OFAC Lawsuit Background
OFAC has violated Congress's explicit limits on its authority in its regulations governing publishing activities. A brief history:
1917—Trading with the Enemy Act (TWEA) was enacted as a wartime measure. Congress granted restricted powers to the executive branch to regulate business between citizens of nations at war.
1977—International Emergency Economic Powers Act (IEEPA) was enacted to govern the executive's imposition of peacetime sanctions against countries whose actions the President judges to be a threat to national security. OFAC, an agency of the Department of the Treasury, administers the sanctions under TWEA and IEEPA.
1988—The Berman Amendment, named for its sponsor Rep. Howard Berman (D-CA), was enacted in 1988, and made it clear that the President's powers under TWEA and IEEPA were subject to an exemption excluding "informational materials" from trade sanctions, using the following language:
The authority granted to the President by this section does not include the authority to regulate or prohibit, directly or indirectly, the importation from any country, or the exportation to any country, whether commercial or otherwise of publications, films, posters… or other informational materials.
1989—While acknowledging that the import and/or export of informational materials were exempt from regulation, OFAC promulgated its own qualification that the Berman Amendment did not exempt from regulation or authorize transactions related to "informational materials not fully created and in existence at the date of the transactions," or to the "substantive or artistic alteration or enhancement of informational materials." In other words, according to OFAC, the Berman Amendment only applied to works that already exist—for example, previously published articles or books. OFAC also prohibited the provision of marketing services for all works authored in the embargoed countries.
1994—Dismayed by OFAC's overly narrow interpretation of the Berman Amendment, as articulated in two court cases, Congress passed the Free Trade in Ideas Amendment (in Section 525 of the Foreign Relations Authorization Act, P.L. 103-236) to reiterate that the Berman Amendment applied to all information – whether or not the information was fully existing in tangible form at the time of the transaction. The Conference Report on the bill reaffirms that the Berman Amendment "established that no embargo may prohibit or restrict directly or indirectly the import or export of information that is protected under the First Amendment to the U.S. Constitution" and that "the language was explicitly intended, by including the words 'directly or indirectly,' to have a broad scope." The Report also states that Congress intends both amendments "to facilitate transactions and activities incident to the flow of information and informational material without regard to the type of information, its format, or means of transmission, and electronically transmitted information, transactions for which must normally be entered into in advance of the information's creation" (H.R. Conf. Rep. No. 482, 103rd Cong., 2nd Sess., 1994 U.S.C.C.A.N. 398, 483).
1995—OFAC amended its regulations to add the term "information" and to include compact disks, CD ROMS, artworks and news wire feeds in its definition of informational materials. However, despite the clear direction from Congress, OFAC made no changes to the provisions of the regulations forbidding Americans from entering into transactions for information "not fully created and in existence at the date of the transactions. " Nor did it retract the prohibitions on "substantive or artistic alteration or enhancement" of information or the provision of marketing services for either existing or not-yet-fully created works.
2003-2004—Recent OFAC Rulings of Concern to Publishers, Writers, and Scholars
With such clear legislative language, publishers remained until recently unaware of OFAC's continued belief in its authority to control information and informational materials. In September 2003, OFAC issued a series of interpretive rulings that made clear that publishers were prohibited from engaging in standard publishing activities in connection with works written by authors in the embargoed nations unless granted a special license from OFAC. For example, OFAC informed one U.S.-based scholarly society, the Institute of Electrical and Electronics Engineers (IEEE) that "the collaboration on and editing of manuscripts submitted by persons in Iran" is prohibited. The society’s journals could only publish articles from Iranian scholars "as received"—essentially the author had to provide camera-ready copy. In another ruling the same month, OFAC stated that an American entity could not publish a book authored by an Iranian since "inherent in the publication of a book are marketing, distribution, artistic, advertising and other services not exempt from" the OFAC regulations. These rulings immediately raised alarms in the scholarly publishing world, as they prohibit authors and publishers from engaging in such essential publishing practices as peer review by experts in the relevant field, editing, publication design and text layout, translation, and marketing and promotion. Further, they subject authors and publishers to an unconstitutional licensing scheme that constitutes a classic prior restraint on speech.
On April 2, 2004, OFAC amended its ruling to IEEE and allowed the specific narrowly-defined review, editorial, and production procedures of that society. The ruling did little to assuage the concerns of many authors and publishers who engage in far more extensive "alterations and enhancements" than IEEE. Further, the April letter did not alter OFAC’s ban on commissioning new works or collaborations, or change the prohibition on marketing and promotion of a book. Further OFAC rulings on similar issues have simply deepened the uncertainty felt by publishers, authors, and others—literary agents, scholarly reviewers, and even copyeditors—involved in publishing books and journals. The penalties for violating IEEPA are quite severe—including jail terms of up to 10 years and fines of up to $1 million per violation. Many publishers have backed off projects involving authors from the affected countries for fear of incurring these penalties. [See Endangered projects]
Further OFAC rulings may allow individual publishers or projects to go forward, but the ambiguity and arbitrariness of the regulation regime means that publishers must continue to go to OFAC, hat in hand, for permission to publish. This is a repugnant and unconstitutional scheme.
Where does OFAC's continuing insistence that it may regulate works "not yet fully in existence" come from? It is not in the law, nor in the legislative history. Yet it is the basis of the Office's assertion that it can regulate the publishing of manuscripts originating in any country against which sanctions have been imposed under TWEA and IEEPA.
Congress, in crafting the Berman and Free Trade in Ideas Amendments, clearly intended to prevent this outcome. As Rep. Berman, on introducing the 1994 legislation to the House, stated, "The fact that we disapprove of the government of a particular country ought not inhibit our dialog with the people who suffer under those governments."
The plaintiffs seek to enjoin these OFAC regulations that prohibit or subject to license the work of publishing—work that includes entering into contracts for materials that are still in an early form, substantial editing that leads to alteration and enhancement of the original work, and marketing books and journal articles to the interested public.