[House Report 109-417]
[From the U.S. Government Publishing Office]



                                                                       
109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-417

======================================================================



 
                        IRAN FREEDOM SUPPORT ACT

                                _______
                                

 April 25, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 282]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on International Relations, to whom was 
referred the bill (H.R. 282) to hold the current regime in Iran 
accountable for its threatening behavior and to support a 
transition to democracy in Iran, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     9
Summary of Provisions of the Bill as Reported....................    11
Background and Need for the Legislation..........................    12
Hearings.........................................................    14
Committee Consideration..........................................    15
Votes of the Committee...........................................    15
Committee Oversight Findings.....................................    15
New Budget Authority and Tax Expenditures........................    15
Congressional Budget Office Cost Estimate........................    15
Performance Goals and Objectives.................................    18
Constitutional Authority Statement...............................    18
Section-by-Section Analysis and Discussion.......................    18
Agency Views.....................................................    28
New Advisory Committees..........................................    31
Congressional Accountability Act.................................    31
Federal Mandates.................................................    32
Exchange of Letters Regarding Committee Jurisdiction.............    32
Changes in Existing Law Made by the Bill, as Reported............    38
Additional Views.................................................    47

                             The Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Iran Freedom Support Act''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

            TITLE I--CODIFICATION OF SANCTIONS AGAINST IRAN

Sec. 101. Codification of sanctions.
Sec. 102. Liability of parent companies for violations of sanctions by 
foreign entities.

 TITLE II--AMENDMENTS TO THE IRAN AND LIBYA SANCTIONS ACT OF 1996 AND 
             OTHER PROVISIONS RELATED TO INVESTMENT IN IRAN

Sec. 201. Multilateral regime.
Sec. 202. Imposition of sanctions.
Sec. 203. Termination of sanctions.
Sec. 204. Sunset.
Sec. 205. Clarification and expansion of definitions.
Sec. 206. United States pension plans.
Sec. 207. Report by Office of Global Security Risks.
Sec. 208. Technical and conforming amendments.

TITLE III--DIPLOMATIC EFFORTS TO CURTAIL IRANIAN NUCLEAR PROLIFERATION 
               AND SPONSORSHIP OF INTERNATIONAL TERRORISM

Sec. 301. Diplomatic efforts.
Sec. 302. Strengthening the Nuclear Nonproliferation Treaty.

                      TITLE IV--DEMOCRACY IN IRAN

Sec. 401. Declaration of Congress regarding United States policy toward 
Iran.
Sec. 402. Assistance to support democracy in Iran.
Sec. 403. Waiver of certain export license requirements.

            TITLE I--CODIFICATION OF SANCTIONS AGAINST IRAN

SEC. 101. CODIFICATION OF SANCTIONS.

    (a) Codification of Sanctions.--United States sanctions, controls, 
and regulations with respect to Iran imposed pursuant to Executive 
Order 12957, Executive Order 12959, and sections 2 and 3 of Executive 
Order 13059 (relating to exports and certain other transactions with 
Iran) as in effect on January 1, 2006, shall remain in effect until the 
President certifies to the Committee on International Relations of the 
House of Representatives and the Committee on Foreign Relations of the 
Senate that the Government of Iran has verifiably dismantled its 
weapons of mass destruction programs.
    (b) No Effect on Other Sanctions Relating to Support for Acts of 
International Terrorism.--Subsection (a) shall have no effect on United 
States sanctions, controls, and regulations relating to a determination 
under section 6(j)(1)(A) of the Export Administration Act of 1979 (50 
U.S.C. App. 2405(j)(1)(A)), section 620A(a) of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2371(a)), or section 40(d) of the Arms Export 
Control Act (22 U.S.C. 2780(d)) relating to support for acts of 
international terrorism by the Government of Iran, as in effect on 
January 1, 2006.

SEC. 102. LIABILITY OF PARENT COMPANIES FOR VIOLATIONS OF SANCTIONS BY 
                    FOREIGN ENTITIES.

    (a) In General.--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 12959 of May 
6, 1995, Executive Order 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) Definitions.--In this section--
            (1) 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
            (2) the term ``entity'' means a partnership, association, 
        trust, joint venture, corporation, or other organization.

 TITLE II--AMENDMENTS TO THE IRAN AND LIBYA SANCTIONS ACT OF 1996 AND 
             OTHER PROVISIONS RELATED TO INVESTMENT IN IRAN

SEC. 201. MULTILATERAL REGIME.

    (a) Reports to Congress.--Section 4(b) of the Iran and Libya 
Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended to read as 
follows:
    ``(b) Reports to Congress.--Not later than six months after the 
date of the enactment of the Iran Freedom Support Act and every six 
months thereafter, the President shall submit 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).''.
    (b) Waiver.--Section 4(c) of such Act (50 U.S.C. 1701 note) is 
amended to read as follows:
    ``(c) Waiver.--
            ``(1) In general.--The President may, on a case by case 
        basis, waive for a period of not more than six months the 
        application of section 5(a) with respect to a national of a 
        country, if the President certifies to the appropriate 
        congressional committees at least 30 days before such waiver is 
        to take effect that--
                    ``(A) such waiver is vital to the national security 
                interests of the United States; and
                    ``(B) the country of the national has undertaken 
                substantial measures to prevent the acquisition and 
                development of weapons of mass destruction by the 
                Government of Iran.
            ``(2) Subsequent renewal of waiver.--If the President 
        determines that, in accordance with paragraph (1), such a 
        waiver is appropriate, the President may, at the conclusion of 
        the period of a waiver under paragraph (1), renew such waiver 
        for subsequent periods of not more than six months each.''.
    (c) Investigations.--Section 4 of such Act (50 U.S.C. 1701 note) is 
amended by adding at the end the following new subsection:
    ``(f) Investigations.--
            ``(1) In general.--The President shall initiate an 
        investigation into the possible imposition of sanctions against 
        a person upon receipt by the United States of credible 
        information indicating that such person is engaged in activity 
        related to investment in Iran as described in section 5(a).
            ``(2) Determination and notification.--
                    ``(A) In general.--Not later than 180 days after an 
                investigation is initiated in accordance with paragraph 
                (1), the President shall determine, pursuant to section 
                5(a), whether or not to impose sanctions against a 
                person engaged in activity related to investment in 
                Iran as described in such section as a result of such 
                activity and shall notify the appropriate congressional 
                committees of the basis for such determination.
                    ``(B) Extension.--If the President is unable to 
                make a determination under subparagraph (A), the 
                President shall notify the appropriate congressional 
                committees and shall extend such investigation for a 
                subsequent period, not to exceed 180 days, after which 
                the President shall make the determination required 
                under such subparagraph and shall notify the 
                appropriate congressional committees of the basis for 
                such determination in accordance with such 
                subparagraph.
            ``(3) Determinations regarding pending investigations.--Not 
        later than 90 days after the date of the enactment of this Act, 
        the President shall, with respect to any investigation that was 
        pending as of January 1, 2006, concerning a person engaged in 
        activity related to investment in Iran as described in section 
        5(a), determine whether or not to impose sanctions against such 
        person as a result of such activity and shall notify the 
        appropriate congressional committees of the basis for such 
        determination.
            ``(4) Publication.--Not later than 10 days after the 
        President notifies the appropriate congressional committees 
        under paragraphs (2) and (3), the President shall ensure 
        publication in the Federal Register of the identification of 
        the persons against which the President has made a 
        determination that the imposition of sanctions is appropriate, 
        together with an explanation for such determination.''.

SEC. 202. IMPOSITION OF SANCTIONS.

