DC Circuit Upholds Sanctions Listing of Russian Billionaire

The U.S. Court of Appeals for the D.C. Circuit upheld the sanctions listing of Russian billionaire Oleg Deripaska, finding that the Treasury Department's Office of Foreign Assets Control provided proper evidence for the listing. The court also held that while Deripaska was found to no longer own two major energy companies, OFAC found him to still operate them, justifying his placement in the Russian sanctions regime.

Deripaska was listed in 2018 under executive orders that had followed Russia's invasion and annexation of Crimea in 2014. The Russian filed suit at the U.S. District Court for the District of Columbia to contest the sanctions listing on three grounds. After the district court affirmed the listing, striking down all three challenges, Judges Patricia Millett, Cornelia Pillard and Gregory Katsas followed suit at the D.C. Circuit.

The first challenge to the sanctions listing said that OFAC exceeded its statutory authority since the sanctions listing responded not to the threat Russia poses to Ukraine but to some nebulous "undeclared national emergency," as evidenced by OFAC's press release announcing the listing. The judges said this argument fails for two reasons: OFAC gave evidence beyond the press release for the grounds of its sanctions listing and the press release itself properly shows how the EOs apply to Deripaska by summarizing OFAC's "extensive justifications" for listing the Russian.

The second claim says that OFAC lacked the authority to sanction Deripaska for conduct before the EO's effective date. The judges held, however, that they need not consider the question of the orders' retroactive reach since there's evidence that Deripaska's actions justified the listings after the orders.

The third claim argues that OFAC acted illegally by sanctioning Deripaska since it lifted sanctions on two major Russian energy companies after it was found that the Russian no longer owns them. Deripaska argued that he can no longer be operating in the energy sector since he no longer owns the companies. The judges, though, drew a distinction between owning and operating, ultimately finding that Deripaska continues to operate in the sector.

"And that OFAC may list and delist energy companies at its discretion to further the President’s geopolitical goals does not mean that a delisted company no longer 'operates' in the energy sector, nor does it change the facts of Deripaska’s ongoing role in those energy companies," the opinion said.