OFAC Not Entitled to Deference in Interpreting IEEPA, Magnitsky Act, Sanctioned Parties Say

The U.S. Supreme Court's recent decision upending the Chevron principle of deferring to federal agencies' interpretations of ambiguous statutes requires a more demanding review of the Office of Foreign Assets Control's use of the Global Magnitsky Act and International Emergency Economic Powers Act, sanctioned Mir Rahman Rahmani and his son, Hafi Ajmal Rahmani, argued (Mir Rahman Rahmani v. Janet Yellen, D.D.C. # 24-00285).

In a July 16 notice of supplemental authority filed at the U.S. District Court for the District of Columbia, the pair said OFAC's interpretation of who counts as a "government official" under the Global Magnitsky Act isn't due any deference. The Rahmanis added the government's interpretation of IEEPA to include "generalized, global, and never-ending threats" shouldn't be afforded deference.

The Rahmanis and 44 of their companies were sanctioned under the Global Magnitsky Human Rights Accountability Act in December for leading a "complex procurement corruption scheme" meant to steal millions from U.S. government-funded contracts for Afghan security forces (see 2312110026). The pair challenged their listings in the D.C. court, though their suit was partially dismissed in April for a lack of standing (see 2404230056).

The Rahmanis argued that OFAC didn't have the statutory authority under the Global Magnitsky Act to sanction them because the statute doesn't allow for the listing of former government officials. The court said it's unnecessary to see if this is the case since the government invoked its IEEPA powers in sanctioning the pair and their companies.

The former Afghan officials said developments in the administrative record and the high court's ruling in Loper Bright v. Raimondo change this decision. The record, produced after the court's ruling, showed that OFAC relied on the Global Magnitsky Act in imposing the sanctions.

Due to this, the pair filed a motion for reconsideration, asking the court to "interpret the Global Magnitsky Act and its provisions limiting its application to a person who is a government official." While OFAC said its interpretation of the act to include former government officials is entitled to deference, the Loper Bright decision (see 2406280051) shows that this is no longer the case. The Supreme Court "has now made clear that Defendants are not entitled to any deference in their interpretation of the Global Magnitsky Act," the brief said.

The same is true of IEEPA, which provides the authority to act only in the face of an "unusual and extraordinary threat," the Rahmanis said. The executive branch has invoked this mandate broadly and generally, though this read of the law "is improper and is no longer due deference following the decision in Loper Bright," the pair argued.

The high court's decision is "perfectly clear on this point: agency action must be reasonably tethered to statutory authority and '[c]ourts must exercise their independent judgment in deciding whether an agency has acted within' that authority," the brief said.