When pressed to recuse himself, Attorney General Sessions should have said that the FBI’s Russia investigation was a counterintelligence probe, and therefore he was not disqualified under the regulation. Nevertheless, there was a pending criminal investigation arising out of the Russia investigation: the inquiry into whether former National Security Adviser Michael Flynn had made false statements to FBI agents regarding his communications with Russian Ambassador Sergey Kislyak. Sessions could thus have announced that he was recusing himself from the criminal investigation of Flynn.
Sessions could have added that, in the event the Russia counterintelligence probe uncovered other criminal evidence, he would be prepared to recuse himself from any resulting criminal investigation as to which he had a conflict of interest. Thus, if Director Comey had later claimed that President Trump pressured him to drop the Flynn investigation, Sessions could have recused himself from the decision about whether to proceed with a criminal investigation of the president for obstruction. Mind you, this would not have been a finding that the president had committed felony obstruction; it would have been an acknowledgment that, under the regulations, that issue has to be resolved by an un-conflicted prosecutor.
Notice what the effect of this would have been. If Sessions had recused himself in this properly limited manner, the question of whether the Justice Department should appoint a special counsel would still have arisen. But the jurisdiction of any special counsel would have been appropriately limited, by regulation, to the criminal investigations that triggered the attorney general’s recusal: the false-statements investigation of Flynn and the obstruction investigation of Trump.