IEEPA and Its Limits

On December 18, 2024, the Congressional Study Group on Foreign Relations and National Security convened in-person on Capitol Hill to discuss the growing role of the International Emergency Economic Powers Act (IEEPA) of 1977 in national security policy, as well as its limits. For almost fifty years, IEEPA has given the president wide-ranging authority over cross-border economic transactions. Over time, IEEPA has been used to implement policies ranging from export controls to global economic sanctions, making it a foundational element of U.S. national security policy. And as strategic competition with China and Russia grows, this role is only likely to increase. But IEEPA is not without its limits. With the executive branch using IEEPA in more innovative ways—from the outgoing Biden administration’s new outbound investment restrictions to the incoming Trump administration’s promise of new tariffs—these limits seem primed to become increasingly relevant.

The meeting of the study group was moderated by the project director Scott R. Anderson, a fellow at the Brookings Institution, and was joined by two leading experts on the topic:

• Peter Harrell, a non-resident senior fellow at the Carnegie Endowment for International Peace and former senior director for international economics and competitiveness on the National Security Council; and
• Brad Brooks-Rubin, a partner at Arktouros PLLC and former senior advisor in the Office of Sanctions Coordination at the U.S. Department of State.

Harrell began with a brief history of the statute, contextualizing its passage in 1977 as part of a package of reforms that came out of the Watergate scandal that reflected a desire on the part of Congress to reduce and rationalize executive emergency powers. It was initially envisioned as a statute that would be used sparingly, but Harrell noted that this has not been the case. First used by President Carter during the Iran hostage crisis, its use has increased exponentially since then.

In the 1990s, Congress enacted the Berman amendment to create an exception to IEEPA’s regulatory authority so that it could not be used to regulate the flow of information between the United States and sanctioned countries, such as Cuba. Harrell pointed out that it has also been amended over the years to raise statutory penalties. And after the September 11th terrorist attacks, Congress changed the circumstances in which assets could be seized.

Brooks-Rubin then turned to the mechanics of the statute. He explained that IEEPA was enacted in conjunction with the National Emergencies Act (NEA), and can only be used in relation to a national emergency declared and maintained in compliance with the NEA. Under the NEA, an emergency is “an unusual and extraordinary threat”—language that is left undefined. There have been close to 80 national emergencies, Brooks-Rubin noted, the majority of which have used IEEPA. The original statute intended broad congressional oversight of emergencies, and allowed Congress to override or veto; now it only has that power through a joint resolution.

Harrell then explained that, once a president has decided to use IEEPA, he or she has broad power to: regulate international payments; block property and regulate transactions in which a foreign national has interest; require companies to keep records of certain types of transactions to provide to the government; and, in some limited circumstances, allow the U.S. government to take title to an asset.

Brooks-Rubin noted that IEEPA is flexible in terms of who it claims to have jurisdiction over, which includes U.S. citizens, anyone within the United States, U.S. companies, and U.S. branches of companies. He explained that one challenge has been the question of foreign subsidiaries. Currently, sanctions are not directly enforceable against the foreign subsidiaries of U.S. companies, although there have been suggestions that any transaction in U.S. dollars travels through U.S. jurisdiction through the U.S. banking system and therefore becomes subject to U.S. jurisdiction, resulting in bank penalties. Brooks-Rubin suggested that this posed a problem of overreach and could discourage the use of the U.S. dollar.

Harrell then outlined some of the novel applications of IEEPA outside of the sanctions context. IEEPA was until recently used as the legal basis for all U.S. export controls. Over the past few years, it’s also been used to limit investments in China under both Trump and Biden. And it has been used to mandate that cloud service providers retain certain records, and to restrict certain overseas data transfers.

The discussion then turned to the limits of IEEPA. Beginning with the First Amendment, Brooks-Rubin returned to the Berman amendment, which places limits on the ability to use IEEPA to impose limits on the flow of information and informational materials and reflects First Amendment concerns.

Harrell then turned to potential Fourth Amendment constitutional limitations. He described how IEEPA has mostly been used against foreign entities and parties, not those in the United States. But in the immediate aftermath of the September 11th terrorist attacks, the Treasury Department actively designated some U.S.-based institutions—most notably several Islamic charities—claiming that foreigners had an interest in them, which was enough to bring them within IEEPA’s jurisdictional scope. These entities brought suit and the courts found that, with respect to Americans and U.S. residents, reasonable search and seizure requirements applied, requiring some advance judicial process and post-judicial review. As a result, there has not been extensive use of sanctions against Americans in recent years.

Anderson then raised the question of potential legal challenges under the Fifth Amendment’s Takings Clause. Harrell pointed out that there has been very little successful litigation in this realm. Courts have generally found that there is no constitutionally protected property interest or that the government’s interest overrides the plaintiff’s interest. But when thinking about sanctions that would have a significant impact on American properties, the Clause may be more applicable.

The panel then discussed the problems presented by the emergency declaration requirement. Brooks-Rubin pointed out that there is not extensive detail in the statute about how to declare an emergency and how to end one. There have been cases in which it’s clear that an emergency has ended, but in other cases Congress has left it to the executive branch to determine. He raised the Zimbabwe program as an example. To the extent that emergencies have been declared—for example with terrorism—these are not issues that are likely to neatly end without significant diplomatic fallout. Brooks-Rubin suggested that this requires greater discretion in emergency declarations in the first place.

Anderson pointed to another statutory barrier in the form of seizing assets, or vesting, which was explicitly omitted from IEEPA. But he noted there has been a debate recently that it applies even if not included, as demonstrated by the case of seizing Russian assets and disbursing those funds to Ukraine. Harrell maintained that the text of the statute is only clear about vesting being available in certain cases of armed hostility, meaning that using IEEPA to vest in other circumstances would almost certainly invite litigation.

Finally, Anderson raised recent litigation coming out of the Fifth Circuit regarding the application of sanctions to Tornado Cash, a cryptocurrency blender. The court pushed back to exclude crypto from sanctions, citing the Loper Bright Enterprises v. Raimondo decision regarding judicial deference to agencies. He asked how this might impact IEEPA. Brooks-Rubin explained that in a post-Loper Bright world, courts are going to have to give some thought to what agencies are doing in what areas. The Tornado Cash case may be an outlier; in most cases courts will likely be unwilling to get into the details of a particular national security issue and are likely to continue to defer to the executive branch.

The study group then concluded with an open discussion session, during which attendees were free to comment on and pose questions regarding the various issues raised.

Visit the Congressional Study Group on Foreign Relations and National Security landing page to access notes and information on other sessions.