When many consider U.S. sanctions, they think about familiar targets: foreign banks, oligarchs, energy companies. But what people may not realize is that for years now, the United States has similarly used sanctions to pursue individuals and entities that operate in the creative space: for example, recently OFAC has sanctioned foreign TV networks and movie studios, while DOJ has indicted art collectors and movie producers.

As a result, particularly given the increased use of such tools in response to, among other things, the 2022 Russian invasion of Ukraine and human rights violations in China, companies like American film studios, TV networks, and social media platforms that may not have paid much attention to sanctions in the past, now had no choice. Can they release a new film in a foreign jurisdiction? How about basing some of their creative workforce in their another one? Increasingly, sanctions compliance has become a bigger thorn in the side of in-house counsel and compliance groups at content creators and facilitators.

Going forward, however, U.S. regulators may find it hard to police creative industries after the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024). In Loper Bright, the Supreme Court discarded so-called “Chevron deference” to federal government agencies’ interpretations of statutory terms.

When it comes to regulating traditional First Amendment material like TV programming, movies, or music, U.S. regulators have relied on a cramped interpretation of the governing statutes. Without the protection of Chevron deference, however, U.S. regulators are likely to have a more difficult time defending that interpretation. And that may mean more breathing room for content creators and facilitators trying to do business in an increasingly global, and fraught, market.

The Informational Materials Exemption

The primary statutory authority for the U.S. sanctions regime is the International Emergency Economic Powers Act (50 U.S.C. §§1701 et seq.) (IEEPA). IEEPA gives the president the power to restrict or prohibit a wide range of transactions involving “property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States.” 50 U.S.C. § 1702. Once sanctions are imposed, OFAC adopts regulations to implement the sanctions and to enforce them.

In 1988, concerned by OFAC’s seizure of magazines and books and the potential harm to the free flow of ideas and information, Rep. Howard Berman sponsored what became known as the Berman Amendment to IEEPA. This provision added an “informational materials” exemption to IEEPA, denying the president (and thus OFAC) the “authority to regulate or prohibit, directly or indirectly, the importation from any country, or the exportation to any country, whether commercial or otherwise, of publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, or other informational materials.” Pub. L. No. 100-418 §2502, 102 Stat. 1107, 1371-72.

The informational materials exemption in the Berman Amendment does not contain any carve-outs. OFAC, nevertheless, interpreted the exemption narrowly, adopting regulations that excluded “informational materials not fully created and in existence at the date of the transaction” or “intangible items, such as telecommunications transmissions.” 54 Fed. Reg. 5229-35 (Feb. 2, 1989).

In response, in 1994, Rep. Berman sponsored another amendment (the “1994 Amendment,” and with the Berman Amendment, the “IEEPA Amendments”) specifically designed to reject OFAC’s interpretation. That amendment expanded the exemption to “information,” not just “informational materials”; clarified that it included intangible information “regardless of format or medium of transmission”; expanded the illustrative list of informational materials; and explicitly noted that scope of the exemption was “not limited to” that list. Pub. L. No. 103-236, § 525, 108 Stat. 382, 474 (1994) (codified as amended at 50 U.S.C. §1702(b)(3)).

Undeterred, OFAC continues to interpret the exemption not to apply to “information or informational materials not fully created and in existence at the date of the transactions, or to the substantive or artistic alteration or enhancement of informational materials, or to the provision of marketing and business consulting services.” See, e.g., 31 C.F.R. §560.210(c)(2).

For example, on Oct. 30, 2020, OFAC issued guidance to “to highlight sanctions risks arising from dealings in high-value artwork associated with persons blocked pursuant to OFAC’s authorities.” See https://ofac.treasury.gov/media/49091/download?inline. OFAC took the position that, although the exemption specifically includes “artworks” as material outside of OFAC’s sanctions reach, it nevertheless does not “allow blocked persons or their facilitators to evade sanctions by exchanging financial assets such as cash, gold, or cryptocurrency for high-value artwork or vice versa” and, consequently, that OFAC may prohibit such transactions “to extent the artwork functions primarily as an investment asset or medium of exchange.”