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Congress & the Middle East:
Iran Counter-Proliferation Act of 2007

(September 25, 2007)


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The U.S. House of Representatives passed the Iran Counter-Proliferation Act, introduced by Rep. Tom Lantos, by a vote of 397-16. The bill seeks to toughen sanctions against Iran by banning American firms from using foreign subsidiaries to get around current sanctions on Iran’s energy sector, banning free-trade agreements with countries investing in Iran, banning nuclear dealings with entities that trade with Iran’s nuclear sector, and making it more difficult for the president to waive the sanctions.  The bill’s companion in the Senate is stalled and will unlikely by considered this year.

H.R.1400

A BILL

To enhance United States diplomatic efforts with respect to Iran by imposing additional economic sanctions against Iran, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title- This Act may be cited as the `Iran Counter-Proliferation Act of 2007'.

SEC. 2. UNITED STATES POLICY TOWARD IRAN.

    (a) Findings- Congress finds the following:
      (1) The prospect of the Islamic Republic of Iran achieving nuclear arms represents a grave threat to the United States and its allies in the Middle East, Europe, and globally.
      (2) The nature of this threat is manifold, ranging from the vastly enhanced political influence extremist Iran would wield in its region, including the ability to intimidate its neighbors, to, at its most nightmarish, the prospect that Iran would attack its neighbors and others with nuclear arms. This concern is illustrated by the statement of Hashemi Rafsanjani, former president of Iran and currently a prominent member of two of Iran's most important decisionmaking bodies, of December 14, 2001, when he said that it `is not irrational to contemplate' the use of nuclear weapons.
      (3) The theological nature of the Iranian regime creates a special urgency in addressing Iran's efforts to acquire nuclear weapons.
      (4) Iranian regime leaders have persistently denied Israel's right to exist. Current President Mahmoud Ahmadinejad has called for Israel to be `wiped off the map' and the Government of Iran has displayed inflammatory symbols that express similar intent.
      (5) The nature of the Iranian threat makes it critical that the United States and its allies do everything possible--diplomatically, politically, and economically--to prevent Iran from acquiring nuclear-arms capability and persuade the Iranian regime to halt its quest for nuclear arms.
    (b) Sense of Congress- It is the sense of the Congress that--
      (1) Iranian President Ahmadinejad's persistent denials of the Holocaust and his repeated assertions that Israel should be `wiped off the map' may constitute a violation of the Convention on the Prevention and Punishment of the Crime of Genocide and should be brought before an appropriate international tribunal for the purpose of declaring Iran in breach of the Genocide Convention;
      (2) the United States should increase use of its important role in the international financial sector to isolate Iran;
      (3) Iran should be barred from entering the World Trade Organization (WTO) until all issues related to its nuclear program are resolved;
      (4) all future free trade agreements involving Iran should be conditioned on the requirement that the parties to such agreements pledge not to invest and not to allow companies based in its territory or controlled by its citizens to invest in Iran's energy sector or otherwise to make significant investment in Iran;
      (5) United Nations Security Council Resolution 1737 (December 23, 2006), which was passed unanimously and mandates an immediate and unconditional suspension of Iran's nuclear enrichment program, represents a critical gain in the world-wide campaign to prevent Iran's acquisition of nuclear arms and should be fully respected by all nations;
      (6) the United Nations Security Council should take further measures beyond Resolution 1737 to tighten sanctions on Iran, including preventing new investment in Iran's energy sector, as long as Iran fails to comply with the international community's demand to halt its nuclear enrichment campaign;
      (7) the United States should encourage foreign governments to direct state-owned entities to cease all investment in Iran's energy sector and all exports of refined petroleum products to Iran and to persuade, and, where possible, require private entities based in their territories to cease all investment in Iran's energy sector and all exports of refined petroleum products to Iran;
      (8) moderate Arab states have a vital and perhaps existential interest in preventing Iran from acquiring nuclear arms, and therefore such states, particularly those with large oil deposits, should use their economic leverage to dissuade other nations, including the Russian Federation and the People's Republic of China, from assisting Iran's nuclear program directly or indirectly and to persuade other nations, including Russia and China, to be more forthcoming in supporting United Nations Security Council efforts to halt Iran's nuclear program;
      (9) the United States should take all possible measures to discourage and, if possible, prevent foreign banks from providing export credits to foreign entities seeking to invest in the Iranian energy sector;
      (10) the United States should oppose any further activity by the International Bank for Reconstruction and Development with respect to Iran, or the adoption of a new Country Assistance Strategy for Iran, including by seeking the cooperation of other countries;
      (11) the United States should extend its program of discouraging foreign banks from accepting Iranian state banks as clients;
      (12) the United States should prohibit all Iranian state banks from using the United States banking system;
      (13) United States Federal pension plans should divest themselves of all non-United States companies investing more than $20,000,000 in Iran's energy sector;
      (14) State and local government pension plans should divest themselves of all non-United States companies investing more than $20,000,000 in Iran's energy sector;
      (15) the United States should designate the Islamic Revolutionary Guards Corps, which purveys terrorism throughout the Middle East and plays an important role in the Iranian economy, as a foreign terrorist organization under section 219 of the Immigration and Nationality Act, place the Islamic Revolutionary Guards Corps on the list of specially designated global terrorists, and place the Islamic Revolutionary Guards Corps on the list of weapons of mass destruction proliferators and their supporters;
      (16) United States concerns regarding Iran are strictly the result of actions of the Government of Iran; and
      (17) the American people have feelings of friendship for the Iranian people, regret that developments of recent decades have created impediments to that friendship, and hold the Iranian people, their culture, and their ancient and rich history in the highest esteem.

