Earlier this fall, Congress enacted a new law with potentially dramatic implications for U.S. foreign policy toward the Israeli-Palestinian conflict. The Anti-Terrorism Clarification Act (ATCA) exposes foreign organizations that accept certain forms of U.S. foreign assistance to the possibility of terrorism-related civil litigation in U.S. federal courts. Fearful of potential liability, the Palestinian Authority and Palestine Liberation Organization (PLO) are now preparing to reject the limited amounts of U.S. foreign assistance they still receive—including support for an Israeli-Palestinian security cooperation program that Israeli officials, among others, believe has substantially improved the security situation in the West Bank.
Aside from a few astute observers, no one appears to have anticipated this outcome. Or if anyone in the legislative process did, they did not mention it. Both chambers of Congress approved ATCA through unanimous voice votes. Only the House of Representatives engaged in any debate on the matter, none of which raised potential policy ramifications. The Trump administration, meanwhile, made no objections while the bill was being debated, and the president himself signed it without reservations.
Yet support for the ATCA as-written has now soured. The Associated Press reported on Nov. 30 that the White House plans to deploy Lt. Gen. Eric P. Wendt, the U.S. Security Coordinator (USSC) in charge of the endangered Israeli-Palestinian security cooperation program, to Capitol Hill in order to push for a legislative fix that will allow that program to continue. Members of Congress, meanwhile, have expressed growing concerns with some of the dramatic measures that U.S. and Palestinian officials are preparing to pursue in response to the ATCA, including shutting down the USSC and U.S. Agency for International Development (USAID) offices in the West Bank. All corners, it seems, are hoping for some legislative solution. But it is unclear whether Congress will be able to agree to one before Feb. 1, 2019, when the ATCA takes full effect.
Adding a waiver position to the ATCA is likely to be the most effective legislative solution, as it will provide the executive branch with the flexibility necessary to continue to use foreign assistance to advance U.S. foreign policy objectives while allowing Congress and others to hold it accountable. Absent such a legislative fix, the only means of escaping the ATCA’s consequences will be to challenge its constitutionality in federal court. But the resulting litigation is likely to be costly and time-consuming with no guarantee of a final resolution, imposing substantial costs on U.S. foreign policy interests even if the ATCA is ultimately struck down.
How Does the ATCA Effect U.S. Foreign Assistance?
The product of an active advocacy campaign by plaintiffs’ groups, the ATCA is designed to remove certain legal barriers that U.S. victims of terrorism have encountered in pursuing and enforcing claims under the civil liability provision of the Anti-Terrorism Act (ATA). That provision allows U.S. victims of terrorism to sue any entity alleged to have knowingly provided material support to the perpetrators of the terrorist attack in which the victims were injured for treble damages. While the ATCA makes a number of statutory changes towards this end, only part of Section 4 has a bearing on U.S. foreign assistance policies. (Harry Graver and I discussed the legislation’s other provisions at length in a previous Lawfare post.)
Section 4 of the ATCA specifically responds to rulings in two recent ATA cases, Waldman v. Palestine Liberation Organization and Livnat v. Palestinian Authority. In both cases, either the plaintiffs or their family members were killed or injured in terrorist attacks in Israel or the West Bank, which the plaintiffs allege were facilitated by the Palestinian Authority and PLO. The Waldman plaintiffs secured a favorable judgment providing for $655.5 million in damages in district court, but the judgment was vacated on appeal and their action dismissed. In doing so, the U.S. Court of Appeals for the Second Circuit held that that the Palestinian Authority and PLO lacked the close ties to the United States necessary for the court to exercise general personal jurisdiction over them and that the attacks did not specifically target Americans or otherwise purposefully affect the United States as would be necessary for the court to to exercise specific personal jurisdiction in relation to those events. Both the district court and the U.S. Court of Appeals for the D.C. Circuit reached a similar conclusion in Livnat. The Supreme Court denied certiorari in both cases, leaving these holdings in place as a substantial barrier to future claims.
The ATCA attempts to do away with these barriers by linking jurisdiction to U.S. foreign assistance. Specifically, Section 4 of the ATCA establishes that a defendant “shall be deemed to have consented to personal jurisdiction” in any civil action under the ATA if it “accepts . . . any form of assistance, however provided,” under any one of three foreign assistance authorities: economic support fund (ESF) authorities; international narcotics control and law enforcement (INCLE) authorities; or nonproliferation, antiterrorism, demining, and related programs (NADR) authorities. This “consent” lasts for five years even after the defendant ceases to accept the foreign assistance in question, and the link takes effect 120 days after the ATCA was enacted—namely, Feb. 1, 2019.
