Case Explained: AXEL DIEGELMANN v. SCOTT BESSENT

Court: United States Court of Appeals for the District of Columbia Circuit

Filed: 2026-07-14

The D.C. Circuit affirmed the district court’s grant of summary judgment to the government, upholding OFAC sanctions imposed on German nationals Axel and Fritz Diegelmann for operating in the metals and mining sector of the Russian economy under Executive Order 14024 and the International Emergency Economic Powers Act (IEEPA). The court reviewed the agency’s decision de novo under the Administrative Procedure Act, applying an “arbitrary or capricious” standard that is “extremely deferential” in matters of national security. The court rejected the Diegelmanns’ argument that purchasing finished gold bars from Russian clients did not constitute “operating” within the sanctioned sector because they did not “procure geological materials.” Relying on 31 C.F.R. § 589.325, which defines the sector to include acts of “procuring… such geological materials,” the court held that the ordinary meaning of “procure”—to obtain or acquire by special effort—encompasses the Diegelmanns’ acquisition of finished metals from Russian entities. The court further ruled that the Diegelmanns forfeited their alternative argument that “geological materials” refers only to raw, unrefined minerals and not processed goods like gold bars, as they failed to raise this specific distinction in their summary judgment briefing before the district court. Finally, the court found that the classified record provided substantial evidence supporting OFAC’s determination that the transactions were sufficiently connected to Russia, rejecting the claim that the metals must have been both extracted and located within Russia at the time of purchase. As a result of this decision, the sanctions blocking the Diegelmanns’ property remain in effect, and their challenge to the scope of the regulations and the factual basis for the sanctions is dismissed.

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