Global oil and gas giant ExxonMobil sued the U.S. government on Thursday, claiming that newly issued fines against the company for alleged Russian sanctions violations directly contradict guidance given to it by the Obama administration in 2014. ExxonMobil’s suit was filed shortly after the Trump administration announced that it planned to levy a $2 million fine against the energy company for allegedly doing business with Igor Sechin, a Russian national who was blacklisted by the U.S. Treasury Department in April of 2014.
ExxonMobil argues in legal filings, however, that its 2014 deals with Rosneft, the Russian government-owned oil company, were explicitly blessed by the Obama administration at the time, and that Sechin’s involvement with Rosneft was deemed immaterial by U.S. officials. Multiple White House statements on the matter, for example, explicitly stated that the 2014 sanctions were targeted only at the personal assets of blacklisted individuals like Sechin and not the government-owned businesses they managed.
“I want to be clear that while we will not rule out taking additional steps in the future, our current focus is to identify these cronies of the Russian government and target their personal assets and wealth, rather than the business entities and industries that they may manage or oversee,” a senior Obama administration official stated on March 17, 2014. An official fact sheet issued by the Obama White House that same day declared that the purpose of the sanctions was only to target individuals, not businesses they managed on behalf of the government.
“We recognize that the Russian leadership derives significant support from, and takes action through, individuals who do not themselves serve in any official capacity,” the fact sheet stated. “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.”
Contemporaneous news reports quoting Obama administration officials bolster Exxon’s case that the newly issued fines violate due process, since the allegedly prohibited business transactions had been explicitly blessed by the U.S. government at the time they were completed.
On April 28, 2014, the New York Times quoted an Obama Treasury official who noted that deals with Rosneft were not prohibited, notwithstanding Igor Sechin’s association with the Russian oil firm:
The United States did not place sanctions on Rosneft, and Mr. Sechin does not own a majority of the company, so American companies can still work with Rosneft. “U.S. persons are not prohibited from dealing with Rosneft, including participating in meetings of the company board,” on which Mr. Sechin sits, a Treasury Department official said.
That same guidance from the Obama admin was also noted by Foreign Policy in an article it published the same day:
Obama administration officials specifically noted the inclusion of Sechin and Sergei Chemezov, on Monday, saying the inclusion underscores the severity of the sanctions. Sechin is president of the state-owned Rosneft oil company and a key Putin adviser, according to Treasury. Sechin’s personal assets will be frozen, but Treasury officials said the designation wouldn’t impact U.S. companies’ ability to do business with Rosneft because Sechin does not control the firm.
In its legal filings, Exxon claims that it would be unfair to retroactively punish it for behavior that had been specifically blessed by the federal government at the time.
“[A]uthoritative guidance from the White House and the Treasury Department made clear that the conduct was lawful and proper,” Exxon’s federal complaint notes. “It would violate due process for a party to be held liable retroactively for such conduct.”
The complaint also characterized the newly issued fines as “arbitrary, capricious, an abuse of discretion” and stated that they “contravene the plain text of the Executive Order, are contrary to authoritative guidance from the Executive Branch, and make meaningless distinctions between Rosneft documents signed by Mr. Sechin and identical Rosneft documents signed by any other Rosneft executive.”
Exxon’s suit was filed in federal court in Texas, where the company is based. A judge has not yet been assigned to hear the case.