On Wednesday, the argument before the U.S. Court of Appeals for the District of Columbia Circuit (the D.C. Circuit), originally set for 20 minutes, stretched to more than 42 minutes. finews.com reviewed the recordings of the oral argument. 

The judges pursued a granular reading of what it means to «procure geological materials» under OFAC’s rules and how much geographic nexus to Russia is required.

«Procurement» and «Geological Materials»

Both terms — «procurement» and «geological materials» — feature prominently in the Presidential designation on Russia sanctions and in OFAC’s official FAQ on sanctionable conduct.

The three-judge panel — Circuit Judges Gregory G. Katsas (appointed by President Donald Trump in 2017), J. Michelle Childs (appointed by President Joe Biden in 2022), and Senior Circuit Judge Harry T. Edwards (appointed by President Jimmy Carter in 1980) — steered the discussion to a single hinge point: does buying refined bullion from Russian nationals, outside Russia, amount to «procuring» minerals within the sanctioned sector?

Appellants: Production, Not Retail

For the appellants, counsel Amir Toossi from Akrivis Law Group maintained that the regulation’s focus is the production chain — extraction, processing, refining and at most transport — not downstream resale or investment purchases.

In his reading, «geological materials» refers to unrefined inputs tied to extraction «in the Russian Federation,» not to finished bars changing hands in New York or Dubai.

Government: «Procure» Means Acquire — Including Bars

He warned that equating any purchase from a Russian national with «operating» in the sector would sweep in ordinary market actors far removed from the mine, a result he said the text and prior OFAC guidance do not support.

Arguing for the government, DOJ attorney Sean R. Janda countered that «procure» carries its plain meaning — to acquire — and that commercial acquisitions of refined gold bars can constitute operating in the sector, particularly where transactions involve Russia-based persons or a discernible Russian nexus.

Refined Gold and the Russia Nexus

He emphasized that the sanctions regime must not be reducible to a «refine-and-relabel» workaround.

Pressed on limits, the government distinguished bullion and similar refined metals from retail consumer goods like jewelry or watches, arguing the case concerns the former.

The Classified Black Box

Because no new specifics from the classified record surfaced at argument, the debate centered on hypotheticals: a European trader buying finished bars from Russians abroad; whether routing through intermediaries changes the analysis; and how much evidence is needed to infer a Russian origin.

One judge openly questioned whether it is natural usage to say a luxury retailer «operates» in the mining sector merely by buying polished bars — underscoring the panel’s focus on plain language and practical limits.

Secret Evidence, Public Argument

A striking aspect of the hearing was that the appellants had to argue without access to the classified administrative record that underpins OFAC’s decision.

While the court had asked the government for pinpoint citations, the Justice Department pointed only to a handful of pages from a voluminous file, leaving the appellants to respond in the dark about what classified allegations may exist.

Why It Matters

The bench gave both sides a tough workout — challenging the appellants on issue-preservation and textual concessions, and pressing the government for a coherent limiting principle that doesn’t turn any purchase from a Russian national into a per se violation.

Beyond Diegelmann, the case tests how far OFAC’s discretion reaches. If the government’s reading prevails, dealers in gold, precious stones or jewelry could face sanctions risk for transactions with Russian nationals, even outside Russia — depending on how the court defines «procurement» of «geological materials» and the required nexus to the Russian economy.

What’s Next

The court took the case under advisement.

A ruling is expected in the coming weeks or months — typically, the D.C. Circuit issues decisions within two to six months after oral argument.