Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-05447/USCOURTS-caDC-05-05447-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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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.

USCA Case #05-5447 Document #1022767 Filed: 02/13/2007 Page 1 of 18
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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

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3

1

For simplicity, we refer to the remaining defendants

collectively as “the Government.”

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

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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

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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

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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 IARAUSA and IARA, along with other branch offices, comprised a

single global organization. The Government argues that their

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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 IARAUSA 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. IARAUSA 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

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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

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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 IARAUSA 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

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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.

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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. IARAUSA 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).

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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 IARAUSA 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 IARAUSA 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,

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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

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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, IARAUSA contends, interfered with that religious expression. As we

explained in Holy Land, “[a]cting against the funding of

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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. IARAUSA, 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.

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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

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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 eightpage 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 IARAUSA functions as a branch of IARA was supported by

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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.

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