The Foundation for Global Political Exchange (Exchange Foundation) reached a settlement last month in a case raising important questions at the intersection of national security and free speech. The settlement is a significant victory because it resulted in the government’s abandonment of a legal theory that would have profoundly undermined Americans’ ability to exchange ideas with people from around the world. Brought by the Knight First Amendment Institute (where one of us works) and the Exchange Foundation (with which the other of us works), the lawsuit argued that the Treasury Department’s Office of Foreign Assets Control (OFAC) overstepped its authority and violated the First Amendment when it barred the Exchange Foundation from organizing political discussions with people whom the U.S. government had sanctioned. The settlement implicitly recognizes the right of Americans to engage with speakers and ideas from across the full spectrum of viewpoints, even when some of those speakers express ideas deeply antithetical to U.S. foreign policy and interests. Crucially, it also ensures that the Exchange Foundation will be able to continue its work.
Resisting Treasury’s Overreach
In an earlier piece in Just Security, the Exchange Foundation shared the circumstances leading to its lawsuit. In brief, the Exchange Foundation, a nonprofit that organizes convenings—called “exchanges”—across the Middle East and North Africa, sought to organize discussions with several individuals subject to U.S. sanctions regulations in Beirut, Lebanon. After the organization reached out to OFAC about the exchange in April 2022, the agency replied in a letter that including those individuals would constitute the provision of a prohibited “service” to people and groups designated under U.S. sanctions regimes. The Exchange Foundation brought suit, arguing that OFAC’s determination exceeded the agency’s statutory and regulatory authority, and violated the First Amendment.
OFAC’s position, which was essentially that Americans do not have a right to engage with individuals abroad whom the government designates as off-limits, raised serious free speech concerns. It suggested that merely organizing conversations with sanctioned people could subject the Exchange Foundation, and groups like it, to civil or even criminal liability. It meant potentially cutting off political conversation with the tens of thousands of people and organizations subject to U.S. sanctions.
Those familiar with the caselaw in this area will know that the Supreme Court held in Holder v. Humanitarian Law Project that expressive activity that is protected in other contexts is sometimes not protected when it supports designated organizations. But even Humanitarian Law Project, which has been widely criticized, did not supply a basis for the position that OFAC took in its letter. Humanitarian Law Project involved an as-applied challenge to a statute that proscribes the knowing provision of “material support or resources to a foreign terrorist organization.” The plaintiffs wished to train groups the United States had designated as foreign terrorist organizations in non-violent dispute resolution, so that they could pursue their demands through lawful processes. The Supreme Court upheld the application of the law to the plaintiffs’ proposed activities, concluding that the First Amendment does not protect the provision of legal services and specialized training to terrorist groups, even though that support takes the form of speech and even though it directly advances only the groups’ lawful and non-violent activities.
Crucially, though, even Humanitarian Law Project never purported to permit the government to stifle an American organization’s ability to engage in or facilitate political discourse with individuals or groups the government disfavors. If endorsed by the courts, OFAC’s legal theory would have dramatically expanded the Treasury Department’s authority to police not just economic transactions, but the exchange of ideas.
Treasury Reverses Course
OFAC reversed course after we filed our complaint. As part of a settlement, it issued a new letter rescinding its prior decision to block the Exchange Foundation from engaging in political dialogue with sanctioned individuals, revoking its prior interpretation of its authority. In the letter, OFAC made clear that hosting sanctioned individuals at Exchanges “is not a service prohibited by U.S. sanctions and thus no authorization is necessary.” Importantly, the letter acknowledged that OFAC’s new position applies to events that are “hosted virtually online.” This clears up considerable uncertainty that emerged in 2020 after the online conferencing platform Zoom unilaterally canceled university-sponsored seminars involving Palestinian activist Leila Khaled, a member of a designated foreign terrorist organization, citing concerns that hosting the events might involve the provision of “material support” for terrorism.
Although not officially linked to our legal challenge, OFAC also released an FAQ in August—towards the tail end of our settlement negotiations—including language identical to what it states in the settlement letter. The FAQ explains in no uncertain terms that “OFAC does not sanction persons for their engagement in activities subject to U.S. constitutional protection, such as protected speech . . . ; nor do U.S. persons violate OFAC sanctions for engaging in such constitutionally protected activity.” It goes on to acknowledge clear statutory limits to the president’s authority to regulate “personal communication” and “information or informational materials.”
OFAC’s reversal is a victory for free speech that ensures Americans can continue to engage with people and ideas from around the world. The settlement helps secure protections for the political discourse that is vital to our democracy, and reinforces checks and balances designed to prevent government overreach. It is particularly important for groups like the Exchange Foundation, which work in countries with complex political dynamics that Americans often do not fully appreciate. The Exchange Foundation, and other groups working in these spaces, are committed to engaging with actors from across the political spectrum, including those the U.S. government would rather exclude. Mutual understanding and durable political solutions are only possible by engaging with all sides in a dispute.
A Warning for the Future
Although the settlement is cause for celebration, the circumstances that led to our lawsuit are a warning sign of the perils present when the government attempts to use national security laws to shut down vital political discourse. This was not the first time that Treasury has attempted to improperly use its sanctions authority to suppress speech it disfavors, and it won’t be the last.
Throughout the Cold War, presidents relied on various sanctions authorities to cut off Americans’ access to books, newspapers, and other materials originating from abroad. These overreaches prompted Congress to repeatedly emphasize important limits to the president’s sanctions powers. In enacting the International Emergency Economic Powers Act (IEEPA), a 1977 law that forms the basis of much of the Treasury Department’s modern-day sanctions authority, Congress included a number of exceptions designed to protect free speech. It later amended IEEPA twice—first in 1988 through the so-called “Berman Amendment” and again in 1994—to further bolster those exceptions to protect the exchange of information and ideas.
These limits to the president’s sanctions authorities make clear what should be plain: The restrictions authorized by IEEPA are about blocking economic transactions, not the exchange of ideas. The law’s important protections for communications and the dissemination of information, and Congress’ plain directive, serve as a clear reminder that the executive branch must not use its sanctions authority to suppress speech.
We should be especially wary of executive branch overreach given recent and alarming examples of governments around the world using national security laws to suppress political dissent. Just a few weeks ago, police in the UK arrested an Israeli academic on charges of supporting terrorism based on his pro-Palestinian advocacy. In France, a court sentenced a pro-Palestinian activist to prison for social media posts that purportedly advocated terrorism. In the United States, we should be concerned with how a second Trump administration might seek to abuse existing laws and regulations—and new ones—to shut down political discourse and debate in this country. This could include bills like H.R. 9495, which recently passed the House, that would grant the Secretary of the Treasury the sweeping, unilateral power to strip American non-profit organizations of their tax-exempt status by designating them as “terrorist supporting”; although it may not pass the Senate this session, it would likely reappear after the new year. The bill was crafted in response to claims that U.S.-based non-profits were providing “support, encouragement, and potential financing” to Hamas, though the extraordinary authority it grants could be used to suppress the speech of a broad range of disfavored groups, and could chill the speech of many more.
If the Biden Treasury Department is willing to push past the limits of its regulatory authority, imagine how these powers might be exploited and weaponized by an administration emboldened by broader authorities. The next big fight is surely just around the corner.