On June 15, 2017, the Senate passed the Countering Iran’s Destabilizing Activities Act of 2017 (S.722) by a vote of 98-2. Included with the bill is a significant Russia sanctions amendment, the Countering Russian Influence in Europe and Eurasia Act of 2017, which would expand U.S. primary and secondary sanctions for Russia and limit the President’s ability to ease existing sanctions.

The bill represents a bi-partisan compromise among key legislators to advance Iran and Russia sanctions measures together. The House of Representatives is now beginning to consider its own Iran and Russia sanctions measure, with the potential for final legislation this fall.

Russia Sanctions Provisions

Key provisions of the Russia sanction bill include:

  • Codification of existing Russia, Ukraine and Crimea sanctions, sectoral sanctions and sanctions listings, including Executive Orders 13660, 13661, 13662, 13685, 13694, and 13757.
  • Congressional review is required under detailed procedures before removal of sanctions or making major licensing moves that impact U.S. foreign policy.
  • Modifications to sectoral sanctions directives, including:
    • Limiting the term of new debt U.S. persons may provide under sectoral sanctions Directive 1 (from 30 to 14 days) and Directive 2 (from 90 to 30 days).
    • Expanding the Directive 4 to cover certain projects outside of Russia. The prohibition against goods, services or technology in support of Russian deepwater, Arctic offshore, or shale projects with the potential to produce oil would cover any projects in which both (a) a Russian energy firm and (b) a party designated under Directive 4 are involved. Currently Directive 4 is limited to projects in the Russian Federation.
  • New sectoral sanctions authority under Executive Order 13662 with respect to the railway, shipping, or metals and mining sectors in Russia.
  • New discretionary secondary sanctions on certain activity related to Russian energy export pipelines.
  • Amending the Ukraine Freedom Support Act to require the President to impose secondary sanctions on investment in certain energy projects in Russia and on non-U.S. financial institutions supporting certain transactions with parties sanctioned related to Russia/Ukraine, unless the President determines it is not in the national interest to do so.
  • Mandatory imposition of secondary sanctions with respect to foreign sanctions evasion and facilitating structured transactions for or on behalf of any person subject to U.S. sanctions.
  • Mandatory imposition of secondary sanctions on:
    • Persons engaging in certain destabilizing cyber activities on behalf of the Russian government.
    • Activity relating to Russian corrupt activity and serious human rights abuses.
    • Persons knowingly engaged in a significant transaction with the Russian defense or intelligence sectors, as well as support for the Syrian government.

Iran Sanctions Provisions

The sanctions provisions for Iran include:

  • New sanctions authority with respect to Iran’s ballistic missile program and persons who materially contribute to the program.
  • New, mandatory terrorism-related sanctions with respect to the Iranian Revolutionary Guard Corps (IRGC) (although note that this group is already sanctioned).
  • New sanctions authority with respect to human rights abuses and corruption within Iran.
  • Sanctions authority for imposition of sanctions on persons engaging in any activity that violates arms embargos against Iran.

What Was Not Included?

Several controversial provisions of an earlier version of the Counteracting Russian Hostilities Act of 2017 were not included in the bill enacted by the Senate. In particular, the present bill did not include expansive secondary sanctions which had been proposed for (1) investment and services/support for development of Russian petroleum and gas resources (not limited to particular types of projects) and (2) Russian civil nuclear projects and related activity.

For Iran, no sanctions are nuclear-related and the bill is designed to be consistent with the Joint Comprehensive Plan of Action for Iran (JCPOA).

Next Steps

The House of Representatives is now just beginning to consider Iran and Russia sanctions legislation. It has not been decided at this point whether the House will work from the Senate bill or craft an entirely new bill. In either case, there will likely be differences that will require conference committee resolution. This could provide an opportunity for changes to the language. Passage of final legislation is unlikely before the fall. Although the Trump administration was not involved in the bill and has expressed some reservations, sponsors in the Senate have stated they expect there to be enough congressional support to override any veto.