Strait Shipbrokers Pte. Ltd. v. Blinken ( 2021 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STRAIT SHIPBROKERS PTE. LTD., et al.,
Plaintiffs,
Civil Action No. 21-1946 (BAH)
v.
Chief Judge Beryl A. Howell
ANTONY BLINKEN, in his official capacity
as Secretary of State, et al.,
Defendants.
MEMORANDUM OPINION
In October 2020, the Secretary of State sanctioned plaintiffs Strait Shipbrokers Pte. Ltd.
and the company’s Managing Director, Murtuza Mustafa Munir Basrai, for prohibited
commercial transactions involving the shipment of petroleum products from Iran. The U.S.
Department of Treasury’s Office of Foreign Asset Control (“OFAC”) then placed plaintiffs on
the Specially Designated Nationals (“SDN”) list. As a result, United States persons are
prohibited from engaging in transactions with plaintiffs, plaintiffs’ property and interests within
the United States or in the control of U.S. persons are blocked, and plaintiff Basrai may not enter
the United States. With their request for reconsideration of the sanctions still pending before the
State Department and the administrative record in the process of declassification and appropriate
redaction for disclosure, plaintiffs filed this extraordinary motion for a preliminary injunction.
Plaintiffs were informed that they were being designated for “knowingly engag[ing] in a
significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum
products from Iran,” see Executive Order 13,846 (“E.O. 13,846”) § 3(a)(ii), 83 Fed. Reg. 38,939,
38,941 (Aug. 6, 2018), and subsequently provided with details regarding the specific transactions
or shipments underlying the designations. In plaintiffs’ view, defendants’ disclosures have fallen
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short of providing plaintiffs with either the factual basis for their designation or a “reasoned
explanation” for the government’s decision-making. Given that the administrative record is
largely classified—unsurprising given that the designation was made under an executive order
aimed at the threats posed by the Islamic Republic of Iran and is predicated on national security
concerns—plaintiffs demand that the government nonetheless disclose the classified record to
plaintiffs or, in the context of this pending motion for preliminary injunctive relief, to the Court.
Put another way, plaintiffs’ motion for a preliminary injunction aims to oblige the Court,
on a highly expeditated basis, to check the classified work of the State Department and the
intelligence agencies on which it relies based on plaintiffs’ hypothesis that the classified record
does not support the government’s clear factual assertions. Plaintiffs fail to meet the
requirements for the extraordinary remedy of a preliminary injunction and their motion is,
accordingly, denied.
I. BACKGROUND
Provided below is an overview of the statutory background of the International
Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. §§ 1701–08, the relevant executive
orders prohibiting transactions with Iran and providing sanctions for those who deal with Iran,
and the factual and procedural background of this case.
A. International Emergency Economic Powers Act
The United States has long used economic sanctions to prohibit transactions that threaten
national security. IEEPA grants the President authority “to deal with any unusual and
extraordinary [foreign] threat” to U.S. “national security” so long as “the President declares a
national emergency with respect to such threat.” 50 U.S.C. § 1701(a). The statute authorizes the
President to take a range of actions to combat such a threat after declaring a national emergency,
including permitting the President to:
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[R]egulate, direct and compel, nullify, void, prevent or prohibit, any . . .
transfer . . . of, or dealing in, . . . or transactions involving, any property in
which any foreign country or a national thereof has any interest . . . with
respect to any property, subject to the jurisdiction of the United States[.]
Id. § 1702(a)(1)(B). The President may also “empower the head of any” executive department or
agency to take those actions on his behalf. 3 U.S.C. § 301.
B. Executive Order Regarding Sanctions Imposed on Iran
IEEPA has been invoked to impose sanctions against Iran, including sanctions aimed at
cutting off the market for its petroleum products. See Executive Order 12,957, 60 Fed. Reg.
14615 (Mar. 15, 1995). In January 2016, some sanctions imposed against Iran were briefly
lifted, Executive Order 13,716, 81 Fed. Reg. 3693 (Jan. 16, 2016), but, on August 6, 2018,
sanctions were reimposed in Executive Order 13,846. The sanctions imposed in the latter order
are currently in effect and are applicable to this dispute.
Executive Order 13,846 provides sanctions to put “financial pressure on the Iranian
regime” to oppose “Iran’s proliferation and development of missiles and other asymmetric and
conventional weapons capabilities, its network and campaign of regional aggression, its support
for terrorist groups, and the malign activities of the Islamic Revolutionary Guard Corps and its
surrogates[.]” E.O. 13,846, preamble. The Secretary of State, in consultation with the heads of
other agencies, is authorized to impose sanctions on any person determined to have “knowingly
engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of
petroleum or petroleum products from Iran” on or after November 5, 2018 Id. § 3(a)(ii). Once
the determination has been made, the Executive Order provides a “menu-based” list of sanctions
for designated entities or individuals. Id. §§ 4, 5. The sanctions may include prohibiting certain
transactions with or involving the interests of the sanctioned person, as well as blocking
transactions involving the property and interests of the sanctioned person. Id. § 5(a)(i)–(vi).
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Similar sanctions may be imposed by the Secretary of State on principle executive officers of
sanctioned entities or other persons “performing similar functions and with similar authorities.”
Id. § 5(a)(vii). Any individual determined to be “a corporate officer or principal of, or a
shareholder with a controlling interest in, a sanctioned person” shall be excluded from the United
States. Id. § 4(e). Persons subject to sanctions pursuant to the Executive Order are added by
OFAC to the SDN list of individuals whose assets are blocked and with whom United States
persons are generally prohibited from dealing. See Compl., Ex. 1 (“Oct. 29, 2020 Notice of
Addition to SDN List,”) at 2, 5–6, ECF 1-1; Fares v. Smith, 901 F.3d 315, 318 (D.C. Cir. 2018)
(citing 31 C.F.R. § 501.807(a); Zevallos v. Obama, 793 F.3d 106, 110 (D.C. Cir. 2015)).
