[House Report 104-523]
[From the U.S. Government Publishing Office]



104th Congress                                            Rept. 104-523
                        HOUSE OF REPRESENTATIVES

 2d Session                                                      Part 1
_______________________________________________________________________


 
                     IRAN OIL SANCTIONS ACT OF 1996
                                _______
                                

                 April 17, 1996.--Ordered to be printed

                                _______
                                

 Mr. Gilman, from the Committee on International Relations, submitted 
                             the following

                              R E P O R T

                             together with

                            Additional Views

                        [To accompany H.R. 3107]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on International Relations, to whom was 
referred the bill (H.R. 3107) to impose sanctions on persons 
exporting certain goods or technology that would enhance Iran's 
ability to explore for, extract, refine, or transport by 
pipeline petroleum resources, and for other purposes, having 
considered the same, report favorably thereon with amendments 
and recommend that the bill as amended do pass.
  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Iran Oil Sanctions Act of 1996''.

SEC. 2. FINDINGS.

  The Congress makes the following findings:
          (1) The efforts of the Government of Iran to acquire weapons 
        of mass destruction and the means to deliver them and its 
        support of international terrorism endanger potentially the 
        national security and foreign policy interests of the United 
        States and those countries with which the United States shares 
        common strategic and foreign policy objectives.
          (2) The objective of preventing the proliferation of weapons 
        of mass destruction and international terrorism through 
        existing multilateral and bilateral initiatives requires 
        additional efforts to deny Iran the financial means to sustain 
        its nuclear, chemical, biological, and missile weapons 
        programs.
          (3) The Government of Iran uses its diplomatic facilities and 
        quasi-governmental institutions outside of Iran to promote acts 
        of international terrorism and assist its nuclear, chemical, 
        biological, and missile weapons programs.

SEC. 3. DECLARATION OF POLICY.

  The Congress declares that it is the policy of the United States to 
deny Iran the ability to support international terrorism and to fund 
the development and acquisition of weapons of mass destruction and the 
means to deliver them by limiting the development of Iran's ability to 
explore for, extract, refine, or transport by pipeline petroleum 
resources of Iran.

SEC. 4. IMPOSITION OF SANCTIONS.

  (a) In General.--Except as provided in subsection (d), the President 
shall impose 2 or more of the sanctions described in paragraphs (1) 
through (5) of section 5 if the President determines that a person has, 
with actual knowledge or reason to know, on or after the date of the 
enactment of this Act--
          (1) exported, transferred, or released to Iran, nationals of 
        Iran, or entities owned or controlled by Iran or nationals of 
        Iran any items included under subparagraph (A) or (B) of 
        section 9(a)(1) on the List of Petroleum and Natural Gas-
        Related Goods and Technology established under section 9 (in 
        this Act referred to as the ``List'') if the provision of such 
        items would significantly and materially enhance Iran's ability 
        to develop petroleum resources of Iran--
                  (A) whether or not the items are exported from the 
                United States; and
                  (B) whether or not the items are subject to the 
                jurisdiction of the United States; or
          (2) made an investment of $40,000,000 or more (or any 
        combination of investments of at least $10,000,000 each, which 
        in the aggregate equals or exceeds $40,000,000 in any 12-month 
        period), that directly contributed to the enhancement of Iran's 
        ability to develop petroleum resources of Iran.
  (b) Persons Against Which the Sanctions Are To Be Imposed.--The 
sanctions described in subsection (a) shall be imposed on--
          (1) any person the President determines has carried out the 
        activities described in subsection (a); and
          (2) any person the President determines--
                  (A) is a successor entity to the person referred to 
                in paragraph (1);
                  (B) is a wholly owned subsidiary of the person 
                referred to in paragraph (1);
                  (C) is any other subsidiary of the person referred to 
                in paragraph (1) if that subsidiary, with actual 
                knowledge or reason to know, engaged in the activities 
                referred to in paragraph (1);
                  (D) is a parent of the person referred to in 
                paragraph (1) if that parent had actual knowledge or 
                reason to know of the activities referred to in 
                paragraph (1); or
                  (E) is an affiliate of the person referred to in 
                paragraph (1) if that affiliate, with actual knowledge 
                or reason to know, engaged in the activities referred 
                to in paragraph (1).
For purposes of this Act, any person or entity described in this 
subsection shall be referred to as a ``sanctioned person''.
  (c) Publication in Federal Register.--The President shall cause to be 
published in the Federal Register a current list of sanctioned persons. 
The removal of persons from, and the addition of persons to, the list, 
shall also be so published.
  (d) Exceptions.--The President shall not be required to apply or 
maintain the sanctions under subsection (a)--
          (1) in the case of procurement of defense articles or defense 
        services--
                  (A) under existing contracts or subcontracts, 
                including the exercise of options for production 
                quantities to satisfy requirements essential to the 
                national security of the United States;
                  (B) if the President determines in writing that the 
                person to which the sanctions would otherwise be 
                applied is a sole source supplier of the defense 
                articles or services, that the defense articles or 
                services are essential, and that alternative sources 
                are not readily or reasonably available; or
                  (C) if the President determines in writing that such 
                articles or services are essential to the national 
                security under defense coproduction agreements;
          (2) to products or services provided under contracts entered 
        into before the date on which the President publishes his 
        intention to impose the sanctions;
          (3) to--
                  (A) spare parts which are essential to United States 
                products or production;
                  (B) component parts, but not finished products, 
                essential to United States products or production; or
                  (C) routine servicing and maintenance of products, to 
                the extent that alternative sources are not readily or 
                reasonably available;
          (4) to information and technology essential to United States 
        products or production; or
          (5) to medicines, medical supplies, or other humanitarian 
        items.

SEC. 5. DESCRIPTION OF SANCTIONS.

  The sanctions to be imposed on a sanctioned person under section 4(a) 
are as follows:
          (1) Export-import bank assistance for exports to sanctioned 
        persons.--The President shall direct the Export-Import Bank of 
        the United States not to guarantee, insure, extend credit, or 
        participate in the extension of credit in connection with the 
        export of any goods or services to any sanctioned person.
          (2) Trade sanction.--The President shall both--
                  (A) order the United States Government not to issue 
                any specific license and not to grant any other 
                specific permission or authority to export any goods or 
                technology to a sanctioned person under--
                          (i) the Export Administration Act of 1979;
                          (ii) the Arms Export Control Act;
                          (iii) the Atomic Energy Act of 1954; or
                          (iv) any other statute that requires the 
                        prior review and approval of the United States 
                        Government as a condition for the export or re-
                        export of goods or services; and
                  (B) prohibit the importation into the United States 
                of products produced by any sanctioned person.
        Subparagraph (B) includes application to the importation of any 
        finished product or component part, whether shipped directly by 
        the sanctioned person or by another entity.
          (3) Loans from united states financial institutions.--The 
        United States Government shall prohibit any United States 
        financial institution from making loans or providing credits to 
        any sanctioned person totaling more than $10,000,000 in any 12-
        month period unless such person is engaged in activities to 
        relieve human suffering and the loans or credits are provided 
        for such activities.
          (4) Prohibitions on financial institutions.--The following 
        prohibitions shall be imposed against a sanctioned person that 
        is a financial institution:
                  (A) Designation as primary dealer.--Neither the Board 
                of Governors of the Federal Reserve System nor the 
                Federal Reserve Bank of New York may designate, or 
                permit the continuation of any prior designation of, 
                such financial institution as a primary dealer in 
                United States Government debt instruments.
                  (B) Government funds.--Such financial institution 
                shall not serve as agent of the United States 
                Government or serve as repository for United States 
                Government funds.
          (5) Procurement sanction.--The United States Government shall 
        not procure, or enter into any contract for the procurement of, 
        any goods or services from a sanctioned person.

