
F.3d at 549-50. He also points to the questionnaire Treasury
asked him to answer in 2009 once the agency realized he still
wanted a decision on his delisting request, and complains that
Treasury’s 2013 decision did not address any of the topics
about which the 2009 questionnaire inquired. This argument
is doubly forfeited: Zevallos did not make it to the district
court; and on appeal he made it for the first time in his reply
brief. See Russell v. Harman Int’l Indus., Inc., 773 F.3d 253,
255 n.1 (D.C. Cir. 2014) (holding that arguments raised for
the first time in a reply brief are forfeited).
Finally, Zevallos insists that Treasury’s conduct violated
his substantive due process rights. We have explained in the
past that substantive due process forbids only “egregious
government misconduct,” George Wash. Univ. v. District of
Columbia, 318 F.3d 203, 209 (D.C. Cir. 2003), involving state
19
officials guilty of “grave unfairness” so severe that it
constitutes either “a substantial infringement of state law
prompted by personal or group animus,” or “a deliberate
flouting of the law that trammels significant personal or
property rights,” Silverman v. Barry, 845 F.2d 1072, 1080
(D.C. Cir. 1988). “Inadvertent errors, honest mistakes, agency
confusion, even negligence in the performance of [official]
duties, do not” violate substantive due process rights. Id.Zevallos has not suggested misconduct even approaching this
egregious standard. Any error Treasury committed was, at
most, the result of mistake or negligence and, as we have
pointed out repeatedly, was harmless. Thus we affirm the
district court on this score as well.
Nor is it true, as Zevallos suggests, that his claims could
only be adjudicated at a trial because we have not before
examined designations under the Kingpin Act. Due process is
a thickly forested field. Though the statute is new, the legal
question is very old; and though Zevallos contests action
taken under a statute we have not confronted until now, the
deficiency in his claims arises from legal rules that apply
equally to all statutes. The district court’s decision was
perfectly appropriate.
III
For the foregoing reasons we affirm the district court.