1. U.S. Sanctions Amy E. Roth U.S. Mission to the EU

2. Why Sanctions? o Coerce o Constrain o Signal o Better than the alternatives military intervention inaction o Stigmatization (naming and shaming) o Prevent legislative action

3. U.S. Authorities International Emergency Economic Powers Act (IEEPA) Executive Order (E.O.) Designation Packages

4. IEEPA (50 U.S.C. § 1701) Primary authority for economic sanctions Requires declaration of national emergency President granted broad economic powers to : o “deal with any unusual or extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.” Vests President with broad economic powers, including blocking Declared by President in Executive Orders Very little guidance on what may or may not be a national emergency. Courts unlikely to review that issue. Emergencies must be renewed annually.

5. IEEPA Blocking Powers In order to deal with a national emergency the President may “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any 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”

6. Executive Orders Issued pursuant to IEEPA Done unilaterally by the Executive Branch (sometimes to implement legislation) Declare National Emergency and define contours Establish criteria for designations

7. Ukraine-related E.O.s 13660 - Blocking Property of Certain Persons Contributing to the Situation in Ukraine (March 6, 2014) 13661 - Blocking Property of Additional Persons Contributing to the Situation in Ukraine (March 17, 2014) 13662 - Blocking Property of Additional Persons Contributing to the Situation in Ukraine (March 20, 2014) 13685 - Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine (December 19, 2014)

8. E.O. 13660 National Emergency: President found “actions and policies of persons... who have asserted governmental authority in the Crimean region without the authorization of the Government of Ukraine... constitute an unusual and extraordinary threat to the national security and foreign policy of the United States,” and declared a “national emergency to deal with that threat.”

9. E.O. 13660 (con’t) Designation Criteria: o Undermine democratic processes or institutions in Ukraine; or o Threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; or o Misappropriated state assets of Ukraine or significant economic entity in Ukraine; or o Asserted gov’t authority without authorization from Gov’t of Ukraine

10. E.O. 13661 Expanded scope of National Emergency to include Russian intervention Expanded criteria to include: o Any official of the Government of Russia o Any person operating in arms sector in Russia

11. E.O. 13661 (con’t) Expanded criteria (continued) o Any person owned, controlled, or acting on behalf of Senior official of Russian Government, or Designated person o Any person that materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of: Senior official of Russian Government, or Designated person

12. Example 13662 Expanded national emergency for a third time Gives Secretary of Treasury authority to choose a sector of Russian economy and to then designate individuals or entities in that sector. Sector chosen “in consultation with” the Secretary of State to consider foreign policy implications.

13. Designations Designations are administrative, not criminal o Lower standard of proof o Fewer procedural hurdles o More types of information can be considered o Great deference given to government during challenges

14. Standard of Proof Derived from the Administrative Procedure Act An agency must provide a satisfactory explanation for action, including “rational connection” between facts found and the determination that individual or entity meets the criteria for designation in the E.O. Often say that there must be a “reason to believe” that the criteria are met. Often easily met for status based designations, e.g. “official of the Government of the Russian Federation.” Slightly more difficult for conduct-based designations, e.g. “significant risk of committing acts of terrorism”

15. U.S. Designation Record U.S. record may include: o Classified information o Open source documents o Self-incriminating statements o Law enforcement documents o Hearsay, which is generally not allowed as evidence in U.S. courts o Business records

16. Sanctions Enforcement U.S. enforcement is the responsibility of: Department of Treasury (OFAC) Department of State Department of Commerce Department of Justice

17. Office of Foreign Assets Control (OFAC) Ukraine General License Number 1A - Authorizing Certain Transactions Related to Derivatives Prohibited by Directives 1, 2 and 3 Under Executive Order 13662 (issued September 12, 2014) Ukraine General License Number 2 - Authorizing Certain Activities Prohibited by Directive 4 under Executive Order 13662 Necessary to Wind Down Operations (issued September 12, 2014) Ukraine General License Number 3 - Authorizing Transactions Involving Certain Entities Otherwise Prohibited by Directive 1 under Executive Order 13662 (October 6, 2014) Ukraine General License Number 4 - Authorizing the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Supplies, and Replacement Parts (December 19, 2014) Ukraine General License Number 5 - Authorizing Certain Activities Prohibited by Executive Order 13685 of December 19, 2014 Necessary to Wind Down Operations Involving the Crimea Region of Ukraine (December 30, 2014) Ukraine General License Number 6 - Noncommercial, Personal Remittances Authorized Ukraine General License Number 7 - Operation of Accounts Authorized Ukraine General License Number 8 ​ - Transactions Related to Telecommunications and Mail Authorized ​ ​

18. U.S. Delistings: Administrative Procedures OFAC regulations set forth basic procedure for designated individuals to petition for delisting Delisting could be sought for several possible reasons, e.g. individual no longer meets criteria and/or shows change in circumstances Judicial review at any time; no need to exhaust administrative remedies.

19. U.S. Legal Challenges Standard of review: was decision arbitrary, capricious, or an abuse of agency discretion? Court can review classified record ex parte and in camera Many challenges but no domestic designation overturned as arbitrary, capricious, or an abuse of discretion. Key Point: Designations are administrative, not criminal o Lower standard of proof o Fewer procedural hurdles o More types of information can be considered - e.g. hearsay o Great deference given to government during challenges

20. Kadi v. Geithner (U.S. Case) Court recognized that great deference is owed to the agency in administrative decisions. o Agency decisions will be set aside only if “arbitrary, capricious, [or] an abuse of discretion.” o “court must not substitute its judgment for that of the agency.” o Must be a “rational connection between the facts found and the choice made” but there is a “presumption of regularity.” Court rejected challenge to hearsay evidence o Administrative decisions can use “any oral or documentary evidence so long as the evidence is not irrelevant, immaterial, or unduly repetitious.” Court also rejected evidence from outside the administrative record because the issue was whether the evidence within the record supported the agency’s decision.

21. Kadi v. Geithner (U.S. Case) Due Process - use of classified material o Court allowed classified material to be submitted ex parte to court and independently reviewed that material. o Court stated that “due process requires the disclosure of only the unclassified portions of the administrative record” to Kadi. o “Opportunity to be heard at a meaningful time and in a meaningful manner does not include access to the classified record.”

22. Kadi Designation (ECJ Case) Challenged designation on human rights and due process grounds The ECJ ruled that even when the UNSCR requires member states to impose sanctions, EU implementation is subject to judicial review in EU courts. The ECJ also held improved procedures, such as the UN Ombudsperson do not obviate the need for EU court review. In addition, the ECJ also held that EU courts hearing challenges must use a strict standard of review and may conduct this review only on the basis of information disclosed to them (thus effectively eliminating consideration of classified information).

23. Tänan väga. For more information: http://www.treasury.gov/resource- center/sanctions/Programs/Pages/ukraine.aspx http://www.treasury.gov/resource- center/sanctions/Programs/Pages/ukraine.aspx http://www.state.gov/e/eb/tfs/spi/ukrainerussia/ RothAE@state.gov