SEC. 6. ADVISORY OPINIONS.

  The Secretary of State may, upon the request of any person, issue an 
advisory opinion to that person as to whether a proposed activity by 
that person would subject that person to sanctions under this Act. Any 
person who relies in good faith on such an advisory opinion which 
states that the proposed activity would not subject a person to such 
sanctions, and any person who thereafter engages in such activity, may 
not be made subject to such sanctions on account of such activity.

SEC. 7. TERMINATION OF SANCTIONS.

  (a) In General.--The requirement under section 4 to impose sanctions 
shall no longer have force or effect if 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; and
          (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, to have 
        repeatedly provided support for acts of international 
        terrorism.
  (b) Additional Requirement With Respect to Libya.--The requirement 
under section 4 to impose sanctions shall no longer have force and 
effect with respect to Libya only if the President, in addition to 
making the determination required by subsection (a), determines and 
certifies to the appropriate congressional committees that Libya has 
fulfilled the requirements of United Nations Security Council 
Resolution 731, adopted January 21, 1992.

SEC. 8. DURATION OF SANCTIONS; PRESIDENTIAL WAIVER.

  (a) Delay of Sanctions.--
          (1) Consultations.--If the President makes a determination 
        described in section 4(a) with respect to a foreign person, the 
        Congress urges the President to initiate consultations 
        immediately with the government with primary jurisdiction over 
        that foreign person with respect to the imposition of sanctions 
        under this Act.
          (2) Actions by government of jurisdiction.--In order to 
        pursue consultations under paragraph (1) with the government 
        concerned, the President may delay imposition of sanctions 
        under this Act for up to 90 days. Following such consultations, 
        the President shall immediately impose sanctions unless the 
        President determines and certifies to the Congress that the 
        government has taken specific and effective actions, including, 
        as appropriate, the imposition of appropriate penalties, to 
        terminate the involvement of the foreign person in the 
        activities that resulted in the determination by the President 
        under section 4(a) concerning such person.
          (3) Additional delay in imposition of sanctions.--The 
        President may delay the imposition of sanctions for up to an 
        additional 90 days if the President determines and certifies to 
        the Congress that the government with primary jurisdiction over 
        the person concerned is in the process of taking the actions 
        described in paragraph (2).
          (4) Report to congress.--Not later than 45 days after making 
        a determination under section 4(a), the President shall submit 
        to the Committee on Banking, Housing, and Urban Affairs of the 
        Senate and the Committee on International Relations of the 
        House of Representatives a report on the status of 
        consultations with the appropriate foreign government under 
        this subsection, and the basis for any determination under 
        paragraph (3).
  (b) Duration of Sanctions.--A sanction imposed under section 4(a) 
shall remain in effect for a period of not less than 2 years from the 
date on which it is imposed.
  (c) Presidential Waiver.--
          (1) Authority.--The President may waive the requirement in 
        section 4(a) to impose a sanction or sanctions on a person 
        described in section 4(b), and may waive the continued 
        imposition of a sanction or sanctions under subsection (b) of 
        this section, 30 days or more after the President determines 
        and so reports to the Committee on Banking, Housing, and Urban 
        Affairs of the Senate and the Committee on International 
        Relations of the House of Representatives that it is important 
        to the national interest of the United States to exercise such 
        waiver authority.
          (2) Contents of report.--Any report under paragraph (1) shall 
        provide a specific and detailed rationale for the determination 
        under paragraph (1), including--
                  (A) a description of the conduct that resulted in the 
                determination;
                  (B) in the case of a foreign person, an explanation 
                of the efforts to secure the cooperation of the 
                government with primary jurisdiction over the 
                sanctioned person to terminate or, as appropriate, 
                penalize the activities that resulted in the 
                determination;
                  (C) an estimate as to the significance of the 
                provision of the items described in section 4(a)(1) or 
                the investment described in section 4(a)(2), as the 
                case may be, to Iran's ability to develop its petroleum 
                resources; and
                  (D) a statement as to the response of the United 
                States in the event that the person concerned engages 
                in other activities that would be subject to section 
                4(a).
          (3) Effect of report on waiver.--If the President makes a 
        report under paragraph (1) with respect to a waiver of 
        sanctions on a person described in section 4(b), sanctions need 
        not be imposed under section 4(a) on that person during the 30-
        day period referred to in paragraph (1).

SEC. 9. GOODS AND TECHNOLOGY SUBJECT TO EXPORT CONTROL RESTRICTIONS.

  (a) Control List.--
          (1) Contents of list.--For purposes of the determinations to 
        be made under section 4(a), the President, in consultation with 
        the Secretary of State, the Secretary of Energy, and the heads 
        of other appropriate departments and agencies, shall establish 
        and maintain the List of Petroleum and Natural Gas-Related 
        Goods and Technology. The List shall consist of--
                  (A) all items listed in the Annex to Resolution 883 
                of the Security Council of the United Nations, adopted 
                November 11, 1993, and all types of equipment, 
                supplies, and grants of licenses prohibited by 
                paragraph 5 of that resolution; and
                  (B) any other goods or technology (including software 
                and technical data) that the President determines could 
                significantly or materially contribute to Iran's 
                ability to develop its petroleum resources, including 
                goods and technology that are required for the 
                development, production, or use of facilities 
                (including the repair, maintenance, or operation of 
                equipment) for the development of petroleum resources.
          (2) Publication.--The President, within 60 days after the 
        date of the enactment of this Act, shall cause the List to be 
        published in the Federal Register, together with any 
        regulations issued with respect thereto. Thereafter, any 
        revisions to the List or amendments to the regulations shall be 
        published in the same manner.
          (3) Advance notice to congress.--Not less than 30 days in 
        advance of the publication of the List, it shall be provided to 
        the Committee on Banking, Housing, and Urban Affairs of the 
        Senate and to the Committee on International Relations of the 
        House of Representatives. The President shall consult with each 
        such Committee regarding the content of the List and shall 
        respond to questions regarding the basis for the inclusion on, 
        or exclusion from, the List of specified items.
  (b) Statutory Construction.--Nothing in this section prevents the 
inclusion on the List of any items that may be produced in and traded 
internationally by persons or entities in countries other than the 
United States.

SEC. 10. REPORTS REQUIRED.

  (a) Report on Certain International Initiatives.--Not later than 6 
months after the date of the enactment of this Act, and every 6 months 
thereafter, the President shall transmit a report to the appropriate 
congressional committees describing--
          (1) the efforts of the President to mount a multilateral 
        campaign to persuade all countries to pressure Iran to cease 
        its nuclear, chemical, biological, and missile weapons programs 
        and its support of international terrorism;
          (2) the efforts of the President to persuade other 
        governments to ask Iran to reduce the presence of Iranian 
        diplomats and representatives of other government and military 
        or quasi-governmental institutions of Iran and to withdraw any 
        such diplomats or representatives who participated in the 
        takeover of the United States embassy in Tehran on November 4, 
        1979, or the subsequent holding of United States hostages for 
        444 days;
          (3) the extent to which the International Atomic Energy 
        Agency has established regular inspections of all nuclear 
        facilities in Iran, including those presently under 
        construction; and
          (4) Iran's use of Iranian diplomats and representatives of 
        other government and military or quasi-governmental 
        institutions of Iran to promote acts of terrorism or to develop 
        or sustain Iran's nuclear, chemical, biological, and missile 
        weapons programs.
  (b) Other Reports.--The President shall ensure the continued 
transmittal to the Congress of reports describing--
          (1) the nuclear and other military capabilities of Iran, as 
        required by section 601(a) of the Nuclear Non-Proliferation Act 
        of 1978 and section 1607 of the National Defense Authorization 
        Act for Fiscal Year 1993; and
          (2) the support provided by Iran for acts of international 
        terrorism, as part of the Department of State's annual report 
        on international terrorism.

