Rusaviainvest, OOO v. Mnuchin

Background

Rusaviainvest, OOO challenged the Office of Foreign Assets Control (OFAC)’s decision to block three wire transfers totaling $1.4 million. The transfers were payments toward Rusaviainvest’s proposed purchase of a used Airbus aircraft from Uzbekistan Airways. The company said it intended to resell the aircraft’s parts.

The transfers were blocked by intermediary banks under OFAC’s global terrorism sanctions regulations. OFAC later denied Rusaviainvest’s applications for licenses to release the funds, stating that the transfers involved an interest of a person sanctioned under Executive Order 13,224. Rusaviainvest applied for reconsideration, but the opinion states that those applications remained pending and were not part of the administrative record reviewed in this case.

Claims and arguments

Rusaviainvest brought the action under the Administrative Procedure Act (APA), which permits judicial review of final federal agency action. It sought a declaration that OFAC’s decisions were arbitrary, capricious, and an abuse of discretion, as well as an order requiring the funds to be unblocked.

Rusaviainvest argued that the available portions of the administrative record did not reasonably justify blocking the funds. It also argued that the company, its owner Andrey Vorobev, its employees, and Uzbekistan Airways were not on OFAC’s list of Specially Designated Nationals and Blocked Persons. The company challenged OFAC’s reliance on classified information and argued that the International Emergency Economic Powers Act (IEEPA) should not apply to transactions between foreign entities with no U.S. ties.

Court’s analysis

The court explained that IEEPA authorizes the President to regulate or prohibit transactions involving property in which a foreign country or foreign national has an interest. Executive Order 13,224 authorizes sanctions against persons associated with designated terrorists, and OFAC administers the resulting sanctions regulations.

The court reviewed the classified information submitted by the government outside Rusaviainvest’s presence and privately in the court’s review. IEEPA expressly permits that procedure when a determination is based on classified information. Based on its review, the court found that OFAC had “ample evidence” that a sanctioned person had an interest in the funds. The court further held that the applicable regulations define an interest broadly, including direct or indirect interests of any nature, so the fact that the sanctioned person did not hold legal title to the funds did not prevent OFAC from blocking them.

The court also held that the classified information supported both the initial blocking decisions and OFAC’s later refusal to release the funds. It rejected Rusaviainvest’s argument that the blocking decision conflicted with the sanctions program’s policy goals, explaining that decisions involving national security and foreign policy receive heightened judicial deference.

Regarding the company’s procedural-fairness arguments, the court stated that Rusaviainvest had not identified a constitutional, legal, or regulatory provision supporting its claim that OFAC’s procedure was improper. The court also rejected the challenge to OFAC’s use of classified information in the judicial review.

Finally, the court rejected Rusaviainvest’s argument that IEEPA does not apply extraterritorially. It concluded that the statute’s language shows that Congress intended it to address international threats to U.S. national security, foreign policy, and the economy.

Disposition

The court concluded that OFAC’s blocking of the wire transfers and denial of Rusaviainvest’s license applications were not arbitrary and capricious. Judge Paul G. Gardephe granted the government’s motion for summary judgment and denied Rusaviainvest’s cross-motion for summary judgment. The Clerk of Court was directed to terminate the motions and close the case.