    (a) Sanctions With Respect to Development of Petroleum Resources.--
Section 5(a) of the Iran and Libya Sanctions Act of 1996 (50 U.S.C. 
1701 note) is amended--
            (1) in the heading, by striking ``to Iran'' and inserting 
        ``to the Development of Petroleum Resources of Iran'';
            (2) by striking ``(6)'' and inserting ``(5)''; and
            (3) by striking ``with actual knowledge,''.
    (b) Sanctions With Respect to Development of Weapons of Mass 
Destruction or Other Military Capabilities.--Section 5(b) of such Act 
(50 U.S.C. 1701 note) is amended to read as follows:
    ``(b) Mandatory Sanctions With Respect to Development of Weapons of 
Mass Destruction or Other Military Capabilities.--Notwithstanding any 
other provision of law, the President shall impose two or more of the 
sanctions described in paragraphs (1) through (5) of section 6 if the 
President determines that a person has, on or after the date of the 
enactment of this Act, exported, transferred, or otherwise provided to 
Iran any goods, services, technology, or other items knowing that the 
provision of such goods, services, technology, or other items would 
contribute to the ability of Iran to--
            ``(1) acquire or develop chemical, biological, or nuclear 
        weapons or related technologies; or
            ``(2) acquire or develop destabilizing numbers and types of 
        advanced conventional weapons.''.
    (c) Persons Against Which the Sanctions Are to Be Imposed.--Section 
5(c)(2) of such Act (50 U.S.C. 1701 note) is amended--
            (1) in subparagraph (B), by striking ``, with actual 
        knowledge,'' and by striking ``or'' at the end;
            (2) in subparagraph (C), by striking ``, with actual 
        knowledge,'' and by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding after subparagraph (C) the following new 
        subparagraph:
                    ``(D) is a private or government lender, insurer, 
                underwriter, or guarantor of the person referred to in 
                paragraph (1) if that private or government lender, 
                insurer, underwriter, or guarantor engaged in the 
                activities referred to in paragraph (1).''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to actions taken on or after March 15, 2006.

SEC. 203. TERMINATION OF SANCTIONS.

    Section 8(a) of the Iran and Libya Sanctions Act of 1996 (50 U.S.C. 
1701 note) is amended--
            (1) in paragraph (1)(C), by striking ``and'' at the end;
            (2) in paragraph (2), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(3) poses no significant threat to United States national 
        security, interests, or allies.''.

SEC. 204. SUNSET.

    Section 13 of the Iran and Libya Sanctions Act of 1996 (50 U.S.C. 
1701 note) is amended--
            (1) in the section heading, by striking ``; SUNSET'';
            (2) in subsection (a), by striking the subsection 
        designation and heading; and
            (3) by striking subsection (b).

SEC. 205. CLARIFICATION AND EXPANSION OF DEFINITIONS.

    (a) Person.--Section 14(14)(B) of the Iran and Libya Sanctions Act 
of 1996 (50 U.S.C. 1701 note) is amended--
            (1) by inserting after ``trust,'' the following: 
        ``financial institution, insurer, underwriter, guarantor, any 
        other business organization, including any foreign subsidiaries 
        of the foregoing,''; and
            (2) by inserting before the semicolon the following: ``, 
        such as an export credit agency''.
    (b) Petroleum Resources.--Section 14(15) of the Iran and Libya 
Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended by inserting 
after ``petroleum'' the second place it appears, the following: ``, 
petroleum by-products,''.

SEC. 206. UNITED STATES PENSION PLANS.

    (a) Findings.--Congress finds the following:
            (1) The United States and the international community face 
        no greater threat to their security than the prospect of rogue 
        regimes who support international terrorism obtaining weapons 
        of mass destruction, and particularly nuclear weapons.
            (2) Iran is the leading state sponsor of international 
        terrorism and is close to achieving nuclear weapons capability 
        but has paid no price for nearly twenty years of deception over 
        its nuclear program. Foreign entities that have invested in 
        Iran's energy sector, despite Iran's support of international 
        terrorism and its nuclear program, have afforded Iran a free 
        pass while many United States entities have unknowingly 
        invested in those same foreign entities.
            (3) United States investors have a great deal at stake in 
        preventing Iran from acquiring nuclear weapons.
            (4) United States investors can have considerable influence 
        over the commercial decisions of the foreign entities in which 
        they have invested.
    (b) Publication in Federal Register.--Not later than six months 
after the date of the enactment of this Act and every six months 
thereafter, the President shall ensure publication in the Federal 
Register of a list of all United States and foreign entities that have 
invested more than $20,000,000 in Iran's energy sector between August 
5, 1996, and the date of such publication. Such list shall include an 
itemization of individual investments of each such entity, including 
the dollar value, intended purpose, and current status of each such 
investment.
    (c) Sense of Congress Relating to Divestiture From Iran.--It is the 
sense of Congress that, upon publication of a list in the relevant 
Federal Register under subsection (b), managers of United States 
Government pension plans or thrift savings plans, managers of pension 
plans maintained in the private sector by plan sponsors in the United 
States, and managers of mutual funds sold or distributed in the United 
States should immediately initiate efforts to divest all investments of 
such plans or funds in any entity included on the list.
    (d) Sense of Congress Relating to Prohibition on Future 
Investment.--It is the sense of Congress that, upon publication of a 
list in the relevant Federal Register under subsection (b), there 
should be no future investment in any entity included on the list by 
managers of United States Government pension plans or thrift savings 
plans, managers of pension plans maintained in the private sector by 
plan sponsors in the United States, and managers of mutual funds sold 
or distributed in the United States.
    (e) Disclosure to Investors.--
            (1) In general.--Not later than 30 days after the date of 
        publication of a list in the relevant Federal Register under 
        subsection (b), managers of United States Government pension 
        plans or thrift savings plans, managers of pension plans 
        maintained in the private sector by plan sponsors in the United 
        States, and managers of mutual funds sold or distributed in the 
        United States shall notify investors that the funds of such 
        investors are invested in an entity included on the list. Such 
        notification shall contain the following information:
                    (A) The name or other identification of the entity.
                    (B) The amount of the investment in the entity.
                    (C) The potential liability to the entity if 
                sanctions are imposed by the United States on Iran or 
                on the entity.
                    (D) The potential liability to investors if such 
                sanctions are imposed.
            (2) Follow-up notification.--
                    (A) In general.--Except as provided in subparagraph 
                (C), in addition to the notification required under 
                paragraph (1), such managers shall also include such 
                notification in every prospectus and in every regularly 
                provided quarterly, semi-annual, or annual report 
                provided to investors, if the funds of such investors 
                are invested in an entity included on the list.
                    (B) Contents of notification.--The notification 
                described in subparagraph (A) shall be displayed 
                prominently in any such prospectus or report and shall 
                contain the information described in paragraph (1).
                    (C) Good-faith exception.--If, upon publication of 
                a list in the relevant Federal Register under 
                subsection (b), such managers verifiably divest all 
                investments of such plans or funds in any entity 
                included on the list and such managers do not initiate 
                any new investment in any other such entity, such 
                managers shall not be required to include the 
                notification described in subparagraph (A) in any 
                prospectus or report provided to investors.

SEC. 207. REPORT BY OFFICE OF GLOBAL SECURITY RISKS.

    Not later than 30 days after the date of publication of a list in 
the relevant Federal Register under section 206(b), the Office of 
Global Security Risks within the Division of Corporation Finance of the 
United States Securities and Exchange Commission shall issue a report 
containing a list of the United States and foreign entities identified 
in accordance with such section, a determination of whether or not the 
operations in Iran of any such entity constitute a political, economic, 
or other risk to the United States, and a determination of whether or 
not the entity faces United States litigation, sanctions, or similar 
circumstances that are reasonably likely to have a material adverse 
impact on the financial condition or operations of the entity.

