Senate Banking Committee to Mark-Up Draft Iran Sanctions Bill

Bill Would Expand, Extend Sanctions on Energy, Human Rights Violations, Etc.

According to a committee summary, highlights of the bill include:

Mandatory sanctions on shippers of WMD/terror materials - would require the blocking of assets of, and other sanctions on shippers, insurers, and reinsurers who knowingly provide ships or insure vessels used in the shipment of materials contributing to Iran’s WMD program or its terrorism-related activities. Also applies to parent firms if they knew or should have known of the shipments, and to subsidiaries of violators if they knowingly participated in the activity.

Liability of U.S. firms for activities of foreign subsidiaries - would require the imposition of civil penalties of up to twice the amount of the transaction on US parent companies for the activities of their foreign subsidiaries which, if undertaken in the US or by a US person, would violate US sanctions law. This includes activities under the current US trade embargo with Iran, and would apply regardless of whether the subsidiary had been established to circumvent US sanctions, as under CISADA.

Expand current ISA menu of sanctions to senior corporate officers - would expand the current menu of sanctions available to the President under the ISA to authorize exclusion from the U.S. of principal corporate officers (or other senior officers performing a similar function) or major shareholders in a sanctioned firm, and provides for applicable ISA sanctions to be applied to the CEO or other senior officers of a sanctioned firm, which could include a freeze of their US assets.

Accelerate, expand Efforts to Target Iran’s Revolutionary Guard Corps - would require the President to identify and designate for sanctions known officials, affiliates and agents of the IRGC within 90 days, and periodically thereafter; establishes priorities for investigations of IRGC entities. The bill would also require exclusion of such persons from the US, and their designation for sanctions (related to WMD) under the International Emergency Economic Powers Act (IEEPA), including freezing their assets and otherwise isolating them financially. In addition, the bill would require reports to Congress on progress in sanctions designations.

The bill would make foreign persons and firms who are agents and affiliates of the IRGC, and anyone who materially assists them, or engages in any significant transaction with them -- including through barter transactions -- subject to at least 3 ISA sanctions. Also would apply similar sanctions against any persons or firms who engage in significant transactions with UN-sanctioned persons, those acting for them or on their behalf. The bill would provide for additional sanctions under IEEPA which the President deems appropriate and require the President to report on designations and waivers, as applicable.

In addition, the bill would extend U.S. procurement ban to foreign persons who interact with the IRGC, requiring certification by all prospective government contractors that neither they nor any of their subsidiaries have engaged in significant economic transactions with designated IRGC officials, agents or affiliates.

Extend sanctions to Iranian Energy Joint Ventures - would, for the first time, extends U.S. sanctions under the Iran Sanctions Act (ISA) to firms engaged in new energy-related joint ventures anywhere in the world in which Iran’s government is a substantial partner or investor, or by which Iran could otherwise receive critical advanced energy sector technology or know-how not previously available to its government.

Expand human rights sanctions - would impose broad sanctions, including visa denial and freezing of assets, on persons and firms which supply Iran with technologies -- including weapons, rubber bullets, tear gas and other riot control equipment, and jamming, monitoring and surveillance equipment -- which the President determines are likely to be used by Iranian security forces to commit human rights abuses. Also would require: sanctions against individuals and firms found to have engaged in censorship; a strategy to promote Internet freedom in Iran; and expedited processing of Iran-related humanitarian, human rights and democratization aid.

Codify and expand sanctions on suppliers to Iran’s energy, petrol sectors -- would codify the President’s decision to extend U.S. sanctions to Iran’s petrochemical sector, adopting the standards, monetary thresholds ($250,000 per transaction, or multiple transactions aggregating to $1 million in a 12-month period) and specific petrochemicals list contained in the November 21, 2011 Executive Order 13590. It would also extend U.S. sanctions to all suppliers who knowingly provide goods, services and technologies valued at $1 million or more, or $5 million annually, to a person or firm involved in Iran’s energy sector, including petroleum resource projects and domestic production of refined petroleum products (primarily gasoline) in Iran.

Apply mandatory sanctions to Iranian uranium mining JVs -- would require at least 3 ISA sanctions to be imposed on firms who knowingly engage in joint ventures with Iran’s government, Iranian firms, or persons acting for or on behalf of Iran’s government in the mining, production or transportation of uranium anywhere in the world. The bill would exempt from sanctions persons who agree to withdraw from such projects within 6 months after the effective date of the bill.

Policy statements, ID of diplomatic efforts, disclosure to SEC, etc - The bill also includes a U.S. policy statement on Iran, identification of U.S. diplomatic efforts on Iran, would require the mandatory disclosure of Iran-related activity to the Securities and Exchange Commission, and would exclude Iranian students who intend to work in Iran’s energy sector or nuclear program.

¹The Iran Sanctions, Accountability and Human Rights Act.

(See ITT’s Online Archives 12010615 for summary of recently enacted National Defense Authorization Act which contained certain Iran sanctions.

See ITT's Online Archives 11121527 for summary of House passage of Iran sanctions legislation on December 14, 2011.

See ITT’s Online Archives 11052612 for summary of Congressional Research Service (CRS) report saying international sanctions are affecting Iran’s economy.

See ITT’s Online Archives 11052451 for summary of State Dept fact sheet stating that since the passage of CISADA, five multinational oil firms have been persuaded to withdraw all significant activity from Iran.

See ITT’s Online Archives 11032913 for detailed summary of CISADA.)