H.R. 2194: Iran Refined Petroleum Sanctions Act

H.R. 2194

Iran Refined Petroleum Sanctions Act

Date
December 15, 2009 (111th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

H.R. 2194 is being considered on the floor on December 15, 2009, under suspension of the rules, requiring a two-thirds majority vote for passage. This legislation was introduced by Rep. Howard Berman (D-CA) on April 30, 2009. The Committee on Foreign Affairs approved the bill by voice vote on October 28, 2009.

Bill Summary

H.R. 2194 would amend the Iran Sanctions Act of 1996 to provide additional sanctions specifically related to Iran's production of refined petroleum products and the export to Iran of such products, among other measures. The purpose of the legislation is to pressure the Government of Iran to verifiably suspend, and ultimately dismantle its weapons-applicable nuclear program, including the ceasing of all uranium enrichment activities through the application of targeted sanctions. The sanctions would terminate once the President determines that Iran has ceased its efforts to design, develop, manufacture or acquire a nuclear explosive device or related materials and technology, and has ceased nuclear-related activities, including uranium enrichment, that would facilitate such efforts.

The bill amends the Iran Sanctions Act to restate the requirement that the President impose two or more current sanctions if a person has "knowingly" made an investment of $20 million or more (or any combination of investments of at least $5 million each that exceeds $20 million in any 12-month period) that directly and significantly contributed to Iran's ability to develop its petroleum resources. The sanctions would apply to "persons" who knowingly: (1) sell, lease, or provide to Iran any goods, services, technology, information or support that would allow Iran to maintain or expand its domestic production of refined petroleum products, including any assistance in the construction, modernization, or repair of refineries that make refined petroleum products; or (2) provide Iran with refined petroleum products or engage in an activity that could contribute to Iran's ability to import refined petroleum resources; including providing ships, vehicles, or other means of transportation to deliver refined petroleum products to Iran or insurance or financing services for such activities. The value of such support would have to exceed $200,000 or a combined total of $500,000 in any 12-month period.

Under H.R. 2194, companies found to be in violation would effectively be barred from doing business in the U.S. Those entities would be prohibited from carrying out any transactions in U.S. dollars, barred from making any transaction with a U.S. person or financial institution, would have any assets under the jurisdiction of the U.S. frozen, and sanctioned entities could not receive U.S. government contracts.

The legislation requires the President to initiate an investigation of possible sanctions violations upon receipt of credible information that a violation has occurred and to make a determination whether a violation occurred within 180 days of beginning the investigation.

H.R. 2194 requires the President to report within 90 days and every six months thereafter on any person who has (1) provided Iran with refined petroleum or engaged in activity that could contribute to Iran's ability to import refined petroleum resources; (2) sold, leased, or provided to Iran any goods, services, or technology that would allow Iran to maintain or expand its domestic production of refined petroleum resources; (3) acted as an agent, alias, front, instrumentality, representative, official, or affiliate of the Islamic Revolutionary Guard Corp; or (4) provided material support or conducted any commercial or financial transactions with the Islamic Revolutionary Guard Corps.

The bill would prohibit new agreements for civil nuclear cooperation with a country that has not taken action against an individual within its jurisdiction who has contributed to Iran's nuclear weapons program or Iran's program to produce a nuclear-capable missile. It also limits licenses under any current such agreements.

H.R. 2194 states that it is the policy of the U.S. to impose sanctions on the Central Bank of Iran, any Iranian financial institution engaged in proliferation or terrorist activities and any entities conducting financial transactions with those institutions.

Finally, the bill would apply sanctions to the subsidiaries and parent companies of entities found to be violating the Iran Sanctions Act, and would extend that Act through December 31, 2016.

 

 

Background

Iran poses a significant threat to the U.S. and our allies in the Middle East and elsewhere, especially due to its continuing nuclear weapons program. Additionally, Iran has been designated a State Sponsor of Terrorism since 1984. The human rights situation in Iran deteriorated in 2009, as highlighted by the fraudulent election on June 12, 2009, and the murder, arrests, show trials, and ongoing suppression of freedom of expression in its aftermath.

Despite being one of the largest producers of crude oil in the world, Iran lacks adequate refining capability to meet its own domestic needs for gasoline, diesel and aviation fuel. Iran imports 25 to 40 percent of its refined petroleum needs.

Since the 1979 seizure of the U.S. Embassy in Iran, economic sanctions have formed a major part of U.S. foreign policy toward Iran. Sanctions against Iran were initially imposed in early 1984 after Iran's involvement in the bombing of the Marine barracks in Beirut, Lebanon.

In 1996, Congress enacted the Iran-Libya Sanctions Act, to deter foreign investment in Iran's energy sector by imposing sanctions on foreign firms that make such investments. However, none of the sanctions have been applied against foreign entities, largely because of strong opposition from the European Union (EU). Although the sanctions were enacted over a decade ago, no Administration has sanctioned a foreign entity for investing $20 million or more in Iran's energy sector, even though there have been numerous instances of such investments since the sanctions became law.

In 2006, President Bush signed legislation expanding U.S. sanctions against Iran. The legislation reauthorized current law and codified certain executive orders that require the President to impose any two of six specified sanctions against any foreign company or entity investing $20 million or more in the development of Iran's oil or gas industry-if such an investment directly and significantly contributes to the enhancement of Iran's ability to develop its petroleum resources.

Nonetheless, recent events have shown that Iran is proceeding with its nuclear weapons program. In September 2009, reports surfaced that Iran is developing a secret uranium enrichment site near Qom that appears to have no civilian application. The site was not disclosed to the International Atomic Energy Agency (IAEA). Iran continues to enrich uranium, install and operate additional centrifuges, and conduct research on new types of centrifuges.

According to Foreign Affairs Committee Ranking Member Ileana Ros-Lehtinen (R-FL), "This important bill strengthens sanctions to prevent the sale of refined petroleum products to the Iranian regime-with a particular eye to oil flowing from Venezuela to Iran."

 

 

Cost

The Congressional Budget Office (CBO) estimates that H.R. 2194 would not affect direct spending or revenues.