The Treasury Department said Tuesday business between the Air Force, launch provider United Launch Alliance (ULA) and Russian rocket engine manufacturer NPO Energomash wouldn’t violate economic sanctions because Treasury hasn’t “triggered” blocking of NPO Energomash.
In a filing in the U.S. Court of Federal Claims, the federal government asked Judge Sudan Braden to dissolve her temporary injunction based on opinions provided by the Commerce, State and Treasury departments. Braden April 30 issued a temporary injunction preventing the United States and its launch provider, ULA, from doing business with NPO Energomash until the Treasury, Commerce and State departments weighed in on whether such business would directly or indirectly violate economic sanctions against Russia issued by President Barack Obama (Defense Daily, May 1).
The Air Force uses NPO Energomash’s RD-180 rocket engine in its national security space launches. NPO Energomash is allegedly controlled by Russian Deputy Prime Minister Dmitry Rogozin, who is on an economic sanctions list issued by Obama.
Treasury Department Chief Counsel for Foreign Assets Control Bradley Smith said in a letter, as the department interprets it, Executive Order 13661 requires the department make an affirmative determination to trigger blocking under the “controlled by” provisions of the order. But Smith said, as of Tuesday, no such determination had been made with respect to NPO Energomash, nor has Treasury’s Office of Foreign Assets Control (OFAC) made any determination that the property and interests in property of NPO Energomash are otherwise blocked pursuant to Executive Order 13661.
Therefore, Smith said, to the best of the department’s knowledge, purchases from, and payments to, NPO Energomash currently do not directly, or indirectly, contravene Executive Order 13661, which blocks the United States or companies within the United States from doing business with companies headed by Russian officials on a sanctions list.
Commerce Department Director of Office of National Security and Technology Transfer Controls Eileen Albanese in a letter deferred to the Treasury and State departments regarding whether the listing of Rogozin on Treasury’s “Specially Designated Nationals and Blocked Persons List” controls NPO Energomash and, if so, whether that control contravenes Executive Order 13661. State Department Principal Deputy Legal Adviser Mary McLeon said in a letter that the executive order does not provide for the automatic blocking of an entity based purely on a designated individual’s control of the entity. McLeon said, instead, such entities may be blocked if affirmatively designated by Treasury, in consultation with the State Department.
This affirmative designation has not occurred, McLeon said.
In the case of Space Exploration Technologies Corp. (SpaceX) v. United States, SpaceX sued the Air Force to compete its sole source block buy of 36 launch cores to ULA. In doing so, SpaceX alleged that Rogozin controls NPO Energomash, which concerned Braden enough to issue the temporary injunction. Braden Tuesday denied the federal government’s request to clarify her injunction.
ULA spokeswoman Jessica Rye said Wednesday in a statement the letters clearly state NPO Energomash is not subject to any of the current sanctions and that ULA’s continued purchase of the RD-180 does not directly, or indirectly, contravene sanctions. The Treasury Department said ti would not be able respond to a request for comment by press time.
SpaceX said in a late Wednesday filing that the letters from the three federal departments are “nonresponsive” and simply say the agencies have not made any determination, one way or the other, regarding whether payments to NPO Energomash violate sanctions. SpaceX said Treasury’s letter states only that “as of today,” it has not yet made a determination. SpaceX said it wants the injunction to remain until the court receives the letter it requested.
ULA is a joint venture of Lockheed Martin [LMT] and Boeing [BA]. The RD-180 is distributed in the U.S. by RD AMROSS, a joint venture of NPO Energomash and Pratt & Whitney of United Technologies Corp. [UTX]