SEC. 208. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Findings.--Section 2 of the Iran and Libya Sanctions Act of 
1996 (50 U.S.C. 1701 note) is amended by striking paragraph (4).
    (b) Declaration of Policy.--Section 3 of the Iran and Libya 
Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended--
            (1) in subsection (a), by striking ``(a) Policy With 
        Respect to Iran.--''; and
            (2) by striking subsection (b).
    (c) Termination of Sanctions.--Section 8 of the Iran and Libya 
Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended--
            (1) in subsection (a), by striking ``(a) Iran.--''; and
            (2) by striking subsection (b).
    (d) Duration of Sanctions; Presidential Waiver.--Section 9(c)(2)(C) 
of the Iran and Libya Sanctions Act of 1996 (50 U.S.C. 1701 note) is 
amended to read as follows:
                    ``(C) an estimate of the significance of the 
                provision of the items described in section 5(a) or 
                section 5(b) to Iran's ability to, respectively, 
                develop its petroleum resources or its weapons of mass 
                destruction or other military capabilities; and''.
    (e) Reports Required.--Section 10(b)(1) of the Iran and Libya 
Sanctions Act of 1996 (50 U.S.C. 1701 note) is amended by striking 
``and Libya'' each place it appears.
    (f) Definitions.--Section 14 of the Iran and Libya Sanctions Act of 
1996 (50 U.S.C. 1701 note) is amended--
            (1) in paragraph (9)--
                    (A) in the matter preceding subparagraph (A), by--
                            (i) striking ``, or with the Government of 
                        Libya or a nongovernmental entity in Libya,''; 
                        and
                            (ii) by striking ``nongovenmental'' and 
                        inserting ``nongovernmental''; and
                    (B) in subparagraph (A), by striking ``or Libya (as 
                the case may be)'';
            (2) by striking paragraph (12); and
            (3) by redesignating paragraphs (13), (14), (15), (16), and 
        (17) as paragraphs (12), (13), (14), (15), and (16), 
        respectively.
    (g) Short Title.--
            (1) In general.--Section 1 of the Iran and Libya Sanctions 
        Act of 1996 (50 U.S.C. 1701 note) is amended by striking ``and 
        Libya''.
            (2) References.--Any reference in any other provision of 
        law, regulation, document, or other record of the United States 
        to the ``Iran and Libya Sanctions Act of 1996'' shall be deemed 
        to be a reference to the ``Iran Sanctions Act of 1996''.

TITLE III--DIPLOMATIC EFFORTS TO CURTAIL IRANIAN NUCLEAR PROLIFERATION 
               AND SPONSORSHIP OF INTERNATIONAL TERRORISM

SEC. 301. DIPLOMATIC EFFORTS.

    (a) Sense of Congress Relating to United Nations Security Council 
and the International Atomic Energy Agency.--It is the sense of 
Congress that the President should instruct the United States Permanent 
Representative to the United Nations to work to secure support at the 
United Nations Security Council for a resolution that would impose 
sanctions on Iran as a result of its repeated breaches of its nuclear 
nonproliferation obligations, to remain in effect until Iran has 
verifiably dismantled its weapons of mass destruction programs.
    (b) Prohibition on Assistance to Countries That Invest in the 
Energy Sector of Iran.--
            (1) Withholding of assistance.--If, on or after April 13, 
        2005, a foreign person (as defined in section 14 of the Iran 
        Sanctions Act of 1996 (50 U.S.C. 1701 note), as renamed 
        pursuant to section 208(g)(1)) or an agency or instrumentality 
        of a foreign government has more than $20,000,000 invested in 
        Iran's energy sector, the President shall, until the date on 
        which such person or agency or instrumentality of such 
        government terminates such investment, withhold assistance 
        under the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et 
        seq.) to the government of the country to which such person 
        owes allegiance or to which control is exercised over such 
        agency or instrumentality.
            (2) Waiver.--Assistance prohibited by this section may be 
        furnished to the government of a foreign country described in 
        subsection (a) if the President determines that furnishing such 
        assistance is important to the national security interests of 
        the United States, furthers the goals described in this Act, 
        and, not later that 15 days before obligating such assistance, 
        notifies the Committee on International Relations of the House 
        of Representatives, the Committee on Foreign Relations of the 
        Senate, the Committee on Appropriations of the House of 
        Representatives, and the Committee on Appropriations of the 
        Senate of such determination and submits to such committees a 
        report that includes--
                    (A) a statement of the determination;
                    (B) a detailed explanation of the assistance to be 
                provided;
                    (C) the estimated dollar amount of the assistance; 
                and
                    (D) an explanation of how the assistance furthers 
                United States national security interests.

SEC. 302. STRENGTHENING THE NUCLEAR NONPROLIFERATION TREATY.

    (a) Findings.--Congress finds the following:
            (1) Article IV of the Treaty on the Non-Proliferation of 
        Nuclear Weapons (commonly referred to as the ``Nuclear 
        Nonproliferation Treaty'' or ``NPT'') states that countries 
        that are parties to the Treaty have the ``inalienable right . . 
        . to develop research, production and use of nuclear energy for 
        peaceful purposes without discrimination and in conformity with 
        articles I and II of this Treaty.''.
            (2) Iran has manipulated Article IV of the Nuclear 
        Nonproliferation Treaty to acquire technologies needed to 
        manufacture nuclear weapons under the guise of developing 
        peaceful nuclear technology.
            (3) Legal authorities, diplomatic historians, and officials 
        closely involved in the negotiation and ratification of the 
        Nuclear Nonproliferation Treaty state that the Treaty neither 
        recognizes nor protects such a per se right to all nuclear 
        technology, such as enrichment and reprocessing, but rather 
        affirms that the right to the use of peaceful nuclear energy is 
        qualified.
    (b) Declaration of Congress Regarding United States Policy to 
Strengthen the Nuclear Nonproliferation Treaty.--Congress declares that 
it should be the policy of the United States to support diplomatic 
efforts to end the manipulation of Article IV of the Nuclear 
Nonproliferation Treaty, as undertaken by Iran, without undermining the 
Treaty itself.

                      TITLE IV--DEMOCRACY IN IRAN

SEC. 401. DECLARATION OF CONGRESS REGARDING UNITED STATES POLICY TOWARD 
                    IRAN.

    (a) In General.--Congress declares that it should be the policy of 
the United States to support independent human rights and peaceful pro-
democracy forces in Iran.
    (b) Rule of Construction.--Nothing in this Act shall be construed 
as authorizing the use of force against Iran.

SEC. 402. ASSISTANCE TO SUPPORT DEMOCRACY IN IRAN.

    (a) Authorization.--
            (1) In general.--The President is authorized to provide 
        financial and political assistance (including the award of 
        grants) to foreign and domestic individuals, organizations, and 
        entities that support democracy and the promotion of democracy 
        in Iran. Such assistance may include the award of grants to 
        eligible independent pro-democracy radio and television 
        broadcasting organizations that broadcast into Iran.
            (2) Limitation on assistance.--In accordance with the rule 
        of construction described in subsection (b) of section 401, 
        none of the funds authorized under this section shall be used 
        to support the use of force against Iran.
    (b) Eligibility for Assistance.--Financial and political assistance 
under this section may be provided only to an individual, organization, 
or entity that--
            (1) officially opposes the use of violence and terrorism 
        and has not been designated as a foreign terrorist organization 
        under section 219 of the Immigration and Nationality Act (8 
        U.S.C. 1189) at any time during the preceding four years;
            (2) advocates the adherence by Iran to nonproliferation 
        regimes for nuclear, chemical, and biological weapons and 
        materiel;
            (3) is dedicated to democratic values and supports the 
        adoption of a democratic form of government in Iran;
            (4) is dedicated to respect for human rights, including the 
        fundamental equality of women;
            (5) works to establish equality of opportunity for people; 
        and
            (6) supports freedom of the press, freedom of speech, 
        freedom of association, and freedom of religion.
    (c) Funding.--The President may provide assistance under this 
section using--
            (1) funds available to the Middle East Partnership 
        Initiative (MEPI), the Broader Middle East and North Africa 
        Initiative, and the Human Rights and Democracy Fund; and
            (2) amounts made available pursuant to the authorization of 
        appropriations under subsection (g).
    (d) Notification.--Not later than 15 days before each obligation of 
assistance under this section, and in accordance with the procedures 
under section 634A of the Foreign Assistance Act of 1961 (22 U.S.C. 
2394-l), the President shall notify the Committee on International 
Relations and the Committee on Appropriations of the House of 
Representatives and the Committee on Foreign Relations and the 
Committee on Appropriations of the Senate. Such notification shall 
include, as practicable, the types of programs supported by such 
assistance and the recipients of such assistance.
    (e) Sense of Congress Regarding Diplomatic Assistance.--It is the 
sense of Congress that--
            (1) contacts should be expanded with opposition groups in 
        Iran that meet the criteria under subsection (b);
            (2) support for a transition to democracy in Iran should be 
        expressed by United States representatives and officials in all 
        appropriate international fora;
            (3) efforts to bring a halt to the nuclear weapons program 
        of Iran, including steps to end the supply of nuclear 
        components or fuel to Iran, should be intensified, with 
        particular attention focused on the cooperation regarding such 
        program--
                    (A) between the Government of Iran and the 
                Government of the Russian Federation; and
                    (B) between the Government of Iran and individuals 
                from China and Pakistan, including the network of Dr. 
                Abdul Qadeer (A. Q.) Khan; and
            (4) officials and representatives of the United States 
        should--
                    (A) strongly and unequivocally support indigenous 
                efforts in Iran calling for free, transparent, and 
                democratic elections; and
                    (B) draw international attention to violations by 
                the Government of Iran of human rights, freedom of 
                religion, freedom of assembly, and freedom of the 
                press.
    (f) Authorization of Appropriations.--There is authorized to be 
appropriated to the Department of State such sums as may be necessary 
to carry out this section.

