This alert summarizes recent developments relating to EU sanctions against Russia as well as President Trump’s implementation of the Russia-related sanctions and tariffs authorized under the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 (the “Graham Act” or the “Act”).
With respect to EU developments, on October 12, 2026, the Council of the European Union (the “Council”) added a significant number of Russian entities and individuals to the EU asset-freezing list, targeting, in particular, Russian suppliers of key components to Russia’s military-industrial complex.
Separately, on September 22, 2026, shortly before the existing measures were due to expire, the Council agreed to extend the EU’s Russia-related asset-freezing sanctions framework for a further three years. The extension followed several weeks of negotiations among EU Member States and was accompanied by the delisting of a number of Russian businesspersons, including Mikhail Maratovich Fridman and Alisher Burkhanovich Usmanov.
With respect to U.S. developments, on October 16, 2026, President Trump issued an Executive Order titled “Implementing the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026” (the “Graham Act EO” or the “EO”). As discussed in our prior client alert, the Graham Act, signed into law on September 18 by President Trump, required that the President impose certain Russia-related tariffs and sanctions by October 18, 2026 unless he exercised the broad waiver authority set out in the law. The Graham Act EO invokes the broad waiver authority contained in section 115 of the Act to waive all tariffs, sanctions, and prohibitions addressed to U.S. persons provided for under the Act.
Separately, on October 9, 2026, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued new Russia-related General License 135 (“GL 135”), which authorizes certain otherwise prohibited transactions that are related to the sale, delivery, offloading, or importation (including into the United States) of Russian-origin diesel fuel until 12:01 a.m. EDT on April 7, 2027.
On October 12, 2026, the Council adopted a substantial number of new EU asset-freezing designations through several implementing regulations:
- Council Implementing Regulation (EU) 2026/2281 adds 826 entities and 743 individuals to the EU asset-freezing list. The Regulation indicates that the listed entities have been identified by the Russian government as belonging to Russia’s military-industrial complex, while the listed individuals are executives of those entities.
- Council Implementing Regulation (EU) 2026/2292 adds a further 77 individuals to Annex I to Regulation (EU) No 269/2014 in connection with their involvement in the September 2026 Russian State Duma elections held in Ukrainian territories temporarily occupied by Russia.
- Council Implementing Regulation (EU) 2026/2278 adds a further three individuals and four entities to the EU asset-freezing list. These designations were adopted under the EU’s North Korea sanctions framework and target individuals and entities in the context of military and nuclear cooperation between Russia and North Korea.
As a result of EU asset-freezing designations, all funds and economic resources belonging to, owned, held or controlled by listed persons or entities must be frozen. It is furthermore prohibited to make any funds or economic resources available, directly or indirectly, to or for the benefit of listed persons or entities. These restrictions may also extend to non-listed entities that are 50% or more owned or controlled by a listed person.
Separately, on September 22, 2026, shortly before the existing measures were due to expire, the Council agreed to extend Council Decision 2014/145/CFSP and the related asset-freezing sanctions under Regulation (EU) No 269/2014 for a further three years, until September 22, 2029. The measures currently cover more than 3,000 Russian and non-Russian individuals and entities.
The extension followed several weeks of negotiations among EU Member States, including demands by certain Member States, such as France, Slovakia, and Luxembourg, to delist particular individuals. As part of the agreement to extend the measures for three years, rather than for the shorter periods used for previous renewals, the EU delisted a number of Russian businesspersons, including Mikhail Maratovich Fridman and Alisher Burkhanovich Usmanov. Both had been designated shortly after Russia’s full-scale invasion of Ukraine in February 2022 and reportedly hold significant interests in different companies. The delistings were implemented through Council Implementing Regulation (EU) 2026/2160.
Graham Act Waivers
As discussed in our prior client alert, the Graham Act requires the President to impose a range of Russia-related tariffs, sanctions, and related prohibitions on activities by U.S. persons, including certain measures that were required to take effect by October 18, 2026. Such measures include the requirement under section 112 of the Act that the President impose an additional tariff of up to 500% on imports from Russia, subject to certain exceptions and conditions, as well as the requirement under section 113 of the Act that the President impose additional tariffs of up to 100% on imports from the top five countries that import Russian-origin crude oil, the top five countries that import Russian natural gas, and the top five countries “facilitating Russian oil sanctions evasion.” Other mandatory and time-bound measures under the Act include various Russia-related sanctions and U.S.-person prohibitions.
At the same time, section 115 of the Act provides the President with broad authority to waive these requirements. Under section 115, the President may waive “any sanctions provision with respect to a foreign person, any restriction with respect to a person, or any duty under” the Russia-related portion of the Act, subject only to the requirement that the President submit a report to Congress certifying that the waiver is in the “national interests of the United States,” and explain the basis for that determination. The Act includes no limitation on the duration of such waivers.