TITLE I--SUPPORT FOR DIPLOMATIC EFFORTS RELATING TO PREVENTING IRAN FROM ACQUIRING NUCLEAR WEAPONS

SEC. 101. SUPPORT FOR INTERNATIONAL DIPLOMATIC EFFORTS.

    It is the sense of the Congress that--
      (1) the United States should use diplomatic and economic means to resolve the Iranian nuclear problem;
      (2) the United States should continue to support efforts in the International Atomic Energy Agency and the United Nations Security Council to bring about an end to Iran's uranium enrichment program and its nuclear weapons program; and
      (3)(A) United Nations Security Council Resolution 1737 was a useful first step toward pressing Iran to end its nuclear weapons program; and
      (B) in light of Iran's continued defiance of the international community, the United Nations Security Council should adopt additional measures against Iran, including measures to prohibit investments in Iran's energy sector.

SEC. 102. PEACEFUL EFFORTS BY THE UNITED STATES.

    Nothing in this Act shall be construed as authorizing the use of force or the use of the United States Armed Forces against Iran.

TITLE II--ADDITIONAL BILATERAL SANCTIONS AGAINST IRAN

SEC. 201. APPLICATION TO SUBSIDIARIES.

    (a) In General- Except as provided in subsection (b), in any case in which an entity engages in an act outside the United States which, if committed in the United States or by a United States person, would violate Executive Order No. 12959 of May 6, 1995, Executive Order No. 13059 of August 19, 1997, or any other prohibition on transactions with respect to Iran that is imposed under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) and if that entity was created or availed of for the purpose of engaging in such an act, the parent company of that entity shall be subject to the penalties for such violation to the same extent as if the parent company had engaged in that act.
    (b) Exception- Subsection (a) shall not apply to any act carried out under a contract or other obligation of any entity if such contract or obligation was entered into before the acquisition of such entity by the parent company unless such parent company acquired such entity knowing or having reason to know that such contract or other obligation existed or such contract or other obligation is expanded to cover additional activities beyond the terms of such contract or other obligation as it existed at the time of such acquisition.
    (c) Definitions- In this section--
      (1) the term `entity' means a partnership, association, trust, joint venture, corporation, or other organization;
      (2) an entity is a `parent company' of another entity if it owns, directly or indirectly, more than 50 percent of the equity interest in that other entity and is a United States person; and
      (3) the term `United States person' means any United States citizen, any alien lawfully admitted for permanent residence to the United States, any entity organized under the laws of the United States, or any person in the United States.

