On March 23, 2017, members of Congress introduced two new bills aimed at increasing non-nuclear sanctions against Iran. While several Iran sanctions bills have been introduced since the start of the year, these newly introduced bills are particularly notable due to their bipartisan support from an influential group of legislators. The bills represent legislative compromises between Republican Iran sanctions hawks and Democrats seeking to preserve the Joint Comprehensive Plan of Action (JCPOA) agreement regarding Iran’s nuclear program.
In the Senate, a bipartisan group of senators introduced the Countering Iran’s Destabilizing Activities Act of 2017. The bill’s sponsors included Senate on Foreign Relations Committee Chairman Bob Corker (R-TN) and Ranking Member Ben Cardin (D-MD). In the House, a similarly bipartisan group of representatives introduced the Iran Ballistic Missiles and International Sanctions Enforcement Act of 2017, including House Foreign Affairs Committee Chairman Ed Royce (R-CA) and Ranking Member Eliot Engel (D-NY), House Majority Leader Kevin McCarthy (R-CA), and House Minority Whip Steny Hoyer (D-MD).
Under the JCPOA, the United States suspended a number of sanctions previously imposed in response to Iran’s nuclear program, and agreed not to implement new “nuclear-related” sanctions. Therefore, these bills purport to impose new sanctions only with regard to Iran’s non-nuclear activities, such as its ballistic missile program, support for terrorism, and human rights abuses.
The Senate Bill
Iran’s Ballistic Missile Program
Section 4 of the Senate bill would require the President to impose sanctions against US and foreign individuals and entities “engaged in any activity that has materially contributed, or poses a risk of materially contributing” to Iran’s ballistic missile program or other programs aimed at creating delivery systems for weapons of mass destruction. Specifically, sanctioned persons would be subject to “blocking,” meaning that US persons would be required to freeze sanctioned persons’ assets to the extent they were in their possession or control, and would be cut off from practically all transactions or dealings with sanctioned persons. The provision is particularly notable due to its potential breadth, as the bill does not specify what activities are considered to “materially contribute” to Iran’s missile program, and because it would authorize new secondary sanctions, which present unique compliance obstacles for companies and individuals who may have little or no nexus to the US. Another notable aspect of the provision is that in the event an entity is sanctioned, the restrictions would apply not only to the entity, but to its parent company, subsidiaries, and affiliates. Moreover, sanctions would apply regardless of whether the person knowingly contributed to Iran’s missile program or not.
Iranian Revolutionary Guard Corps / Quds Force
Section 5 of the bill targets the Iranian Revolutionary Guard Corps (“IRGC”) and its special forces unit, the Quds Force (“IRGC-QF”). Currently, the IRGC is listed as a Specially Designated National (“SDN”) based on its proliferation activity and involvement in human rights abuses, as well as pursuant to sanctions set out in the Iran Threat Reduction and Syria Human Rights Act, while the IRGC-QF has been designated as an SDN based on its support for terrorism and involvement in Syria. The bill would require the President to impose sanctions against the IRGC, the IRGC-QF, and their officials, agents, and affiliates under Executive Order 13224, which targets persons involved in terrorism. Notably, this stops short of requiring the President to designated the IRGC as a Foreign Terrorist Organization, which, as explained in a previous post, would potentially have a far-reaching impact on non-US person business with Iran. Overall, section 5 of the Senate bill will be of only limited practical impact, as the IRGC and IRGC-QF already are SDNs.
Codification of Previous Designations
Section 8 codifies the designation of persons as SDNs pursuant to Executive Order 13382 (Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters) and Executive Order 13224. Such persons could only be removed from the SDN List upon certification from the President to Congress that they were no longer engaged in the activities that prompted their designation. This provision may be unpopular with the Executive Branch because it limits its flexibility to “delist” SDNs.
