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Paul Zimmerman
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CAATSA vs. NDAA Unraveled

Earlier this afternoon, the U.S. Department of State and the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”) announced sanctions under the Countering America’s Adversaries Act (“CAATSA”) against Turkey’s Presidency of Defense Industries (“SSB” a/k/a “SSM”) and four Turkish individuals for the acquisition of the S-400 missile defense system from Russia. By design, the individuals have been automatically placed on the Specially Designated Nationals and Blocked Persons (“SDN”) List, while SSB was listed under the newly formed Non-SDN Menu-Based Sanctions List (“NS-MBS List”).

CAATSA is a nascent regime, and the implementation of these specific sanctions will likely trigger debate among the compliance officers asked to assess each company’s exposure. In the coming days, we will explore CAATSA generally, these designations compared to prior similar actions under CAATSA, and the practical implications of today’s designations.

Until then, suffice to say that CAATSA, which President Trump signed into law on August 2, 2017, comprises a complex set of rules that address a wide range of conduct and countries. More specifically, 22 U.S.C. § 9525 prohibits “significant transactions” with the Russian Federation. That being said, today’s sanctions stem from Turkey’s purchase of the S-400 air defense system from Rosoboronexport (ROE), Russia’s main arms export entity that, in addition to being included on the CAATSA List of Specified Persons (LSP), was also designated by OFAC on April 6, 2018, pursuant to Executive Order 13582, for its support to the Government of Syria. 

Under § 9525, President Trump was obligated to impose five of the 12 sanctions listed in 22 U.S.C. § 9529 in response to the air defense acquisition. However, under §9525(c), the President is given the authority to delay the “imposition of these sanctions” by ongoing 180-day periods by certifying to the “appropriate congressional committees” that doing so is in the U.S.’s national security interest. Despite the mandatory language in this section (“The President shall impose…”), no action was taken until today. As I have discussed in an older draft of this article, national news has reported since Thursday that these sanctions were imminent. 

Today’s action is consistent with the U.S.’ National Defense Authorization Act (“NDAA”) of 2021. The NDAA is not the same thing as CAATSA; instead, it is the budgetary law the U.S. Congress passes and the sitting U.S. President ordinarily signs into law each year to authorize U.S. defense spending for the following year. All of the discussion surrounding whether President Trump will sign it aside, the law has passed both legislative chambers with veto proof majority; meaning that the Congress could override a veto by the President. So, it is safe to assume that unless there are last minute political negotiations, the NDAA 2021 will become the law without change from last week. Most strikingly, the NDAA has a specific section that mandates the President to impose five of the 12 sanctions listed under CAATSA against Turkey for its acquisition of the S-400 air defense system, but does not give the President any discretion to waive the imposition of these sanctions.   

Given this absolute language, one could argue that §1241 of the NDAA violates the doctrine of separation of powers because Congress—the Legislative Branch—practically usurps the Executive’s exclusive authority to conduct foreign affairs. Under this doctrine, all three branches of the U.S. Government (Executive Branch, Legislative Branch, and Judicial Branch) respect the other’s authority and jurisdiction. The Executive Branch has long been recognized as the sole branch responsible for the U.S.’ foreign affairs. (Note that the Office of the President is the head of the Executive Branch). Whatever the case may be, this is a discussion for another day. This is especially true given today’s imposition of sanctions under CAATSA. In its wake, it is unclear whether Congress will amend the language in the NDAA or push ahead with its current version. If the current version becomes law, imposition of additional sanctions against Turkey under CAATSA may be redundant raising additional legal concerns.

In short, although the NDDA’s text neither amends nor vacates any of the powers CAATSA gave to the U.S. President, it has created a new and independent basis for the mandatory imposition of the same menu of options against Turkey for its acquisition of the air missile systems.  Of course, the rest is politics.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.