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Information Wants To Be Free (of Sanctions): Why the President Cannot Prohibit Foreign Access to Social Media Under U.S. Export Regulations

Posted By Jarred O. Taylor III On December 19, 2012 @ 1:01 am In William and Mary Law Review | No Comments

Introduction

Social media plays a crucial role in assisting individuals to self-organize, in part by reducing collective action problems. There is perhaps no better confirmation of this than recent decisions by Arab leaders to shut off Internet access amidst widespread protests and uprisings in their countries. Sometimes, however, it is American social media companies that block foreign users for fear that the companies would otherwise violate U.S. export regulations, whose penalties can include crippling fines and even imprisonment.1

Paradoxically, the U.S. “Internet Freedom” agenda specifically advocates the use of social media by dissident populations. For example, in 2009 the State Department asked Twitter to postpone scheduled maintenance so that it would remain available during a crucial period of protests in Iran. Fortunately, beginning in 2010, the Obama Administration acted to immunize social media from export liability through a series of general licenses that authorize access to certain U.S. digital tools in Iran, Sudan, Cuba, and Syria.2

However, it is not clear that social media actually needs a license to avoid liability. Congress has passed two amendments—the Berman Amendment and the Free Trade in Ideas Act (FTIA), hereinafter referred to jointly as the “Informational Amendments”—that withdraw the President’s authority to regulate exports of “informational materials.” This Note argues that the Informational Amendments prohibit the President from regulating foreign access to American social media.

I.
The President’s Export Regulatory Authority and the Informational Amendments

The Trading with the Enemy Act of 1917 (TWEA) and the International Emergency Economic Powers Act of 1977 (IEEPA) authorize the President to regulate exports during national crises.  The President delegates these powers to the Treasury Department’s Office of Foreign Assets Control (OFAC).3 The 1988 Berman Amendment withdrew the President’s power to regulate exports of certain “informational materials.” Although the Amendment’s legislative history is relatively bare, one committee report justified it on First Amendment grounds. In 1994, Congress adopted FTIA, which extended the Berman Amendment to exports of any informational materials “regardless of format or medium of transmission.” FTIA’s legislative history notes that Congress intended, in part, to protect transactions related to “electronically transmitted information” and transactions related to its creation.4

OFAC has changed its export regulations in an attempt to comport with the Informational Amendments. Although the regulations’ main text generally tracks the Amendments, it deviates from them in several important ways. For example, the definition of informational materials in the Iranian Transactions Regulations (ITRs) includes the same list of exempt media as FTIA, but OFAC prepends its list with the term “includes” rather than FTIA’s broader phrase “including but not limited to.” More significantly, OFAC retains the authority to regulate “transactions related to … informational materials not fully created and in existence at the date of the transactions, or … [the] provision of services to market, produce or co-produce, create or assist in the creation of … informational materials.”5

II.
OFAC’s Regulations and Social Media

An example helps to demonstrate the regulations’ applicability to social media. The ITRs forbid exports “by a United States person, wherever located, of any … services to Iran.” “Services” encompass any service provided by an American entity, even if performed entirely in the United States, so long as it is done for the benefit of a person in Iran. Blabber, a hypothetical California-based company, operates an eponymous social media service that permits users to share typed messages with others on its website. Supposing that Blabber has active users in Iran, under the ITRs, the company is a “United States person” providing a “service” for the benefit of persons in Iran. Absent an exception, Blabber would have to block access in Iran or face serious liability.6

The next question is whether the ITRs’ informational exceptions save Blabber from liability. Although the ITRs’ list of exempt media incorporates some physical computer media, it does not refer to information located exclusively online. If OFAC intends the ITRs’ list to be exhaustive rather than illustrative because it uses the word “includes,” the Agency would likely find Blabber’s web-based service to be subject to continued regulation. Even if OFAC’s list is illustrative, the Agency nevertheless retains the power to regulate information-creation services and transactions. Blabber has no other purpose than to enable the creation of new information, and so OFAC would undoubtedly find Blabber’s service in violation.

