October 17, 2017

President Trump's Decertification of the Iran Nuclear Deal: Process Started for Possible New Sanctions and Withdrawal or Renegotiation of Multilateral Agreement with Iran


On Friday, October 13, President Trump announced that he would no longer certify that suspension of sanctions related to Iran under the Joint Comprehensive Plan of Action (JCPOA) is vital to the national security interests of the United States and appropriate and proportionate to Iran's measures to terminate its nuclear program. Under the Iran Nuclear Agreement Review Act (INARA), the President is required to evaluate every ninety days whether these conditions are met, and to certify only if he believes they are met. The JCPOA is an agreement between the United States (US), China, France, Germany, Russia, the United Kingdom (UK), and Iran, in which Iran agreed to certain concessions related to its nuclear program in exchange for economic sanctions relief.

In announcing his decision to decertify, the President has not withdrawn the United States from the JCPOA or refused to abide by US commitments in the JCPOA; rather, he has initially kicked to Congress the decision whether to re-impose sanctions on Iran that have been suspended for the last two years or to enact additional sanctions on Iran. During his announcement, the President said if his administration is not able to reach a solution with Congress and US allies, he will unilaterally withdraw from the JCPOA. This likely would entail an end to the sanctions relief that the US granted as part of JCPOA by, for example, allowing the current Presidential waivers of extraterritorial sanctions imposed under numerous statutes to lapse in January. At the same time, the President also announced that the Department of the Treasury will impose new sanctions on Iran's Islamic Revolutionary Guard Corps (IRGC) in addition to those sanctions already in place on the IRGC. He stopped short of designating the IRGC as a Foreign Terrorist Organization, which would subject it to even more sanctions.

The President's announcements had little immediate practical effect on persons subject to US jurisdiction as such persons were already effectively precluded from dealing with Iran unless licensed. Nor did the announcement impose new secondary sanctions on non-US persons. The President did make some additional designations of prohibited parties. The more important effect will be to shift the focus to Congress regarding potential new sanctions, start to lay the groundwork for eventual withdrawal or renegotiation of the JCPOA, and signal that licensing for parties subject to US jurisdiction to deal with Iran is likely to be even more challenging.

Sanctions Implications Following Decertification

Post-decertification, there are multiple avenues by which the US could resume sanctions currently lifted by the JCPOA.

Option 1: Congressional Legislation

First, Congress could enact legislation to re-impose sanctions lifted by the JCPOA. INARA provides that if the President does not certify the deal, then "qualifying legislation introduced within 60 calendar days of such event shall be entitled to expedited consideration."1 Such qualifying legislation could reinstate some or all of the statutory sanctions suspended by the JCPOA. The expedited procedures in INARA will make it easier for Congress to enact such legislation as compared to passing a bill through the normal legislative process.(Among other things, these expedited procedures eliminate the cloture process with its associated three-fifths vote threshold, preclude floor amendments, and limit the time for floor consideration and debate.)

Congress also could choose to pursue legislation to address the weaknesses of the JCPOA. Indeed, even before President Trump's decertification announcement, members of Congress, including Senator Bob Corker, Chairman of the Foreign Relations Committee, were already proposing legislation that would impose new sanctions involving Iran, should Iran violate certain new restrictions that would be separate and apart from the JCPOA.2 This legislation could include a list of unacceptable Iranian nuclear-related or missile-related activities that would automatically trigger the re-imposition of nuclear sanctions and thus the US withdrawal from the JCPOA. Such legislation would not necessarily contradict any of the US's commitments under the JCPOA, but would unilaterally impose additional conditions on Iran for the US's continued waiver of sanctions lifted under the JCPOA. At this point, this appears the most likely path forward following President Trump's decertification.

Option 2: JCPOA's "Snap Back" Provision

Second, President Trump could seek to trigger the re-imposition of UN sanctions through the JCPOA's "snap back" provision, by notifying the UN Security Council of an issue the US believes, in good faith, "constitutes significant non-performance of commitments under the JCPOA."3 Under the JCPOA's dispute resolution mechanism, a party can assert that another party is violating the agreement, seek to resolve the issue, and treat the unresolved issue as grounds to cease performing its commitments under the JCPOA and/or notify the UN Security Council.4 As a veto-holding permanent member of the UN Security Council, the US could block any resolution impeding the snap back. While this mechanism focused on the UN Security Council is available, the Trump Administration has not yet made clear the basis for alleging non-performance that would be a prerequisite for going to the Security Council. President Trump has indicated that he believes Iran is violating "the spirit" of the JCPOA, and that "Iranian military leaders have stated publicly that they will refuse to allow [International Atomic Energy Agency (IAEA)] inspections of their military sites." President Trump may focus on this or other shortcomings to allege "significant non-performance" of the deal.5

European leaders and the other JCPOA signatories have criticized President Trump's disavowal of the JCPOA, noting that the UN Security Council unanimously endorsed the agreement in UN Security Council Resolution 2231 and that the IAEA has confirmed Iran's compliance with it. European businesses, moreover, have reaped significant financial gains since the opening of trade with Iran under the JCPOA. It will therefore be challenging to convince European leaders to sign on to the US's efforts to renegotiate the JCPOA.