SEC. 202. ADDITIONAL IMPORT SANCTIONS AGAINST IRAN.

    Effective 120 days after the date of the enactment of this Act--
      (1) goods of Iranian origin that are otherwise authorized to be imported under section 560.534 of title 31, Code of Federal Regulations, as in effect on March 5, 2007, may not be imported into the United States; and
      (2) activities otherwise authorized by section 560.535 of title 31, Code of Federal Regulations, as in effect on March 5, 2007, are no longer authorized.

SEC. 203. ADDITIONAL EXPORT SANCTIONS AGAINST IRAN.

    Effective on the date of the enactment of this Act--
      (1) licenses to export or reexport goods, services, or technology relating to civil aviation that are otherwise authorized by section 560.528 of title 31, Code of Federal Regulations, as in effect on March 5, 2007, may not be issued, and any such license issued before such date of enactment is no longer valid; and
      (2) goods, services, or technology described in paragraph (1) may not be exported or reexported.

TITLE III--AMENDMENTS TO THE IRAN SANCTIONS ACT OF 1996

SEC. 301. MULTILATERAL REGIME.

    Section 4(b) of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended to read as follows:
    `(b) Reports to Congress- Not later than 6 months after the date of the enactment of the Iran Counter-Proliferation Act of 2007 and every six months thereafter, the President shall transmit to the appropriate congressional committees a report regarding specific diplomatic efforts undertaken pursuant to subsection (a), the results of those efforts, and a description of proposed diplomatic efforts pursuant to such subsection. Each report shall include--
      `(1) a list of the countries that have agreed to undertake measures to further the objectives of section 3 with respect to Iran;
      `(2) a description of those measures, including--
        `(A) government actions with respect to public or private entities (or their subsidiaries) located in their territories, that are engaged in Iran;
        `(B) any decisions by the governments of these countries to rescind or continue the provision of credits, guarantees, or other governmental assistance to these entities; and
        `(C) actions taken in international fora to further the objectives of section 3;
      `(3) a list of the countries that have not agreed to undertake measures to further the objectives of section 3 with respect to Iran, and the reasons therefor; and
      `(4) a description of any memorandums of understanding, political understandings, or international agreements to which the United States has acceded which affect implementation of this section or section 5(a).'.

SEC. 302. MANDATORY SANCTIONS.

    Section 5(a) of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended by striking `2 or more of the sanctions described in paragraphs (1) through (6) of section 6' and inserting `the sanction described in paragraph (5) of section 6 and, in addition, one or more of the sanctions described in paragraphs (1), (2), (3), (4), and (6) of such section'.

SEC. 303. AUTHORITY TO IMPOSE SANCTIONS ON PRINCIPAL EXECUTIVE OFFICERS.

    Section 5 of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended by adding at the end the following:
    `(g) Authority To Impose Sanctions on Principal Executive Officers-
      `(1) SANCTIONS UNDER SECTION 6- In addition to the sanctions imposed under subsection (a), the President may impose any of the sanctions under section 6 on the principal executive officer or officers of any sanctioned person, or on persons performing similar functions as such officer or officers. The President shall include on the list published under subsection (d) the name of any person on whom sanctions are imposed under this paragraph.
      `(2) ADDITIONAL SANCTIONS- In addition to the sanctions imposed under paragraph (1), the President may block the property of any person described in paragraph (1), and prohibit transactions in such property, to the same extent as the property of a foreign person determined to have committed acts of terrorism for purposes of Executive Order 13224 of September 23, 2001 (50 U.S.C. 1701 note).'.

SEC. 304. UNITED STATES EFFORTS TO PREVENT INVESTMENT.