SEC. 11. APPLICATION OF THE ACT TO LIBYA.

  (a) In General.--The sanctions of this Act, including the terms and 
conditions for the imposition, duration, and termination of sanctions, 
shall apply to persons making investments with respect to the 
development of petroleum resources of Libya, or exporting, 
transferring, or releasing of certain items to Libya, nationals of 
Libya, or entities owned or controlled by Libya, in the same manner as 
those sanctions apply under this Act to persons making investments with 
respect to the development of petroleum resources of Iran, or 
exporting, transferring, or releasing of certain items to Iran, 
nationals of Iran, or entities owned or controlled by Iran.
  (b) Application of Specific Provisions.--In applying the provisions 
of this Act with respect to Libya under subsection (a), each reference 
to ``Iran'' shall be deemed to be a reference to ``Libya''.

SEC. 12. DETERMINATIONS NOT REVIEWABLE.

  A determination to impose sanctions under this Act shall not be 
reviewable in any court.

SEC. 13. DEFINITIONS.

  As used in this Act:
          (1) Act of international terrorism.--The term ``act of 
        international terrorism'' means an act--
                  (A) which is violent or dangerous to human life and 
                that is a violation of the criminal laws of the United 
                States or of any State or that would be a criminal 
                violation if committed within the jurisdiction of the 
                United States or any State; and
                  (B) which appears to be intended--
                          (i) to intimidate or coerce a civilian 
                        population;
                          (ii) to influence the policy of a government 
                        by intimidation or coercion; or
                          (iii) to affect the conduct of a government 
                        by assassination or kidnapping.
          (2) Affiliate.--For purposes of section 4(b), a person is an 
        ``affiliate'' of another person if more than 50 percent of the 
        outstanding capital stock of or other beneficial interest in 
        both persons is owned, directly or indirectly, by a third 
        person or both persons are otherwise controlled by a third 
        person.
          (3) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the Committee on 
        Banking, Housing, and Urban Affairs and the Committee on 
        Foreign Relations of the Senate and the Committee on 
        International Relations of the House of Representatives.
          (4) Component part.--The term ``component part'' has the 
        meaning given that term in section 11A(e)(1) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2410a(e)(1)).
          (5) Develop and development.--To ``develop'', or the 
        ``development'' of, petroleum resources means the exploration 
        for, or the extraction, refining, or transportation by pipeline 
        of, petroleum resources.
          (6) Financial institution.--The term ``financial 
        institution'' includes--
                  (A) a depository institution (as defined in section 
                3(c)(1) of the Federal Deposit Insurance Act), 
                including a branch or agency of a foreign bank (as 
                defined in section 1(b)(7) of the International Banking 
                Act of 1978);
                  (B) a credit union;
                  (C) a securities firm, including a broker or dealer;
                  (D) an insurance company, including an agency or 
                underwriter;
                  (E) any other company that provides financial 
                services; and
                  (F) any subsidiary of an entity described in any of 
                subparagraphs (A) through (E).
          (7) Finished product.--The term ``finished product'' has the 
        meaning given that term in section 11A(e)(2) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2410a(e)(2)).
          (8) Foreign person.--The term ``foreign person'' means--
                  (A) an individual who is not a United States person 
                or an alien lawfully admitted for permanent residence 
                into the United States; or
                  (B) a corporation, partnership, or other 
                nongovernment entity which is not a United States 
                person.
          (9) Goods and technology.--The terms ``goods'' and 
        ``technology'' have the meanings given those terms in section 
        16 of the Export Administration Act of 1979 (50 U.S.C. app. 
        2415).
          (10) Investment.--The term ``investment'' means--
                  (A) the entry into a contract that includes 
                responsibility for the development of petroleum 
                resources located in Iran or Libya (as the case may 
                be), or the entry into a contract providing for the 
                general supervision and guarantee of another person's 
                performance of such a contract;
                  (B) the purchase of a share of ownership in that 
                development;
                  (C) the entry into a contract providing for the 
                participation in royalties, earnings, or profits in 
                that development, without regard to the form of the 
                participation; or
                  (D) the entry into or performance of--
                          (i) a contract for the financing of the 
                        development of petroleum resources located in 
                        Iran or Libya (as the case may be); or
                          (ii) a guaranty of another person's 
                        performance under such a contract.
          (11) Iran.--The term ``Iran'' includes any agency or 
        instrumentality of Iran.
          (12) Iranian diplomats and representatives of other 
        government and military or quasi-governmental institutions of 
        iran.--The term ``Iranian diplomats and representatives of 
        other government and military or quasi-governmental 
        institutions of Iran'' includes employees, representatives, or 
        affiliates of Iran's--
                  (A) Foreign Ministry;
                  (B) Ministry of Intelligence and Security;
                  (C) Revolutionary Guard Corps;
                  (D) Crusade for Reconstruction;
                  (E) Qods (Jerusalem) Forces;
                  (F) Interior Ministry;
                  (G) Foundation for the Oppressed and Disabled;
                  (H) Prophet's Foundation;
                  (I) June 5th Foundation;
                  (J) Martyr's Foundation;
                  (K) Islamic Propagation Organization; and
                  (L) Ministry of Islamic Guidance.
          (13) Libya.--The term ``Libya'' includes any agency or 
        instrumentality of Libya.
          (14) Nuclear explosive device.--The term ``nuclear explosive 
        device'' means any device, whether assembled or disassembled, 
        that is designed to produce an instantaneous release of an 
        amount of nuclear energy from special nuclear material (as 
        defined in section 11aa. of the Atomic Energy Act of 1954) that 
        is greater than the amount of energy that would be released 
        from the detonation of one pound of trinitrotoluene (TNT).
          (15) Parent.--For purposes of section 4(b), a person is a 
        ``parent'' of another person if that person owns, directly or 
        indirectly, more than 50 percent of the outstanding capital 
        stock of or other beneficial interest in that other person, or 
        otherwise controls that other person.
          (16) Person.--The term ``person'' means--
                  (A) a natural person;
                  (B) a corporation, business association, partnership, 
                society, trust, any other nongovernmental entity, 
                organization, or group, and any governmental entity 
                operating as a business enterprise; and
                  (C) any successor to any entity described in 
                subparagraph (B).
          (18) Petroleum resources.--The term ``petroleum resources'' 
        includes petroleum and natural gas resources.
          (19) Subsidiary.--(A) For purposes of section 4(b), and 
        subject to subparagraph (B), a person is a ``subsidiary'' of 
        another person if that other person owns, directly or 
        indirectly, more than 50 percent of the outstanding capital 
        stock of or other beneficial interest in that person, or 
        otherwise controls that person.
          (B) A person is a ``wholly owned'' subsidiary of another 
        person if that other person owns all of the outstanding capital 
        stock of or other beneficial interests in that person.
          (20) United states or state.--The term ``United States'' or 
        ``State'' means the several States, the District of Columbia, 
        the Commonwealth of Puerto Rico, the Commonwealth of the 
        Northern Mariana Islands, American Samoa, Guam, the United 
        States Virgin Islands, and any other territory or possession of 
        the United States.
          (21) United states person.--The term ``United States person'' 
        means--
                  (A) a natural person who is a citizen of the United 
                States or who owes permanent allegiance to the United 
                States; and
                  (B) a corporation or other legal entity which is 
                organized under the laws of the United States, any 
                State or territory thereof, or the District of 
                Columbia, if natural persons described in subparagraph 
                (A) own, directly or indirectly, more than 50 percent 
                of the outstanding capital stock or other beneficial 
                interest in such legal entity.