C. Factual Background
Plaintiff Strait Shipbrokers is a maritime shipbroker based in Singapore that acts as an
intermediary between ship owners and cargo owners, and negotiates “freight and demurrage,”
Compl. ¶ 22; Declaration of Murtuza Mustafa Munir Basrai (“Basrai Decl.”) ¶¶ 1, 3, ECF No. 8,
“offering varied services in ship brokering of bulk petrochemicals, Veg oil, LPG, LNG, clean
petroleum and crude oil,” Basrai Decl. ¶ 3. Plaintiff Basrai is the founder and serves as the
“managing director” of Strait Shipbrokers, Basrai Decl. ¶¶ 1, 3, and is an Indian national residing
in Singapore, id. ¶ 20. In brokering cargo agreements, plaintiffs concede that they “do[] not
inquire about the cargo country of origin,” Basrai Decl. ¶ 5, nor do they “require specific port
details where ports are relatively close together,” id. ¶ 6, apparently leaving themselves blind to
whether shipments barred under U.S. sanctions are involved in plaintiffs’ deals. Plaintiffs state
matter-of-factly that they “often lack visibility” of the details of the contracts underlying the
deals they are brokering, id. ¶ 5, a surprising concession given that they are in the business of
brokering shipment of “bulk petrochemicals, . . ., clean petroleum and crude oil,” id. ¶ 3, and are
involved in shipping in “Middle East Ports,” id. ¶ 6.
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On October 29, 2020, OFAC issued a public notice that plaintiffs were designated on the
SDN list. Oct. 29, 2020 Notice of Addition to SDN List at 2, 5–6. This public notice was
followed the next day by the Secretary of State’s release of a press statement regarding the
determination, pursuant to section 3(a)(ii) of the Executive Order, that plaintiff Strait
Shipbrokers “knowingly engaged in a significant transaction for the purchase, acquisition, sale,
transport, or marketing of petroleum products from Iran.” Defs.’ Opp’n to Pls.’ Mot. for
Preliminary Injunction and Expedited Discovery (“Defs.’ Opp’n”), Ex. A (“Oct. 30, 2020 Press
Release”), ECF No. 16-1. The press release further stated that plaintiff Basrai was sanctioned for
being “principal executive offer of [Strait Shipbrokers], or performing similar functions and with
similar authorities as a principle executive officer, for purposes of Section 5(a)(vii) of E.O.
13846.” Id.Notice of these sanctions was published, on January 6, 2021, in the Federal Register with
additional description of the range of “menu-based” sanctions imposed on plaintiffs. 86 Fed.
Reg. 672, 672–73 (Jan. 6, 2021). Specifically, the Secretary imposed various sanctions on
plaintiff Strait Shipbrokers, including prohibiting transactions with Straight Shipbrokers subject
to the jurisdiction of the United States and blocking the company’s property interests. Id. at 673.
Comparable sanctions were imposed on plaintiff Basrai based on his executive role at Strait
Shipbrokers, and he was also subject to visa denial and exclusion pursuant to section 4(e) of
Executive Order 13,846. Id.As a result of its designation, plaintiff Strait Shipbrokers has had its Citibank bank
account cancelled, its group insurance policy cancelled, and has limited ability to engage in
business with United States persons, and in business more generally. Basrai Decl. ¶¶ 17–19; see
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also Compl. ¶ 1. Plaintiffs represent that the company is in a “dire financial situation” because
of the designations and the inability to obtain a general or specific license from OFAC. Basrai
Decl. ¶ 19. The company has terminated most its personnel, id., and plaintiff Basrai faces the
loss of his visa to live and work in Singapore if the sanctions on him persist, id. ¶ 20.
On December 7, 2020, plaintiffs submitted to the Department of Treasury a “petition for
delisting and a request for a general license that would allow U.S. persons to engage in business
with Plaintiffs throughout the delisting process.” Compl. ¶ 3; see also Basrai Decl. ¶ 9. In
response, the Department of State sent a letter to plaintiffs explaining the rationale for the
designation and requesting additional information to assist in review of the petition. See Defs.’
Opp’n, Ex. B. (“Jan. 29, 2021 Letter”), ECF No. 16-2. 1 The letter explained that Strait
Shipbrokers was designated under the Executive Order for “broker[ing] the hiring of the M/T
Lady Maris from early October 2019 to early November 2019” and “[i]n that time, the M/T Lady
Maris shipped Iranian petroleum products to China.” Id. at 1. The letter also requested, among
other things, that plaintiffs (1) explain any role Strait Shipbrokers had in that transaction, (2)
describe the nature of Straight Shipbrokers’ relationship with nineteen other entities, and (3)
describe Strait Shipbrokers relationship with the Iranian petroleum sector and with any entities or
individuals on the SDN list. Id. at 1–2.
On February 16, 2021, plaintiff Basrai responded to the letter, representing that “that
Strait Shipbrokers had not brokered the sale of the M/T Lady Maris, identif[ying] who [he]
understood from a public records search to be the ship’s owners, and explain[ing] Strait
Shipbrokers had not conducted business with any of these persons or entities either.” Basrai
Decl. ¶ 11 (internal quotation marks omitted). In response, on March 17, 2021, the State
1
This letter and a subsequent letter are dated “January 29, 2020” and “March 17, 2020,” but both parties
agree that the letters were sent on those dates in 2021. Compl. ¶¶ 4, 6; Defs.’ Opp’n at 8–9.
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Department expressed “continu[ing] to have high confidence in the evidence underlying the State
Department’s designation of Strait Shipbrokers pursuant to section 3(a)(ii) of Executive Order
13846.” Defs.’ Opp’n, Ex. C. (“March 17, 2021 Letter”) at 1, ECF No. 16-3. The agency also
pointed out that while plaintiffs’ “response stated that Strait Shipbrokers did not broker the sale
of the M/T Lady Maris, [the State Department] stated that Strait Shipbrokers was designated for
its role in the chartering of the M/T Lady Maris from early October 2019 to early November
2019.” Id. The letter further noted that plaintiffs submitted “documents showing that Strait
Shipbrokers brokered the chartering of the M/T Red Dragon, a vessel owned by Vietnam Gas
and Chemicals Transportation Co., for multiple voyages between September 2019 and March
2020” and that “[t]he M/T Red Dragon (IMO: 9032264) loaded and transported Iranian
petroleum products on multiple occasions between June 2019 and February 2020.” Id. The
letter provided further detail that the State Department had “additional information suggesting
that Strait Shipbrokers played a role in voyages that involved Iranian petroleum products,”
including “facilitat[ing] the voyage of the M/T Star Sino (IMO: 9174610; previously named M/T
Falcon Victory) for loading of petroleum products in Iran in October 2019.” Id. at 2. The State
Department requested additional information about these transactions, including seeking
clarification of the “due diligence” done with regard to the possible shipment of Iranian
petroleum products and highlighting this need given plaintiffs’ vague language referring to
“Middle East Ports” in documents submitted in connection with the M/T Red Dragon voyage.
See id. at 1–2.
