DC Circuit Endorses Broad Sanctions on Russian Metals Purchasers
The D.C. Circuit held that merely purchasing refined precious metals can constitute 'operating in' Russia’s metals and mining sector, exposing downstream market participants outside Russia to secondary sanctions.
In 'Diegelmann v. Bessent', the D.C. Circuit upheld the Treasury Department’s designation of German precious-metals traders for operating in Russia's metals and mining sector. The court endorsed a broad interpretation of sanctions authority under Executive Order 14024, finding that simply purchasing refined precious metals constitutes “procuring” materials from the sector. This means companies can be sanctioned for operating in a targeted Russian industry without being involved in upstream activities like extraction or processing.
The decision expands sanctions risk to a wide range of downstream actors, including traders, brokers, manufacturers, and financial institutions, even if their activities occur entirely outside of Russia. The court upheld the designation based on a classified administrative record and affirmed that while the Supreme Court’s 'Loper Bright' decision eliminated statutory deference, OFAC’s national-security determinations still receive “extremely deferential” arbitrary-and-capricious review.
The ruling creates practical diligence challenges, as companies may need to trace the ultimate origin of goods rather than just screening immediate counterparties. The court left unresolved at what point a processed good ceases to be a “geological material,” creating continued uncertainty.