  Amend the title so as to read:

      A bill to impose sanctions on persons exporting certain items 
that would enhance Iran's ability to develop its petroleum resources 
and on persons making certain investments directly contributing to the 
enhancement of Iran's ability to develop its petroleum resources, and 
for other purposes.

                         Background and Purpose

    The ``Iran Oil Sanctions Act of 1996'' imposes sanctions on 
persons exporting certain goods or technology or making 
investments that would enhance the ability of Iran or Libya to 
explore for, extract, refine, or transport by pipeline 
petroleum resources. The bill will help deter the two countries 
from supporting international terrorism or acquiring weapons of 
mass destruction and associated delivery vehicles.
    The measure would require the President to impose two or 
more specified sanctions on persons that (1) export to Iran or 
Libya any goods or technology on a list of key petroleum 
technology items or (2) make investments to Iran or Libya of 
$40 million or more in one year to enhance the petroleum 
industries of these two countries.
    The legislation directs the President to establish a list 
of petroleum-related goods and technologies comprised of the 
list of choke point technology already in force on Libya 
pursuant to the annex of UN Security Council Resolution 883, as 
well as other goods or technology that the President determines 
could significantly or materially contribute to Iran's ability 
to develop its petroleum resources. The sanctions are to be 
imposed on any successor, parent, subsidiary, or affiliate of 
the sanctioned person.
    The legislation also requires the President to impose two 
or more of the following penalties on a sanctioned person: (1) 
denial of Eximbank assistance for any exports to the sanctioned 
person; (2) denial of specific licenses for exports of 
controlled technology to the sanctioned person and prohibition 
on imports from that company; (3) a prohibition on a sanctioned 
financial institution from serving as a primary dealer in U.S. 
Government bonds or as a repository for U.S. Government funds; 
(4) a prohibition on any U.S. financial institution from making 
any loan to a sanctioned person over $10 million per year; and 
(5) a ban on any U.S. Government procurement of any goods or 
services from a sanctioned person.
    The legislation allows the President the flexibility to 
delay imposition of sanctions for 90 days to pursue 
consultations with the government of the sanctioned person to 
terminate the sanctionable activities. An additional 90-day 
delay is provided for if that government is in the process of 
terminating those activities. The President may waive any of 
the sanctions if he determines that doing so is in the national 
interest.
    The Iran Oil Sanctions Act of 1996 requires the President 
to continue to report to Congress on Iran's nuclear and 
military capabilities, and on its support for international 
terrorism. To carry out the legislation, the President is given 
appropriate regulatory authority and exemption from judicial 
review in regard to the imposition of sanctions.
    It is the view of the committee that enactment of this 
legislation will be a key element in United States policy of 
cutting off sources of funding to those rogue regimes such as 
Iran and Libya who continue to support acts of terrorism and 
develop weapons of mass destruction.
    For Libya in particular, the Committee is convinced that 
there is an urgent need to increase pressure on Tripoli to gain 
compliance with the UN Security Council resolutions regarding 
the Pan Am 103 bombing. In regard to Iran, our current policies 
limiting their revenues and petroleum resources must be 
continued and further strengthened.
    In his remarks before the Senate in October of last year, 
Under Secretary of State Peter Tarnoff said ``A straight line 
links Iran's oil income and its ability to sponsor terrorism, 
build weapons of mass destruction, and acquire sophisticated 
armaments''. In his testimony before the Committee on 
International Relations on November 9, 1995, Under Secretary 
Tarnoff spelled out these concerns in detail: ``. . . by 
pressuring Iran's economy, we seek to limit the government's 
finances and thereby constrict Tehran's ability to fund rogue 
activities. We launched an initiative to block Iran's access to 
international capital its economy needs. We have worked 
bilaterally and within international financial institutions to 
keep other governments from providing Iran with credit. On May 
6, President Clinton issued Executive Order 12959, which 
imposed an embargo against Iran. The President's decision to 
sever American trade and investment with Iran signaled our 
commitment to exert the maximum efforts of this country to deny 
Iran financial resources. In particular, by barring American 
investment in Iran and prohibiting U.S. companies from buying 
Iranian oil, we have stopped the flow of money from the United 
States to Iran. We are now seeking to dissuade the 
international community from investing in Iran's petroleum 
sector. With these efforts, we are taking advantage of Iran's 
economic vulnerabilities, particularly its shortages in hard 
currency. We recognize that economic pressure takes time, but 
we are convinced that making Iran pay a price for its 
unacceptable activities is the best way to convince the Iranian 
leadership that it is in their country's best interest to 
abandon these policies.''
    Since the November 4, 1979 seizure of the U.S. hostages in 
Tehran, economic sanctions have formed a major part of U.S. 
policy toward Iran. Ten days after the seizure of the Embassy, 
President Carter declared a national emergency with respect to 
Iran, which the President has renewed every year since 1979. 
The United States broke diplomatic relations with Iran on April 
7, 1980. After an Administration determination of Iran's 
involvement in the bombing of the Marine barracks in Beirut in 
October 1983, Iran was placed on the U.S. list of state 
sponsors of terrorism on January 19, 1984. This disqualified 
Iran from receiving U.S. foreign aid, sales of items on the 
U.S. munitions list, Eximbank credits, and U.S. support for 
foreign loans, and requires strict licensing requirements for 
any U.S. exports of controlled goods or technology.
    On March 15, 1995, in response to reports that the U.S. 
firm Conoco, Inc. had initialed a contract with Iran to develop 
oil fields around Iran's Sirri Island, President Clinton issued 
Executive Order No. 12957 (60 Fed. Reg. 14615, March 17, 1995). 
The Executive order declared a national emergency with respect 
to Iran pursuant to the International Emergency Economic Powers 
Act (50 U.S.C. 1703(c)(IEEPA) and prohibited the financing, 
management, or supervision by U.S. persons of the development 
of Iranian petroleum resources. Conoco, Inc., withdrew from its 
contract with Iran shortly thereafter.
    Following the imposition of the new restrictions, the 
Administration determined that Iran continued to engage in 
activities that represent a threat to the peace and security of 
all nations, including support for international terrorism and 
for acts that undermine the Middle East peace process, and 
intensified efforts to acquire weapons of mass destruction. On 
May 6, 1995, President Clinton issued Executive Order No. 12959 
(60 Fed. Reg. 24757, May 9, 1995) to further respond to the 
Iranian threat.
    The May 6 Executive order prohibited U.S. goods, 
technology, and services to Iran and the reexport of certain 
U.S. goods and technology to Iran from third countries. It also 
prohibited new investments by U.S. persons in Iran and any 
brokering and other dealing by U.S. persons in goods and 
services of Iranian origin or owned or controlled by Iran. The 
order prohibited any U.S. persons or companies from approving, 
facilitating, or financing performance by any entity owned or 
controlled by a U.S. person of reexport, investment, and trade 
transactions that a U.S. person is prohibited from performing.
    The Executive order thereby closed the loophole under which 
foreign affiliates of U.S. oil companies were purchasing 
approximately 25% of Iran's oil exports for overseas trade. 
(Under a 1987 Executive order, no Iranian goods could be 
imported into the United States; that prohibition was continued 
by the May 6, 1995 order.) As justification for issuing the 
trade and investment ban, the Administration had said that the 
trading of large amounts of Iranian oil by U.S. companies and 
their foreign affiliates, as well as continued exportation of 
U.S. products to Iran, had undermined U.S. efforts to persuade 
its allies to help isolate Iran.
    The U.S. trade ban represented a major new step in U.S. 
policy toward Iran, and the Administration stressed that the 
trade ban had made Iran more isolated and that U.S. allies were 
not extending Iran any new credits. Japan suspended the second 
tranche of a development loan for construction of a 
hydroelectric dam over Iran's Karun River. However, U.S. allies 
did not join the trade and investment ban, or even 
substantially alter their policy of ``critical dialogue'' with 
Iran, an attempt to moderate Iranian behavior through 
engagement. Administration officials testified before both 
houses of Congress that Iran was able to find new buyers for 
almost all the oil previously purchased by affiliates of U.S. 
oil companies.
    The most significant setback to U.S. efforts to 
multilateralize the isolation of Iran was the July 13, 1995 
signing of a contract between Total SA and Iran to develop the 
Sirri islands--the same contract abandoned by Conoco, Inc. The 
French government said it would not provide official credits to 
finance the deal. Several months later, Iran opened up ten 
major petroleum development projects to foreign investment, 
each project exceeding $50 million. These projects and 
potential investments led the Administration and many in 
Congress to agree that new steps were needed to choke off 
foreign investment in Iran's oil industry. It is expected that 
doing so would, over the long term, deny Iran the revenues and 
resources to develop weapons of mass destruction and fund 
groups that commit international terrorism and acts designed to 
derail the Arab-Israeli peace process.
    On September 8, 1995, Senator Alfonse D'Amato introduced S. 
1228 sanctioning persons that assist in the development of 
Iran's petroleum resources. A subsequent version of S. 1228, 
including provisions relating to Libya, passed the Senate on 
December 20 of 1995. Approved without dissent, this measure has 
a shorter list of sanctions and requires the President to apply 
one of them on foreign companies only in the case of major 
investments in Iran or Libya.
    The prospect for the enactment of a comprehensive sanctions 
regime in the House and Senate has already a strong deterrent 
effect on potential oil field investors and suppliers in Iran 
despite consistent efforts by the Government of Iran to attract 
foreign capital and expertise in the development of its off-
shore petroleum resources.
    The Committee would note that the prospect for the 
implementation of sanctions on Libya has also refocused the 
efforts of the administration to increase pressure on the 
Libyan regime to comply fully with all pending UN Security 
Resolutions, including the release of the two suspects in the 
Pan Am 103 bombing.