The authors of the ATCA did not choose these forms of assistance arbitrarily, as each has been used to provide foreign assistance to the Palestinians in the past. Over the past year, however, the newly-enacted Taylor Force Act and the Trump administration’s own policies have dramatically reduced the amount of foreign assistance provided to the Palestinians, effectively removing all ESF funding while leaving in place only $60 million in INCLE funds—primarily used to support the Israeli-Palestinian security cooperation program—and $1 million in NADR funds.
Ironically, these policies may have undermined the ATCA’s intended effect. Instead of feeling forced to accept personal jurisdiction as a condition of receiving foreign assistance, the Palestinian leadership has determined that the limited U.S. foreign assistance currently received is far outweighed by the potential liability to which they would be subjected if they were to accept it. And their math is hard to argue with. The outstanding judgment in Waldman alone is almost ten times larger than the U.S. foreign assistance that Palestinians received in fiscal year 2017, and more than ten percent of the Palestinian Authority’s current annual budget. More lawsuits, all subject to the ATA’s automatic treble damages provision, will almost certainly be forthcoming. And while the Palestinian Authority and PLO still have legal defenses available to them, including in Waldman, they appear to have determined that the costs of litigating these claims combined with the massive scale of potential liability they face if they lose makes the situation untenable. In other words, from the Palestinian perspective, the ATCA makes U.S. foreign assistance too risky to accept.
This will almost certainly bring to a halt all direct ESF, INCLE and NADR assistance to the Palestinian Authority and PLO, which would undoubtedly trigger section 4 of the ATCA. This primarily means an end to the INCLE-funded security assistance program overseen by the USSC, which remains the only form of substantial direct assistance still in place following the past year’s cuts. Described as a “rare bright spot for U.S. policy in an otherwise bleak Israeli-Palestinian political landscape,” the security assistance program has spent the last decade helping modernize and professionalize Palestinian Authority security forces while facilitating coordination with Israeli security forces. Many experts, including Israeli officials, maintain that these efforts have helped to substantially improve the security situation in and around the West Bank in recent years.
Yet this may not be the full extent of the ATCA’s consequences. Both Palestinian and U.S. officials have raised the possibility that the ATCA will require them to shutter all activities funded by ESF, INCLE and NADR funds in the West Bank, including certain operations undertaken by the USAID and USSC offices there and programs that provide foreign assistance to Palestinian civil society organizations unrelated to the Palestinian Authority and PLO. While officials have not publicly provided a legal explanation for this position, they are most likely responding to the risk that U.S. federal courts might adopt an extremely broad reading of Section 4’s “accepts . . . any form of assistance, however provided” language that reaches programs that indirectly benefit the Palestinian Authority by benefiting Palestinians generally and that operate with its tacit consent. The odds of such a court ruling seem extremely low, but the possibility cannot be ruled out entirely. That said, it’s also possible that the Trump administration is using this interpretation as a pretext to further cut U.S. foreign assistance to Palestinians while spreading the political blame to Congress. Or Palestinian authorities may be advancing this interpretation in order to cut-off U.S. foreign assistance to civil society organizations that the U.S. policymakers value more than they do, thereby imposing some retributive costs on the United States.
The Palestinian Authority and PLO may not be the only entities affected by the ATCA. Foreign states are unlikely to be directly affected by the ATCA, as they are generally not seen as having the constitutional due process rights necessary to raise personal jurisdiction defenses (though the Supreme Court has not firmly settled the issue). Private organizations, however—as well as state-owned enterprises that operate independent of governmental control—may be affected in much the same way as the Palestinian Authority and PLO if they were to receive ESF, INCLE or NADR funds. This will likely be of serious concern to any such organization that believes it could be at risk of ATA claims. And given that plaintiffs have pursued multi-million dollar ATA claims against entities as far-ranging as Facebook and Twitter for purportedly providing services to terrorist groups in the form of standard communications services, the universe of organizations that could face such claims is broad. This is especially true in areas such as the Middle East, where local U.S. foreign assistance partners are sometimes required to operate in proximity to possible terrorist organizations. And even if these claims ultimately fail on the merits, defending against them can be a costly enterprise, particularly for foreign organizations not prepared to represent themselves before U.S. federal courts.
In this sense, the PA and PLO may prove to be just the tip of the iceberg, as other U.S. foreign assistance partners learn of the litigation risks that accepting ESF, INCLE and NADR funds can entail and seek to curtail their relationships with the United States accordingly.
