I was recently re-reading the Judicial Review Commission Report on Foreign Assets Control (“Report”), a 2000 report on the implementation of the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”). A few key points from that Report got me thinking about the overall state of U.S. economic sanctions and where some of the more onerous provisions arise from. While most people blame the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) for the sometimes unfair and imperfect nature of U.S. sanctions laws and the procedures surrounding those laws, a lot of times they really don’t have anything to do with it.

For example, while OFAC has maintained an administrative reconsideration process for reviewing blacklisting designations to the OFAC Specially Designated Nationals and Blocked Persons List (“SDN List”), there is no judicial review of such designations under either the International Emergency Economic Powers Act (“IEEPA”) or the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”). Is that OFAC’s fault? No, not really. Congress failed to put into those statutes any judicial review provisions. That is odd considering that they did include such a judicial review process for Foreign Terrorist Organizations designated under the Anti-Terrorism and Effective Death Penalty Act (“AEDPA”).

A paragraph from the Report sheds more light on this, at least from the perspective of designations made under the Kingpin Act:

“The law enforcement community did not ask Congress to pass the Kingpin Act. Rather, it wanted to expand the Executive Order program under the aegis of the IEEPA, 50 U.S.C. 1701-1706). The IEEPA gives law enforcement the flexibility it needs to pursue economic sanctions effectively and it allows limited judicial review of blacklisting designations. Judicial review under IEEPA posed no problems for law enforcement. Few blacklisted parties sought judicial review and none were successful under the Colombia sanctions program. Moreover, the availability of limited judicial review under the APA [Administrative Procedure Act] of the blacklisting decisions has increased public confidence in the program’s fairness and given the law enforcement community some protection against Bivens suits. Ironically, the law enforcement community feels more comfortable knowing that judicial review of its decisions is available. Not one agency spoke in favor of the Kingpin Act’s provision barring judicial review of Tier 2 blacklisting designations.”

In this scenario it was Congress who not only forced the Kingpin Act upon the law enforcement and sanctions communities, they also barred judicial review of Tier 2 Kingpin Act designations when no agency spoke in favor of such a provision.

This phenomenon is not exclusive to the Kingpin Act. Last year, the Central Bank of Iran was sanctioned pursuant to Section 1245 of the National Defense Authorization Act of 2012 (“NDAA”). However, prior to Congress’ passing of the NDAA, several senior Treasury Department officials objected on the grounds that such a move could provide a boon to Iran in the short term and that such a sanctioning measure was not appropriate at that time. How did Congress react to the objections of the top sanctions officials in the U.S.? By ignoring them and overwhelmingly approving the sanctions measures.

In the end, Congress provides a lot of the sanctions tools that the Executive Branch is utilizing in their efforts to apply U.S. economic sanctions to the bad actors of the world. However, sometimes those tools are being put upon the sanctions community without that community necessarily requesting them. While OFAC and other Executive branch agencies are responsible for how they utilize those tools, you can’t always blame the one wielding the tool, sometimes you have to look at who created it and put it into their hands.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.