OFAC’s interpretative letters reveal a subtle contradiction in the Agency’s analysis, however. Its purported rationale for regulating information-creation services and transactions is to avoid incentivizing the creation of information that would not exist without American support. Nevertheless, OFAC permits print publishers to accept works from authors in sanctioned countries.7 In terms of OFAC’s incentive-based rationale, there is little distinction between print publishers and an electronic publisher like Blabber. The Agency thus faces a dilemma in justifying its differential treatment of these different media.

III.
OFAC’s Informational Exceptions and the Requirements of the Informational Amendments

The next critical question is whether the regulatory exceptions OFAC enacted to comply with the Informational Amendments actually meet the Amendments’ requirements. Two issues bear scrutiny in this regard: the Amendments’ prohibition on indirect regulation and their definition of exempted information.

The Informational Amendments withdraw the President’s ability to regulate informational exports both directly and indirectly. Social media services not only provide a means to create new information but also constitute the very medium of preexisting—and assumedly protected—information.  Although there is something to be said for social media’s utility for information consumption alone, the inherent value of social media is the ability to create and share new information.  In light of OFAC’s continued regulation of information-creation services, companies like Blabber would likely choose to block sanctioned users from their services altogether, preventing the export of preexisting information created in the United States or elsewhere. As a result, OFAC’s direct regulation of information-creation services constructively amounts to a forbidden indirect regulation of protected, preexisting information.

Regarding the definition of exempted information, OFAC’s regulations deviate from the Information Amendments in two problematic ways. First, whereas the Amendments’ exempt media list is made illustrative by the phrase “including but not limited to,” OFAC uses the more limiting word “includes.”  Although courts generally interpret the term “including” to imply illustration rather than restriction, the danger remains that lawyers will counsel social media clients to interpret the omission conservatively. Second, OFAC’s continued regulation of information-creation services and transactions contradicts the legislative history of FTIA, which states that the Amendments protect “electronically transmitted information” and transactions incident to its creation. In light of such clear congressional intent, OFAC’s purported regulation of social media services like Blabber is improper.

IV.
Lessons for Social Media from Case Law

Although there has been no formal legal challenge to OFAC’s purported regulation of social media in light of the Informational Amendments, courts have considered the question in traditional media contexts.8 This Part extrapolates from those cases to find some lessons for social media.

First Amendment Basis. Cernuda’s conclusion that Congress intended the Informational Amendments to reach all First Amendment-protected works is perhaps the strongest support for social media’s exemption from export regulations, as the Supreme Court has found there to be “no basis for qualifying the level of First Amendment scrutiny” for online speech.9 On the other hand, Capital Cities/ABC rejected that Congress clearly intended to exempt all First Amendment-protected information.  Ultimately, the success of the First Amendment argument turns on the extent to which a court credits the Informational Amendments’ legislative history. Most recently, the Emergency Coalition court not only declined to examine the legislative history, but went further to conclude that even prefatory text is irrelevant to the question of congressional intent.  Because congressional intent is critical to the judicial deference inquiry, a court’s refusal to credit or even examine the Amendments’ legislative history may well be fatal to one of social media’s strongest arguments

Indirect Regulation Theory. The Walsh and Emergency Coalition courts found that OFAC did not improperly engage in indirect regulation of information by restricting informational travel because the Informational Amendments did not clearly limit the President’s authority to regulate that activity. In contrast, FTIA’s legislative history clearly conveys Congress’s desire to immunize “electronically transmitted information” and transactions required to create it. Unlike with informational travel, then, a court should conclude that Congress specifically prohibited indirect regulation of information through the direct regulation of information-creation services and transactions. Again, however, this argument presumes that a court would examine and credit the Amendments’ legislative history.