SEC. 403. WAIVER OF CERTAIN EXPORT LICENSE REQUIREMENTS.

    The Secretary of State may, in consultation with the Secretary of 
Commerce, waive the requirement to obtain a license for the export to, 
or by, any person to whom the Department of State has provided a grant 
under a program to promote democracy or human rights abroad, any item 
which is commercially available in the United States without government 
license or permit, to the extent that such export would be used 
exclusively for carrying out the purposes of the grant.

                          Purpose and Summary

    Iran is the state which poses the most critical security 
threat to the United States. Iran's program to develop weapons 
of mass destruction, in particular nuclear weapons and the 
means to deliver them, is a special concern to the American 
people and should alarm the entire international community. As 
Under Secretary of State for Arms Control and International 
Security Robert Joseph testified before the Committee on March 
8, 2006: ``Iran is at the nexus of weapons of mass destruction 
and terrorism, pursuing nuclear, chemical, and biological 
programs and actively supporting terrorist movements. If Iran 
has fissile material or nuclear weapons, the likelihood of 
their transfer to a third party would increase--by design or 
through diversion.''
    The United States has sought to prevent Iran from acquiring 
weapons of mass destruction by a number of means. One principal 
means has been a series of Executive Orders under the 
International Emergency Economic Powers Act which forbid 
American firms from engaging in many routine transactions with 
Iran, and which, in particular, forbid investments in Iran and 
its petroleum sector. The petroleum sector is Iran's main 
foreign currency earner. In addition, other administrative and 
legislative provisions are designed to prevent specific 
components of weapons of mass destruction systems from falling 
into Iran's hands.
    A major weakness of the United States system of laws and 
regulations concerning Iran is and has been the ability of 
entities outside the jurisdiction of the United States to enter 
into transactions that ``fill in behind'' United States 
entities which do not engage in those transactions because of 
United States domestic law. Allowing this situation to continue 
would have had the effect of allowing Iran access to capital 
and future streams of petroleum revenue that could expedite 
Iran's development of weapons of mass destruction and expand 
their ability to fund, train, and supply terrorist 
organizations around the world. In October, 1995, then-Under 
Secretary of State Peter Tarnoff underscored that ``a straight 
line links Iran's oil income and its ability to sponsor 
terrorism and build weapons of mass destruction . . . and any 
private company that helps Iran to expand its oil [sector] must 
accept that it is indirectly contributing to this menace.'' 
Finally, allowing foreign firms to act where American firms 
could not would have strengthened those foreign firms at the 
expense of American firms, their employees, suppliers, and 
investors.
    Recognizing this, in 1996 the Congress passed and President 
Clinton signed into law Public Law 104-172, ``the Iran and 
Libya Sanctions Act'' (ILSA) which was designed to dissuade 
foreign entities from investing in the Iranian petroleum sector 
by providing for the imposition of certain sanctions on such 
entities.
    No firms have been sanctioned under this law. However, 
there have been certain favorable aspects of its operation from 
the perspective of United States national security. First, 
certain concessions from major powers were made with respect to 
those powers' dealings with Iran, in exchange for waivers of 
the law's operation, pursuant (in the view of the 
Administration) to the statute as enacted. In 1998, then-
Secretary of State Madeleine Albright found that an investment 
by Total, a French firm, in Iran violated ILSA but waived 
sanctions and indicated that additional waivers would be 
forthcoming if there was cooperation from European Union states 
on non-proliferation matters with respect to Iran. The view of 
the importance of those concessions and promises of future 
cooperation vary greatly. Second, the supply of capital to the 
Iranian petroleum sector has been constrained by the threat of 
sanctions, driving up the cost of capital--to the disadvantage 
of Iran. ILSA was in fact a deterrent to investment and served 
to help highlight the threat from Iran. In 2001, Iranian 
economic experts themselves noted that ``sanctions result in 
contracts with second [-rate] companies and ``at least double 
the cost of [Iran's] oil extraction,'' requiring ``that a 
significant part of [Iran's] economic and financial resources 
are expended to compensate for such limitations.'' This is one 
explanation for the widely disparate rate of investment in the 
petroleum sector in Iran, on the one hand, and its immediate 
neighbors, such as Qatar, on the other. For this reason, in 
2001, the Congress extended ILSA, as mentioned above, for five 
years. It would have otherwise expired. It will now expire in 
August, 2006. The Administration testified in March, 2006, that 
ILSA is a useful tool and supports its renewal for five years. 
Nevertheless, the lack of imposition of sanctions has, over 
time, greatly diminished ILSA's impact and, given the growing 
concern over Iranian WMD capabilities, particularly its nuclear 
program, led the Committee to recommend the enactment of H.R. 
282 as amended.
    In the years since ILSA was last amended, Libya's behavior 
with respect to its weapons of mass destruction program has 
changed radically. The President has certified that Libya has 
met the requirements of United Nations Security Council 
resolutions relating to Libyan involvement in the bombing of 
Pan Am 103 in 1988, and accordingly, Administrative action 
restrictions on investment in Libya have been removed. The 
Committee deems it appropriate to remove references to Libya 
from Public Law 104-172 at this time.
    In brief, H.R. 282, as amended, would extend Public Law 
104-172 indefinitely, remove former restrictions on investments 
in Libya from its scope and change its title to the Iran 
Sanctions Act (``ISA''), and entrench certain domestically-
applicable sanctions into law until specified conditions were 
met. Also, as an additional means to deter investment in Iran, 
language is included to inform pension funds and mutual funds 
that they may be investing in entities which themselves invest 
in Iran's petroleum sector, and is designed, in general, to 
discourage such investments. The bill also requires the 
President to investigate, on a schedule fixed in law, whether 
credible evidence of an investment in the Iranian petroleum 
sector exists, and if it does exist, whether sanctions should 
be imposed or waived. Finally, the bill authorizes 
appropriations for a program to help promote democracy in Iran.