                            Committee Action

    On May 2, 1995, the Subcommittee on International Economic 
Relations held a hearing on U.S. Policy Toward Iran and how it 
can be made more effective. Witnesses included the Honorable 
Peter King; Assistant Secretary of State Robert H. Pelletreau; 
Patrick Clawson, Senior Fellow at the Institute for National 
Strategic Studies at the National Defense University; Geoffrey 
Kemp, Senior Associate at the Carnegie Endowment for 
International Peace; Jeffrey Schott, Senior Fellow at the 
Institute for International Economics; Arthur T. Downey, Vice 
President of Baker Hughes, Inc. on behalf of the National 
Foreign Trade Council, Inc.; and John H. Lichtblau, Chairman of 
the Petroleum Industry Research Foundation, Inc.
    On October 12, 1995, Chairman Benjamin A. Gilman introduced 
H.R. 2458, a bill imposing sanctions on foreign persons 
providing oilfield equipment and technology to Iran.
    On November 9, 1995, the Committee on International 
Relations held a hearing on U. S. Policy Toward Iran with 
witnesses from the administration and the private sector 
including: The Honorable Peter Tarnoff, Under Secretary of 
State for Political Affairs; Mr. Bruce Reidel, Deputy Assistant 
Secretary of Defense for Near East and South Asia; Mr. Patrick 
Clawson with the Institute for National Strategic Studies at 
the National Defense University; Mr. Geoffrey Kemp at the Nixon 
Center for Peace and Freedom; Mr. Michael Eisenstadt, Senior 
Fellow at the Washington Institute for Near East Policy; and 
Mr. Arthur Downey representing the National Foreign Trade 
Council.
    On March 19, 1996, Chairman Benjamin A. Gilman introduced 
H.R. 3107, The Iran Oil Sanctions Act of 1996 requiring the 
President to impose two or more sanctions on any person 
annually providing $40 million or more of investments to Iran 
or Libya or exporting key oilfield goods and technology to 
these same countries. Original cosponsors of the legislation 
include Representatives Berman, Gejdenson, Burton, King, Shaw 
and Forbes. Additional cosponsors of the legislation include 
Representatives Lantos, Torricelli, Royce, English, Zimmer, 
Filner, Fox, Bunn, Barcia, Diaz-Balart, Meehan, Ehrlich, 
Cunningham, Collins (MI), Lipinski, Engel, Frank, Sanford, 
Funderburk, Pryce, Kasich, Meek, McCollum, Traficant, 
Knollenberg, Stark, Porter, Paxon, Deutsch, Hall, Smith (NJ), 
Burton, Frazer, Metcalf, Evans, Bryant, Saxton, Houghton, 
Durbin, Kaptur, Souder, McHugh, Roybal-Allard, Wyden, Markey, 
Oberstar, Thurman, Sisisky, Lofgren, LoBiondo, Lowey, Shays, 
LaTourette, Cardin, Kleczka, Foley, Yates, Ackerman, Torres, 
Coyne, Towns, Cooley, Pelosi, DeFazio, Ward, Lewis (GA), 
Frelinghuysen, and Furse.
    On March 21, 1996, the Committee on International Relations 
received testimony from Senator D'Amato strongly endorsing the 
provisions in H.R. 3107. The Committee subsequently debated the 
measure and reported out H.R. 3106 by a vote of 32 to 0.

            RollCall Votes and Amendments and Final Passage

    In compliance with clause (2)(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the record of committee 
rollcall votes taken on final passage or amendments during the 
committee's consideration of H.R. 3107, as amended, is set out 
on the following pages, as is a report of the committee's final 
action on the bill.

     Description of Amendment, Motion, Order, or Other Proposition

    By voice vote, the committee accepted several amendments 
including an en bloc amendment offered by Chairman Gilman 
clarifying certain definitions in the bill, specifying a two 
year time frame for the duration of sanctions and making other 
technical and conforming changes.
    It also accepted an amendment offered by Mr. Torricelli 
requiring an additional condition for the lifting of sanctions 
on Libya, specifying that the two Libyan nationals indicted for 
their role in the destruction of Pan American Flight 103 be 
made available for prosecution pursuant United Nations Security 
Council Resolution 731 of January 21, 1992.
    The Committee accepted an amendment offered by Mr. Campbell 
specifying that the requirement in the bill preventing a 
sanctioned person from receiving a loan or credit in an amount 
exceeding $10 million be modified to ensure that it is 
determined on an annual basis.
    The Bereuter motion that the bill be reported to the House 
with the recommendation that the bill, as amended, do pass.
    Totals: 32 yeas, 0 nays.