Medium Discrimination. Even if a court declines to acknowledge the Informational Amendments’ legislative history, a social media plaintiff may argue that OFAC’s regulation of social media is arbitrary or capricious in light of the Agency’s disparate treatment of print and electronic publishers. Support for this argument is found in Cernuda, where the court noted that it would have alternatively held OFAC’s regulation of paintings to be arbitrary and capricious in light of the Agency’s exemption for films.

Separation of Powers. Several cases insist that a broad interpretation of the Informational Amendments would unduly interfere with the President’s foreign affairs prerogative, but this conclusion is misguided. TWEA and IEEPA are permissive delegations of power. Executive latitude under congressionally delegated foreign affairs powers has been found constitutionally permitted, but not constitutionally required. Others have argued that Congress’s failure to clearly address certain media or activities in the Informational Amendments constitutes legislative acquiescence to the President’s regulatory power. However, this argument fails in social media’s case, because Congress has clearly expressed its intent to deregulate electronic information and related transactions.10

V.
Recommendations

In light of this analysis, a social media company like the hypothetical Blabber faces three potential courses of action. The first is to simply face the odds and permit continued worldwide access to its social media service. The lack of enforcement to date—let alone the government’s encouragement of social media use abroad—supports this approach, although it is unclear whether other companies blocking access to their services abroad are perhaps doing so under quiet pressure from OFAC.  A second option is to request from OFAC an interpretative letter as to social media’s status under the regulations. Although the foregoing analysis suggests the Agency would conclude that social media falls outside its exceptions, this path might help highlight to OFAC its inconsistent treatment of print publishers; moreover, it would force the Agency to contemplate a policy conflict with other elements of the government that have heartily encouraged social media’s deployment abroad.

A final option is to sue OFAC for improperly administering the Informational Amendments. As the plaintiffs did in Capital Cities/ABC, the social media company would request a declaratory judgment that (1) authorizes access to its service in sanctioned countries and (2) voids OFAC’s regulations to the extent that they regulate foreign access to social media. The complaint should allege that the Informational Amendments clearly express a congressional intent to exempt from regulation all First Amendment-protected information, including online speech, and a further intent to immunize all transactions incidental to the creation of new electronic information.  It should assert that OFAC’s continued regulation of information-creation services usurps that statutory intent, and it should alternatively allege that regulating access to social media constitutes an impermissible indirect regulation of preexisting information.  Finally, the plaintiff company should argue that even if the court finds Congress’s intent to be absent or ambiguous, it should not defer to OFAC’s judgment because its regulations are arbitrary and capricious insofar as they presumptively prohibit services through which sanctioned users may publish electronic information, but nevertheless permit services through which sanctioned users may publish print information.

Conclusion

Although the U.S. government is publicly committed to promoting social media use by dissident populations against censorious governments, Congress recognized as early as the 1980s that, through its export regulations, the United States threatened to inadvertently become such a regime. Before it can legitimately promote the cause of Internet freedom in other countries, the United States must first ensure it is not stifling that freedom itself. Only then will social media’s true potential to catalyze widespread political change in authoritarian countries be unlocked.

Acknowledgements:

Jarred O. Taylor III, J.D. Candidate 2013 William & Mary School of Law; B.A. 2007, Davidson College.