On April 2, 2021, plaintiffs responded to this second letter, indicating that the company
“has not conducted business relating to the M/T Lady Maris,” and “did not broker the sale of use
of M/T Star Sino or M/T Falcon Victory.” Compl. ¶ 7; see also Basrai Decl. ¶ 13. Plaintiffs
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provide no information regarding the steps they took to confirm that they had not conducted
business related to any of the named ships and, in any event, emphasize that they have only
“limited and rare visibility into the details of underlying charter transactions, including with
respect to cargo origin and port destinations.” Basrai Decl. ¶ 15. Plaintiffs have presented no
documentary evidence relevant to these claims and provided no further description of their
business practices or otherwise explained what due diligence they have done to support their
denial of the State Department’s factual attestations.
Plaintiffs’ request for reconsideration of the State Department determination is pending,
and OFAC “continues to assess Plaintiffs’ request for a license to operate in the interim period
while the request for reconsideration is pending.” Defs.’ Opp’n at 9.
D. Procedural Background
Over four months after receipt of the State Department’s disclosure of additional
information underlying the designations in the March 17, 2021 letter, plaintiffs filed this lawsuit
on July 19, 2021, alleging that the government action designating plaintiffs as SDNs under
Executive Order 13,846 was arbitrary and capricious, in violation of the Administrative
Procedure Act (“APA”), 5 U.S.C. § 706(2)(A), and violated plaintiffs’ due process rights under
the Fifth Amendment. See Compl. ¶¶ 40–50. Plaintiffs seek a declaratory judgment that
plaintiffs’ designation was unlawful and unconstitutional, id. at 16 (“Prayer for Relief”) ¶ 2, as
well as a writ of mandamus compelling defendants to delist plaintiffs, Prayer for Relief ¶ 3.
Less than a week later, on July 22, 2021, plaintiffs filed the pending motion for a
preliminary injunction to enjoin “the enforcement or implementation of the United States
Department of State . . . designation of Plaintiffs as “Specially Designated National[s]” and the
resulting restrictions.” Pls.’ Mot. for Preliminary Injunction and Expedited Discovery (“Pls.’
Mot.”) at 2, ECF No. 5; see also Compl. ¶ 52 (requesting that the Court issue a preliminary
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injunction requiring OFAC to issue a license permitting United States persons to deal with
plaintiffs while their delisting petition is pending), and to obtain expedited discovery of the
administrative record, Pls.’ Mot. at 2. Attached to the motion were declarations of plaintiff
Basrai, id. Ex. 1, Decl. of Murtuza Mustafa Munir Basrai, ECF No. 5-3, and another Strait
Shipbrokers employee, Ooi Yen Yong, id. Ex. 2, Decl. of Ooi Yen Yong, ECF No. 5-4.
Plaintiffs have also resubmitted the Basrai declaration with two exhibits—correspondence from
the State Department regarding cancellation of his visa and correspondence from clients severing
business relationships due to the SDN designations—that were omitted from the earlier filing.
See Basrai Decl., ECF No. 8; id., Ex. A (“Nov. 10, 2020 Visa Cancellation Letter”), ECF No. 8-
1; id., Ex. B (“Notices of Cessation of Business”), ECF No. 8-2.
The parties proposed a briefing schedule on the pending motion, which proposed
schedule was adopted. See Min. Order (July 23, 2021). The government filed its opposition
memorandum on August 5, 2021 along with three exhibits: (1) the October 30, 2020 press
release announcing and explaining the designations; (2) the State Department’s correspondence
with plaintiffs from January 29, 2021; and (3) the State Department’s correspondence with
plaintiffs from March 17, 2021. On that same day, defendants provided plaintiffs with the
unclassified version of the relevant administrative record. See Defs.’ Opp’n at 36.
At the Court’s request, defendants also submitted to the Court physical copies of “the
unclassified versions of the evidentiary and supporting exhibits that established the basis for
State’s Determinations, which were released to Plaintiffs Strait Shipbrokers Pte. Ltd. and its
Managing Director, Murtuza Mustafa Munir Basrai, on August 5, 2021.” Defs.’ Resp. to Order
of the Court Regarding Evidentiary Materials at, ECF No. 17 (internal quotation marks
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omitted). 2 This unclassified administrative record consists of (1) an action memorandum for the
Secretary of State; (2) Executive Order 13,846; (3) a proposed sanctions memorandum; (4) a
Federal Register notice; (5) an evidentiary memorandum supporting determinations by the
Secretary of State; and (6) 24 exhibits. The action memorandum, proposed sanctions
memorandum, evidentiary memorandum, and many of the exhibits are very heavily redacted.
Defendants rely on no information in the administrative record beyond Executive Order 13,846,
which is, of course, publicly available. Plaintiffs filed their reply on August 8, 2021, see Pls.’
Reply, and their motion is now ripe for resolution.
II. LEGAL STANDARD
A preliminary injunction “is a stopgap measure, generally limited as to time, and
intended to maintain a status quo or ‘to preserve the relative positions of the parties until a trial
on the merits can be held.’” Sherley v. Sebelius, 689 F.3d 776, 781–82 (D.C. Cir. 2012) (quoting
Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981)). To obtain relief, the moving party must
establish that (1) they are “likely to succeed on the merits”; (2) they are “likely to suffer
irreparable harm in the absence of preliminary relief”; (3) “the balance of equities” is in their
“favor”; and (4) “an injunction is in the public interest.” Winter v. Nat. Res. Def. Council,
555 U.S. 7, 20 (2008); see also League of Women Voters of the U.S. v. Newby, 838 F.3d 1, 6
(D.C. Cir. 2016); Pursuing Am.’s Greatness v. FEC, 831 F.3d 500, 505 (D.C. Cir. 2016). The
first factor is also the “most important factor.” Aamer v. Obama, 742 F.3d 1023, 1038 (D.C. Cir.
2
Defendants also offered to provide to the Court ex parte and in camera the unredacted classified record,
pursuant to 50 U.S.C. § 1702(c) (providing that classified information underlying an IEEPA determination “may be
submitted to the reviewing court ex parte and in camera”). The classified record has not been requested by the Court
for review. As plaintiffs note, even if such judicial review of the classified record were performed, “the Court’s
ability to test [the agency’s] factual conclusions will be limited without the Plaintiffs’ aid in rebutting their factual
claims and [] the deference the Court must show them will reduce the Court’s role to that of a rubber stamp.” Pls.’
Reply Supp. Mot. for Preliminary Injunction and Expedited Discovery (“Pls.’ Reply”) at 1, ECF No. 18. Moreover,
“[t]here is no need for the Court to rely upon the classified record if the government is not asking the Court to rely
upon it or indicating which parts of the classified record that it should rely upon . . ..” Id. at 10.
