NFAPResearch

Let's unpack the legal debate over Trump's diesel deal with Russia. I see the imports as illegal, but there are arguments on the other side: 1. The first legal issue is the Ending Importation of Russian Oil Act (EIROA), which Congress passed in April 2022. EIROA states that Russian energy "shall be banned from importation into the [US], in a manner consistent with any implementation actions issued under [EO] 14066..." EIROA then established a process for POTUS to terminate the prohibition following a Russia-Ukraine peace deal, with termination subject to congressional review. 2. The backstory is that in March 2022, Biden signed EO 14066, which invoked IEEPA, the 1977 emergency powers statute, to ban Russian energy imports. However, Treasury issued a general license (GL 16) authorizing a "wind down" of imports for 45 more days. Congress passed EIROA during that 45-day window and likely wanted to ensure that the statutory ban did not cut short the wind-down. Congress may also have wanted to retain any specific licenses that had been issued to enable an orderly wind-down of U.S. imports. 3. Treasury has implemented the diesel deal with GL 135, which purports to authorize the imports under EO 14066 and other Russia sanctions. The Administration likely sees GL 135 as an “implementation action” under EO 14066 thus that EIROA's prohibition does not apply--the imports are “consistent with any implementation actions issued under [EO] 14066.” 4. The problem with this reading is that it would gut the entire termination provision in the law. Courts are supposed to interpret statutes as a whole so that all parts of a statute make sense, and an interpretation that let Trump ignore the termination provisions simply by issuing licenses would render the termination meaningless. The better reading of “consistent with any implementation actions” is that it grandfathered the implementation actions *in place in April 2022,* not that it created an open-ended option for future licenses. That said, I can see what the Administration would argue in court. 5. GL 135 may itself also be invalid. CAATSA, a 2018 statute, requires that licenses that "significantly alter [US] foreign policy" towards Russia must be subject to Congressional review before being implemented. Diesel imports certainly seem to meet this threshold. IEEPA violations have a 10 year statute of limitations. 6. If EIROA applies to the diesel deal, importers (and their facilitators) could face criminal liability under 18 U.S.C. 545, an anti-smuggling statute that makes it illegal to “knowingly import[]” “any merchandise contrary to law,” punishable by fines and up to 20 years in prison. Section 545’s statute of limitations extends beyond Trump’s term. There are also potential civil penalties under 19 U.S.C. 1595a. 7. I see the illegality risk as very real, beyond the obvious reputational and congressional investigation risks. This is why I am skeptical that major companies will touch Russian diesel.