The federal government Friday asked a federal judge to confirm her preliminary injunction order issued last week does not apply to purchases from, or payments made to, national security launch provider United Launch Alliance (ULA).
In its filing in the U.S. Court of Federal Claims, the government told Judge Susan Braden this interpretation would serve the court’s purpose of preventing money from flowing into the hands of Russian minister Dmitry Rogozin, who is subject to U.S. economic sanctions, without endangering the contractual relationship between the Air Force and ULA. The Air Force contracts ULA to perform national security space launches. Braden late Wednesday issued a preliminary injunction barring the Air Force and ULA from purchasing RD-180s or executing monetary transfers with any company or individual controlled by Rogozin until the Commerce, State and Treasury departments say such purchases wouldn’t violate sanctions.
Space Exploration Technologies Corp. (SpaceX), plaintiff in the lawsuit against the Air Force and ULA that spurred the temporary injunction, responded Sunday in a filing. SpaceX said no further clarification was necessary and that if the court does, indeed, decide to clarify its injunction, it should reject ULA’s proposal and make clear both the Air Force and ULA cannot make any director or indirect purchases to Russia’s NPO Energomash, maker of the RD-180 rocket engine, or any other Rogozin-controlled entity unless and until it gets the required opinions from the Treasury, State and Commerce departments.
ULA in a Monday court filing denied SpaceX’s allegation and asked Braden to issue the proposed order submitted by the federal government. ULA said SpaceX is “opportunistically” seeking to expand the scope of the injunction far beyond its plain language to prohibit all payments by the Air Force to ULA. The company said it is ensuring, and will ensure, that any money it receives from the Air Force does not flow, directly or indirectly, to NPO Energomash or any entity controlled by Rogozin while the injunction remains in place.
Braden said Wednesday in a hearing she wanted a plan from ULA to ensure the company is not violating President Barack Obama’s economic sanctions against Russia, according a court transcript. Braden asked a lawyer for ULA April 30 what the company performed internally to ensure that there were no sanctions being violated. ULA is a joint venture of Lockheed Martin [LMT] and Boeing [BA] and uses the RD-180 in its Atlas V launch vehicles.
Counsel for ULA said he had not “asked that question,” of what ULA’s plan was to ensure economic sanctions weren’t being violated. Braden on April 30 issued a temporary injunction to prevent ULA and the Air Force from buying the RD-180 (Defense Daily, April 30). ULA argued against the injunction, saying it would interfere with critical national security issues like space launches. Braden disagreed.
“I think that the public interest in being sure that the sanctions are being honored by United States companies and honored by the government supersedes whatever inconvenience you may experience in the next few weeks,” Braden said. “You don’t know right now who the recipient of those monies is and whether any of those people are on the sanctions list. I was just told there’s money flowing. They have to stop.”
A lawyer for SpaceX in the Wednesday court hearing alleged money is flowing to Rogozin via Energomash, which is also alleged to be a state-owned company. The RD-180 is distributed in the U.S. by RD AMROSS, a joint venture of Energomash and Pratt & Whitney, a division of United Technologies Corp. [UTX]
“Because all of this is kind of done behind the curtain, we don’t know,” SpaceX lawyer Richard Vacura said. “We can’t identify specifically that money is going to someone on the sanctions list, but that’s a reasonable inference from the facts.”
Braden told Justice Department lawyers representing the Air Force to verify with the Treasury, Commerce and State Departments that their actions were not violating sanctions.
ULA spokeswoman Jessica Rye said Monday the company is complying with its obligations under this injunction as well as the sanctions requirements. Rye said, though, the sanctions “clearly” do not apply to ULA’s transactions with RD AMROSS and NPO Energomash, ULA has currently suspended payments to RD AMROSS as it responds to the injunction.
Rye said in late April ULA changed its schedule for receiving RD-180s from Energomash from annually to “when ready.” Rye said Friday the scope of the preliminary injunction does not extend to purchase orders previously placed, or monies paid to NOP Energomash, before the date of Executive Order 13,661, which was issued March 16.
Pentagon spokeswoman Maureen Schumann said the Defense Department is not aware of any impacts the sanctions the administration has announced have on its current, “very limited,” acquisitions dealing with Russian companies. Schumann pointed to a March 17 administration press briefing where a senior administration official said the administration’s “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 Treasury Department spokeswoman said Monday those sanctioned under the three Ukraine-related executive orders are placed on the agency’s Office of Foreign Assets Control’s (OFAC) specially-designated nationals list. She said the assets of these people within U.S. jurisdiction are blocked and U.S. individuals and entities are prohibited from doing business with them. The Treasury spokeswoman added if a designated individual or entity has 50 percent or greater ownership of an entity, that entity is also blocked in the United States.