LawFlash

United States Renews Iran Sanctions Waivers

April 03, 2020

Although the overall goal of increasing pressure on Iran through sanctions remains official policy, the Trump administration on March 30 again extended the civilian-nuclear cooperation waiver allowing non-US companies to continue to work at identified civilian nuclear facilities in Iran. The decision is based on a determination that these projects are designed to make the Iranian nuclear program less capable of producing weapons. The waiver continues for 60 days and allows these activities to occur without subjecting the parties to US penalties.

The decision appears to have been met with general industry approval. Supporters of continuing the waiver assert that the waivers give international experts a valuable window into Iran’s atomic program that might otherwise not exist, including the Bushehr nuclear power station, Arak heavy water plant, and Tehran Research Reactor. These facilities represent significant nuclear facilities in the Iranian system, each of which could be misused under the existing agreement between Iran and the remaining parties in the Joint Comprehensive Plan of Action (JCPOA).

Background

In May 2018, President Trump announced the United States’ withdrawal from the JCPOA, otherwise known as the Iran nuclear deal, citing Iran’s bad faith and bad actions with respect to the agreement. Following a pair of wind-down periods designed to provide US and non-US entities the time to complete existing transactions and unwind relationships, in November 2018, the United States reinstated and strengthened comprehensive sanctions against Iran. The overall focus remains to force Iran to alter its continuing development of ballistic missiles and nuclear weapons. As a result, US entities and persons have been, since early November 2018, prohibited from conducting almost all activities with Iranian entities and persons.

In addition to the impact from the withdrawal of the JCPOA, Congress’s enactment of the most sweeping sanctions legislation in more than a decade—the Countering America’s Adversaries Through Sanctions Act (CAATSA), Pub.L. 115-44, 84 Stat. 1114 (2017)—imposed secondary sanctions on numerous activities of non-US entities doing business with Iranian entities. Even with these continuing foreign policy avenues to press Iran to alter its behavior, the Trump Administration retained a pragmatic approach toward the scope of sanctions, in particular if it directly affected allies and partners. This included the exercise of various waiver authorities in addition to the implementation of several wind-down general licenses.

No Impact on US Entities’ Ability to Operate at Iran Civilian Nuclear Facilities

While the waivers were welcomed by many Russian, European, and Chinese companies working at Iran’s civilian nuclear facilities, they have little direct impact on US entities, which are not included among its beneficiaries. The same limitations remain on US persons and persons subject to US jurisdiction—these individuals cannot engage with or participate in any activity involving Iran’s civilian nuclear facilities. This includes non-US entities owned or controlled in fact by US companies. Thus, the extension of this waiver does not yet open up this activity to US companies or persons, and US companies must continue to ensure that they and their employees are not involved directly or indirectly in transactions or activities involving these Iranian facilities. 

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Heather C. Sears
Giovanna M. Cinelli
Kenneth J. Nunnenkamp