    Section 5 of the Iran Sanctions Act of 1996 is amended by adding the following new subsection at the end:
    `(h) United States Efforts To Address Planned Investment-
      `(1) REPORTS ON INVESTMENT ACTIVITY- Not later than January 30, 2008, and every 6 months thereafter, the President shall transmit to the Committee on Foreign Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate a report on investment and pre-investment activity, by any person or entity, that could contribute to the enhancement of Iran's ability to develop petroleum resources in Iran. For each such activity, the President shall provide a description of the activity, any information regarding when actual investment may commence, and what steps the United States has taken to respond to such activity.
      `(2) DEFINITION- In this subsection--
        `(A) the term `investment' includes the extension by a financial institution of credit or other financing to a person for that person's investment; and
        `(B) the term `pre-investment activity' means any activity indicating an intent to make an investment, including a memorandum of understanding among parties indicating such an intent.'

SEC. 305. CLARIFICATION AND EXPANSION OF DEFINITIONS.

    (a) Person- Section 14(13)(B) of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended to read as follows:
        `(B)(i) a corporation, business association, partnership, society, trust, financial institution, insurer, underwriter, guarantor, and any other business organization;
        `(ii) any foreign subsidiary of any entity described in clause (i); and
        `(iii) any nongovernmental entity operating as a business enterprise, such as an export credit agency; and'.
    (b) Petroleum Resources- Section 14(14) of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended by inserting after `petroleum' the second place it appears the following: `, petroleum refining capacity, liquefied natural gas, the sale of oil tankers or liquefied natural gas tankers,'.

SEC. 306. REMOVAL OF WAIVER AUTHORITY.

    (a) Six-Month Waiver Authority- Section 4 of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended--
      (1) in subsection (d)(1), by striking `except those with respect to which the President has exercised the waiver authority of subsection (c)';
      (2) by striking subsection (c); and
      (3) by redesignating subsections (d), (e), and (f) as subsections (c), (d), and (e), respectively.
    (b) General Waiver Authority- Section 9 of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended by striking subsection (c).
    (c) Construction- The amendments made by this section shall not be construed to affect any exercise of the authority of section 4(c) or section 9(c) of the Iran Sanctions Act of 1996 as in effect on the day before the date of the enactment of this Act.

TITLE IV--ADDITIONAL MEASURES

SEC. 401. ADDITIONS TO TERRORISM AND OTHER LISTS.

    (a) Determinations and Report- Not later than 120 days after the date of the enactment of this Act, the President shall--
      (1) determine whether the Islamic Revolutionary Guards Corps should be--
        (A) designated as a foreign terrorist organization under section 219 of the Immigration and Nationality Act (8 U.S.C. 1189);
        (B) placed on the list of specially designated global terrorists; and
        (C) placed on the list of weapons of mass destruction proliferators and their supporters; and
      (2) report the determinations under paragraph (1) to the Committee on Foreign Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate, including, if the President determines that such Corps should not be so designated or placed on either such list, the justification for the President's determination.
    (b) Extension of Authority- The President may block all property and interests in property of the following persons, to the same extent as property and interests in property of a foreign person determined to have committed acts of terrorism for purposes of Executive Order 13224 of September 21, 2001 (50 U.S.C. 1701 note) may be blocked:
      (1) Persons who assist or provide financial, material, or technological support for, or financial or other services to or in support of, the International Revolutionary Guards Corps (IRGC) or entities owned or effectively controlled by the IRGC.
      (2) Persons otherwise associated with the IRGC or entities referred to in paragraph (1).
    (c) Definitions- In this section--
      (1) the term `specially designated global terrorist' means any person included on the Annex to Executive Order 13224, of September 23, 2001, and any other person identified under section 1 of that Executive order whose property and interests in property are blocked by that section; and
      (2) the term `weapons of mass destruction proliferators and their supporters' means any person included on the Annex to Executive Order 13382, of June 28, 2005, and any other person identified under section 1 of that Executive order whose property and interests in property are blocked by that section.

SEC. 402. INCREASED CAPACITY FOR EFFORTS TO COMBAT UNLAWFUL OR TERRORIST FINANCING.