The Graham Act EO formally implements the Act’s tariff provisions but immediately waives their application. The EO sets out a framework under which the U.S. would impose a 500% tariff on Russian imports as well as 100% tariffs on imports from the five largest purchasers of Russian-origin crude oil and natural gas and the five countries determined to be the largest facilitators of Russian oil sanctions evasion. Without identifying either set of countries potentially subject to these new tariffs, the Graham Act EO simultaneously invokes section 115 to waive the application of any duties provided for under sections 112 and 113 of the Graham Act or under the EO itself. As a result, no new tariffs have been imposed under the Graham Act. The EO directs the U.S. Trade Representative, in consultation with the Secretaries of State, the Treasury, and Energy, to monitor relevant countries’ purchases of Russian energy and facilitation of sanctions evasion and to advise the President regarding circumstances that may warrant further action.
The EO also invokes section 115 to waive the entirety of the Graham Act’s Russia-related sanctions and U.S.-person prohibitions, including those contained in sections 102(a), 102(e), 103, 104, 105, 106, 107, 108, 109, 110, and 111 of the Act. The EO also waives section 102(d) of the Act, which would have otherwise prevented the President from de-listing persons sanctioned pursuant to earlier Russia-focused executive orders, terminating relevant prohibitions, or otherwise unwinding the existing Russia-related sanctions regime. The waiver thus effectively nullifies the Graham Act’s codification of prior Russia-related sanctions, but, importantly, does not lift such sanctions.
Interestingly, the Graham Act EO also purports to waive section 117, the Act’s termination provision. It is unclear whether the waiver provision in section 115 actually allows for the waiver of section 117, since the waiver authority is limited to the Act’s sanctions, prohibitions, and duties. However, recognizing that there is no limit to the duration of waivers under the Act, the practical implications of the asserted waiver of the Act’s termination provision appear limited.
OFAC GL 135
Separately, on October 9, OFAC issued new Russia-related GL 135, which authorizes all transactions prohibited by the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR,” 31 CFR Part 587) or the Ukraine-/Russia-Related Sanctions Regulations (“URRSR,” 31 CFR Part 589) that are related to the sale, delivery, offloading, or importation (including importation into the United States) of Russian-origin diesel fuel until April 7, 2027. This GL has the effect of suspending for a six-month period: (1) the prohibition against the importation into the United States of Russian-origin diesel fuel that has been in place since March 8, 2022; and (2) the prohibition that has been in place since February 5, 2023 on the provision by U.S. persons of certain services related to the maritime transport of Russian-origin diesel fuel that is sold above the relevant price cap determined by the Secretary of the Treasury in consultation with the Secretary of State (though it does not impact the prohibition against the provision of certain services by U.S. persons related to the maritime transport of other Russian-origin petroleum products sold above the applicable price cap, which remains in place). GL 135 also allows, until April 7, 2027, transactions involving certain parties subject to U.S. property-blocking sanctions, or narrower forms of U.S. sanctions, pursuant solely to the RuHSR and URRSR, provided that such transactions are related to the sale, delivery, offloading, or importation of Russian-origin diesel fuel.
Political Reaction in the United States
The political reaction in the United States to these actions by President Trump has been largely critical. Supporters of the Graham Act—which passed both houses of Congress by wide margins—have expressed sharp disappointment that it evidently will not be implemented at all, at least in the near term. And the implication of GL 135 is that the United States now has an economic interest in the preservation of Russia’s oil refinery infrastructure, which increases tensions with the Ukrainian government over its policy of attacking that infrastructure in response to Russian attacks on its energy infrastructure.
With congressional elections scheduled for November 3, Democrats have been especially critical, but some Republicans (especially those not seeking reelection) have joined in the criticism, while most other Republicans have distanced themselves by remaining silent. Republicans will remain in control of both houses of Congress until January 3, 2027, irrespective of the outcome of the elections, so congressional action before then to reverse these moves is highly unlikely. If Democrats gain control of one or both houses of Congress in the elections, they are likely after January 3 to advance legislation to challenge President Trump’s recent moves. But President Trump can be expected to veto any legislation passed by Congress that contradicts his policy on Russia and Ukraine, so ultimately two-thirds majorities of both houses of Congress would be required to override any presidential veto. Achieving such majorities would require significant Republican cooperation with the Democrats, which would in turn imply some fracturing of Republican support for Trump in Congress, as well as willingness by congressional Democrats to collaborate with sympathetic congressional Republicans on these issues.
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We are closely monitoring developments concerning the U.S., UK, and EU sanctions against Russia, and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.
Covington’s International Trade Controls and International Trade Policy teams—which include lawyers in the firm’s offices in the United States, London, Brussels, and Frankfurt—regularly advise clients across business sectors, and are well-placed to provide support in connection with the evolving Russia sanctions and export controls. Our trade lawyers also work regularly with Covington’s Global Public Policy team—consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia—many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders. Moreover, as the Ukraine crisis continues to unfold, Covington is exceptionally well-positioned to assist clients in navigating their most complex challenges, drawing on the multidisciplinary capabilities of additional practices in areas such as international arbitration and disputes, cybersecurity, anti-money laundering, insurance, and corporate restructuring.
If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls, International Trade Policy, or International Dispute Resolution practice:
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