D.C. Circuit Upholds Civil Forfeiture of Iranian Oil, Rejecting Foreign Commerce and Intent Challenges

The United States seized the petroleum products in 2021, alleging they belonged to the National Iranian Oil Company (NIOC). The government argued that NIOC materially supported the Islamic Revolutionary Guard Corps (IRGC), a designated Foreign Terrorist Organization, by acting as its agent in international oil transactions.

Aspan Petrokimya Co., a Turkish commodities trading company, claimed ownership of the oil and sought to recover proceeds from the government’s interlocutory sales, which totaled over $50 million. Aspan moved to dismiss, arguing the government failed to adequately plead elements of its forfeiture claim.

The district court initially granted Aspan’s motion without prejudice, finding the government did not adequately plead that NIOC’s sales affected foreign commerce. The United States filed an Amended Complaint with additional factual allegations, after which the district court denied Aspan’s renewed motion to dismiss.

Aspan appealed, arguing the Amended Complaint failed to allege that NIOC owned the property at the time of seizure, that the offense affected foreign commerce, and that the offense was calculated to influence government conduct. The D.C. Circuit rejected all three arguments.

Regarding ownership, the court held that title vests in the United States upon commission of the offense, not at the time of seizure. The Amended Complaint adequately alleged NIOC owned the oil when it engaged in material support for the IRGC, supported by Certificate of Origin documents identifying NIOC as the consignor.

On the foreign commerce issue, the court applied its precedent in United States v. Park, holding that the Foreign Commerce Clause is at least as expansive as the Interstate Commerce Clause. The court found that NIOC’s sustained trafficking of millions of dollars in oil to support the IRGC substantially affected U.S. energy markets, satisfying the jurisdictional element.

Finally, the court addressed whether NIOC’s conduct was "calculated to influence" government conduct. Distinguishing prior cases involving tenuous connections to terrorist organizations, the court noted that NIOC and the IRGC are closely intertwined arms of the Iranian government. The court held it was reasonable to infer that NIOC intended its support to further the IRGC’s terrorist activities aimed at influencing the United States.

The D.C. Circuit affirmed the district court’s judgment, allowing the forfeiture action to proceed. The court declined to reach an alternative theory that the property afforded its owner a source of influence over a terrorist entity, having already found adequate allegations that NIOC was engaged in perpetrating a federal crime of terrorism.