             Summary of Provisions of the Bill as Reported

Codification of U.S. Sanctions on Iran
    Existing sanctions, controls and regulations under the 
International Economic Emergency Powers Act relating to Iran 
are codified and will remain in effect until the President can 
certify to Congress that Iran has verifiably dismantled its 
weapons of mass destruction and related programs.
    The termination of sanctions for WMD reasons does not 
affect sanctions imposed on Iran for state-sponsorship of 
terrorism.
Amends the original Iran and Libya Sanctions Act, with respect to Iran
    1) Requires a twice-annual report to Congress detailing 
specific diplomatic efforts toward the imposition of 
multilateral sanctions against Iran.
    2) Investigation into violations of ILSA will be triggered 
by the discovery of credible evidence of investment in the 
petroleum sector of Iran.
    3) No later than 180 days after beginning an investigation, 
the President shall determine if sanctions are to be imposed. A 
determination to impose sanctions shall be reported to Congress 
and published in the Federal Register. The investigation may be 
extended for one additional period of 180 days.
    4) A decision on investigations pending on January 1, 2006, 
must be made within 90 days of the date of enactment and such a 
decision shall be reported to Congress and, if it results in 
the imposition of sanctions, shall be published in the Federal 
Register.
    5) A waiver by the President shall be effective for six 
months, on an entity basis, and will be based on a 
determination that the waiver is vital to the national security 
interests of the United States and that the country of the 
person who would be subject to sanctions has undertaken 
substantial measures to prevent Iran's acquisition of weapons 
of mass destruction. Waivers may be renewed for subsequent six-
month periods.
    6) Liability for sanctioned parties is expanded to private 
or government lenders, insurers, underwriters, and guarantors. 
A government export credit agency can help ensure the success 
of an investment deal, and the provision of support by such an 
agency would make that agency subject to sanctions.
    7) The Sunset provision is eliminated. However, the 
requirement to impose sanctions will no longer have force or 
effect when the President determines and reports to the 
Congress that Iran no longer poses a significant threat to the 
national security of the United States, its interests, or 
allies.
    8) ILSA provides a set of criteria which, if met, would 
result in the termination of sanctions. H.R. 282 adds: Iran 
will have to be determined not to pose a significant threat to 
United States national security, interests, or allies.
Definitions Expanded
    1) The sorts of enterprises that may be deemed to 
``invest'' in the Iranian petroleum sector are specified to 
include entities such as guarantors, insurers, and the like.
    2) The term ``petroleum resources'' shall now include 
petroleum by-products.
Supporting a Change to Democratic Rule in Iran
    1) Provides authorization of assistance for human rights 
and peaceful pro-democracy organizations and individuals 
meeting a certain criteria.
    2) Authorizes assistance for independent broadcasts into 
Iran. Funding for this provision could be derived from existing 
programs relating to the Middle East region.
    3) It formally articulates that United States policy should 
be to support independent human rights and pro-democracy forces 
in Iran, and that contacts should be expanded with opposition 
groups in Iran that support the values articulated in the bill.
Additional provisions
    1) Expresses the Sense of Congress that U.S. Government 
pension funds and other similar funds should divest from 
existing investments in companies subject to ILSA sanctions and 
should not enter into any future investments in such entities.
    2) Requires managers of these public and private pension 
plans and mutual funds to notify investors that the funds are 
invested in entities that are subject to ILSA sanctions because 
of their activities in Iran's energy sector.
    3) Calls for a series of reports documenting all companies 
subject to ILSA sanctions since the enactment of ILSA in 1996.
    4) Calls for a series of diplomatic efforts to curtail 
Iranian terrorism and proliferation activities.
    5) Requires the withholding of U.S. assistance to countries 
that directly help Iran, or permit commercial entities subject 
to their laws, help Iran, by investing in its energy sector. 
(Can be waived by the President.)
    6) Provides that nothing in H.R. 282 shall be construed as 
authorizing the use of force against Iran.

                Background and Need for the Legislation

    Iran has been the subject of considerable Congressional 
attention over the past dozen years.
    The Committee is aware of abundant evidence of Iran's 
misbehavior on all fronts: its pursuit of weapons of mass 
destruction, its support for terrorism, its efforts to 
undermine United States interests in Iraq and Afghanistan, its 
denial of Israel's right to exist, its actions to try to defeat 
the Middle East peace process, and its extreme mistreatment of 
its own people. This record has been made in the public 
hearings detailed in the section ``Hearings'' set out below, as 
well as in dozens of meetings between Members or staff of the 
House International Relations Committee, Administration 
officials and members of the public. Diplomatic engagement by 
friends (or rivals) of the United States, and on occasion by 
the United States itself, aimed at moderating Iranian behavior, 
has had little, if any, positive result.
    In May 1995, then-Secretary of State Warren Christopher 
warned the international community that the path Iran was 
following was a mirror image of the steps taken by others who 
have sought nuclear weapons capabilities. After numerous House 
and Senate hearings, the Iran and Libya Sanctions Act (ILSA) 
was signed on August 5, 1996. In May 1998, the Congress passed 
the Iran Missile Proliferation Sanctions Act of 1998. President 
Clinton vetoed the Act. Congress did not override the veto but 
the Administration issued an Executive Order addressing the 
Iranian missile threat.
    Executive Order 13094 was issued in July 1998 and seven 
Russian entities were sanctioned for assisting Iran in 
developing its missile program. The decision came just days 
after Iran test-fired a missile with an 800-mile range. 
Hearings on and attention to Iran continued, and the Iran 
Nonproliferation Act was signed into law on March 14, 2000. The 
ILSA Extension Act was signed into law on August 3, 2001.
    Representatives Ros-Lehtinen and Lantos introduced an 
earlier version of the Iran Freedom Support Act in 2004; H.R. 
282 was introduced on January 6, 2006, and has attracted 355 
cosponsors. Further information on the bill's consideration is 
set out in other sections of this report.
    Other resolutions or provisions of law addressing Iran not 
mentioned elsewhere are: H. Con. Res. 398, expressing the 
concern of Congress over Iran's development of the means to 
produce nuclear weapons (passed by the House on May 6, 2004); 
and H. Con. Res. 341, condemning the Government of Iran for 
violating its international nuclear nonproliferation 
obligations and expressing support for efforts to report Iran 
to the United Nations Security Council (passed by the House on 
February 16, 2006).
    The Committee believes that the laws which have been 
enacted, as enforced, and other steps taken by current and past 
Administrations, have proven inadequate. They have not 
succeeded in ending Iran's efforts to produce weapons of mass 
destruction or ending Iran's other, considerable threats to 
American national interests.
    Specifically with respect to ILSA, the Committee is deeply 
dismayed that the current Administration, like the prior 
Administration, has not acted to sanction a single enterprise 
for investing in Iran, but has delayed its decisions on 
``alleged'' investments well past the point of failing the 
``laugh test.'' Even so, the Administration does support 
continuing the present law (ILSA) in effect, albeit only for an 
additional five years. The Administration, the Committee, and 
some outside observers believe that the existing sanctions 
regime has had some ongoing impact on Iran's ability to raise 
investment capital. It is time, however, to either gain 
diplomatic leverage to deal with the current emergency (by 
exercising a waiver in an appropriate case) or to come down 
hard on enterprises which choose to invest in Iran regardless 
of the impact of those investments on world peace.
    It is necessary, of course, that existing and strengthened 
provisions be administered flexibly in appropriate cases. In 
particular, the Committee acknowledges that the Administration, 
after a long and arduous effort, has been able to move the 
question of Iran's nuclear arms from the International Atomic 
Energy Agency (IAEA) to the United Nations Security Council 
(UNSC). This is a remarkable diplomatic feat, but it must now 
be followed up by decisive action either in the UNSC or by 
like-minded countries that share, in whole or in part, our 
concerns about Iran. During its consideration of H.R. 282, the 
Committee adjusted the various mechanisms contained within the 
bill in part to provide the Administration the option to use 
the newly-dubbed ISA as a lever in our current diplomatic 
efforts, and not just as a weapon against states, or entities, 
which invest in Iran's petroleum sector. The Committee 
underlines the appropriateness of using all available leverage, 
in addition to diplomatic efforts, to hold together the 
diplomatic coalition that might be able to alter Iran's 
behavior. It is ironic that the more dangerous Iran is, the 
more appropriate it might be to decide that marshalling 
effective diplomatic forces is critical to the national 
security interests of the United States.
    Current ILSA legislation would impose wide-ranging trade 
and investment sanctions on firms involved in Libya until such 
time as the President certified that Libya is in compliance 
with UN Security Council (UNSC) Resolutions 731, 748, and 883, 
all of which related to the involvement of Libyans in the 
terrorist bombing of Pan Am Flight 103 in 1988. On April 23, 
2004, President Bush certified that Libya had met the 
requirements of the UNSC resolutions, thereby removing the ILSA 
restrictions on trade with Libya. H.R. 282 would codify this 
Presidential determination by removing all reference to Libya 
from ILSA and changing the name of the law to ``Iran Sanctions 
Act.'' The Committee believes that the U.S. willingness to 
terminate sanctions contained in ILSA based on Libya's decision 
to comply with its obligations under these Security Council 
resolutions, as well as its December 2003 decision to 
verifiably eliminate its weapons of mass destructions program, 
is an incentive for Iran to modify its own behavior regarding 
weapons of mass destruction and terrorism.