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2014); see also Munaf v. Geren, 553 U.S. 674, 690 (2008) (“[A] party seeking a preliminary
injunction must demonstrate, among other things, ‘a likelihood of success on the merits.’”
(quoting Gonzales v. O Centro Espirita Beneficente União do Vegetal, 546 U.S. 418, 428
(2006))). 3 A preliminary injunction “is an extraordinary . . . remedy, one that should not be
granted unless the movant, by a clear showing, carries the burden of persuasion” on each of the
four factors. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam) (emphasis omitted)
(quoting 11A C. WRIGHT, A. MILLER, & M. KANE, FEDERAL PRACTICE AND PROCEDURE § 2948,
at 129–30 (2d ed. 1995)).
III. DISCUSSION
As a threshold matter, plaintiffs request in their motion “expedited discovery” of the “full
administrative record.” Pls.’ Mem. in Supp. of Mot. for Preliminary Injunction and Expedited
Discovery (“Pls.’ Mem.”) at 16, ECF No. 5-1. This request has morphed from a general request
for the administrative record—without any reference to the classified information plaintiffs knew
would be contained therein, see id. at 16–17—to a request without any relevant authority that the
Court force the government “to produce the full record or to justify any redaction,” Pls.’ Reply at
13. IEEPA expressly contemplates that OFAC may rely on classified information and make
classified information underlying designation available “to the reviewing court ex parte and in
camera.” 50 U.S.C. § 1702(c). Such classified information may be provided only to the Court.
See Holy Land Found. for Relief and Dev. v. Ashcroft (“Holy Land II”), 333 F.3d 156, 163–64
(D.C. Cir. 2003) (holding that notice provided to the designated party “need not disclose the
3
The D.C. Circuit has previously followed a “sliding scale” approach to evaluating preliminary injunctions,
but that approach is likely inconsistent with Winter, see Archdiocese of Wash. v. Wash. Metro. Area. Transit Auth.,
897 F.3d 314, 334 (D.C. Cir. 2018) (observing that Winter may be “properly read to suggest a ‘sliding scale’
approach to weighing the four factors be abandoned”); Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1295–
96 (D.C. Cir. 2009) (Kavanaugh, J., concurring) (noting that “this Circuit’s traditional sliding-scale approach to
preliminary injunctions may be difficult to square with the Supreme Court’s recent decisions in” Winter and Munaf),
and therefore will not be employed here, Singh v. Carter, 185 F. Supp. 3d 11, 16–17 (D.D.C. 2016).
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classified information to be presented in camera and ex parte to the court under the statute”).
Plaintiffs’ request is therefore moot since the government has already provided to plaintiffs the
“unclassified version of the relevant administrative record.” See Defs.’ Opp’n at 36 & n.15. 4
This leaves only plaintiffs’ request for a preliminary injunction. After addressing the
heightened burden plaintiffs face on their request for a mandatory preliminary injunction,
plaintiffs’ likelihood of success on the merits, claim of irreparable harm, and the balance of the
equities and public interest are discussed seriatim.
A. Heightened Burden for Mandatory Preliminary Injunctions
Here, plaintiffs request “a preliminary injunction against the enforcement or
implementation of the [Secretary of State’s] designation of Plaintiffs as . . . [SDNs] and the
resulting restrictions.” Pls.’ Mot at 2. The designations and accompanying sanctions, of course,
were implemented almost ten months ago, and plaintiffs do not explain how their “enforcement
or implementation” can be enjoined without defendants taking the step of withdrawing them or
otherwise acting. What plaintiffs really want is found in their complaint, which states that “[t]he
Court should issue a preliminary injunction requiring OFAC to issue a general license permitting
U.S. persons to do business with Plaintiffs while their delisting petition is pending.” Compl.
¶ 52; see also Pls.’ Mem. at 1.
4
Plaintiffs challenge, without citation to any authority, the scope of defendants’ redactions to the
administrative record, Pls.’ Reply at 13, in an apparent invitation for this Court to engage, on an expedited basis, in
assessing the propriety of the classification of certain information. This invitation is declined. The scope of the
government’s redaction of classified information need not be addressed here both because (1) the classified
administrative record is not necessary to resolve the pending motion, as this classified material is not even relied
upon by defendants; and (2) the generally expedited nature of a preliminary injunction proceeding is not the
appropriate context for such a classification challenge. See Elec. Priv. Info. Ctr. v. Dep’t of Just., 15 F. Supp. 3d 32,
48 (D.D.C. 2014) (emphasizing, in addressing a motion for a preliminary injunction implicating classified
information, the importance of “permitting [the government] to take the time it needs to conduct an adequate
classification review”).
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Plaintiffs therefore do not seek relief to maintain the status quo, which is the typical
function of a preliminary injunction. See Sherley, 689 F.3d at 781; City of Moundridge v. Exxon
Mobil Corp., 429 F. Supp. 2d 117, 126 (D.D.C. 2006) (“A motion for a preliminary injunction
generally seeks to maintain the status quo[.]”). Instead, they request a mandatory injunction to
alter rather than preserve the status quo by compelling, without a clear end date, the relief they
seek in their complaint. See Prayer for Relief ¶¶ 2–3. Mandatory injunctions that “would
change the status quo” are disfavored as “an even more extraordinary remedy” than the typical
preliminary injunction, Abdullah v. Bush, 945 F. Supp. 2d 64, 67 (D.D.C. 2013), “especially
when directed at the United States Government,” Sierra Club v. Johnson, 374 F. Supp. 2d 30, 33
(D.D.C. 2005); see also Mylan Pharms., Inc. v. Shalala, 81 F. Supp. 2d 30, 36 (D.D.C. 2000)
(“In this Circuit, ‘the power to issue a preliminary injunction, especially a mandatory one, should
be sparingly exercised.’”) (quoting Dorfmann v. Boozer, 414 F.2d 1168, 1173 (D.C. Cir. 1969)).
“Plaintiffs seeking this type of relief . . . face ‘an additional hurdle’ when proving their
entitlement to relief,” Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de
C.V., 901 F. Supp. 2d 54, 56–57 (D.D.C. 2012) (quoting King v. Leavitt, 475 F. Supp. 2d 67, 71
(D.D.C. 2007)), and courts “exercise extreme caution in assessing” such motions, id. at 57.
