President Trump signed into law H.R. 3364, the "Countering America's Adversaries Through Sanctions Act" ("CAATSA"), imposing new sanctions on Iran, North Korea and Russia.

The expanded sanctions against Russia were a response to its (i) interference in Ukraine, (ii) annexation of Crimea and (iii) cyber-related election-meddling activities in the United States. CAATSA encroaches significantly on the President's ability to act unilaterally. CAATSA codifies certain previously imposed Russia-related executive orders and removes President Trump's discretion to remove sanctions imposed by his predecessor. The law also includes provisions requiring the President to report to Congress on any action to terminate or waive most Russia-related sanctions, or to make a licensing decision that "significantly alters" U.S. foreign policy with respect to Russia. The President is prohibited from implementing his proposed actions during a 30-day (and, in some cases, 60-day) Congressional review period, unless he is authorized to act by a joint resolution of approval.

CAATSA directs the Secretary of the Treasury to strengthen and tighten, within 60 days, certain "Directives" issued by the Office of Foreign Assets Control ("OFAC"). These Directives authorize so-called "sectoral" sanctions against the financial services, energy, and defense industries in Russia, and restricts U.S. persons from engaging in specific types of dealings with targeted companies.

CAATSA provides authorization for a number of additional Russia-related sanctions, including "secondary" sanctions that would impose restrictions on foreign (and, in some cases, U.S.) persons that engage in specified activities. For example, the President is directed to impose sanctions on foreign persons who knowingly make a significant investment in "special" oil projects inside Russia. While these and other sanctions are described as "mandatory," the President generally must take the step of determining that a company or individual meets the law's criteria before the sanctions have effect. CAATSA provides for optional sanctions against persons involved in certain Russian energy export pipeline projects. (In response to European concerns about the potential impact on current pipeline infrastructure projects, these sanctions are to be applied "in coordination with allies of the United States.")

A veto-proof majority in both houses of Congress gave President Trump little choice but to sign CAATSA. He made his displeasure with the law clear in a series of signing statements. In an initial White House Statement, President Trump stated that while he favors "tough measures," he claimed that Congress included a number of "unconstitutional provisions" that may undermine the President's constitutional authority to conduct foreign relations. In a subsequent White House Statement, President Trump added that he signed H.R. 3364 for "the sake of national unity," but voiced serious concerns with its content:

"By limiting the Executive's flexibility, this bill makes it harder for the United States to strike good deals for the American people, and will drive China, Russia, and North Korea much closer together. The Framers of our Constitution put foreign affairs in the hands of the President. This bill will prove the wisdom of that choice."

In a final remark on Twitter, President Trump expressed concern and frustration with the state of the U.S.-Russia relationship, adding that the American people should "thank Congress" for the "very dangerous low" in bilateral relations.

Commentary / JamesTreanor

The enactment of CAATSA was a disappointment to President Trump, and surely dashed the hopes of those with a commercial interest in renewed economic cooperation between the United States and Russia. At the same time, the law provides a level of certainty with respect to the future of the Russia-related sanctions program – something that had been lacking since last November's presidential election. Unless President Trump challenges CAATSA's Congressional notice and review provisions with action stronger than a signing statement or a tweet, companies should plan for Russia sanctions to remain in place for the foreseeable future.

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