United States District Court, D. Columbia
OKKO BUSINESS PE, Plaintiff: Erich C. Ferrari, FERRARI LEGAL,
PC, Washington, DC.
JACOB J. LEW, in his official capacity as Secretary of the
Department of the Treasury, ADAM J. SZUBIN, in his official
capacity as Director of the Office of Foreign Assets Control,
OFFICE OF FOREIGN ASSETS CONTROL, Defendants: Lynn Yuhee Lee,
LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Civil
Division-Federal Programs Branch, Washington, DC.
KOLLAR-KOTELLY, United States District Judge.
OKKO Business PE (" Plaintiff" ) brings this action
challenging the Office of Foreign Assets Control ("
OFAC" )'s denial of Plaintiff's application for
a license to unblock a wire transfer of 200,000 Euros
originating from Plaintiff. The intended beneficiary of the
wire transfer was UE Belarusian Oil Trading House ("
UEB" ), a Belarusian entity designated by the President
as a target of U.S. sanctions. Presently before the Court is
Defendants'  Motion for Summary Judgment. Upon
consideration of the pleadings, the relevant
legal authorities, and the record as a whole, the Court
GRANTS Defendants' Motion for Summary Judgment. The Court
enters judgment for Defendant. Accordingly, this action is
DISMISSED in its entirety.
International Emergency Economic Powers Act ("
IEEPA" ), 50 U.S.C. § § 1701-1706 authorizes
the President to declare a national emergency when any "
extraordinary threat" to the United States arises that
originates in substantial part in a foreign state. "
Such a declaration clothes the President with extensive
authority set out in 50 U.S.C. § 1702." Holy
Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156,
159, 357 U.S.App.D.C. 35 (D.C. Cir. 2003). Under Section
1702, the President may " investigate, regulate, or
prohibit" transactions in foreign exchange, banking
transfers, and importation or exportation of currency or
securities by persons or with respect to property, subject to
the jurisdiction of the United States. 50 U.S.C. §
1702(a)(1)(A). Furthermore, the President may,
investigate, block during the pendency of an investigation,
regulate, direct and compel, nullify, void, prevent or
prohibit, any acquisition, holding, withholding, use,
transfer, withdrawal, transportation, importation or
exportation of, or dealing in, or exercising any right,
power, or privilege with respect to, or transactions
involving, any property in which any foreign country or a
national thereof has any interest by any person, or with
respect to any property, subject to the jurisdiction of the
United States. . . .
50 U.S.C. § 1702(a)(1)(B).
2006, the President, pursuant to his authority under the
IEEPA, declared a national emergency as to Belarus. The
President found that the actions and policies of certain
members of the Government of Belarus and other persons to
undermine Belarus' democratic processes, to commit human
rights abuses, and to engage in public corruption,
constituted an extraordinary threat to the national security
and foreign policy of the United States. See Exec.
Order No. 13405, 71 Fed.Reg. 35485 (June 16, 2006) ("
E.O. 13405" ). In response to this threat, the President
blocked " all property and interests in property"
of persons listed on the Annex to E.O. 13405 as well as any
persons subsequently determined by the Secretary of Treasury
to meet one or more of the criteria in E.O. 13405.
Id. On May 15, 2008, OFAC added UEB to the list of
entities that met one or more of the criteria in E.O. 13405.
Administrative Record (" A.R." ) 000019. OFAC's
decision was based on information providing reasons to
believe that UEB acts as a clearinghouse for financial,
contractual, and web-based transactions on behalf of
Belarus' largest petrochemical conglomerate, which in
is controlled by Belarusian President Alexander
Lukashenko--an individual listed by the President on the
Annex to E.O. 13405.
2010, OFAC, acting pursuant to authority delegated by the
President, see E.O. 13405 § 5, and the
Secretary of the Treasury, see 31 C.F.R. §
548.802, promulgated regulations (" Belarus
regulations)" to implement E.O. 13405. See
generally 31 C.F.R. Pt. 548. The Belarus regulations
provide that unless otherwise authorized, " all property
and interests in property [of a person designated under E.O.
13405] that hereafter come within . . . the possession or
control of U.S. persons, including their overseas branches .