Indeed, “[a]s a rule, ‘[w]hen a mandatory preliminary injunction is requested, the district court
should deny such relief unless the facts and law clearly favor the moving party.’” Columbia
Hosp. for Women Found., Inc. v. Bank of Tokyo-Mitsubishi Ltd., 15 F. Supp. 2d 1, 4 (D.D.C.
1997) (second alteration in original) (emphasis omitted) (some internal quotation marks omitted)
(quoting Phillip v. Fairfield Univ., 118 F.3d 131, 133 (2d Cir. 1997)). Set against “the
demanding standard for a mandatory preliminary injunction,” Archdiocese of Wash. v. Wash.
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Metro. Area Transit Auth., 897 F.3d 314, 319 (D.C. Cir. 2018), plaintiffs face a high hurdle that
they fail to overcome.
B. Likelihood of Success on the Merits
Plaintiffs assert a likelihood of success on the merits of both their APA and due process
claims in the pending motion. Each is discussed in turn.
1. APA Claim
Plaintiffs argue that they are likely to prevail on their APA claim that defendants’
designation of Strait Shipbrokers under Executive Order 13,846 was arbitrary and capricious
because (1) “the SDN designation is unexplained” and (2) “the SDN designation is . . . not
supported by substantial evidence.” Pls.’ Mem. at 11 (internal quotation marks omitted). 5
Defendants contend—pointing to the October 30 press release, the Federal Register notice, and
the subsequent correspondence with plaintiffs—that the unclassified record sufficiently supports
the Department of State’s determination that Strait Shipbrokers met the criteria of section 3(a)(ii)
of Executive Order 13,846. Defs.’ Opp’n at 13.
In reviewing a claim under the judicial review provisions of the APA, the reviewing court
will uphold an agency decision unless it is “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law[.]” 5 U.S.C. § 706(2)(A). This is a “highly deferential
standard.’” Zevallos, 793 F.3d at 112 (quoting Islamic Am. Relief Agency v. Gonzales, 477 F.3d
728, 732 (D.C. Cir. 2007)). The reviewing court “may not substitute [its] judgment for [the
agency’s],” but must require only that the agency “examine the relevant data and articulate a
satisfactory explanation for its action including a rational connection between the facts found and
5
The parties’ dispute hinges on the designation of Strait Shipbrokers. As defendants observe, plaintiff
Basrai’s designation under section 5(a)(v)(ii) of Executive Order 13,846 was predicated on his role as the principle
executive officer of Strait Shipbrokers, see 86 Fed. Reg. at 673, which plaintiffs do not contest, see generally Pls.’
Reply; see also Basrai Decl. ¶ 1 (identifying Basrai as the “Managing Director of Strait Shipbrokers”).
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the choice made.” Id. (quoting Islamic Am. Relief Agency, 477 F.3d at 732). The agency’s
decision will only be reversed if it “is not supported by substantial evidence, or the agency has
made a clear error in judgment.” Spirit Airlines, Inc. v. U.S. Dep’t of Trans., 997 F.3d 1247,
1255 (D.C. Cir. 2021) (quoting J.A. Jones Mgmt. Servs. v. FAA, 225 F.3d 761, 764 (D.C. Cir.
2000)). “The ‘substantial evidence’ standard requires more than a scintilla, but can be satisfied
by something less than a preponderance of the evidence.” FPL Energy Me. Hydro LLC v. FERC,
287 F.3d 1151, 1160 (D.C. Cir. 2002).
Deference for agency decision-making is heightened in the context of executive blocking
decisions, which lie “at the intersection of national security, foreign policy, and administrative
law.” Islamic Am. Relief Agency, 477 F.3d at 734; see also Olivares v. TSA, 819 F.3d 454, 462
(D.C. Cir. 2016) (“[W]e defer to the informed judgment of agency officials whose obligation it is
to assess risks to national security.”).
Plaintiffs’ first argument—that the SDN designations were “unexplained” and therefore
arbitrary and capricious—has no merit. The day after the designations were made, the State
Department issued a press release indicating that plaintiff Strait Shipbrokers had been
sanctioned, pursuant to section 3(a)(ii) of Executive Order 13,846, for “knowingly engag[ing] in
a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum
products from Iran” and that plaintiff Basrai was being sanctioned as a principal officer pursuant
to section 5(a)(vii) of Executive Order 13,846. October 30, 2020 Press Release at 2. Plaintiffs
do not support their assertion that defendants must do more at the time of designation than (1)
provide the authority for the designations and (2) generally describe the conduct that prompted
the designations. Put another way, defendants need not immediately turn over the entire
administrative record on or around the date of designation. Moreover, as plaintiffs concede, they
15
were soon provided with more specific information regarding the precise transaction on which
the designations were predicated and then given the opportunity to engage with the State
Department on the accuracy of the information underlying the designation. See Jan. 29, 2021
Letter at 1; March 17, 2021 Letter at 1–2.
Plaintiffs next challenge the factual basis for the designation. Plaintiffs assert that
“[t]here is no basis for any suggestion that Plaintiffs engaged in a transaction for the purchase,
acquisition, sale, transport, or marketing of petroleum products from Iran.” Pls.’ Mem. at 12.
They further deny having “conducted business with [the ships named in correspondence with the
State Department] and certainly have not ‘knowingly’ done so.” Id. On that basis—and
ignoring that they do not have access to the classified record—plaintiffs contend that the
designations “run counter to any accurate evidence before the agency.” Id.Defendants argue that they have presented enough unclassified information to support the
State Department’s designation under Executive Order 13,846. Defs.’ Opp’n at 13. In
defendants’ view, the statements regarding the basis for the designation—that Strait Shipbrokers
“brokered the hiring of the M/T Lady Maris from early October 2019 to early November 2019
. . . [and] [i]n that time, the M/T Lady Maris shipped Iranian petroleum products to China”—
provides a sufficient basis at this stage of the litigation to determine that plaintiffs are unlikely to
succeed on their APA claim. See Defs.’ Opp’n at 13–14, 16 (quoting Mar. 17, 2021 Letter at 1).
While defendants have not quoted, summarized, or detailed the underlying documentary or
testimonial evidence to support this factual assertion, plainly, the State Department believes that
the evidence relating to the Lady Maris warrants the actions taken. See Mar. 17, 2021 Letter
(State Department stating, in responding to plaintiffs’ denials, that the agency “continue[s] to
16
have high confidence in the evidence underlying the State Department’s designation of Strait
Shipbrokers pursuant to section 3(a)(ii) of Executive Order 13,846”).