On the other hand, we understand that our European allies have recently expressed their own concern to US counterparts that, even within the four corners of the JCPOA, the US and European signatories may not be fully exploiting their inspection rights particularly with respect to confirmation that Iran is abiding by Section T of Annex I (Nuclear-Related Matters) which provides that Iran shall not engage in certain non-nuclear activities which could contribute to the development of a nuclear explosive device, such as computer modeling or designing, fabricating, or acquiring certain multipoint detonation systems, explosive diagnostic systems, and neutron sources. The JCPOA contemplates that E3/EU+3 would have rights to inspect military bases and certain other non-nuclear facilities to confirm Iran's compliance with Section T. Congressional leaders have recently suggested that the interest expressed by Europeans to more thoroughly examine and enforce the Section T commitments is an opportunity for the US and allies to find common ground within the JCPOA framework to signal heightened pressure on Iran without abrogating the deal.

Option 3: President Trump Unilaterally Re-Imposes Sanctions

Third, the President could utilize a number of tools to unilaterally re-impose sanctions on Iran, including reinstating those sanctions imposed by Executive Order or declining to continue waiving provisions of sanctions laws. President Trump must transmit waiver renewals every 120 days to Congress to comport with the requirements of the sanctions laws that were waived to implement the JCPOA.6 President Trump most recently waived sanctions last month, so the next sanction waivers are due in January 2018. President Trump will have to decide by then whether to continue waiving sanctions or stop and breach the JCPOA.

Similarly, the President could re-designate Iranian persons and entities as Specially Designated Nationals (SDNs) that were previously listed but then delisted as one component of the sanctions relief under the JCPOA. Such redesignations would not only subject those listed individuals and entities to sanctions; they could also resume the application of harsh secondary sanctions on non-US persons transacting with SDNs, such as the secondary sanctions set forth in the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA),7which blocked access to the US financial system for any foreign financial institution transacting with Iran-related SDNs.

Importantly, President Trump has not indicated that he intends to take any of these unilateral steps to re-impose sanctions, but he retains the authority to make such determinations.

IRGC Designation

Following President Trump's speech, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) designated the IRGC for supporting terrorist organizations under Executive Order (EO) 13224 and announced that the designation is "consistent with the Countering America's Adversaries Through Sanctions Act," a bill signed by President Trump in August that provides for additional sanctions against Iran, Russia, and North Korea.8 OFAC also designated four entities under EO 13382, which targets weapons of mass destruction proliferators and their supporters.

There are a few factors to consider regarding the implications of these sanctions. First, these designations are not inconsistent with the JCPOA, in which the US government only committed to waiving sanctions related to Iran's nuclear activities. The US government has made clear since the JCPOA's start that the agreement covers only nuclear obligations and sanctions, and that the US retains the authority to continue imposing sanctions addressing Iran's support for terrorism, human rights abuses, and its ballistic missile program. Second, contrary to the impression from President Trump's speech, the IRGC has been on OFAC's SDN list since before the JCPOA for activities separate from nuclear weapons or terrorism, and these sanctions were not lifted in the JCPOA. The IRGC's designation as an SDN pursuant to EO 13224 will have minimal practical effect, since the IRGC's assets are already blocked and US persons are generally prohibited from dealing with them. This designation allowed President Trump to express his discontent with the IRGC's regional activities. President Trump stopped short of designating the IRGC as a Foreign Terrorist Organization, a designation generally reserved for non-state organizations. Such a designation would have been marginally more provocative, although in practical terms, persons subject to US jurisdiction were precluded from engaging in transactions with the IRGC before the designation, and the previous designations caused some parties not subject to US jurisdiction to otherwise refrain from dealing with the IRGC in response to the US designation.


In sum, at this point, President Trump's decertification of the Iran deal appears to be largely symbolic in its effect on actual sanctions, but it sets up the conditions for the US to impose new sanctions and to start building the case for exiting from the JCPOA. While it could pave the way for the US Congress, the UN, or President Trump himself to re-impose specific sanctions that were waived under the JCPOA, no sanctions will automatically "snap back" as a result of the decertification. Nor is there an indication, at this point, that the US will unilaterally re-impose the specific sanctions that were lifted in connection with the JCPOA, as doing so would draw the ire of international leaders who would be unlikely to follow suit. The most interesting aspect of decertification may be that it provides President Trump the ability to express his disapproval of the Iran deal without actually undoing it, and creates leverage to pressure Iran to reform its behavior to meet US demands regarding Iran's nuclear, missile, and regional activities.

© 2017 Arnold & Porter Kaye Scholer LLP. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. 42 U.S.C. §2160e(e).

  2. See, e.g., "Amendment in the Nature of a Substitute to H.R. 1698 Offered by Mr. Royce of California," (proposed sanctions involving Iran's missile program); see also CQ News, Corker, Cotton Offer Iran Sanctions Bill to Boost Trump, Oct. 13, 201).

  3. UN Security Council Resolution 2231, paragraphs 11-13.

  4. JCPOA, paragraphs 36-37.

  5. See, e.g., White House Press Release, President Donald J. Trump's New Strategy on Iran (Oct. 13, 2017); Reuters.

  6. Specifically, sanction waivers are required every 120 days under Section 1245(d) of the National Defense Authorization Act for FY2012 (P.L. 112-81); every 180 days under Section 1244(i), 1245(g), 1246(e), and 1247(f) of the Iran Freedom and Counter Proliferation Act of 2012 (P.L. 112-239); every six months under Sections 212(d)(1) and 213(b)(1) of the Iran Threat Reduction and Syria Human Rights Act of 2012 (P.L. 112-158); and every six months under the Iran Sanctions Act of 1996 (P.L. 104-172).

  7. P.L. 111-195.

  8. Treasury Designates the IRGC under Terrorism Authority and Targets IRGC and Military Supporters under Counter-Proliferation Authority, OFAC Press Release, Oct. 13, 2017.

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