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NEW YORK � The president of the United States can regulate financial transactions with foreign countries during a time of security crisis, and create criminal penalties for violating those regulations, a federal appeals court ruled Thursday. The ruling from a unanimous panel of the Second Circuit U.S. Court of Appeals held that President George H.W. Bush had not abused his power under the International Emergency Economic Powers Act when he prohibited trade, transportation and financial transactions with Iraq in 1990, after Iraq invaded Kuwait. The former president’s actions were challenged by Osameh Al Wahaidy, a Jordanian who pleaded guilty to charges that he sent $100,000 to Iraq in October and November of 1999, and in February 2000. Wahaidy, who was sentenced to community service and two years probation, argued that the president had improperly created crimes in his use of the law, a power Wahaidy argued was reserved for Congress. The Second Circuit disagreed in United States v. Wahaidy, 05-CR-4770, a 20-page opinion written by Judge Dennis Jacobs. Second Circuit Judge Pierre Leval and Judge Jed Rakoff, sitting by designation from the Southern District, concurred on the ruling. “Significantly, the IEEPA relates to foreign affairs � an area in which the President has greater discretion,” Judge Jacobs wrote. “Additionally, Congress endorsed the President’s actions and enacted legislation codifying the sanctions.” The decision affirmed a ruling by Judge Norman Mordue, chief judge of the Northern District. The law, passed in 1977, reserves a continuing role for Congress, as the president is supposed to consult Congress before exercising authority under the emergency act and report periodically concerning actions taken under it. Congress also can terminate a president’s declaration of an emergency. In reviewing the constitutionality of the law, the Second Circuit noted that the U.S. Supreme Court has upheld other kinds of congressional delegation under the law, such as to nullify attachments and transfers of assets (see Dames & Moore v. Regan, 453 U.S. 654 (1981)). The Supreme Court has also upheld delegations of authority to define criminal offenses, such as when Congress empowered the president to declare arms sales illegal to certain countries (see Curtiss-Wright Export Corp., 299 U.S. 304 (1936)). However, the Supreme Court had not yet had occasion to uphold the delegation of authority to define criminal offenses in the context of the International Emergency Economic Powers Act, the Second Circuit said. In Touby v. United States, 500 U.S. 160 (1991), the Supreme Court upheld a temporary delegation of power to the attorney general to define what constitutes a controlled substance under criminal law. Wahaidy argued that Touby was inapplicable to his case because it upheld a temporary power, while the economic powers law gives the president the power to define conduct as a crime for an unlimited time. The Second Circuit disagreed. “The IEEPA delegation is, however, subject to the President’s periodic re-affirmation of necessity and is conditioned on reporting to Congress,” Judge Jacobs wrote. “Moreover, Congress can terminate the President’s declaration of emergency.” The Second Circuit also rejected arguments that the president had not complied with the statutory reporting requirements. Tom Perrotta is a reporter with the New York Law Journal, a Recorder affiliate.

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