The Coalition Column

Sleeping with the Enemy? OFAC Rules and First Amendment Freedoms

Bruce Craig, May 2004

Until recently, the U.S. Treasury's Office of Foreign Assets Control (OFAC) has been warning—through a series of rulings—U.S. academic publishers that they would be violating the International Emergency Economic Powers Act of 1977 (which incorporates the Trading with the Enemy Act of 1917) if they helped in any way (through peer review or editing, for example) to improve manuscripts submitted from embargoed countries such as Cuba, Iran, Libya, and Sudan. The rulings had a chilling effect—and not just because the penalties for violating this law are steep (fines up to $1 million and prison terms for up to 10 years). Scholars, editors, and publishers were particularly perturbed because in their interpretive policy implications, the OFAC rulings appeared to be making the government the ultimate arbiter of how information should be processed, and coming close to violating the First Amendment guarantee of press freedom.

In its most recent ruling—a letter dated April 2, 2004, addressed to the Institute of Electrical and Electronics Engineers (IEEE)—OFAC seems to have retreated (perhaps in response to pressure from various groups) from the more draconian policies enunciated in its previous letters (to see a redacted version of the letter, see document titled, "Publishing Activities Involving Manuscripts from Sanctioned Countries," ruling number 0404405-FARCL-1A-15 at http://www.ustreas.gov/offices/eotffc/ofac/rulings/index.html). Indeed, an OFAC press release quotes Richard Newcomb, the director of OFAC, as stating, "Today's ruling makes clear that scientific communities in sanctioned countries may publish their works in U.S. scholarly journals," and that the process was "vital to promoting the free flow of information within the global community of scholarship." The IEEE also considers the latest ruling as conferring "full freedom to engage in scholarly peer review and style and copy editing of papers, all without OFAC regulation or licensing." But this apparent retreat has not entirely allayed anxieties about the implications of the Treasury Department's policies, especially in their effect upon freedom of the press guarantees given by the First Amendment. What is the reason for this concern?

The Background

Congress enacted the International Emergency Economic Powers Act (IEEPA) in 1977, empowering the president to impose sanctions on countries whose actions threaten American national security and to establish guidelines to regulate trade with hostile nations. The law seeks to ensure that actions by American citizens will not, in any way, assist enemies of the United States, a category that included citizens of sanctioned countries. When the law took effect, publishers took notice. Partly because of their concerns, Congress adopted legislation sponsored by Rep. Howard Berman (D-Calif.) and amended the IEEPA in 1988. The "Berman Amendment" (which was revised in 1994 to include electronic media) stipulates that transactions involving "information and informational materials" are generally exempt from the purview of the presidential regulation (see box below for the text of the relevant part of the law).

USC50: 35, section 1702, (b) (3)
[Originally introduced by Rep.Howard Berman (D-Calif.) as an amendment.]
The authority granted to the President by this section does not include the authority to regulate or prohibit, directly or indirectly
(3) the importation from any country, or the exportation to any country, whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds. The exports exempted from regulation or prohibition by this paragraph do not include those which are otherwise controlled for export under section 2404 of the Appendix to this title, or under section 2405 of the Appendix to this title to the extent that such controls promote the nonproliferation or antiterrorism policies of the United States, or with respect to which acts are prohibited by chapter 37 of title 18;

The Treasury Department's Interpretations

The Treasury Department adopted the position, however, that the Berman Amendment did not exempt from regulation certain types of information. OFAC asserted that editors of scholarly and other publications may not "significantly alter" the works of an author who resides in a sanctioned nation, because such revisions constituted a "substantive enhancement" to the originating author's work and thus create a "benefit" to a sanctioned nation.

