• May 6, 2024

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Senate Introduces Straight ISA Reauthorization

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Following last week’s hearings on Iran in the Senate Banking Committee and the House Foreign Affairs Committee, it was unclear whether the Obama administration would go along with a straight re-authorization of the Iran Sanctions Act (“ISA”) due to expire at the end of this year. Pressed repeatedly as to whether the Obama administration could accept such a straight re-authorization for a five-year time period, the U.S. Lead Coordinator for Iran Nuclear Deal Implementation Stephen Mull refused to answer the question, stating instead that the administration would have to look at the bill prior to giving an answer as to its possible support. That response was widely understood as an evasion.

Now, though, there is a bill seeking a straight re-authorization of the Iran Sanctions Act – with the exception that ISA would sunset at such time as the IAEA provides its “broader conclusion” as to the peacefulness of Iran’s nuclear program rather than following a five-year period. Moreover, this bill – S.2988 – is sponsored by Sens. Tim Kaine (D-WV) and Chris Murphy (D-CT), two stalwart supporters of the Obama administration’s diplomacy with Iran.

Will the Obama administration go along with it?

I think not – and the reason does indeed have to do with the current language of the bill.

S.2988 amends the Iran Sanctions Act so as to establish a new sunset clause. The new clause states that ISA will “cease to be effective on the date on which the President certifies to Congress that the Director General of the International Atomic Energy Agency has reached a broader conclusion…that all nuclear material in Iran remains in peaceful activities.” According to the bill’s prefatory language, the new sunset clause is intended “to effectuate the Joint Comprehensive Plan of Action.”

However, it does a poor job of effectuating the JCPOA. Under the JCPOA, the U.S. will be obligated to seek the lifting (i.e. termination) of all nuclear-related sanctions on Transition Day, which is either 8 years after Adoption Day or upon a report from the IAEA stating that it has reached its broader conclusion that all nuclear material in Iran is in peaceful activities, whichever is earlier. There is general agreement among nuclear experts that the IAEA will take longer than 8 years to reach its broader conclusion regarding Iran’s nuclear program. As such, Transition Day is most likely to occur 8 years after Adoption Day (October 18, 2023) rather than upon a report from the IAEA stating that all of Iran’s nuclear material remains in peaceful activities.

S.2988 attempts to tie ISA’s sunset to Transition Day “in order to effectuate the JCPOA.” Instead of doing so, though, S.2988 ties ISA’s sunset exclusively to the IAEA reaching its broader conclusion about Iran’s nuclear program. Because such broader conclusion will likely take more than 8 years (and could take as long as a decade-and-a-half), ISA is unlikely to sunset upon Transition Day. In other words, the bill will not sunset simultaneous with the U.S.’s obligation to lift nuclear-related sanctions. The bill thus fails “to effectuate the JCPOA” as intended.

Presumably, the Obama administration would have remedied this error if it had seen the bill prior to its introduction on the Senate floor. (At least one hopes.)  It is thus unlikely that the administration will offer quick support for this stand-alone measure – at least not without certain modifications to make it consistent with the explicit terms of the JCPOA.

Tyler Cullis

Mr. Cullis is an Associate Attorney at Ferrari & Associates, P.C. where he is engaged in the practice of U.S. economic sanctions, including trade compliance, regulatory licensing matters, and federal investigations and prosecutions. Mr. Cullis has extensive experience counseling clients on matters falling under the purview of the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). He has provided counsel to U.S. and foreign parties on complex cross-border transactions and compliance with U.S. economic sanctions; conducted corporate internal investigations and developed sanctions compliance policies; and submitted license applications and voluntary self-disclosures to OFAC. Mr. Cullis has advised global financial institutions, multi-national corporations, U.S. and foreign exporters and insurers, as well as private individuals regarding U.S. sanctions matters, including matters involving Russia, Iran, and Cuba.

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