Sanctions law needs reform, but how?

The Brennan Center for Justice released a report last week on a law that is little known to the general public, but that plays an ever greater role in U.S. foreign policy. The International

Emergency Economic Powers Act (IEEPA) of 1977 – implemented and enforced principally by the Treasury Department’s Office of Foreign Assets Control (OFAC) – underlies almost all of the

sanctions that the United States has imposed over the last four decades, including the dozens of programs—encompassing thousands of sanctioned targets—in place today. Because the U.S.

banking system and the U.S. dollar sit at the center of the international financial world, and as the targets of sanctions have grown economically more important (moving from a focus on

peripheral economies like Cuba and North Korea to global players like Russia and China), IEEPA sanctions have a tremendous impact. Sanctions are an important tool in advancing American

interests and both Democratic and Republican administrations have increasingly embraced them. But as a former senior executive branch adviser on sanctions—and now as an attorney in private

practice who works on sanctions—I know that there are shortcomings of IEEPA that can impose costs on innocent parties, limit the effectiveness of sanctions, and even leave the tool open to

potential abuse. These shortcomings stem principally from the fact that when the law was promulgated during the Carter Administration no one could dream that sanctions would become the

juggernaut that they have. After more than 40 years, sanctions policy makers, practitioners, and the regulated community need an updated authorizing law that reflects the importance of the

sanctions tool and its far reaching effects. Determining how IEEPA can be improved while preserving its value as a flexible instrument of foreign policy is daunting. In this regard, the

Brennan Center’s report— “Checking the President’s Sanctions Powers: A Proposal to Reform the International Emergency Economic Powers Act”—makes an important contribution. The report begins

with a helpful overview of IEEPA, including the historical background to the law, and a description of the complicated mechanics by which sanctions operate. It then surveys some of the

challenging aspects of IEEPA, including the high bar that’s required for Congress to terminate a sanctions program with which it has concerns; the frequent unintended humanitarian impacts of

sanctions; and the constitutional difficulties that arise on the occasions when sanctions have been used to pursue targets in the United States. Following this, the report moves from the

descriptive to the prescriptive, offering a range of reforms to IEEPA that could address some of its shortcomings. In my own writing, I have noted that IEEPA, originally intended as a

constraint on presidential power has “morphed into a tool that presidents have used in increasingly unfettered ways.” The Trump administration marked an inflection point in this regard with

his team using the law in unprecedented ways (such as to sanction prosecutors at the International Criminal Court) and threatening even more aggressive implementations (such as mooting a

prohibition on all U.S. companies from doing business with China). At the same time, the COVID-19 pandemic served to highlight how sanctions can interfere with the delivery of medical

supplies and other necessities. Problems with IEEPA existed before the Trump years as well, and they continue today. A review of sanctions policy has been overdue, which is why I was

encouraged when I learned that the Biden administration, under Treasury Secretary Janet Yellen and Deputy Treasury Secretary Wally Adeyemo, has initiated such a review. While certainly

necessary, it is not clear that executive action alone is sufficient to address IEEPA’s limitations. Any improvements implemented by the Biden administration could just as easily be reversed

by a future administration. And recent litigation has seen the judiciary raise concerns about the nature of IEEPA itself and how the law is being implemented. In order to avoid continued

judicial challenges and future administration backsliding, enduring reform will require legislation. It is important that such legislation be considered while there is an administration in

office that is willing to recognize the need for reform and by all measures appears to be positively disposed to being a constructive partner to Congress in that process. Clearly, some of

the Brennan Center’s suggested reforms will more easily gain traction in Congress than others. For instance, as the report notes, some bills have already been introduced that would improve

access to humanitarian aid under sanctions, and the report’s suggestions in that vein will likely find many supporters. In addition, in my experience speaking with governmental officials

over the years, there is broad support to at least constrain—and perhaps eliminate (as the report recommends)—the provision of IEEPA that allows sanctions to be imposed for an indefinite

period of time while the government completes its investigation and makes a final decision about the appropriateness of sanctions. In line with recent jurisprudence, there may also be an

appetite to more formally clarify and update the Berman Amendment (which restricts the executive’s ability to impose sanctions on the flow of information) – that amendment was last updated

in 1994, when the means by which information flowed was drastically different than it is today. Further, many in Congress who have heard from constituents and  companies eager to comply with

sanctions may also be sympathetic to requiring OFAC to invest more in outreach and licensing so as to avoid the specter of applicants unable to proceed with a transaction, a donation, or

remittance as they wait for months (or more) to hear back from the agency. This reality has contributed to significant global sanctions over-compliance, which has served to dull the surgical

nature of some sanctions targeting. Other proposed reforms will undoubtedly be a harder lift. The report recommends that Congress be required to vote annually to approve existing IEEPA

sanctions regimes as a package, with the ability to strip individual sanctions regimes by a majority vote in both houses. This is a far less onerous requirement than the one contained in the

current leading proposal for reforming the National Emergencies Act, which would require Congress to vote on each emergency declaration individually. Yet Congress has shown little appetite

for a more active role in overseeing IEEPA and it is not clear whether such congressional oversight would hamper the executive’s ability to effectively threaten sanctions (which at times can

be just as effective as imposing them). Similarly, there are lawmakers who will reflexively oppose the report’s recommendation for judicial review of sanctions against U.S. targets. Of

course, such targets already can bring suit under the Administrative Procedure Act, which by design is very challenging for targets to overcome. What the Brennan Center’s recommendation

would enable is a more robust evidentiary hearing and a standard of review that more accurately reflects the stakes for U.S. persons who find themselves the subject of sanctions. In any

event, even those who might be skeptical of some of the reforms proposed in the report will learn a great deal from reading it and will benefit from considering the solutions offered. While

I do not necessarily endorse every recommendation in the Brennan Center’s report, I can attest to the careful approach behind them. As reflected in the report’s acknowledgments, the Brennan

Center solicited input from me and several other former sanctions officials in developing its proposals, seeking to understand more fully the interests of the executive branch and how its

proposals might affect those interests. At bottom, the Report asks Congress to consider legislation to promote a more careful and considered application of sanctions, within a legal

framework that respects Congress’ important role, includes safeguards against abuse, and limits extraneous harms to individuals and companies alike. Such an effort will not only be more

protective of rights at home and abroad, but will ultimately make for more effective sanctions that better advance America’s foreign policy and national security. These are goals that should

have bipartisan support, and any stakeholder in this process will be better equipped to tackle these necessary reforms after reading the Brennan Center’s report. FEATURED IMAGE: An exterior

view of the building of US Department of the Treasury is seen on March 27, 2020 in Washington, DC. - US Treasury Secretary Steven Mnuchin on Friday pledged to quickly send cash to Americans

as part of the a massive $2.2 trillion relief package aimed at rescuing the coronavirus-battered economy. (Photo by Olivier DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images)