                                                                                                                
----------------------------------------------------------------------------------------------------------------
              Name and State                 Yea      Nay              Name and State              Yea     Nay  
----------------------------------------------------------------------------------------------------------------
Benjamin A. Gilman, NY., Chmn............        X  .......  Lee H. Hamilton, IN..............        X  .......
William F. Goodling, PA..................        X  .......  Sam Gejdenson, CN................        X  .......
James A. Leach, IA.......................  .......  .......  Tom Lantos, CA...................        X  .......
Toby Roth, WI............................        X  .......  Robert G. Torricelli, NJ.........        X  .......
Henry J. Hyde, IL........................  .......  .......  Howard L. Berman, CA.............        X  .......
Doug Bereuter, NE........................        X  .......  Gary L. Ackerman, NY.............  .......  .......
Christopher H. Smith, NJ.................  .......  .......  Harry Johnston, FL...............  .......  .......
Dan Burton, IN...........................  .......  .......  Eliot L. Engel, NY...............        X  .......
Jan Meyers, KS...........................        X  .......  Eni F.H. Faleomavaega, Am. Samoa.  .......  .......
Elton Gallegly, CA.......................  .......  .......  Matthew G. Martinez, CA..........        X  .......
Ileana Ros-Lehtinen, FL..................        X  .......  Donald M. Payne, NJ..............  .......  .......
Cass Ballenger, NC.......................        X  .......  Robert E. Andrews, NJ............        X  .......
Dana Rohrabacher, CA.....................        X  .......  Robert Menendez, NJ..............        X  .......
Donald A. Manzullo, IL...................  .......  .......  Sherrod Brown, OH................        X  .......
Edward R. Royce, CA......................        X  .......  Cynthia A. McKinney, GA..........        X  .......
Peter T. King, NY........................        X  .......  Alcee L. Hastings, FL............  .......  .......
Jay Kim, CA..............................        X  .......  Albert Russell Wynn, MD..........        X  .......
Sam Brownback, KS........................        X  .......  James P. Moran, VA...............        X  .......
David Funderburk, NC.....................        X  .......  Victor O. Frazer, VI.............  .......  .......
Steven J. Chabot, OH.....................        X  .......  Charlie Rose, NC.................  .......  .......
Marshall ``Mark'' Sanford, SC............        X  .......  Pat Danner, MO...................        X  .......
Matt Salmon, AZ..........................        X                                                              
Amo Houghton, NY.........................        X                                                              
Tom Campbell, CA.........................        X                                                              
----------------------------------------------------------------------------------------------------------------

    The Committee notes that Messrs. Ackerman and Payne arrived 
in the Committee room shortly after the conclusion of the vote 
and after the Committee had adjourned and told the Chairman 
that had they been present they would have voted ``aye.''
    The Committee notes the receipt of the following statement 
from Mr. Manzullo:

                                                    March 21, 1996.
Hon. Ben Gilman,
Chairman, Committee on International Relations,
Washington, DC.
    Dear Ben: I was unavoidably detained in a meeting with 
constituents from the 16th District of Illinois that prevented 
me from casting the only and final vote during the committee's 
mark-up of the Iranian sanctions legislation. If I were 
present, I would have voted ``aye.'' I ask that my remarks 
appear in the committee record reflecting my vote preference on 
this legislation.
    Thank you for your kind attention to my request.
    Best wishes.
            Sincerely,
                                        Donald A. Manzullo,
                                                Member of Congress.

                      Section-by-Section Analysis

Section 1. Short title

    The title of the bill is the ``Iran Oil Sanctions Act of 
1996''.

Section 2. Findings

    This section states that the efforts of the Government of 
Iran to acquire weapons of mass destruction and the means to 
deliver them as well as its support for international terrorism 
endanger the interests of the United States and those countries 
sharing common strategic and foreign policy objectives.
    Furthermore, additional bilateral and multilateral efforts 
are needed to deny Iran the financial means to develop its 
nuclear, chemical, biological and missile weapons programs. 
While multilateral efforts to reduce the flow of new credits, 
sensitive dual use technology and new weapons systems going to 
Iran are now underway, much more remains to be done by the 
United States to implement its containment policy and to ensure 
that Iran does not attract significant new investment from any 
foreign company.
    This section also states that Iran uses its diplomatic 
facilities and quasi-governmental institutions outside that 
country to promote terrorism and the acquisition of materials 
and technology for its weapons of mass destruction programs.

Section 3. Declaration of policy

    In this section, Congress declares that it is U.S. policy 
to deny Iran the means to threaten U.S. interests and those of 
our allies by limiting its ability to extract, refine, process, 
store, or transport petroleum resources.

Section 4. Imposition of sanctions

    This section defines those persons to be subjected to 
sanctions as any person that the President determines has 
exported to Iran any goods on a List of Petroleum and Natural 
Gas-Related Goods and Technology. Also subject to sanctions 
would be any person that the President determines has with 
knowledge or reason to know made investments in Iran of at 
least $40 million in any one year that directly contributed to 
enhancement of Iran's ability to develop its petroleum 
resources. Any person determined by the President to be a 
successor or wholly owned subsidiary of the sanctioned person 
also would be subject to sanctions as would any parent that 
knew of the activity or affiliate that with knowledge or reason 
to know engaged in the activity.
    The Committee would note that the intent of the legislation 
is not to apply sanctions on the transfer of all petroleum and 
natural gas-related products being acquired by Iran or Libya. 
The Administration is specifically given the discretion of 
deciding which goods and services would significantly and 
materially enhance Iran's ability to develop its petroleum 
resources. In the view of the Committee, the administration has 
the flexibility it needs in implementing this provision with a 
view toward denying Iran those key goods and technology items 
needed to develop its offshore oil resources.
    In making a determination to impose the sanctions contained 
in this section, the administration must use this so-called 
``trade trigger'' or the $40 million investment trigger, but it 
has broad latitude in making such a determination based on the 
circumstances of each discrete export to or investment in Iran. 
The Committee would note that the $40 million investment 
threshold in Section 4(A)(2) is intended as an absolute cap on 
each person's investment in any project or projects increasing 
the ability of Iran to develop its petroleum resources. The 
Committee does not intend that the sanctions provided in this 
section would extend to portfolio investments made by any other 
person in a sanctioned person.

Section 5. Description of sanctions

    This section describes five specified sanctions, at least 
two of which shall be imposed on a person sanctioned under the 
provisions of the previous section:
          denial of Eximbank assistance for exports to a 
        sanctioned person;
          trade sanction, including denial of licenses for 
        exports of controlled technology to the sanctioned 
        person, and a prohibition on imports into the United 
        States of products produced by the sanctioned person;
          prohibition of loans by U.S. financial institutions 
        totaling more than $10 million in one year to a 
        sanctioned person unless such person is engaged in 
        activities to relieve human suffering and the loans and 
        credits are provided for such purpose;
          prohibition of sanctioned financial institutions from 
        serving as a primary dealer in U.S. Government debt 
        instruments or as a repository of U.S. Government funds 
        or an agent of the U.S. Government;
          prohibition of U.S. government procurement from a 
        sanctioned person.