In arguing that they did not “knowingly” do business involving the relevant ships,
plaintiffs emphasize that they “act as intermediaries between ship owners and charter parties and
have limited visibility into the underlying charter transactions, including the cargo origin and
port destination.” Pls.’ Mem. at 11–12 (citing Basrai Decl. ¶ 4). Plaintiffs do not clearly indicate
what they know about the transactions they are brokering, but, if anything, this fact makes
plaintiffs’ claims weaker by undermining their assertion that they had nothing to do with the
ships that defendants say were carrying Iranian petroleum products. As the government points
out, the Executive Order defines “knowingly” to include circumstances where a person “should
have known” about the relevant conduct, circumstances, or result. E.O. 13,846 § 16(i). To the
extent plaintiffs exercised willful blindness to the “cargo origin and port destinations,” Basrai
Decl. ¶ 15, while shipping oil and petrochemicals potentially subject to international sanctions,
their lack of knowledge cannot shield them from responsibility for transactions involving Iranian
petroleum products.
Plaintiffs bear the burden of persuasion on all factors in consideration of a motion for a
preliminary injunction. See Sherley, 644 F.3d at 392 (noting that “[a] preliminary injunction is
‘an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is
entitled to such relief’” (quoting Winter, 555 U.S. at 22)). In this case, plaintiffs have presented
no documentary evidence to support their assertion that they did not engage in the conduct
prohibited under Executive Order 13,846. This is not surprising, as doing so would require them
to prove a negative. Still, plaintiffs do not inspire confidence in their denial given that they have
provided no information or evidence regarding the basis for the denials that they were involved
17
in any of the transactions highlighted by the State Department. Rather, they have conceded that
they broker shipment of petrochemicals and other petroleum products, Basrai Decl. ¶ 3, in
“Middle East Ports,” id. ¶ 6; Mar. 17, 2021 Letter at 2, with “limited and rare visibility” into the
underlying transactions, Basrai Decl. ¶ 15.
At the same time, defendants, have also not presented evidence—beyond offering to
“make available to the Court the classified evidentiary memorandum and supporting exhibits,
without any redactions, ex parte, in camera,” Defs.’ Opp’n at 16 (citing 50 U.S.C. § 1702(c))—
to support the assertion that plaintiffs actually meet the criteria for designation under section
3(a)(ii) Executive Order 13,846. As additional information may be declassified, more evidence
underlying the designation may become available, and in subsequent stages of this litigation,
with different burdens on the parties, this may make a difference. At this stage, however,
plaintiffs have not established a likelihood of success on the merits of their APA claim. Given
(1) the heightened standard for mandatory preliminary injunctions; (2) the extensive classified
record; (3) the apparently active declassification process; (4) the ongoing engagement between
plaintiffs and the State Department; and (5) the relative dearth of evidence presented by
plaintiffs, the merits of the APA claim are uncertain, and defendants will not be compelled to
expedite the declassification process or provide the classified record to the Court, which
plaintiffs acknowledge would bypass the adversarial process. See supra n.2.
A single factual dispute underlies plaintiffs’ claim: whether plaintiffs knowingly engaged
in transactions prohibited under Executive Order 13,846. Compare Basrai Decl. ¶ 13 (stating
that he told the State Department that “the Company has not conducted business relating to the
M/T Lady Maris”); with Defs.’ Opp’n at 16 (asserting that defendants “reasonably determined
that the Company and Mr. Basrai met the criteria set forth in E.O. 13,846”); March 17, 2021
18
Letter (“We continue to have high confidence in the evidence underlying the State Department’s
designation of Strait Shipbrokers pursuant to section 3(a)(ii) of Executive Order 13846.”). Given
the current posture of this case, as well as plaintiffs’ limited support of their denial and apparent
blindness to the details of their business dealings, now is not the appropriate time to resolve this
factual dispute. Plaintiffs may not take the extraordinary step of moving for a preliminary
injunction to ask the Court to check the State Department’s work on a highly expedited and ex
parte basis, while declassification is apparently ongoing. 6
Accordingly, plaintiffs have failed to demonstrate a likelihood of success on the merits of
their APA claim.
2. Due Process
In their due process claim, plaintiffs argue that defendants failed to provide them due
process by (1) failing to provide plaintiffs with pre-designation notice of their SDN designations
and (2) failing to provide plaintiffs with the “factual basis for their SDN designations nor the
materials on which those materials were purportedly based.” Pls.’ Mem. at 13. Defendants
argue that plaintiffs were not entitled to pre-designation notice, id. at 23, and that plaintiffs
cannot complain about the post-designation opportunity to contests the designations given that
they are currently participating in the reconsideration process and have been provided with
relevant non-classified information, including the October 30, 2020 press release, Federal
6
Tellingly, each of the three IEEPA cases relied upon by plaintiffs, see Pls.’ Mem. at 10, involving
preliminary injunctions (1) sought to enjoin impending prohibitions that had yet to go into effect rather than force
the rolling back of earlier designations; (2) did not involve classified information; and (3) did not hinge on specific
factual disputes regarding the actions of the plaintiffs. See generally TikTok Inc. v. Trump, 507 F. Supp. 3d 92(D.D.C. 2020); Luokung Tech. Corp. v. Dep’t of Defense, Case No. 21-cv-583 (RC), 2021 WL 1820265 (D.D.C.
May 5, 2021); Xiaomi Corp. v. Dep’t of Defense, Case No. 21-cv-280 (RC), 2021 WL 950144 (D.D.C. Mar. 12,
2021).
19
Register notice, and subsequent communication explaining the transaction underlying the
designation, id. at 20–23. 7
In considering whether an SDN designation provides constitutionally required notice and
the opportunity to be heard, “courts weigh three factors under the familiar Mathews v. Eldridge
balancing test: (1) ‘the private interest that will be affected by the official action’; (2) ‘the risk of
an erroneous deprivation of such interest through the procedures used, and the probable value, if
any, of additional or substitute procedural safeguards’; (3) and ‘the Government’s interest,
including the function involved and the fiscal and administrative burdens that the additional or
substitute procedural requirement would entail.’” Fares v. Smith, 901 F.3d 315, 323 (D.C. Cir.
