US Court Declines Energy Firm's Request to Block Potential OFAC Designation
A U.S. federal court declined a request from a Cayman Islands energy firm to preemptively block it from being sanctioned by the Office of Foreign Assets Control, saying the company failed to point to a statute that would give the court this power.
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Turboven Company, which began as a joint venture between U.S. and Venezuelan energy companies before establishing subsidiaries in the Venezuelan cities of Maracay and Cagua, told the court in 2024 that it was concerned that OFAC would soon place it on the U.S. Specially Designated Nationals List after the subsidiaries were seized by the Venezuelan government. The company asked the U.S. District Court for the District of Columbia to grant an injunction blocking OFAC from placing it on OFAC’s SDN List.
The court dismissed Turboven’s complaint last month, saying it failed to prove “that any OFAC action -- let alone placing Turboven on the SDN list -- is ‘certainly impending.’” The court also said it lacked jurisdiction.
Turboven said its fear of being sanctioned began after the Venezuelan government in 2023 raided MCELD, a Venezuelan business that used power generated by Turboven for crypto mining. After the raid, Turboven suspended electrical service to MCELD’s facilities, which prompted the government to allegedly break into Turboven facilities in Maracay, lock the employees inside, steal customer information and threaten to arrest its executives.
Turboven said the government eventually “forcibly” seized Turboven Maracay and Cagua and operated them “under the guise” of being private entities.
Although Turboven no longer controls Turboven Maracay or Cagua, it told the court it was concerned that OFAC might find the company liable for the Venezuelan government’s actions and add it to the SDN list. The company asked the court to “declare” that none of the company’s employees are “participating in, nor are they in any way involved with, the illegal activities” of Turboven Maracay and Cagua, and to grant an injunction prohibiting OFAC from adding Turboven and its owner, Gregorian, to the SDN List.
The court called the lawsuit a “jurisdictional nonstarter.” There is no statute that “grants the Court subject matter jurisdiction over Turboven’s claims,” it said.
Turboven argued that the court had jurisdiction under the Mandamus Act, which allows courts to compel a U.S. government employee to “perform a duty owed to the plaintiff.” But the court said it can “award mandamus relief” only if the plaintiff has a “clear right to relief,” the defendant has a “clear duty to act,” and “there is no other adequate remedy available to [the] plaintiff.”
The court said “Turboven falls short of that standard,” noting that the company never alleged that OFAC has a “clear duty to act.” Turboven actually argued the opposite -- that OFAC should “refrain from action” by not placing it on the SDN List.
U.S. sanctions authorities also give OFAC “ample discretion over whom it places on the SDN list,” the court said. “In short, this is not the stuff of which mandamus suits are made, and nothing in the Complaint suggests otherwise.”
Turboven also argued that the court had jurisdiction under the Declaratory Judgment Act and the federal question statute, but the court struck both arguments down after saying that the Declaratory Judgment Act can’t “fill a gap in subject matter jurisdiction” and that the federal question statute -- which gives a court jurisdiction when “federal law creates the cause of action asserted” or “when a federal issue lies at the heart of a state-law claim” -- also doesn’t apply here.
“Turboven points to no federal statute or constitutional provision other than the Mandamus Act. This means that its ‘request for an injunction based on the general federal question statute is essentially a request for a writ of mandamus,’” the court said.
It also said Turboven had “little to say in response” to this when these points were raised by OFAC in its May motion to dismiss, “effectively conceding that the Court lacks jurisdiction.”
The court also said Turboven lacked standing, saying it failed to show that a sanctions designation by OFAC was imminent or that an injury was likely to be caused by OFAC. “While the absence of a statutory grant of jurisdiction dooms Turboven’s case,” the court said, “the lack of standing puts a nail in the coffin.”