Background
The International Emergency Economic Powers Act authorizes the President to declare a national emergency and regulate the property of foreign nationals. In 2021, President Biden invoked this authority via Executive Order 14024 to address harmful activities of the Russian Federation. In 2023, the Office of Foreign Assets Control extended these sanctions to the metals and mining sector of the Russian economy. The Diegelmanns, German nationals who trade in precious metals, were sanctioned after OFAC determined they operated in this sector by purchasing precious metals from Russian clients.
The court’s reasoning
The court reviewed the grant of summary judgment de novo and applied an extremely deferential standard to the agency’s decision. The court agreed that the regulation defining the metals and mining sector includes any act of procuring geological materials. The court found that the ordinary meaning of procure is to get by special effort or obtain, and thus buying finished gold bars constitutes procuring geological materials. The court rejected the challengers’ argument that geological materials must be in a natural state because that argument was not preserved for appeal. The court also found that the classified record provided substantial evidence that the metals were connected to Russia.
We conclude that the phrase procuring geological materials incorporates the ordinary meaning of procuring—the phrase means acquiring geological materials through special effort.
Opinion for the Court filed by Circuit Judge KATSAS
What it means going forward
The decision reinforces the broad scope of U.S. sanctions on the Russian metals and mining sector, confirming that transactions involving refined precious metals purchased from Russia are prohibited.