    (a) Findings- The work of the Office of Terrorism and Financial Intelligence of the Department of Treasury, which includes the Office of Foreign Assets Control and the Financial Crimes Enforcement Center, is critical to ensuring that the international financial system is not used for purposes of supporting terrorism and developing weapons of mass destruction.
    (b) Authorization- There is authorized for the Secretary of the Treasury $59,466,000 for fiscal year 2008 and such sums as may be necessary for each of the fiscal years 2009 and 2010 for the Office of Terrorism and Financial Intelligence.
    (c) Authorization Amendment- Section 310(d)(1) of title 31, United States Code, is amended by striking `such sums as may be necessary for fiscal years 2002, 2003, 2004, and 2005' and inserting `$85,844,000 for fiscal year 2008 and such sums as may be necessary for each of the fiscal years 2009 and 2010'.

SEC. 403. EXCHANGE PROGRAMS WITH THE PEOPLE OF IRAN.

    (a) Sense of Congress- It is the sense of the Congress that the United States should seek to enhance its friendship with the people of Iran, particularly by identifying young people of Iran to come to the United States under United States exchange programs.
    (b) Exchange Programs Authorized- The President is authorized to carry out exchange programs with the people of Iran, particularly the young people of Iran. Such programs shall be carried out to the extent practicable in a manner consistent with the eligibility for assistance requirements specified in section 302(b) of the Iran Freedom Support Act (Public Law 109-293).
    (c) Authorization- Of the amounts available to the Department of State for `Educational and Cultural Exchanges' to carry out the Mutual Educational and Cultural Exchange Act of 1961, there is authorized to be appropriated to the President to carry out this section the sum of $10,000,000 for fiscal year 2008.

SEC. 404. REDUCING CONTRIBUTIONS TO THE WORLD BANK.

    The President of the United States shall reduce the total amount otherwise payable on behalf of the United States to the International Bank for Reconstruction and Development for each fiscal year by the percentage represented by--
      (1) the total of the amounts provided by the Bank to entities in Iran, or for projects and activities in Iran, in the then preceding fiscal year; divided by
      (2) the total of the amounts provided by the Bank to all entities, or for all projects and activities, in the then preceding fiscal year.

SEC. 405. RESTRICTIONS ON NUCLEAR COOPERATION WITH COUNTRIES ASSISTING THE NUCLEAR PROGRAM OF IRAN.

    (a) In General- Notwithstanding any other provision of law or any international agreement, no agreement for cooperation between the United States and the government of any country that is assisting the nuclear program of Iran or transferring advanced conventional weapons or missiles to Iran may be submitted to the President or to Congress pursuant to section 123 of the Atomic Energy Act of 1954 (42 U.S.C. 2153), no such agreement may enter into force with such country, no license may be issued for export directly or indirectly to such country of any nuclear material, facilities, components, or other goods, services, or technology that would be subject to such agreement, and no approval may be given for the transfer or retransfer directly or indirectly to such country of any nuclear material, facilities, components, or other goods, services, or technology that would be subject to such agreement, until the President determines and reports to the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives that--
      (1) Iran has ceased its efforts to design, develop, or acquire a nuclear explosive device or related materials or technology; or
      (2) the government of the country that is assisting the nuclear program of Iran or transferring advanced conventional weapons or missiles to Iran--
        (A) has suspended all nuclear assistance to Iran and all transfers of advanced conventional weapons and missiles to Iran; and
        (B) is committed to maintaining that suspension until Iran has implemented measures that would permit the President to make the determination described in paragraph (1).
    (b) Construction- The restrictions in subsection (a)--
      (1) shall apply in addition to all other applicable procedures, requirements, and restrictions contained in the Atomic Energy Act of 1954 and other laws; and
      (2) shall not be construed as affecting the validity of agreements for cooperation that are in effect on the date of the enactment of this Act.
    (c) Definitions- In this section:
      (1) AGREEMENT FOR COOPERATION- The term `agreement for cooperation' has the meaning given that term in section 11 b. of the Atomic Energy Act of 1954 (42 U.S.C. 2014(b)).
      (2) ASSISTING THE NUCLEAR PROGRAM OF IRAN- The term `assisting the nuclear program of Iran' means the intentional transfer to Iran by a government, or by a person subject to the jurisdiction of a government with the knowledge and acquiescence of that government, of goods, services, or technology listed on the Nuclear Suppliers Group Guidelines for the Export of Nuclear Material, Equipment and Technology (published by the International Atomic Energy Agency as Information Circular INFCIRC/254/Rev. 3/Part 1, and subsequent revisions), or the Nuclear Suppliers Group Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, Material, and Related Technology (published by the International Atomic Energy Agency as Information Circular INFCIR/254/Rev. 3/Part 2, and subsequent revisions).
      (3) COUNTRY THAT IS ASSISTING THE NUCLEAR PROGRAM OF IRAN OR TRANSFERRING ADVANCED CONVENTIONAL WEAPONS OR MISSILES TO IRAN- The term `country that is assisting the nuclear program of Iran or transferring advanced conventional weapons or missiles to Iran' means--
        (A) the Russia Federation; and
        (B) any other country determined by the President to be assisting the nuclear program of Iran or transferring advanced conventional weapons or missiles to Iran.
      (4) TRANSFERRING ADVANCED CONVENTIONAL WEAPONS OR MISSILES TO IRAN- The term `transferring advanced conventional weapons or missiles to Iran' means the intentional transfer to Iran by a government, or by a person subject to the jurisdiction of a government with the knowledge and acquiescence of that government, of goods, services, or technology listed on--
        (A) the Wassenaar Arrangement list of Dual Use Goods and Technologies and Munitions list of July 12, 1996, and subsequent revisions; or
        (B) the Missile Technology Control Regime Equipment and Technology Annex of June 11, 1996, and subsequent revisions.