Section 6. Advisory opinions

    This section provides an opportunity for any person to 
request the Secretary of State to issue an advisory opinion as 
to whether a proposed activity by that person would subject 
that person to sanctions under the Act. Any person who relies 
in good faith on an advisory opinion stating that the activity 
would not lead to the imposition of sanctions would not be made 
subject to sanctions for that specific activity.

Section 7. Termination of sanctions

    This section terminates sanctions imposed pursuant to the 
Act if the President determines and certifies to the 
appropriate congressional committees that Iran has ceased its 
efforts to acquire weapons of mass destruction and has been 
removed from the U.S. list of state sponsors of terrorism 
established pursuant to section 6(j) of the Export 
Administration Act of 1979. It also provides a further 
requirement with respect to Libya that the President certify to 
the appropriate congressional committees that Libya has 
fulfilled the requirements of United Nations Security Council 
Resolution 731 adopted on January 21, 1992.

Section 8. Duration of sanctions; Presidential waiver

    This section urges the President to begin consultations 
with the government with primary jurisdiction over any foreign 
person sanctioned under the provisions of this Act. The 
President may delay imposition of sanctions under this Act for 
up to 90 days in order to pursue consultations with this 
government. He shall then immediately impose sanctions on this 
person unless he can certify to Congress that the government 
has taken very specific actions, including imposing appropriate 
penalties, to terminate the activities giving rise to the 
sanctions. The Committee would expect that certification to 
establish that these actions were fully implemented and were 
having a demonstrable impact on the sanctioned person.
    An additional 90-day delay period is also provided if the 
President determines and certifies to Congress that the 
government with primary jurisdiction over the person is taking 
actions to terminate the sanctionable activities. The President 
is also directed to submit a report to the appropriate 
congressional committees 45 days after making a determination 
regarding sanctionable activities, on the status of his 
negotiations with the foreign government with primary 
jurisdiction. This report would also lay out in detail the 
circumstances leading to any delays in the implementation of 
sanctions.
    Consistent with the sanctions provisions in previously-
enacted proliferation-related statutes, including the Iran-Iraq 
Non-proliferation Act of 1992, sanctions shall be imposed for a 
period of at least two years.
    The President may waive the requirement to impose sanctions 
30 days after reporting to the appropriate congressional 
committees that doing so is important to the national interest 
of the United States. In the view of the Committee, this waiver 
standard and the provisions in this section permitting delay in 
the implementation of sanctions should give the administration 
enough flexibility and opportunity for negotiation sufficient 
to avoid the imposition of sanctions in nearly all 
circumstances.

Section 9. Goods and technology subject to export control restrictions

    This section directs the President, in consultation with 
the appropriate departments and agencies, to establish and 
maintain a list of petroleum and natural gas-related goods and 
technology consisting of a United Nations-approved list 
contained in the Annex to resolution 883 of the UN Security 
Council of November 11, 1993, together with other equipment and 
supplies prohibited in other parts of that resolution, as well 
as any other goods and technology that the President determines 
could significantly and materially contribute to the ability of 
Iran to develop its petroleum resources. It is the intent of 
the Committee that the administration use the United Nations-
approved list as a basis for the construction of a 
comprehensive and updated list of items that are essential to 
Iran's ability to further develop its petroleum development 
resources.

Section 10. Report required

    The President is directed to continue to report to Congress 
on Iran's nuclear and other military capabilities, and its 
support for international terrorism.
    The bill requires a new Administration report to Congress 
on efforts to isolate Iran and curb its ability to promote 
terrorism and Islamic revolution and clandestinely procure high 
technology components of weapons of mass destruction. The 
required report must describe Administration efforts to mount a 
multilateral campaign to isolate Iran; Administration efforts 
to persuade other governments to ask Iran to limit its 
diplomatic presence; Iran's use of its diplomats, diplomatic 
facilities, and quasi-governmental institutions to promote 
terrorism or sustain its weapons of mass destruction programs; 
and the extent to which the International Atomic Energy Agency 
has established regular inspections of Iran's nuclear 
facilities.
    The Committee is requiring this new report because the 
annual report to Congress on terrorism addresses only a few of 
these issues. There is no mention in the annual terrorism 
report of U.S. efforts to persuade its allies in Europe to 
expel certain Iranian diplomats who were allegedly linked to 
the holding of the American hostages during 1979-81. Each of 
the past few annual terrorism reports have addressed only a few 
Iranian diplomats, usually the most well-known, alleged to be 
involved in promoting terrorism. The list of Iranian ministries 
allegedly involved in such activity, which are to be reported 
on by the Administration, are defined in Section 13.
    The annual terrorism report does not assess Iran's use of 
parastatal organizations, such as the foundation for the 
Oppressed, to support terrorist groups or procure technology. 
The Foundation is one of many Foundations, and controls 
billions of dollars in companies and financial assets. There 
are consistent reports, not cited in the annual terrorism 
report, that the Foundation, which is headed by the former 
Minister of the Revolutionary Guard, uses its funds to procure 
technology in Europe. Other such foundations, such as the June 
5th Foundation that offers a $2 million reward for the killing 
of Salman Rushdie, are included in a comprehensive list in 
section 13 of Iranian Diplomats and Representatives of Other 
Government and Military or Quasi Governmental Institutions of 
Iran.

Section 11. Application of the Act to Libya

    This section applies all the terms and conditions of the 
Act with respect to the imposition, duration, and terminations 
of sanctions to persons making investments in the petroleum 
resources of Libya or exporting or transferring certain items 
to Libya. All the other provisions in the Act shall apply 
equally to Libya, with each reference in the Act to Iran 
considered to be a reference to Libya.

Section 12. Determinations not reviewable

    In light of the growing threats to U.S. national security 
interests posed by Iran and Libya, the Committee believes that 
once a determination is made to impose sanctions under this 
Act, the imposition of these sanctions should be carried out in 
a timely fashion and, as in the case of similar sanctions laws, 
should not be subject to judicial review. The Committee would 
also note that Section 8 of the legislation provides for delays 
in the imposition of sanctions and a careful and a deliberate 
review of their implementation by the administration in 
consultation with the Congress.

Section 13. Definitions

    This section defines the terms contained in the Act, 
including: act of international terrorism; appropriate 
congressional committees; component part; develop and 
development; financial institution; finished product; foreign 
person; goods and technology; investment; Iran; Iranian 
diplomats and representatives; Libya; nuclear explosive device; 
parent; person; petroleum resources; subsidiary; United States 
or State; and United States person.

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report. Among the principal 
oversight activities which were contributed to the Committee's 
formulation of H.R. 3107 were:

          On May 2, and November 9, 1995 hearings were held on 
        U.S. policy toward Iran, and numerous consultations and 
        briefings took place on U.S.-Iran issues from January 
        through March of 1996 between staff, Committee Members 
        and Executive branch officials.

    As a result of these oversight activities, the Committee 
recommends that the House approve H.R. 3107 as reported.

         Committee on government reform and oversight findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New budget authority and tax expenditures

    The Committee adopts the cost estimate of the Congressional 
Budget Office, set out below, as its submission of any required 
information on new budget authority, new spending authority, 
new credit authority, or an increase or decrease in the 
national debt required by clause 2(l)(3)(B) of rule XI of the 
House of Representatives.

