Source: https://case-law.vlex.com/vid/857-f-3d-913-692773189
Timestamp: 2019-04-21 06:23:36
Document Index: 267624677

Matched Legal Cases: ['§ 1701', '§ 1702', '§ 1', '§ 560', '§ 560', '§ 1291']

857 F.3d 913 (D.C. Cir. 2017), 16-5118, Epsilon Electronics, Inc. v. United States Department of Treasury - Federal Cases - Jurisprudencia - VLEX 692773189
Citation: 857 F.3d 913
Judge Panel: Before: ROGERS and GRIFFITH, Circuit Judges, and SILBERMAN, Senior Circuit Judge. CONCUR BY: SILBERMAN (In Part) Silberman, Senior Circuit Judge, concurring in part and dissenting in part:
OFAC is authorized to impose civil penalties against any person who exports goods to a third party who it has reason to know intends to send them to Iran. At issue was whether OFAC must also show that the goods actually ended up in Iran. The DC Circuit held that the government need not make that showing and affirmed the district court on that ground. However, the court held that OFAC did not... (see full summary)
857 F.3d 913 (D.C. Cir. 2017)
Appeal from the United States District Court for the District of Columbia. (No. 1:14-cv-02220).
When the President identifies an " unusual and extraordinary threat" to the American economy, national security, or foreign policy that originates from abroad, see 50 U.S.C. § 1701, the International Emergency Economic Powers Act authorizes him to declare a national emergency and address the threat by regulating foreign commerce, see id. § 1702. In 1995, President Clinton determined that Iran's " support for international terrorism, its efforts to undermine the Middle East peace process, and its efforts to acquire weapons of mass destruction" represented a national emergency, see Iranian Transactions Regulations, 77 Fed.Reg. 64,664, 64,664 (Oct. 22, 2012), and, invoking his authority under the Act, imposed comprehensive trade sanctions on Iran by executive order, see Exec. Order No. 12,959, 60 Fed.Reg. 24,757, § 1 (May 6, 1995).
OFAC implemented the President's executive order in September 1995 by promulgating the Iranian Transactions and Sanctions Regulations, see 60 Fed.Reg. 47,061 (Sept. 11, 1995), which are now codified, as amended, at 31 C.F.R. pt. 560. Among other prohibitions, the regulations forbid " the exportation, reexportation, sale, or supply, directly or indirectly . . . of any goods, technology, or services to Iran" by United States individuals and businesses,
including exportation to a third country with " knowledge or reason to know" that the goods are " intended specifically" for reexportation to Iran. See 31 C.F.R. § 560.204.
OFAC began investigating Epsilon in 2011, when the agency learned about a 2008 shipment from Epsilon's California headquarters to an address in Tehran, Iran. In response to an administrative subpoena, Epsilon's president denied knowledge of the shipment and suggested that a lower-level employee had sent the package without the company's knowledge.
Later in 2011, OFAC also learned that Epsilon had received multiple wire transfers from a Dubai bank, made on behalf of Asra International. The agency examined Asra's website, which touted the company's success in the Iranian market, contained a directory of dealers who were all located in Iran, and displayed photos from trade shows in various Iranian cities. Some of these photos also appeared on Epsilon's website. OFAC suspected that the company's shipments to Asra were " destined for Iran," and opened a second investigation on Epsilon in December 2011. The agency issued an administrative subpoena to Epsilon's bank, seeking information about the company's transactions with Asra.
In the meantime, OFAC decided to close its investigation of the 2008 shipment. In January 2012, the agency sent Epsilon a letter explaining that the shipment appeared to have violated OFAC regulations, and warning that those regulations " prohibit virtually all" American trade with Iran. Appellant's App. [A.A.] 94. OFAC explained that it would not penalize Epsilon for the shipment but that the agency could take this apparent violation into account in any future case.
Between February and May 2012, while OFAC's investigation continued, Epsilon sent Asra five more shipments. During this period, Epsilon managers corresponded by email with an Asra manager, Shahriar Hashemi, who described plans to launch a Dubai retail store under " Asra's flag." A.A. 118. The emails record Hashemi and Epsilon negotiating several orders, and show Hashemi mentioning plans for his showroom, complaining about another Dubai shop selling Epsilon products, worrying about whether Epsilon products could endure Dubai's heat, and anticipating sales to African and Central Asian customers. An Epsilon manager promised Hashemi that the Dubai retail market was " all yours." See A.A. 119.
In May 2014, OFAC tentatively concluded that all thirty-nine of Epsilon's shipments to Asra violated 31 C.F.R. § 560.204 because each was made with knowledge, or reason to know, that Asra intended to reexport the goods to Iran. The agency sent Epsilon a Prepenalty Notice, declaring its intent to impose a civil monetary
penalty of $4,073,000, subject to Epsilon's response. OFAC arrived at that dollar amount by applying its penalty guidelines, which required the agency to determine whether any of the violations were voluntarily disclosed and whether any were " egregious." See generally 31 C.F.R. pt. 501, App. A. OFAC found that none of Epsilon's violations was voluntarily disclosed, and that the last five shipments, made after Epsilon received OFAC's January 2012 cautionary letter, were egregious. Though the agency has authority to depart upward or downward from the guideline penalty, it decided not to do so after balancing the aggravating and mitigating factors.
In July 2014, OFAC issued a final Penalty Notice, formally imposing a $4,073,000 civil penalty. The agency had not been persuaded by Epsilon's response to the Prepenalty Notice, which again denied any knowledge or reason to know that Asra distributed Epsilon's products in Iran. The Penalty Notice explained that " multiple facts tend to show that the goods exported to Asra were sent to Iran and that Epsilon knew or had reason to know that the goods were intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran." Although the Notice recited much of the evidence against Epsilon, it never mentioned the emails between Epsilon management and Hashemi.
Epsilon timely appealed. We have jurisdiction under 28 U.S.C. § 1291, and review de novo the district court's entry of summary judgment in favor of the government. Islamic Am. Relief Agency v. Gonzales ( IARA ), 477 F.3d 728, 732, 375 U.S.App.D.C. 93 (D.C. Cir. 2007). As the Administrative Procedure Act requires, our review is " highly deferential" to the agency, meaning we may set...