In asserting its interpretation of law, OFAC made a distinction between "works in being" and "works in progress." Scientific, technical, scholarly, and popular works originating from sanctioned countries could be published provided manuscripts were not substantively "enhanced" as a result of the editing and the peer-review process. OFAC declared, for instance (in a letter dated September 30, 2003, addressed to IEEE), that the "collaboration on and editing of manuscripts submitted by persons in Iran, including activities such as the reordering of paragraphs or sentences, correction of syntax, grammar, and replacement of inappropriate words by U.S. persons prior to publication may result in a substantively altered or enhanced product, and is therefore prohibited under ITR [Iranian Transactions Regulatons] § 560.204 unless specifically licensed." Publishers were not prohibited, however, OFAC pointed out, from accepting camera-ready copies of manuscripts.
Concern expressed in early March 2004 by publishing industry representatives, and a letter from Rep. Berman himself that took strong exception to the OFAC interpretation of the law, had some effect on the Treasury Department officials, and the new, slightly more liberal ruling of April 2 was issued (for text of the Berman letter, see http://www.house.gov/apps/list/speech/ca28_berman/newcomb_letter.html).

The Implications of the April 2 Ruling

The OFAC letter of April 2, 2004, essentially does two things: First, it states that limited peer review of journal articles is permitted, provided that certain editorial criteria are met. Second, it indicates that some forms of copy and style editing—those that do "not constitute substantive or artistic alteration or enhancement of the informational material"—will be permitted.

Although the letter applied only to the IEEE, Treasury officials stated that the issuance is also designed to provide other publishers with guidance on what the government deems "acceptable" editing and peer review procedures.
A close reading at the letter, however, suggests that the exemption from OFAC licensing applies only to the IEEE's particularlized type of peer review and style- and copy-editing processes. The ruling does not say that peer review in general or copy editing in general are exempt from OFAC regulation, but only those specific procedures engaged in by the IEEE.
The letter indicates that peer review is permitted for "technical or scientific value … clarity, logic and language." Also, eight editing activities are specifically listed as "allowable," including correcting grammar, spelling, and slight formatting of text. OFAC believes that such activities do not result in any "substantive or artistic alterations or enhancements of the manuscript" nor do they result in "substantial re-write or revision" of an author's manuscript, hence they are all deemed "permitted" activities. But OFAC maintains that co-authorship, commissioning, developmental editing, or any form of "collaborative interaction" between a publisher and foreign author is prohibited. Moreover, the letter reiterates the stated position of OFAC that "the Berman Amendment does not apply to transactions (including exportation of services) with respect to ‘informational materials not fully created and in existence at the time of the transactions,' or to the ‘substantive or artistic alteration or enhancement of the information or informational materials.'" The letter also clarifies that a license from OFAC will not be needed if the editorial activities (during peer review) do not lead to "substantive or artistic alterations or enhancements of the manuscript."

A Challenge to OFAC in the Making?

Scholarly publishers maintain that the April 2 letter to the IEEE is overly narrow in defining editing and peer review (for details on the issue from the perspective of publishers, visit the Association of American Publisher's web pages at www.publishers.org). But more importantly, says Peter Givler, executive director of the Association of American University Presses, "Treasury's continuing assertion that it has licensing authority over publishing is denied by the express language of the Berman Amendment as well as the First Amendment's protection of the freedom of the press." Givler maintains that on its face OFAC's interpretation of law is unconstitutional and believes that it (especially the provision regarding the government's asserted licensing authority) flouts "the freedom of the press guarantees provided by the First Amendment. . . . No publisher should ever be forced to seek government permission to make scientific and cultural information available to the American public."

Givler also notes the irony that the ruling does not restrict what people in sanctioned countries may learn about the United States (information that arguably may have national security implications) but rather, what people in America may learn from historians, scientists, philosophers, poets, and novelists in other countries who "are to be monitored and perhaps even banned." OFAC has now clearly staked out its position, reiterating its right to assert licensing authority over publishing activities. Publishing organizations hold that OFAC has not been granted this authority either by the letter or the spirit of the law. Critics of OFAC's recent ruling are probably now left with little recourse than to challenge Treasury's assertion of authority in federal court.

—Bruce Craig is director of the National Coalition for History.