Imagining a Legislative Fix
Congress could pursue any number of strategies to fix the ATCA’s impact on foreign assistance through new legislation. While the most straightforward solution would be to revoke Section 4 altogether, this is likely to be politically difficult, as the ATCA continues to have influential supporters in Congress. A more tailored approach could involve enacting statutory exceptions to Section 4 for key U.S. foreign assistance programs, either as a general matter or by incorporating those exceptions into annual foreign assistance appropriations. This approach, however, is relatively inflexible and would require the executive branch to request new legislation from Congress whenever it wished to pursue a change in its foreign assistance policies—an arrangement that both sides may ultimately find burdensome.
A better solution would be to amend the ATCA to include a waiver provision. Common in national security-related legislation, waiver provisions generally authorize the executive branch to suspend certain statutory requirements when designated officials certify that specified conditions are met. This allows the executive to retain some policy flexibility while requiring it transparency about relevant trade-offs and making it easier for critics to hold the executive politically accountable, particularly if the designated official’s certification is found to lack credibility or the waiver authority is otherwise abused.
What should a waiver provision for the ATCA look like? Given the ATCA’s potentially wide-ranging consequences, the executive branch—most likely acting through the secretary of state—will likely need some flexibility in defining the activities that a waiver will apply to. To balance this, Congress could require that the secretary provide relevant committees with advance notice of any waiver, as well as a detailed description and justification. Prospective recipients of U.S. foreign assistance, meanwhile, may need some assurances that they will not be exposed to civil liability by a sudden revocation of a waiver, particularly given that any exposure to under the ATCA lasts for five years. To accommodate this, Congress should allow for a reasonable transition period in the event a waiver is revoked during which the ATCA will not apply so that foreign partners can cease accepting U.S. foreign assistance in an orderly fashion if they so choose. Finally, as both waivers and revocations are likely to play a significant role in civil litigation between private parties, Congress may wish to ensure that their status and terms are clear and publicly available—for instance, by requiring that they be published in the Federal Register before taking effect.
The following is model statutory language that could be used to implement a waiver provision along these lines. Implementing it would require Congress to add this language to the end of Section 4 of the ATCA, which is currently codified at 18 U.S.C. § 2334(e):
(A) The Secretary of State may waive any application of paragraph (1) [i.e., the operative provision of section 4 of the ATCA] if the Secretary determines in that the waiver is in the national security interest of the United States and submits a justification for the waiver as well as a description of the activities covered by the waiver in writing to the congressional foreign relations committees at least fifteen days before the waiver enters into effect.
(B) No waiver issued under paragraph 3(A) shall take effect before the date on which the materials submitted to the congressional foreign relations committees pursuant to paragraph 3(A) are published in the Federal Register.
(C) The Secretary of State may revoke a waiver issued under paragraph (3)(A) if the Secretary determines that the waiver is no longer in the national security interests of the United States and submits a justification for revoking the waiver in writing to the congressional foreign relations committees.
(D) No revocation of a waiver issued under paragraph 3(C) shall take effect before 120 days after the date on which the materials provided to the congressional foreign relations committees pursuant to paragraph 3(C) are published in the Federal Register.
Of course, Congress could adopt countless variations on this basic structure, including some that impose more restrictive conditions on when a waiver may be employed. Too narrow a waiver provision, however, will continue to hamstring the U.S. deployment of foreign assistance, thereby requiring additional legislative fixes—particularly as the full range of entities and activities affected by the ATCA remains unknown. A broad waiver that gives the executive branch substantial discretion is preferable.
Supporters of the ATCA may object that a waiver provision will effectively gut Section 4, depriving the Waldman and Livnat plaintiffs, among others, of their opportunity to hold the PA and PLO (as well as other entities) accountable. But the same outcome is likely to result even absent a waiver, as the Palestinian Authority and PLO have already made clear they are willing to reject U.S. foreign assistance altogether before subjecting themselves to the jurisdiction of U.S. courts. A waiver would at least avoid compromising major U.S. foreign policy objectives by allowing the executive branch to continue to pursue key avenues of foreign assistance, such as the INCLE funds supporting Israeli-Palestinian security cooperation or continuing USAID and USSC operations in the West Bank. Moreover, the executive branch would have to justify these waivers publicly and could be held politically accountable for them. And if it has strong objections, Congress could end or prevent a waiver through subsequent legislation. Meanwhile, the judicious use of waivers could allow the United States to maintain a constructive relationship with the PA and PLO—one that may eventually prove useful in facilitating a settlement of the outstanding ATA judgments, which remains the most realistic avenue through which plaintiffs are likely to receive compensation.
