Al-Awlaki was born in Las Cruces, New Mexico, in 1971 to parents from Yemen, while his father, Nasser al-Awlaki, was doing graduate work at U.S. universities. His father was a Fulbright Scholar who earned a master's degree in agricultural economics at New Mexico State University in 1971, received a doctorate at the University of Nebraska, and worked at the University of Minnesota from 1975 to 1977. Nasser al-Awlaki served as Agriculture Minister in Ali Abdullah Saleh's government. He was also President of Sana'a University.

In July 2010, al-Awlaki's father, Nasser al-Awlaki, contacted the Center for Constitutional Rights and the American Civil Liberties Union to represent his son in a lawsuit that sought to remove Anwar from the targeted killing list. ACLU's Jameel Jaffer said:  the United States is not at war in Yemen, and the government doesn't have a blank check to kill terrorism suspects wherever they are in the world. Among the arguments we'll be making is that, outside actual war zones, the authority to use lethal force is narrowly circumscribed, and preserving the rule of law depends on keeping this authority narrow.  Lawyers for Specially Designated Global Terrorists must obtain a special license from the US Treasury Department before they can represent their clients in court. The lawyers were granted the license on August 4, 2010.  On August 30, 2010, the groups filed a "targeted killing" lawsuit, naming President Obama, CIA Director Leon Panetta, and Secretary of Defense Robert Gates as defendants. They sought an injunction preventing the targeted killing of al-Awlaki, and also sought to require the government to disclose the standards under which US citizens may be "targeted for death". Judge John D. Bates dismissed the lawsuit in an 83-page ruling, holding that the father did not have legal standing to bring the lawsuit, and that his claims were judicially unreviewable under the political question doctrine inasmuch as he was questioning a decision that the US Constitution committed to the political branches.  On May 5, 2011, the US tried but failed to kill al-Awlaki by firing a missile from an unmanned drone at a car in Yemen. A Yemeni security official said that two al-Qaeda operatives in the car died.

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