                     Inflationary Impact Statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee estimates that 
H.R. 3107 will have no significant inflationary impact on 
prices and costs in the operation of the national economy.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets forth 
with respect to H.R. 3107 the following estimate and comparison 
prepared by the Director of the Congressional Budget Office 
under section 403 of the Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 27, 1996.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 3107, Iran Oil Sanctions Act of 1996, as ordered 
reported by the House Committee on International Relations on 
March 21, 1996. The bill would require the President to impose 
sanctions on any person who he determines has enhanced the 
development of the petroleum resources of Iran or Libya through 
the export, transfer, or release of goods or technology or 
through direct investment.
    The bill would not affect receipts or direct spending and 
would not be subject to pay-as-you-go procedures under section 
252 of the Balanced Budget and Emergency Deficit Control Act of 
1985. The bill could increase spending subject to 
appropriations action to cover the cost of gathering and 
analyzing information, publishing lists of sanctioned persons, 
and providing advisory opinions. Based on information provided 
by the Administration, CBO estimates that such costs would 
total less than $1 million a year.
    Section 4 of the Unfunded Mandates Reform Act of 1995, P.L. 
104-4, excludes legislative provisions that are necessary for 
the national security from the application of that act. CBO has 
determined that all provisions of H.R. 3107 fit within that 
provision.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Joseph C. 
Whitehill for impacts on the federal budget, Pepper Santalucia 
for impacts on state, local, and tribal governments, and Eric 
Labs and Amy Downs for private sector impacts.
            Sincerely,
                                         June E. O'Neill, Director.

                         Jurisdictional Issues

    H.R. 3107, as ordered reported by the Committee on 
International Relations, contains several provisions which fall 
within the shared jurisdiction of other committees of the 
House, including the Committee on Ways and Means, Banking and 
Financial Services and Government Reform and Oversight.
  ADDITIONAL VIEWS OF THE HONORABLE LEE H. HAMILTON AND THE HONORABLE 
                             JAMES P. MORAN

    We supported this bill because we agree with the sponsors 
that the United States should take steps to limit Iran's 
earnings from exports of oil and gas, which directly contribute 
to its ability to develop weapons of mass destruction and to 
promote terrorism.
    We have several concerns about the bill as it was reported 
from the International Relations Committee, however, and we 
hope those concerns will receive further consideration as this 
bill moves forward.

                     no disagreement on objectives

    When it comes to Iran, Members of the International 
Relations Committee disagree neither on the problem, nor on the 
goal of U.S. policy.
    Iran threatens vital U.S. national interests. It is 
actively pursuing weapons of mass destruction, it is a 
confirmed sponsor of terrorism, and it is working to undermine 
the Middle East peace process. In response to these threats, 
the President last year imposed a total embargo on U.S. trade 
with Iran, a step which all of us supported.
    Members of the Committee agree that a key goal of U.S. 
policy should be to persuade Iran's major trading partners and 
creditors to take similar steps to isolate Iran and press for 
changes in its policies.
    Where we sometimes disagree is not on strategy, but on the 
best tactics with which to pursue that strategy and our shared 
policy goals in Iran.

                          concerns on the bill

    We have three principal reservations about the bill in its 
current form.
    First, we are concerned that the bill could be 
counterproductive to the goal of increasing multilateral 
economic and political pressure on Iran.
    The sanctions in the bill will penalize foreign firms for 
commercial activity which, though objectionable to us, is legal 
in their home countries. We understand that other governments 
are likely to charge that the bill's import and government 
procurement sanctions, at a minimum, violate trade and other 
international agreements to which the United States is a party.
    In official demarches, other governments have already 
notified us that they object to these measures on sovereignty 
grounds. Past experience suggests they will take blocking 
measures. Retaliatory measures against U.S. trade, perhaps 
authorized by international adjudicatory bodies, are also 
possible.
    Our concern here is not that we may offend our allies, for 
we object to their unwillingness to adopt tougher measures to 
isolate Iran economically and politically. Our concern is more 
practical: The United States cannot adequately pressure Iran's 
economy alone. A strong adverse reaction by other governments 
to a U.S. effort to penalize their firms will put us at odds 
with some of our closest friends. That could ultimately reduce, 
rather than increase, multilateral cooperation on Iran.
    We believe recent history is instructive. Western efforts 
to confront another dangerous country--the former Soviet 
Union--were set back in 1982 when the United States tried to 
sanction firms participating in the development of a Soviet gas 
pipeline.
    The target of U.S. pressure in 1982 was subsidiaries of 
U.S. firms, yet the reaction in Europe was intense. And U.S. 
sanctions did not achieve their goal: the sanctions were not 
sustainable, and the United States ultimately had to lift them. 
The bill before us today would hit foreign firms. We can expect 
at least as strong a response.
    We do not object in principle to pressuring foreign firms 
or their home governments to cease commercial activity that 
helps Iran increase its export earnings. But we hope that as 
this bill moves forward, an effort will be made to weigh likely 
international responses to it, because those responses will 
influence the effectiveness of our effort to change Iranian 
government behavior.
    In this regard, we would also like more attention focused 
on the relative merits of sanctioning investment versus 
sanctioning trade. We believe investment is more critical to 
Iran's energy sector than trade. The marginal benefit of trying 
to cut off trade in this area would be relatively small when 
compared with the international diplomatic and economic costs 
of such efforts.
    Our second concern about this bill relates to the costs it 
may impose on the U.S. economy.
    We note that four of the five sanctions called for in this 
bill will--if imposed--result in lost sales or business for 
U.S. firms. That could cost jobs. Retaliation by other 
governments could cost more jobs.
    We believe the United States must sometimes pay an economic 
price to ensure its security. But we also believe that 
successful U.S. sanctions must harm the target country more 
than they harm the United States. If they do not, they will not 
earn public support and will be difficult to sustain.
    To ensure this result, the President needs sufficient 
flexibility to weigh the economic and security implications of 
different sanctions measures. It is not clear to us that the 
sanctions provisions of this bill give the President that 
flexibility.
    The bill requires the President to impose two of five 
possible sanctions. But all of the sanctions won't be available 
in each case:
          Some would only apply to foreign contractors.
          Some would only apply to foreign financial services 
        companies.
    We are hopeful that Congress will be able to give the 
President the full range of policy tools he needs to do what 
only he can: balance U.S. foreign policy and economic 
interests.
    Third, we would have preferred that this bill had treated 
Iran and Libya differently.
    Members of the Committee agree that Libya and Iran each 
threaten U.S. national interests, but they do so in different 
ways, and the international response to each country has also 
been different.
    There is already considerable multilateral cooperation on 
isolating Libya. UN sanctions are already in place. We are 
concerned that new unilateral U.S. sanctions could jeopardize 
current multilateral cooperation and could undercut current 
U.S. efforts to expand existing UN sanctions.
    Furthermore, since there is already substantial foreign 
investment in Libya's energy sector, investment sanctions will 
not have much of a deterrent effect.
    We believe the Administration has put forward a 
constructive proposal on Libya--one that treats it differently 
from Iran, but with equal firmness. Under the Administration's 
proposal, U.S. sanctions would be linked to compliance with 
existing UN sanctions. We think this proposal deserves serious 
consideration.

                               Conclusion

    We voted for this bill because we agree with its 
fundamental objective--changing Iranian government behavior. We 
would like this bill to move forward.
    We raise these concerns in an effort to be constructive. We 
want this legislation to be effective. It will not be effective 
if it generates excessive conflict with our allies and hurts 
American workers more than it hurts Iran. We do not know 
whether that would be the case if the bill were enacted in its 
current form, but we hope Congress and the Administration can 
carefully evaluate these issues as the bill moves forward.

                                   Lee H. Hamilton.
                                   James P. Moran.