                                Hearings

    In recent years, the Full Committee has held several 
hearings regarding Iran: 1) February 26, 2003 (Russia's 
Policies Toward the Axis of Evil: Money and Geopolitics in Iraq 
and Iran); 2) June 4, 2003 (U.S. Nonproliferation Policy After 
Iraq); 3) March 30, 2004 (The Bush Administration and 
Nonproliferation: A New Strategy Emerges); and 4) February 15, 
2006 and March 8, 2006 (both entitled ``United States Policy 
Toward Iran--Next Steps'').
    The Subcommittee on the Middle East and Central Asia has 
held several hearings and briefings on or related to Iran, 
including: June 25, 2003 (Enforcement of the Iran-Libya 
Sanctions Act and Increasing Security Threats from Iran); and 
June 24, 2004 (Iranian Proliferation: Implications for 
Terrorists, their State-Sponsors and U.S. Counter-proliferation 
Policy).
    The Subcommittee on International Terrorism and 
Nonproliferation held hearings on April 14, 2005 (Averting 
Nuclear Terrorism); April 28, 2005 (Previewing the Nuclear 
Nonproliferation Treaty Review Conference); and June 30, 2005 
(Nonproliferation and the G-8); and March 2, 2006 (Assessing 
`Rights' under the Nuclear Nonproliferation Treaty).
    The Subcommittees on the Middle East and Central Asia and 
on International Terrorism and Nonproliferation held a joint 
hearing on February 16, 2005 (Iran: A Quarter-Century of State-
Sponsored Terror).

                        Committee Consideration

    On April 13, 2005, the Subcommittee on the Middle East and 
Central Asia met in open session and ordered favorably reported 
the bill H.R. 282, as amended, by unanimous consent, a quorum 
being present. On March 15, 2006, the Committee met in open 
session and ordered favorably reported the bill H.R. 282, with 
an amendment, by a recorded vote of 37 to 3, a quorum being 
present.

                         Votes of the Committee

    Clause (3)(b) of rule XIII of the Rules of the House of 
Representatives requires that the results of each record vote 
on an amendment or motion to report, together with the names of 
those voting for or against, be printed in the Committee 
Report.
    The Committee considered an amendment in the nature of a 
substitute offered by Ms. Ros-Lehtinen (for herself and Mr. 
Lantos). The amendment was modified by unanimous consent, and 
was agreed to by voice vote. On the motion to report the bill, 
H.R. 282, as amended, the vote was as follows:
    Voting for (37): Hyde, Smith (NJ), Burton, Gallegly, Ros-
Lehtinen, Rohrabacher, Royce, Chabot, Tancredo, Issa, Davis, 
Green, Weller, Pence, McCotter, Boozman, Barrett, Mack, 
Fortenberry, Poe, Lantos, Berman, Ackerman, Brown, Sherman, 
Wexler, Delahunt, Meeks, Lee, Crowley, Berkley, Napolitano, 
Schiff, Watson, Smith (WA), Chandler, and Carnahan.
    Voting against (3): Leach, Paul, and Blumenauer.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII 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.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 282, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 7, 2006.
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 282, the Iran 
Freedom Support Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sam 
Papenfuss, who can be reached at 226-2840.
            Sincerely,
                                          Donald B. Marron,
                                           Acting Director.
Enclosure

cc:
        Honorable Tom Lantos
        Ranking Member
H.R. 282--Iran Freedom Support Act

                                SUMMARY

    H.R. 282 would codify certain sanctions currently imposed 
by executive order with respect to Iran. Additionally, the bill 
would require the President to publish in the Federal Register 
a list of all foreign and domestic entities that have invested 
more than $20 million in Iran's energy sector. If an agency or 
instrumentality of a country, or a person owing allegiance to 
that country, has invested more than $20 million in Iran's 
energy sector, the bill would prohibit the provision of 
assistance to that country, unless the President certifies that 
such assistance is important for national security. Finally, 
the bill would authorize the appropriation of such sums as may 
be necessary for the President to provide assistance to 
individuals and organizations that support the establishment of 
democracy in Iran.
    CBO estimates that implementing H.R. 282 would cost $1 
million in 2006 and $81 million over the 2007-2011 period, 
assuming appropriation of the estimated amounts over the next 
several years. Enacting the bill would not affect direct 
spending or receipts.
    H.R. 282 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    H.R. 282 would impose a private-sector mandate, as defined 
in UMRA. It would require managers of pension plans and mutual 
funds to notify investors if their plans or funds are invested 
in firms that have invested more than $20 million in Iran's 
energy sector. CBO expects that the direct cost of the mandate 
would not exceed the annual threshold established by UMRA for 
private-sector mandates ($128 million in 2006, adjusted 
annually for inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 282 is shown in the 
following table. The costs of this legislation fall within 
budget function 150 (international affairs).

                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                              2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for
Democracy Programs with Respect to Iran
  Estimated Budget Authority\1\                                   5        0        0        0        0        0
  Estimated Outlays                                              10        1        1        0        0        0

Proposed Changes
  Estimated Authorization Level                                  15       20       20       20       20       20
  Estimated Outlays                                               1        9       16       17       19       20

Spending Under H.R. 282 for Democracy
Programs with Respect to Iran
  Estimated Authorization Level                                  20       20       20       20       20       20
  Estimated Outlays                                              11       10       17       17       19       20
----------------------------------------------------------------------------------------------------------------
\1\The 2006 level is the estimated amount appropriated for that year for programs that promote democracy in
  Iran.

                           BASIS OF ESTIMATE

    H.R. 282 would authorize the appropriation of such sums as 
may be necessary to fund organizations and individuals that 
support democracy in Iran. Public Law 109-102, the Foreign 
Operations, Export Financing, and Related Programs 
Appropriations Act, 2006, specified that $6.5 million be spent 
on programs that promote democracy in Iran and Syria, of which 
CBO estimates about $5 million would be for Iran. Additionally, 
the Administration has requested $15 million for programs to 
promote democracy in Iran in its request for a supplemental 
appropriation for 2006. Based on this and information from the 
Office of Management and Budget, CBO estimates that an 
appropriation of $20 million a year would be sufficient to meet 
the aims of H.R. 282. CBO expects that maintaining and 
publishing the list of entities that have invested more than 
$20 million in Iran's energy sector would have no significant 
effect on the budget.
    For the purposes of this estimate, CBO assumes that H.R. 
282 would be enacted before the end of the fiscal year. 
Accordingly, CBO estimates that implementing this legislation 
would increase spending by $1 million in 2006 and $81 million 
over the 2007-2011 period, assuming appropriation of the 
estimated amounts.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 282 contains no intergovernmental mandates as defined 
in UMRA and would not affect the budgets of state, local, or 
tribal governments.
    H.R. 282 would impose a private-sector mandate, as defined 
in UMRA. It would require managers of pension plans and mutual 
funds sold or distributed in the United States to notify 
investors of any funds that are invested in United States or 
foreign entities on the list to be published in the Federal 
Register that have invested more than $20 million in Iran's 
energy sector. The President would have to publish such a list 
within six months after the enactment of the bill, and every 
six months thereafter. The notification would have to be sent 
to investors within 30 days of the publication in the Federal 
Register. The notification also would have to be displayed 
prominently in every prospectus and every regular report 
provided to investors after the initial notification. The 
notification would include the following:

         The name or other identification of the 
        entity;

         The amount of the investment in the entity;

         The potential liability to the entity if 
        sanctions are imposed by the United States on Iran or 
        on the entity; and

         The potential liability to investors if such 
        sanctions are imposed.

