In a June 13, 2021 opinion, the U.S. District Court for the District of Columbia rejected Russian businessman Oleg Deripaska’s challenge to his listing on the US Treasury Department’s (Treasury) Office of Foreign Asset Control (OFAC) list of Specially Designated Nationals (SDN). The listing subjects him to US sanctions. In the opinion the Court granted Treasury’s motion for summary judgment, denying Mr. Deripaska’s cross motion for summary judgement in the process. While Mr. Deripaska’s arguments were numerous, his main arguments are summarized below.
Deripaska’s 2014 SDN listing was in response to Russia’s annexation of the Ukrainian Crimean Peninsula. Following Russia’s move to annex the peninsula, then President Barack Obama declared a series of national emergencies and authorized Treasury to sanction Russian individuals and entities that met specified criteria. On April 6, 2018, Treasury announced that Mr. Deripaska would be designated as an SDN because he met “one or more of the criteria for designation set forth” in Executive Orders (EOs) 13661 and 13662.
In challenging sanctions Mr. Deripaska first asserted that Treasury exceeded its statutory authority when it designated him for sanctions under both EO 13661 and EO 13662. The Court rejected this argument. According to the Court, Treasury produced memoranda explaining that Treasury sanctioned Deripaska because it had “reason to believe” he both acted or purported to act for or on behalf of a senior Russian government official, and because he operated in the energy sector of the Russian economy. According to the Court, “Once the President has declared a national emergency, the International Emergency Economic Powers Act (IIEPA) authorizes the blocking of property to protect against that threat.” Due to these factors the Court stated that Deripaska was properly sanctioned pursuant to the authority granted in EOs 13661 and 13662.
Mr. Deripaska next asserted that his designation was arbitrary and capricious because it was based upon conduct that purportedly occurred prior to the issuance of EO 13661. According to Deripaska his past actions could not have formed the basis for sanctions because those actions were not sanctionable at the time which they occurred. The Court rejected this argument, stating that because EO 13661 permits Treasury to sanction individuals whom it finds “to have acted or purported to act for or on behalf of, directly or indirectly” of a senior Russian official, that past actions are clearly within the scope of the EO. The Court further clarified the arbitrary and capricious standard by stating an agency’s decision is arbitrary and capricious if the agency “relies on factors which Congress has not intended it to consider, entirely fails to consider an important aspect of the problem, offers an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” The Court held that this standard was not violated when the decision to sanction Mr. Deripaska was made.
Mr. Deripaska also argued that his Fifth Amendment due process rights were violated when the decision to subject him to US sanctions was made. According to Deripaska, the US Government relied on undisclosed classified information when making its decision, and subsequently failed to provide him with adequately detailed unclassified summaries of that information. The Court once again rejected this argument stating, “[Mr.] Deripaska lacks standing to pursue his due process challenge to his designations.” This finding was due to his status as a non-resident alien lacking sufficient contact with the US. Although the due process claim was rejected due to lack of standing, the Court made it clear that if it had considered Deripaska’s due process arguments on the merits, it would have rejected them.
If you have any questions relating to this decision or US sanctions do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.