. . may not be transferred, paid, exported, withdrawn or
otherwise dealt in." 31 C.F.R. § 548.201(a). The
same or similar blocking language is used in most OFAC
April 3, 2012, Plaintiff, a privately-owned corporation
located in Ukraine, entered into a deposit agreement with
UEB. AR 000001. The purpose of the agreement was to
participate in an auction organized by UEB to purchase
certain oil products. AR 000002. Under the agreement, UEB
would serve as the " Auction Organizer" and
Plaintiff would be a " Bidder." AR 000005. In order
to participate in the auction, each bidder was required to
deposit 200,000 Euros into UEB's bank account. AR 000008.
This deposit served as a " guarantee that the Bidder
[would] carry out the actions stipulated" in the
agreement. AR 000008. Bidders were not entitled to dispose of
their deposits after entry into UEB's bank account, and
UEB retained each deposit over the course of the auction. AR
000010. In the event that the bidder lost or did not take
part in the auction, UEB would return the deposit to the
bidder within five banking days upon receiving a written
demand from the bidder. AR 000010-11. Alternatively, if the
bidder won, UEB would return the deposit to the bidder after
the execution of a separate supply agreement between the
seller and bidder. AR 000010. If the bidder won, but refused
to carry out its obligations, UEB would transfer the
bidder's deposit to the seller. AR 000011.
4, 2012, Plaintiff, as a potential bidder, initiated a
transfer of 200,000 Euros from its account with CITI Bank
Ukraine to UEB's bank account in Belarus. AR 000001. The
funds were routed through Citibank, N.A., in the United
Kingdom, which blocked the transfer in accordance with E.O.
13405. AR 000001-2. On May 30, 2012, Plaintiff submitted a
three-page online application seeking a license from OFAC to
unblock the funds.
AR 000001-4. The application included additional space at the
end, where applicants could provide a " detailed
explanation of the transaction, including the purpose of the
payment." AR 000001-4. In that space, Plaintiff stated
that the purpose of the wire transfer was to pay the deposit
for " participation in auctions to purchase petroleum
products from Belarusian oil refiners" in accordance
with their deposit agreement with UEB. AR 000002. Plaintiff
attached a copy of the deposit agreement to its application.
AR 000002, 000005-15.
denied Plaintiff's application by letter dated October
12, 2012. AR 000017-18. The denial stated that U.S. financial
institutions were required to block " all wire transfers
in which a sanctions target has an interest," and an
" interest in property sufficient to require blocking
may be an interest of any nature whatsoever, direct or
indirect." AR 000017. The denial explained that the
blocked funds transfer in question involved an "
interest of a sanctions target described in the Executive
Order 13405," specifically UEB, and that it was "
OFAC's policy to license the release of blocked property
only in limited circumstances, most of which do not involve
commercial activity." AR 000017-18. OFAC determined
" upon review" that " the blocked funds
transfer did not fall within those limited
circumstances." AR 000017-18. OFAC's letter also
noted that OFAC does not recognize attempts to extinguish an
interest of a sanctions target in a transfer once that
transfer has been blocked. AR 000017-18.
March 1, 2013, Plaintiff, through counsel, requested
reconsideration of OFAC's denial of its May 30, 2012
unblocking request. AR 000019-23. Plaintiff's request for
reconsideration stated that at the time it initiated the
funds transfer, Plaintiff did not know that UEB was a U.S.
sanctions target, and that since the denial of
Plaintiff's original request, Plaintiff had cancelled its
contract with UEB and that UEB's interest in the funds
had " been extinguished." AR 000019-23. Plaintiff
indicated that it would never again transact with UEB, and
that continued blocking of the funds would not further U.S.
foreign policy goals. AR 000019-23. Plaintiff included
supporting documentation that included a notice of unilateral
termination issued by UEB and a declaration signed by
Plaintiff's managing officer. AR 000019-21, AR 000039-41.
denied Plaintiff's request for reconsideration by letter
dated September 6, 2013. AR 000084. OFAC's denial of
Plaintiff's reconsideration request stated that OFAC
licensed the release of blocked funds " only under
limited and compelling circumstances consistent with the
national security and foreign policy interests of the United
States." AR 000084. In its letter, OFAC stated that it
had reviewed the information submitted by Plaintiff, and that
OFAC had again determined that licensing the release of the
blocked funds would be inconsistent with OFAC policy. AR
filed the instant action on May 30, 2014, alleging that
OFAC's decisions violated Section 706(2) of the
Administrative Procedure Act (" APA" ). On
September 24, 2014, Defendants filed their motion for summary