    Notification would not be required, however, if pension and 
mutual fund managers divest all investments in such entities.
    Based on information from industry sources, CBO expects 
that the direct cost to comply with the mandate would small 
relative to the annual threshold.

                    Performance Goals and Objectives

    The Committee expects that passage of this bill will have 
the effect of slowing or of altogether interrupting Iran's 
attempts to gain access to weapons of mass destruction.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clauses 3 and 18 of 
the Constitution.

               Section-by-Section Analysis and Discussion

Sec. 1. Short Title.
    Provides a short title for the Act (the ``Iran Freedom 
Support Act'').
Sec. 2. Table of Contents.
    Sets out a table of contents for the Act.

            TITLE I--CODIFICATION OF SANCTIONS AGAINST IRAN

Sec. 101. Codification of Sanctions.
    Subsection (a) of this section provides that United States 
sanctions, controls, and regulations with respect to Iran 
imposed pursuant to Executive Order 12957, Executive Order 
12959, and sections 2 and 3 of Executive Order 13059 (relating 
to exports and certain other transactions with Iran) as in 
effect on January 1, 2006, shall remain in effect until the 
President certifies to the Committee on International Relations 
of the House of Representatives and the Committee on Foreign 
Relations of the Senate that the Government of Iran has 
verifiably dismantled its weapons of mass destruction programs. 
(It is the intention of the Committee that the expression 
``weapons of mass destruction programs'' includes the means to 
produce weapons of mass destruction.) The intent of the 
Committee in establishing this rule is that the Executive 
Branch not weaken existing sanctions, established in order to 
prevent Iran from making progress on its weapons of mass 
destruction programs, prior to a real change in Iran's behavior 
with respect to those programs. The Committee believes it would 
be inappropriate and counterproductive to weaken such sanctions 
as part of any diplomatic exercise, or to achieve good will on 
the part of the Iranians. As in the Libyan case, action to end 
weapons of mass destruction programs should come before any 
relaxation of sanctions.
    Subsection (b) provides that the preceding provision is to 
have no effect on United States sanctions, controls, and 
regulations relating to a determination under section 
6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. 
2405(j)(1)(A)), section 620A(a) of the Foreign Assistance Act 
of 1961 (22 U.S.C. 2371(a)), or section 40(d) of the Arms 
Export Control Act (22 U.S.C. 2780(d)) relating to support for 
acts of international terrorism by the Government of Iran, as 
in effect on January 1, 2006.
Sec. 102. Liability of Parent Companies for Violations of Sanctions By 
        Foreign Entities.
    The Committee is concerned that entities may be established 
or availed of by United States persons to evade rules 
established by law. The Administration has indicated that it 
will vigorously pursue sham transactions. The Committee 
establishes a rule without prejudice to any prior or existing 
interpretations, procedures, or enforcement actions of the 
Administration. In cases where 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 12959 of May 6, 1995, Executive Order 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, if a United States 
person, shall be subject to the penalties for such violation to 
the same extent as if the parent company had engaged in that 
act.
    In addition, the Committee intends that the use of 
personnel from the parent entity, the capital of the United 
States parent entity, or the intellectual property of the 
United States parent entity by the subsidiary entity in order 
to undertake an activity prohibited by the rules outlined 
above, are examples of taking advantage of, or ``availed of'' 
referred to in this section.
    Definitions for ``parent company'' and ``entity'' are 
provided in this section.

 TITLE II--AMENDMENTS TO THE IRAN AND LIBYA SANCTIONS ACT OF 1996 AND 
             OTHER PROVISIONS RELATED TO INVESTMENT IN IRAN

