Iran Sanctions Update: No Change for Companies as Pressure Shifts Back to President Trump as Key Deadline Passes

On December 12, a key deadline passed for Congress to reimpose nuclear-related sanctions against Tehran, shifting the pressure back to the executive branch and setting new deadlines that will be critical to the fate of the 2015 Iran nuclear deal.  In October, President Trump refused to certify Iran’s compliance with the 2015 Joint Comprehensive Plan of Action (JCPOA), calling on Congress to set “trigger points” related to Iran’s nuclear and ballistic missile programs, and setting off a 60-day window for lawmakers to reimpose secondary sanctions that have been suspended under the terms of the JCPOA.  That window closed on December 12 without any Congressional action.

The onus is now back on President Trump to decide the fate of the JCPOA, and there are two deadlines approaching in mid-January.  The first deadline is for President Trump and Secretary of State Tillerson to decide whether to continue to issue waivers on the Iran sanctions program, which Tillerson has said he would. Second, there will be another certification deadline under domestic legislation that would reopen yet another 60-day window for Congress to reimpose sanctions, assuming the President stays the course from October when he first refused to certify Iran’s compliance with the terms of the nuclear deal.

For U.S. businesses, the lack of any Congressional action means that not much has changed, including the primary sanctions regime that already prohibits U.S. businesses from participation in most activities and transactions involving Iran or Iranian entities.  Under the Iranian Transactions and Sanctions Regulations (ITSR), which remain in full force with respect to U.S. businesses and continue to apply today, U.S. companies (and U.S. individuals) are prohibited from doing business in or with Iran, Iranian entities, or entities listed on the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals and Blocked Persons (SDN) List. The 2015 JCPOA only conditionally suspended a narrow category of nuclear-related “secondary sanctions” that apply to non-U.S. entities abroad.

One development worth keeping an eye on is Boeing’s tentative deal to sell passenger aircraft to Iran beginning in late 2018. In September 2016, OFAC issued licenses for Boeing and its main European competitor Airbus to sell nearly 300 planes to Iranian airlines. However, the OFAC license for the aircraft deal has come under increasing scrutiny from both Congress and the Trump administration in recent months due to concerns Iran would use the planes to intervene in regional conflicts, particularly in Syria. On December 15, the Wall Street Journal reported that the Trump administration was considering blocking the sales, and a White House spokesman said that the administration would not grant licenses for the sales unless Iran can ensure the airplanes would strictly be used for commercial passenger aviation.