D.Ore.: OFAC seizure can be justified by special needs exception

OFAC seizure of assets is governed by the special needs exception, but, as the court previously ruled, it is not per se reasonable under the Fourth Amendment. Al Haramain Islamic Found. v. United States Dep’t of the Treasury, 2009 U.S. Dist. LEXIS 103373 (D. Ore. November 5, 2009), prior opinion 585 F. Supp. 2d 1233 (D. Or. 2008):

Pursuant to the Fourth Amendment, a warrant requires a description of the “place to be searched and the persons or things to be seized.” Here, however, as Szubin explains in his supplemental declaration, OFAC and the President have Congressional authority to seize a wide variety of property interests, ranging from money to mortgages, options to insurance policies, merchandise to accounts payable, located both in the United States and elsewhere, the existence of which are not always known to the agency at the time of the blocking order. Szubin explains that OFAC and the President often rely on the holder of the property to freeze the asset and report to OFAC about the existence of the asset. As a result, it would be difficult to apply for a warrant for every asset in each jurisdiction in which the asset might be located. Such a requirement would interfere with the President’s and OFAC’s ability to act fast in blocking assets that are often very liquid and transferrable.

Szubin further explains, “In many cases, the holders of blocked property have access to substantially more information about the property than does OFAC and will be in the best position to determine whether a blocked person has an interest in the property, particularly where a third party is the nominal owner of the property and the blocked person’s interest is indirect, beneficial or contingent.” Supp. Decl. of Adam J. Szubin P 8. OFAC provides notice of blocking actions through press releases and by updating its website, as well as by publishing a notice in the Federal Register. Once they have obtained notice, OFAC relies on holders of blocked property “to comply with their obligations to identify and take appropriate steps to freeze the property, including placing blocked funds into an interest-bearing blocked account in accordance with OFAC regulations. See, e.g., 31 C.F.R. § 594.203.” Id. at P 9. Szubin also explains that, technologically, banks and other financial institutions are in the best position to track ownership of blocked assets and use interdiction software to identify assets that potentially belong to a designated person.

In this way, the challenging circumstances OFAC faces are similar to the difficulties faced by the probation officer in Griffin. Just as requiring a warrant prior to entering a probationer’s home would interfere with the probation system and make it difficult for a probation officer to respond quickly to a potential violation of the conditions of probation, so too would a warrant requirement here “make it more difficult to … respond quickly to evidence of misconduct[.]” Griffin, 483 U.S. at 876.

Since I have determined that both the first and second factors apply in this special needs analysis, I must now “assess the constitutionality of the search by balancing the need to search against the intrusiveness of the search.” Henderson v. Simi Valley, 305 F.3d 1052, 1059 (9th Cir. 2002); Ferguson, 532 U.S. at 78 (“we employ[] a balancing test that weigh[s] the intrusion on the individual’s interest in privacy against the ‘special needs’ that support[] the program”).

As I noted in AHIF, the effect of the seizure of assets on AHIF-Oregon is “substantial. The effect of the government’s blocking and designation orders is effectively to close AHIF-Oregon’s doors.” 585 F. Supp. 2d at 1259. AHIF-Oregon’s assets have now been frozen for more than five years. Nevertheless, a designated entity may seek a license from OFAC to engage in any transaction involving blocked property. 31 C.F.R. §§ 501.801-.802.

On the other side of the scale, the government’s interest in seizing the assets of organizations with links to international terrorist organizations are substantial, as I have indicated above. I believe the government’s interest in stopping the financing of terrorism outweighs AHIF-Oregon’s privacy interests. See Propper, 337 U.S. at 481-82 (TWEA used to “deprive enemies, actual or potential[,] of the opportunity to secure advantages to themselves or to perpetrate wrongs against the United States” and does “necessitate[] some inconvenience to our citizens and others”).