Critics of the ATCA, meanwhile, are likely to question how effective a waiver will be. The Trump administration has proven unwilling to accept the political costs associated with waivers in certain circumstances and lacked credibility in its handling of waivers in others. And it has already voluntarily slashed most forms of foreign assistance to Palestinians, raising the question of why the administration would assume the political costs of a waiver to avoid doing so here. That said, a waiver would allow the Trump administration to continue providing support for Israeli-Palestinian security cooperation, an activity that it already openly supports. And a waiver could similarly permit other unobjectionable activities threatened by the ATCA, such as the continued operation of USAID and USSC offices, for which the Trump administration would likely face limited political costs.
Most importantly, a waiver provision would also prevent the ATCA from constraining future U.S. policy toward the Israeli-Palestinian peace process. Any peace plan—including the one the Trump administration claims to be developing—is almost certain to include some combination of ESF, INCLE and NADR assistance as inducements for Palestinian participation. Absent a waiver or other legislative fix, the ATCA is likely to render any such effort dead on arrival. And even if the Trump administration never takes this step, future presidential administrations almost certainly will, particularly if they wish to resume the United States’ once-central role in facilitating an eventual end to the Israeli-Palestinian conflict. So long as ATCA remains in place as currently written, the United States’ ability to play that role will be severely handicapped.
Challenging the ATCA in Court
There is one other avenue through which critics may be able to escape the de facto restrictions imposed by ATCA: challenging its constitutionality. Despite the House judiciary committee’s protestations to the contrary, there are good reasons to doubt whether Section 4 of the ATCA can withstand constitutional scrutiny. But even in the best-case scenario, judicial relief is unlikely to forestall serious damage to U.S. foreign policy interests in the region.
Section 4 of the ATCA is premised on the assumption that Congress can make defendants consent to the general personal jurisdiction of U.S. courts—albeit only for ATA claims—as a precondition for accepting U.S. foreign assistance. But this is in serious tension with the Supreme Court’s 2014 decision in Daimler Ag v. Bauman, which embraces the view that constitutional due process limits general personal jurisdiction to cases in which defendants have substantial ties to a forum, above and beyond what they may have elsewhere in the world. Upholding the ATCA would create an end-run around these requirements by allowing Congress to extend the general personal jurisdiction of U.S. federal courts to reach any overseas conduct by any entity so long as that entity continues to engage in some voluntary relationship with the United States. In considering parallel efforts by some U.S. states to make consent to their general personal jurisdiction a requirement for out-of-state companies registering to do business there, the U.S. Court of Appeals for the Second Circuit has raised serious doubts as to whether such efforts would comport with the Due Process Clause. And as the ATCA is intended to reach foreign entities located overseas, it clearly implicates questions of international comity, a factor that Daimler cites as weighing strongly against broad views of general personal jurisdiction. None of these authorities are necessarily dispositive, but together they put the ATCA’s constitutionality into serious doubt.
The Palestinian Authority, PLO and other similarly affected recipients of relevant U.S. foreign assistance are the most likely to have the requisite legal standing to pursue this challenge. Notably, these plaintiffs would not necessarily have to subject themselves to the requirements of Section 4 before entering litigation, as the chilling effect resulting from the threat of civil liability should provide a sufficient basis. There is even a possibility that the United States might intervene on the plaintiffs’ behalf, a step it has taken to object to broad assertions of general personal jurisdiction in several prior cases (including in its response to the petition for certiorari in Waldman). The fact that President Trump signed the ATCA without objection may make the claim that it is unconstitutional somewhat awkward, but as a legal matter, it does not prevent the United States from intervening or advocating for that law to be overturned.
But litigation alone is likely to be an imperfect solution. Even if the Supreme Court is willing to rule on the matter, a final resolution could take months if not years. In the interim, many U.S. foreign assistance programs may have to be wound down at a great cost—one only exceeded by the need to stand them back up again once the threat of the ATCA is resolved. And there is a substantial chance that, absent a clear circuit split, the Supreme Court will resist granting certiorari, requiring that the issue be re-litigated in various federal circuit courts. Or a final judicial resolution may never come, leaving the matter unsettled and at least some risk substantial liability in place. This would likely be sufficient to continue to deter Palestinian Authority, PLO and other similarly situated entities from accepting U.S. foreign assistance.
A legislative fix is the only clear way to avoid the ATCA’s most severe consequences. And barring legislation that delays the ATCA’s implementation, there is no apparent shortcut for arriving at a solution before the ATCA takes effect on Feb. 1, 2019. This leaves Congress—both the current body, and the new one that will sit in January—with less than 60 days in which to act. Hanging in the balance are not only current U.S. policies that support peace and stability in the region, but the United States’ ability to play a productive role in helping to resolve the Israeli-Palestinian conflict well into the future. And the clock is ticking.