SEC. 406. ELIMINATION OF CERTAIN TAX INCENTIVES FOR OIL COMPANIES INVESTING IN IRAN.

    (a) In General- Subsection (h) of section 167 of the Internal Revenue Code of 1986 (relating to amortization of geological and geophysical expenditures) is amended by adding at the end the following new paragraph:
      `(6) DENIAL WHEN IRAN SANCTIONS IN EFFECT-
        `(A) IN GENERAL- If sanctions are imposed under section 5(a) of the Iran Sanctions Act of 1996 (relating to sanctions with respect to the development of petroleum resources of Iran) on any member of an expanded affiliated group the common parent of which is a foreign corporation, paragraph (1) shall not apply to any expense paid or incurred by any such member in any period during which the sanctions are in effect.
        `(B) EXPANDED AFFILIATED GROUP- For purposes of subparagraph (A), the term `expanded affiliated group' means an affiliated group as defined in section 1504(a), determined--
          `(i) by substituting `more than 50 percent' for `at least 80 percent' each place it appears, and
          `(ii) without regard to paragraphs (2), (3), and (4) of section 1504(b).'.
    (b) Effective Date- The amendment made by subsection (a) shall apply to expense paid or incurred on or after January 1, 2007.

TITLE V--MISCELLANEOUS PROVISIONS

SEC. 501. TERMINATION.

    (a) Termination- The restrictions provided in sections 203, 404, and 405 shall cease to be effective with respect to Iran om the date on which the President determines and certifies to the appropriate congressional committees that Iran--
      (1) has ceased its efforts to design, develop, manufacture, or acquire--
        (A) a nuclear explosive device or related materials and technology;
        (B) chemical and biological weapons; and
        (C) ballistic missiles and ballistic missile launch technology;
      (2) has been removed from the list of countries the governments of which have been determined, for purposes of section 6(j) of the Export Administration Act of 1979 (50 U.S.C. 2405(j)), section 620A of the Foreign Assistance Act of 1961, section 40 of the Arms Export Control Act, or any other provision of law, to have repeatedly provided support for acts of international terrorism; and
      (3) poses no significant threat to United States national security, interests, or allies.
    (b) Definition- In subsection (a), the term `appropriate congressional committees' means the Committee on Foreign Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate.

Sources: Library of Congress

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