2018) (quoting Matthews v. Eldridge, 424 U.S 319, 335 (1976)). “[D]ue process is flexible and
calls for such procedural protections as the particular situation demands.” Morrissey v. Brewer,
408 U.S. 471, 481 (1972).
Plaintiffs’ due process claim is unlikely to succeed on the merits. Relevant to plaintiffs
arguments on pre-deprivation notice, the D.C. Circuit has noted, in the analogous context of a
“Specially Designated Narcotics Trafficker” designation pursuant to the Foreign Narcotics
Kingpin Designation Act, that “[w]here a State must act quickly, or where it would be
impractical to provide predeprivation process, postdeprivation process satisfies the requirements
of the Due Process Clause.” Zevallos, 793 F.3d at 116 (quoting Gilbert v. Homar, 520 U.S. 924,
930 (1997)). In addressing international sanction and asset-blocking regimes, the D.C. Circuit
has held that the risk of “asset flight” creates “a ‘special need for very prompt action.” Id.(quoting Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 678 (1974)). The
7
Defendants also argue that plaintiffs have “insufficient contacts with the United States [to be] entitled to
Fifth Amendment protections,” Defs.’ Opp’n at 17 (quoting Jifry v. FAA, 370 F.3d 1174, 1182 (D.C. Cir. 2004)), but
the merits of this argument need not be addressed because plaintiffs are otherwise unlikely to succeed on the merits
of their due process claim.
20
government does not describe in detail the precise nature of the risk of asset flight here, but
under IEEPA, “courts generally hold that OFAC need not provide pre-deprivation notice and
hearing, given the government’s compelling interest in the immediate blocking of assets upon
designation.” Zevallos v. Obama, 10 F. Supp. 3d 111, 127 (D.D.C. 2014) (collecting cases),
aff’d, 793 F.3d 106 (D.C. Cir. 2015); see also Al Haramain Islamic Found., Inc. v. U.S. Dep’t of
Treasury, 686 F.3d 965, 985 (9th Cir. 2012) (“[A]s many courts have held, the potential for
‘asset flight’ almost certainly justifies OFAC’s decision not to provide notice before freezing the
assets”) (citing Holy Land II, 333 F.3d at 163–64)).
Plaintiffs fare no better in their argument regarding post-deprivation due process. In the
context of national security sanctions and blocking orders, the D.C. Circuit has held that due
process requires only that the government (1) provide plaintiff “with the unclassified evidence on
which it relied to designate him”; (2) allow plaintiff the opportunity “to contest the propriety and
adequacy of that evidence”; and (3) permit plaintiff “to continue contesting his designation by
filing new delisting requests[.]” Zevallos, 793 F.3d at 116–17. 8 The government has
undoubtedly done that here, having turned over the unclassified record, see Pls.’ Opp’n at 36;
described the specific transaction underlying the designation, see Jan. 29, 2021 Letter at 1; and
described other transactions that are of concern, see Mar. 17, 2021 Letter at 1–2. Thus, not only
have plaintiffs been advised of the specific alleged transactions that serve as the basis for their
designations or are otherwise under scrutiny from the government, see Jan. 29, 2021 Letter at 1;
Mar. 17, 2021 Letter at 1–2, they can and are seeking administrative reconsideration of the
designations with the State Department, see Pls.’ Mem. at 5; Defs.’ Opp’n at 23.
8
The D.C. Circuit has held that “Trafficker designations under the Kingpin Act are analogous to other
Executive Branch asset-freezing designations, such as those authorized by [IEEPA].” Fares, 901 F.3d at 318
(noting that, under each statute, designated individuals are “added to the ‘Specially Designated Nationals and
Blocked Persons List.’” (quoting 31 C.F.R. § 501.807(a)).
21
Plaintiffs raise concerns regarding the precise scope of disclosure and the possibility that
the government has designated too much of the underlying record as classified. See Pls.’ Reply
at 10–11. This may be so, particularly given that the government specifically provided in its
January 29, 2021 and March 17, 2021 letters assertions about plaintiffs’ suspect activities that are
not apparent in the declassified administrative record. The possibility that the government has
classified too much of the record or is not moving sufficiently quickly in declassifying the record
does not go directly to the factors laid out in Zevallos, however, given that the question here is
simply whether the government has provided the relevant unclassified evidence to plaintiffs and
given them the opportunity to respond. The request to litigate defendants’ classified redactions
is simply premature in this early stage of the proceedings. 9 Moreover, “[f]orcing the executive
branch to disclose information that it has validly classified would compel a breach in the security
which that branch is charged to protect.” Fares, 901 F.3d at 324 (internal quotation marks and
citations omitted). Thus, when evaluating claims implicating classified information at the
preliminary injunction stage, courts must be mindful of the importance of “permitting [the
government] to take the time it needs to conduct an adequate classification review.” Elec. Priv.
Info. Ctr., 15 F. Supp. 3d at 48.
Plaintiffs further request unclassified summaries or access of cleared counsel to classified
material, see Pls.’ Reply at 10, 13, but these forms of access to classified material are not
required. See Al Haramain Islamic Found., 686 F.3d at 983 (“[A]n unclassified summary may
not be possible because, in some cases, the subject matter itself may be classified and cannot be
revealed without implicating national security.”); Holy Land II, 333 F.3d at 164 (holding that the
9
As noted supra n.4, plaintiffs provide no support for proposition that the government must justify each and
every of its classification determination, nor for the proposition that challenge to classification determinations is
available in deciding a preliminary injunction.
22
OFAC designation process does not convey a right to access classified evidence). Plaintiffs have
been provided sufficient information regarding the bases for their designations, and therefore
have the information necessary to meaningfully engage in the reconsideration process.
Plaintiffs have therefore failed to establish a likelihood of success on the merits of their
due process claim, with respect to both their pre-designation and post-designation due process
arguments.
C. Irreparable Harm
Plaintiffs meet the “high standard for irreparable injury” required for preliminary
injunction relief. Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir.
2006). To show irreparable harm, plaintiffs must demonstrate that they face an injury that is
“both certain and great,” “actual . . . not theoretical,” and “of such imminence that there is a clear
and present need for equitable relief to prevent irreparable harm.” Wis. Gas Co. v. FERC, 758
F.2d 669, 674 (D.C. Cir. 1985) (per curiam) (internal quotation marks and emphasis omitted).
Further, plaintiffs must show “the alleged harm will directly result from the action which the
[plaintiff] seeks to enjoin,” as “the court must decide whether the harm will in fact occur.” Id.(emphasis in original); see also Winter, 555 U.S. at 22 (rejecting “‘possibility’ standard [as] too
lenient,” explaining “[o]ur frequently reiterated standard requires plaintiffs seeking preliminary
relief to demonstrate that irreparable injury is likely in the absence of an injunction.”) (emphasis
in original)).
Plaintiffs contend that they will suffer irreparable harm in the absence of preliminary
relief because, because “the SDN designation” has put “the Company . . . in dire financial
situation” such that the company “has had to terminate the employment of 33 personnel.” Pls.’