  1. See, e.g., Evegeny Morozov, The Net Delusion: The Dark Side of Internet Freedom 205-06 (2011); Cindy Cohn & Jillian C. York, EFF to Obama Administration: Syrians Deserve Access to Communications and Information Tools, Electronic Frontier Found. Deeplinks Blog (July 6, 2011, 2:10 PM), https://www.eff.org/deeplinks/ 2011/07/eff-u-s-treasury-and-commerce-time-clarify-u-s; While White-Listing Syria, LinkedIn Keeps Sudan’s Internet Users Blocked!, ArabCrunch EN (Apr. 20, 2009), http://arabcrunch.com/2009/04/while-white-listing-syria-linkedin-keeps-sudan-blocked.html.
  2. See Hillary Rodham Clinton, U.S. Sec’y of State, Internet Rights and Wrongs: Choices and Challenges in a Networked World (Feb. 15, 2011), http://www.state.gov/secretary/rm/2011/02/156619.htm; Hillary Rodham Clinton, U.S. Sec’y of State, Remarks on Internet Freedom (Jan. 21, 2010), http://www.state.gov/secretary/rm/2010/01/135519.htm.  For the Twitter episode, see Mark Landler & Brian Stelter, With a Hint to Twitter, Washington Taps into a Potent New Force in Diplomacy, N.Y. Times, June 17, 2009, at A12.  For the general export licenses, see Barbara C. Hammerle, Acting Dir., Office of Foreign Assets Control, Interpretive Guidance and Statement of Licensing Policy on Internet Freedom in Iran (Mar. 20, 2012), http://www.treasury.gov/resource-center/sanctions/Programs/documents/ internet_freedom.pdf.; Office of Foreign Assets Control, U.S. Dep’t of the Treasury, General License No. 5: Exportation of Certain Services Incident to Internet-Based Communications Authorized (2011), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/syria_gl5.pdf; Press Release, U.S. Dep’t of the Treasury, Treasury Department Issues New General License to Boost Internet-Based Communication, Free Flow of Information in Iran (Mar. 8, 2010), http://www.treasury.gov/press-center/press-releases/Pages/tg577.aspx.
  3. See 50 U.S.C. §§ 1701-1707 (2006); 50 U.S.C. app. §§ 1-44 (2006); Office of Foreign Assets Control: Authority and Functions, 32 Fed. Reg. 3472, 3472 (Feb. 27, 1967) (amending Treasury Department Order 128).
  4. For the Berman Amendment, see Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, § 2502, 102 Stat. 1107, 1371-72; H.R. Rep. No. 100-40, pt. 3, at 113 (1987).  For FTIA, see Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, Pub. L. No. 103-236, § 525, 108 Stat. 382, 474 (1994); H.R. Rep. No. 103-482, at 239 (1994) (Conf. Rep.), reprinted in 1994 U.S.C.C.A.N. 398, 483.
  5. 31 C.F.R. §§ 560.210(c), 560.315(a) (2011).
  6. Id. §§ 560.204, 560.303, 560.305.
  7. For a list of OFAC’s interpretative rulings, see Interpretative Rulings on OFAC Policy, Office of Foreign Assets Control, http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/rulings-index.aspx (last visited Dec. 7, 2012). See also Pamela S. Falk, Note, Broadcasting from Enemy Territory and the First Amendment: The Importation of Informational Materials from Cuba Under the Trading with the Enemy Act, 92 Colum. L. Rev. 165, 169 (1992).
  8. See Emergency Coal. to Defend Educ. Travel v. U.S. Dep’t of the Treasury, 498 F. Supp. 2d 150, 153 (D.D.C. 2007) (deferring to OFAC’s regulation of educational travel in Cuba), aff’d, 545 F.3d 4 (D.C. Cir. 2008); Capital Cities/ABC, Inc. v. Brady, 740 F. Supp. 1007, 1008 (S.D.N.Y. 1990) (deferring to OFAC’s regulation of television broadcasts from Cuba); Walsh v. Brady, 729 F. Supp. 118, 118 (D.D.C. 1989) (deferring to OFAC’s regulation of travel for purposes of purchasing political posters), aff’d, 927 F.2d 1229 (D.C. Cir. 1991); Cernuda v. Heavey, 720 F. Supp. 1544, 1545 (S.D. Fla. 1989) (invalidating application of OFAC regulations to importation of Cuban paintings).
  9. Reno v. ACLU, 521 U.S. 844, 870 (1997).
  10. For permissive delegation, see United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319-22 (1936); Sardino v. Fed. Reserve Bank of N.Y., 361 F.2d 106, 110 (2d Cir. 1966).  For the acquiescence argument, see Suanne C. Milligan, Comment, Another Inning in Cuban-United States Relations: Capital Cities/ABC Inc. v. Brady, 2 Ind. Int’l & Comp. L. Rev. 281, 298 (1991).

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