10 Senators Demand Update on Sanctions for Foreign Firms in Iran Energy Sector

Tougher Sanctions Needed to Prevent Iran from Obtaining Nuclear Weapons

The Senators wrote that while they support the Administration's efforts to fashion multilateral and unilateral sanctions against Iran, they believe that there is still much more that must be done to prevent Iran from obtaining nuclear weapons capability. They note that the most recent International Atomic Energy Agency report on Iran’s ongoing weaponization activities makes it clear that the U.S. must utilize tougher economic, political, and diplomatic measures to thwart Iran’s efforts to acquire weapons of mass destruction and the means to deliver them.

State has 180 Days to Complete Investigations, Determine if Sanctions Warranted

On September 29, 2010, Deputy Secretary Steinberg announced DOS' initiation of investigations into international firms that had not yet committed to exit Iran's petroleum sector. The Senators say they understand that DOS is continuing these investigations and that CISADA provides DOS with 180 days (by March 29, 2011) to complete its investigation and make a determination as to whether sanctions are warranted.

Update Sought on Status of Investigations, "National Interest" Waivers

The Senators seek an update on the status of all investigations as well as those transactions that DOS is looking into but has not yet initiated an investigation, concerning violations of the Iran Sanctions Act (ISA) as amended by CISADA.

The Senators also seek to know whether DOS has developed standard criteria to determine when it would be appropriate to use the "necessary to the national interest" waiver² and whether it is considering such a wavier in any pending investigation should the party not discontinue prohibited activities. Additionally, the Senators request that Clinton to make available the guidance DOS has promulgated concerning when it has received “credible information”³ to launch an investigation.

Senators Say Chinese Firms in Energy & Banking Sector Have Violated U.S. Law

The Senators stated that based on publicly available information⁴, it appears that Chinese firms in the energy and banking sectors have conducted significant activity in violation of U.S. law. The Senators state that the U.S. cannot afford to create the impression that China will be given free rein to conduct economic activity in Iran when more responsible nations have chosen to follow the course the U.S. has asked of them. The Senators write that the hope the update will include the following entities that appear to be in violation of U.S. law:

1. The Chinese National Offshore Oil Company, which is aiding Iran in the development of Iran’s North Pars field.
2. The Chinese National Petroleum Company, which is aiding Iran in the development of the North Azadegan and South Pars fields.
3. Sinopec, which is aiding Iran’s refinery capacity at Bandar Abbas and the Arak refinery near Markazi.
4. The German company ABB Lumus, which has signed a contract to expand the Abadan refinery with the U.S-sanctioned National Iranian Oil Company.
5. Entities reportedly selling refined petroleum to Iran, including: Zhuhai Zhen Rong of China, the PDVSA trading unit of Venezuela, Turpas of Turkey, and Unipec of China.
6. The Industrial Bank of China, the China Construction Bank, the Agricultural Bank of China and the Bank of China, all of which are reportedly aiding Iran by providing financial services in violation of Section 104 of CISADA.

¹Senators Kyl (R), Menendez (D), Gillibrand (D), Moran (R), Casey (D), Blunt (R), Graham (R), Nelson (D), Cardin (D), and Rubio (R).

²CISADA authorizes the President to waive sanctions for a period not longer than 12 months, on a case-by-case basis, for persons under the jurisdiction of governments that are closely cooperating with the U.S. in multilateral efforts to prevent Iran from acquiring or developing nuclear weapons or related technologies.

In order to exercise the waiver, the President must initiate an investigation and make a determination. To utilize this exception, the President would have to provide advance notice to Congress and provide a certification of the person with respect to which the President will waive the application of sanctions; the actions taken by the government cooperating in multilateral efforts; and that the waiver is vital to the national security interests of the U.S.

³CISADA requires that the President immediately investigate a person upon receipt of credible information that such person is engaged in sanctionable activity. Not later than 180 days after an investigation is initiated, the President is required to make a determination whether a person has engaged in sanctionable activity.

⁴The Senators write that numerous open sources, including reports by the Congressional Research Service and the Government Accountability Office, have detailed foreign investment and other activity that violates U.S. sanction laws.

(See ITT's Online Archives or 03/16/11 news, 11031622, for BP summary of Clinton discussing the Iran sanctions during a March 2 Senate hearing.

See ITT’s Online Archives or 06/30/10 and 09/20/10 news, 10063049 and 10092013, for BP summaries CISADA expanding sanctions for violators of Iran petroleum provisions, etc.)

Joint explanatory statement of the committee of conference is available here.