ExxonMobil Sues USA, Fighting $2 Million Fine for Violating Russia Sanctions

July 21, 2017
By David Lee

DALLAS (CN) – ExxonMobil sued the United States on Thursday within hours of being slapped with a $2 million fine for violating sanctions against Russia during its conflict with Ukraine.

The Irving, Texas-based oil giant sued the Department of the Treasury’s Office of Foreign Assets Control, its director John E. Smith and Treasury Secretary Steven Mnuchin in Federal Court.

Exxon says it was fined on “the sole basis” that eight documents it executed in 2014 with Rosneft Oil Company, a Russian state-owned oil company, were signed by Rosneft president and chairman Igor Sechin.

Rex Tillerson, now the secretary of state, led Exxon during this time.

Exxon claims that Sechin was subject to the sanctions in an individual capacity only.

“OFAC’s current position is that this fact alone suffices to render the conduct unlawful,” the 21-page complaint states. “That position is plainly incorrect. It relied on a new interpretation by OFAC that had not been announced at the time of the challenged conduct, contravenes the plain text of the relevant executive order, and is directly contrary to contemporaneous, authoritative guidance from the White House and Treasury Department, which repeatedly made clear, at the time Mr. Sechin was sanctioned, that the challenged conduct was lawful.”

Exxon says that when the controlling executive order was issued by President Barack Obama in 2014, the White House said the sanctions applied only to “personal assets” of the sanctioned individuals “and emphasized that the sanctions did not restrict business with the companies those individuals managed.”

It says it was not until months after the fact that the United States “adopted the novel and counterintuitive interpretation on which it now seeks to penalize” Exxon said.

Exxon issued a statement citing a March 2014 White House Fact Sheet that states: “Our current focus is to identify these individuals and target their personal assets, but not companies that they may manage on behalf of the Russian state.”

Exxon also cited a U.S. Supreme Court ruling from 2012 involving drug maker SmithKline Beecham that states: “It is one thing to expect regulated parties to conform their conduct to an agency’s interpretations once the agency announces them; it is quite another to require regulated parties to divine the agency’s interpretations in advance or else be held liable when the agency announces its interpretations for the first time in an enforcement proceeding and demands deference.”

Exxon seeks a permanent injunction blocking collection of the fine and a determination that the fine is unlawful under the Administrative Procedure Act and due process clause of the Fifth Amendment. It is represented by Shannon Ratliff with Davis Gerald in Austin, Nina Cortell with Haynes Boone in Dallas and Neil H. MacBride with Davis Polk in Washington, D.C.

From Courthouse News.

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