Mem. at 14 (citing Basrai Decl ¶ 19). As plaintiffs point out, “courts have found irreparable
harm where the movant has made a strong showing that the economic loss would significantly
23
damage its business above and beyond a simple diminution in profits.” Mylan Pharms., Inc., 81
F. Supp. 2d at 43 (collecting cases). The government responds that plaintiffs’ evidence is too
conclusory and that “[r]ecoverable monetary loss may constitute irreparable harm only where the
loss threatens the very existence of the movant’s business.” Wis. Gas Co., 758 F.2d at 674
(citing Wash. Metro. Area Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 843 n.2 (D.C.
Cir. 1977)); see Defs.’ Opp’n at 27.
Plaintiffs meet the demanding standard of establishing irreparable harm on the basis of
monetary loss. Plaintiffs have presented evidence—in the form of the Basrai declaration—that
“all [their] clients have confirmed that they refuse to do business with [them] because of the
designation,” Basrai Decl. ¶ 18; see also Notices of Cessation of Business; that they have had to
terminate or have otherwise lost over 80 percent of their employees, Basrai Decl. ¶ 19; and the
company is in a “dire financial situation” as a result of the designations, id. Moreover, plaintiffs
will be unable to recover damages against the United States if their designation is later found to
be unlawful, Pls.’ Reply at 11, and plaintiff Basrai is at risk of losing his visa and having to move
his entire family to another country, Basrai Decl. ¶ 20.
The D.C. Circuit has expressly noted that, “[a]s a general matter, the effect of an OFAC
designation on the designee’s private interests is ‘dire.’” Fares, 901 F.3d at 323.
Unsurprisingly, that is the case here. Plaintiffs have demonstrated an existential risk to Strait
Shipbrokers sufficient to establish irreparable injury, and defendants’ arguments to the contrary
are uncompelling.
D. The Balance of Equities and Public Interest
Plaintiff has not shown that the balance of hardships and the public interest weigh in
favor of injunctive relief. These factors require courts to “balance the competing claims of injury
and . . . consider the effect on each party with the granting or withholding of the requested
24
relief,” Winter, 555 U.S. at 24 (quoting Amoco Production Co. v. Vill. of Gambell, 480 U.S. 531,
542 (1987)), in addition to paying “particular regard for the public consequences in employing
the extraordinary remedy of injunction,” id. (quoting Weinberger v. Romero-Barcelo, 456 U.S.
305, 312 (1982)). Where the federal government is the opposing party, the balance of equities
and public interest factors merge. See Nken v. Holder, 556 U.S. 418, 435 (2009).
Considering these key factors, factual challenges to SDN designations based on classified
information are extraordinarily ill-suited to preliminary injunctive relief. Plaintiffs devote almost
no space in their briefing to this key issue, asserting that the threat to plaintiffs is “catastrophic”
and noting that “[t]here is generally no public interest in the perpetuation of unlawful agency
action.” Pls.’ Mem. at 16 (quoting League of Women Voters, 838 F.3d at 12)). Plaintiffs baldly
claim that the granting of a preliminary injunction “would have no adverse impact on
Defendants,” id., and that defendants “face no harm at all,” Pls.’ Reply at 12. As support,
plaintiffs suggest that allowing them to be delisted while these proceedings go on will be
particularly low risk because of their willingness to “institute an OFAC compliance program”
and conduct “due diligence on counter-parties.” Id.
This description of the equities and the public interest is myopic. As the government
points out, blocking orders and the imposition of economic sanctions are important national and
foreign policy tools. See Defs.’ Opp’n at 33–34. Actions taken pursuant to IEEPA and the
Executive Order providing sanctions to parties transacting in Iran petroleum products are
particularly important to national security and thus are subject to significant deference. The
“sensitive and weighty interests of national security and foreign affairs,” Holder v. Humanitarian
L. Project, 561 U.S. 1, 33–34 (2010), weigh in favor of the government given that “[b]locking
orders are an important component of U.S. foreign policy, and the President’s choice of this tool
25
to combat terrorism is entitled to particular deference,” Holy Land Found. for Relief & Dev. v.
Ashcroft (“Holy Land I”), 219 F. Supp. 2d 57, 84 (D.D.C. 2002), aff’d, 333 F.3d 156 (D.C. Cir.
2003).
Plaintiffs are currently in the midst of administrative reconsideration of their designations
and have the opportunity to develop the record and establish in that proceeding any error in the
original designation. See Defs.’ Opp’n at 23 n.12. Plaintiffs’ disappointment at the speed of
their proceedings with the agency is understandable, see Pls.’ Reply at 5–6, given the substantial
harm to them stemming from the SDN designations. Yet the national security concerns,
institutional expertise, and the full contents of what may be a dense, classified administrative
record, militates strongly against using the mechanism of a preliminary injunction proceeding to
check the work of the State Department and the intelligence agencies on an expedited basis. As
the Supreme Court has noted, “neither the Members of [the Supreme Court] nor most federal
judges begin the day with briefings that may describe new and serious threats to our Nation and
its people.” Humanitarian L. Project, 561 U.S. at 34 (quoting Boumediene v. Bush, 553 U.S.
723, 797 (2008)). The equities are better balanced, and the public interest better served, by
allowing the government time to declassify more of the record and allow both litigation and
administrative reconsideration to proceed along the normal course.
Plaintiffs are correct that “[t]here is generally no public interest in the perpetuation of
unlawful agency action,” League of Women Voters, 838 F.3d at 12, but they have not established
a likelihood of success on the merits. Rather than making the required showing that the State
Department’s designations are unlawful, plaintiffs have only illustrated a factual dispute better
resolved on a more fulsome record. In light of the national security interests involved, the
equities and public interest do not favor preliminary injunctive relief.
26
IV. CONCLUSION
Having failed to demonstrate either a likelihood of success on the merits or that the
balance of equities and public interest favor preliminary injunctive relief, plaintiffs cannot meet
“the demanding standard for a mandatory preliminary injunction,” Archdiocese of Wash., 897
F.3d at 319, of showing that issuance of this relief is warranted. Accordingly, for the foregoing
reasons, the plaintiffs’ Motion for Preliminary Injunction and Expedited Discovery, ECF No. 5,
requesting that enforcement or implementation of defendants’ designation of plaintiffs as
Specially Designated Nationals be enjoined, is denied.
An order consistent with this Memorandum Opinion will be entered contemporaneously.
Date: August 12, 2021
__________________________
BERYL A. HOWELL
Chief Judge
27