International Law Advisory - Renewal of ILSA Sanctions on Iran

The United States has enacted legislation to codify certain Iranian Transactions Regulations (“ITR”) sanctions imposed by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and to amend sections of the Iran and Libya Sanctions Act of 1996 (“ILSA”, 50 U.S.C. § 1701 Note).  H.R. 6198 passed the U.S. House of Representatives on Thursday, 28 September 2006, by a vote of 397-21.  Subsequently, the U.S. Senate agreed to its terms by unanimous consent on Saturday, 30 September 2006, and the President signed the legislation on the same day, and H.R. 6198 became Pub. L. No. 109-293.  Essentially, H.R. 6198 maintains the status quo of OFAC sanctions involving Iran and removes ILSA sanctions previously applied against Libya.  Key amendments that will be enacted by H.R. 6198 are provided below.

Section 101 codifies, but does not expand, existing ITR sanctions imposed by §§ 1 and 3 of Executive Order Number (“EO”) of EO 12957; §§ 1(e), (1)(g), and (3) of EO 12959; and §§ 2, 3, and 5 of EO 13059, by which OFAC has promulgated the economic sanctions program against Iran as set forth in 31 C.F.R. Part 560.  The section allows the President to terminate such sanctions, in whole or in part, if the President notifies Congress at least 15 days in advance of such termination.

Section 201 authorizes the President at his or her discretion:

• to waive ILSA sanctions in the interests of national security for no longer than a six-month period and renew such a waiver for a subsequent period of no longer than six months each, and
  
• to initiate an investigation into the possible imposition of ILSA sanctions against a person upon receipt of the United States of credible information relating to prohibited investment activity in Iran, which should be completed no longer than 180 days after initiation.

Section 202 authorizes the imposition of (1) ILSA sanctions with respect to Iran’s development of petroleum resources and (2) ILSA mandatory sanctions regarding Iran’s development of weapons of mass destruction and other military capabilities, applying to actions taken on or after 6 June 2006.

Section 203 provides one additional element—i.e., that Iran must no longer pose a significant threat to U.S. national security interests—to the list of requirements to which the President must certify before ILSA sanctions are terminated against Iran.

Section 204 renews the ILSA sanctions on Iran for five years and extends the ILSA’s sunset provision until 31 December 2011.

Section 205 removes ILSA sanctions against Libya.

Finally, the remaining sections of H.R. 6198 seek to promote U.S. policies that will (1) promote democracy in Iran, (2) support the facilitation of nuclear nonproliferation in Iran, and (3) prevent money laundering for the development or production of weapons of mass destruction.  The third policy concerning money laundering imposes no further obligations on U.S. persons, but rather adds evidence of entities involved in proliferating weapons of mass destruction or missiles as a factor by which the Treasury Department may determine that a jurisdiction or institution is a primary money laundering concern.

Should you have any questions regarding the passage of H.R. 6198, and its impact on the ILSA or ITR, please contact Ed Krauland at 202-429-8083 or Jack Hayes at 202-429-6491.