Human Rights Abuses
Section 6 would require the Secretary of State to submit to Congress a list of all persons responsible for gross human rights violations against individuals in Iran who seek to expose illegal activity conducted by the Government of Iran or to defend or promote internationally recognized human rights and freedoms. The provision would also authorize the President to block such persons.
Under section 7, the bill would require the President to impose sanctions on any person that “engages in any activity that materially contributors to the supply, sale, or transfer directly or indirectly to or from Iran” of certain enumerated conventional weapons, as well as any person providing “technical training, financial resources or services, advice, other services or assistance” related to the supply, sale, or transfer of those weapons.
Finally, the bill includes certain waiver provisions. Section 11(a)(3) contains a humanitarian waiver for transactions related to food, agricultural commodities, medicine, and medical devices. Section 12(a) authorizes the President to issue case-by-case waivers where “vital to the national security interests of the United States”.
The House Bill
Report Regarding Supply Chain for Iran’s Ballistic Missile Program
Section 2(c) of the House bill requires the Executive Branch to produce a report analyzing the domestic and global supply chain that supports Iran’s ballistic missile program and listing specific individuals and companies within that supply chain; the list would serve as the basis to impose sanctions under other provisions of the bill. This provision seems to build on the February 3, 2017 designations of a number of individuals and entities – in Iran, Lebanon, the UAE, China, and elsewhere – for supporting Iran’s ballistic missile program, including by transferring dual-use items to Iran via a China-based network of suppliers. See our previous advisory on those designations here.
Exports of Ballistic Missile Technology and Certain Conventional Weapons
Section 2(e) of the House bill would amend section 5(b) of the Iran Sanctions Act of 1996 (“ISA”) by requiring the President to impose sanctions on persons engaged in the transfer of ballistic missile technology and destabilizing types of conventional weapons, in addition to WMDs. Importantly, it would lower the knowledge threshold to impose sanctions when a person knew or should have known its export, reexport, or transfer of an item may result in another person transferring the item to Iran. Section 5(b) currently requires the person to know that its export, reexport, or transfer would likely result in another person exporting the item to Iran in violation of that section. A person sanctioned under section 2(e) would be subject to certain sanctions set out in the ISA, including potential loss of trading privileges, loss of access to the US financial system, ineligibility to receive US government contracts, exclusion from the United States (which, as described below, would be a new sanction under the ISA), and blocking of property.
Material Support for Iran’s Ballistic Missile Program / Foreign Governments
Section 2(f) would require the President to sanction the Government of Iran and any foreign person or agency or instrumentality of a foreign state that supplies material support for Iran’s ballistic missile program. Section 2(g) requires the President to impose sanctions on a foreign person or foreign state that knowingly exports prohibited significant conventional weapons to Iran. This latter provision may be aimed at Russia, which sent S-300 air defense missiles to Iran in April 2016, and similar potential sellers to Iran. Persons or governments sanctioned under these provisions are subject to certain sanctions set out in the ISA, including blocking of property, exclusion from the United States, and a prohibition on the export of munitions to a sanctioned foreign state. As explained below, the restrictions on entry into the United States and munitions exports would be new sanctions added to the ISA by the House bill.
New ISA Sanctions
Finally, section 2(i) adds two new types of sanctions to the ISA section 6(a) “menu” of sanctions: (1) a visa ban for designated persons or officers, principals, and controlling shareholders of a designated entity; and (2) a two-year ban on exports of items on the United States Munitions List (“USML”) and Commerce Control List 600-series to a foreign state if one of that state’s agencies or instrumentalities violates the above provisions.
Prospects for Passage
The bills’ prospects for advancement are uncertain and depend on a number of factors, including congressional and White House legislative and policy priorities, as well as regional developments such as the Iranian presidential elections scheduled for May 19, 2017. However, based on the bipartisan support for the bills from key members of Congress, the bills’ chances for advancement seem relatively high. We will continue to monitor these bills and provide updates on their advancement as appropriate.