Sec. 201. Multilateral Regime.
    Reports to Congress.--Subsection (a) amends Section 4(b) of 
the Iran and Libya Sanctions Act of 1996 to provide that no 
later than six months after the date of the enactment of the 
Iran Freedom Support Act and every six months thereafter, the 
President shall submit to the appropriate congressional 
committees a report regarding specific diplomatic efforts 
undertaken to establish a multilateral regime of pressure on 
Iran, 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 legislative 
objectives of section 3 of ILSA with respect to Iran (that is, 
to deny Iran the ability to support acts of international 
terrorism and 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 its petroleum resources); (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 of ILSA; (3) a list of the countries that have not 
agreed to undertake measures to further the objectives of 
section 3 of ILSA with respect to Iran, and the reasons 
therefore; 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) of ILSA.
    The reference to ``international fora'' in (2)(C), above, 
includes international financial institutions such as the World 
Bank, and the reference to ``actions'' includes blocking of 
loans and other assistance to Iran proposed to be provided by 
and through such IFIs. The Committee requests that the reports 
describe efforts by the Department of State to urge governments 
with voting representation on IFIs to oppose assistance to 
Iran.
    Subsection (b) amends Section 4(c) of ILSA to provide that 
waivers of sanctions against nationals of countries (including 
entities) under section 5(a) of ILSA may be made by the 
President, on a case by case basis, for a period of not more 
than six months with respect to a national of a country, if the 
President certifies to the appropriate congressional committees 
at least 30 days before such waiver is to take effect that: (A) 
such waiver is vital to the national security interests of the 
United States; and (B) the country of the national has 
undertaken substantial measures to prevent the acquisition and 
development of weapons of mass destruction by the Government of 
Iran.
    The Committee believes that that the nature of the Iranian 
threat requires the application of this higher standard for all 
cases reviewed under ILSA. In the Committee's view, persuading 
a country to take part in an effective effort against Iran (but 
not participation in an effort that does not materialize with 
impact on Iran) would qualify as an effort the successful 
conclusion of which is vital to the national security interests 
of the United States. The expression ``national security 
interests'' is intended to encompass a slightly wider range of 
matters than the expression ``national security.''
    The waiver referred to in the preceding passage may be 
renewed for additional periods of not more than six months each 
by following the procedures and making the determination as set 
out above.
    Subsection (c) amends Section 4 of ILSA by adding at the 
end a new subsection (f). That new subsection would require the 
President to initiate an investigation that would lead to the 
possible imposition of sanctions against a person upon receipt 
by the United States of credible information indicating that 
such person is engaged in activity related to investment in 
Iran as described in section 5(a) of ILSA. For the purposes of 
this subsection and of Section 5 of ILSA, the term ``person'' 
is intended to include foreign subsidiaries of United States 
persons. The President shall within 180 days determine, 
pursuant to section 5(a) of ILSA, whether or not to impose 
sanctions and notify the appropriate congressional committees 
of the basis for such determination. The period of 180 days 
may, with notice to the appropriate congressional committees, 
be extended by one additional period of 180 days. By the end of 
the second period, the President must decide whether to impose 
sanctions under section 5(a) of ILSA, and provide Congress an 
explanation for the President's action or inaction, which may 
include a statement that sufficient information was not 
available.
    Pending investigations--Investigations of ILSA violations 
that were pending on January 1, 2006 are to be concluded, 
determinations made (under ILSA section 5(a)), and reports to 
the appropriate congressional committees made within 90 days of 
the date of enactment of the Iran Freedom Support Act. Within 
ten days after notification to the appropriate congressional 
committees, the President shall ensure publication in the 
Federal Register of the identity of persons against whom a 
determination that the imposition of sanctions is appropriate 
has been made, and the explanation of the reasons for such a 
determination.
Sec. 202. Imposition of Sanctions.
    (a) Sanctions with Respect to Development of Petroleum 
Resources.--This subsection amends section 5(a) of ILSA 
(relating to standards for the imposition of sanctions) by 
reducing to five items the list of sanctions which might be 
imposed on entities subject to sanctions to remove, (as one of 
the sanctions which might be imposed for engaging in 
investments in the Iranian petroleum sector, as defined), 
restrictions on imports by the entity into the United States 
(as provided in paragraph 6 of section 6 of ILSA prior to the 
enactment of H.R. 282 as amended). It also eliminates the 
requirement that an entity have ``actual knowledge'' of its 
investment in the Iranian petroleum sector before sanctions 
could be imposed.
    (b) Sanctions with Respect to Development of Weapons of 
Mass Destruction or Other Military Capabilities.--This 
provision amends Section 5(b) of ILSA to require the imposition 
of two or more of the sanctions described in paragraphs (1) 
through (5) of section 6 if the President determines that a 
person has, on or after the date of the enactment of this Act, 
exported, transferred, or otherwise provided to Iran any goods, 
services, technology, or other items knowing that the provision 
of such goods, services, technology, or other items would 
contribute to the ability of Iran to: (1) acquire or develop 
chemical, biological, or nuclear weapons or related 
technologies; or (2) acquire or develop destabilizing numbers 
and types of advanced conventional weapons. This requirement to 
impose a sanction may not be waived.
    (c) Persons Against Which the Sanctions Are to Be 
Imposed.--This provision amends section 5(c)(2) of ILSA to 
eliminate the ``actual knowledge'' test in the case of parents 
or subsidiaries (if the parent or subsidiary engaged in 
proscribed activity), as well as in the case of certain 
affiliates if the affiliates engaged in proscribed activity. 
This provision also amends section 5(c)(2) to include private 
or government lenders, insurers, underwriters, or guarantors of 
the person (who has carried out proscribed activities) if the 
private or government lenders, insurers, underwriters, or 
guarantors themselves engaged in proscribed activities.
    (d) Effective Date.--Provides that the amendments made by 
section 202 shall apply with respect to actions taken on or 
after March 15, 2006 (the date of the consideration of H.R. 282 
in Committee). This provision is intended to obviate deals made 
in contemplation of this change in law after fair notice was 
given of the intention of the Committee with respect to the 
bill.
Sec. 203. Termination of Sanctions.
    Under Section 8(a) of ILSA the requirement to impose 
sanctions on entities that invest in Iran's petroleum sector 
ends when the President makes certain certifications to the 
Congress relating to Iran's weapons of mass destruction program 
and its presence on the terrorism list. This provision adds a 
requirement that Iran be determined to pose no significant 
threat to the United States national security, interests, or 
allies.
Sec. 204. Sunset.
    Section 13 of ILSA is amended to strike its sunset 
provision (under current law it would expire ten years after 
the date of its original enactment, which was August 5, 1996). 
The Act will now continue in effect until repealed by a 
subsequent law, although a Presidential determination under 
Section 8 of ILSA (as amended by the Iran Freedom Support Act) 
would obviate the requirement to impose sanctions.
Sec. 205. Clarification and Expansion of Definitions.
    Subsection (a) amends the definition of the term ``person'' 
as to who might be subject to sanction under ILSA Section 
14(14)(B) to include the following entities: financial 
institutions, insurers, underwriters, guarantors, any other 
business organizations, including any foreign subsidiaries any 
sort of entity included in the definition of ``person'' in the 
law, as amended. It also specifies the term ``governmental 
entity operating as a business enterprise'' that is now in the 
law as including export credit agencies.
    Subsection (b) amends the definition of ``petroleum 
resources'' in ILSA Section 14(15) to include petroleum by-
products.
Sec. 206. United States Pension Plans.
    (a) Findings.--This provision includes a series of 
Congressional findings about threats to security from rogue 
regimes obtaining weapons of mass destruction, and particularly 
nuclear weapons. The findings include: that Iran is the leading 
state sponsor of international terrorism and is close to 
achieving nuclear weapons capability, but has paid no price for 
nearly twenty years of deception regarding its nuclear program; 
and that foreign entities that have invested in Iran's energy 
sector, despite Iran's support of international terrorism and 
its nuclear program, have afforded Iran a free pass, while many 
United States entities have unknowingly invested in those same 
foreign entities. Further, United States investors have a great 
deal at stake in preventing Iran from acquiring nuclear weapons 
and can have considerable influence over the commercial 
decisions of the foreign entities in which they have invested.
    (b) Publication in Federal Register.--This provision 
requires that the President, not later than six months after 
the date of the enactment of this Act and every six months 
thereafter, shall ensure publication in the Federal Register of 
a list of all United States and foreign entities that have 
invested more than $20,000,000 in Iran's energy sector between 
August 5, 1996, and the date of such publication. This list is 
intended to be a cumulative list since that date. Such list 
shall include an itemization of individual investments of each 
such entity, including the dollar value, intended purpose, and 
current status of each such investment.
    (c) Sense of Congress Relating to Divestiture From Iran.--
This provision expresses the sense of Congress that, upon 
publication of a list in the relevant Federal Register under 
the provision of law described in the preceding paragraph, 
managers of United States Government pension plans or thrift 
savings plans, managers of pension plans maintained in the 
private sector by plan sponsors in the United States, and 
managers of mutual funds sold or distributed in the United 
States should immediately initiate efforts to divest all 
investments of such plans or funds in any entity included on 
the list.
    (d) Sense of Congress Relating to Prohibition on Future 
Investment.--This provision expresses the sense of Congress 
that, upon publication of a list in the relevant Federal 
Register, as described above, there should be no future 
investment in any entity included on the list by managers of 
United States Government pension plans or thrift savings plans, 
managers of pension plans maintained in the private sector by 
plan sponsors in the United States, and managers of mutual 
funds sold or distributed in the United States.
    (e) Disclosure to Investors.--This subsection requires that 
not later than 30 days after the date of publication of a list 
in the relevant Federal Register under the provision described 
above, managers of United States Government pension plans or 
thrift savings plans, managers of pension plans maintained in 
the private sector by plan sponsors in the United States, and 
managers of mutual funds sold or distributed in the United 
States shall notify investors that the funds of such investors 
are invested in an entity included on the list. The list is 
that list described in subsection (b) and published in the 
Federal Register of entities that have invested more than $20 
million in Iran's petroleum sector between August 5, 1996 and 
the date of the list's publication. Such notification shall 
contain the following information: (a) the name or other 
identification of the entity; (b) the amount of the investment 
in the entity; (c) the potential liability to the entity if 
sanctions are imposed by the United States on Iran or on the 
entity; and (d) the potential liability to investors if such 
sanctions are imposed. Such notifications are required to be 
included in every prospectus and in every regularly provided 
quarterly, semi-annual, or annual report provided to investors, 
if the funds of such investors are invested in an entity 
included on the list. The notification described above shall be 
displayed prominently in any such prospectus or report and 
shall contain the information discussed above. If, upon 
publication of the list in the relevant Federal Register as 
described above, managers of pension funds, mutual funds, and 
so forth divest all investments of such plans or funds and the 
managers do not initiate any new investment in any other such 
entity, the managers are not required to include the 
notification described above in any prospectus or report 
provided to investors. Other dealings with Iran by an entity 
would not trigger a disclosure requirement under this 
provision.
Sec. 207. Report By Office of Global Security Risks.
    This section provides that not later than 30 days after the 
date of publication of a list in the relevant Federal Register 
the section described above, the Office of Global Security 
Risks within the Division of Corporation Finance of the United 
States Securities and Exchange Commission shall issue a report 
containing a list of the United States and foreign entities 
identified in accordance with such section, a determination of 
whether or not the operations in Iran of any such entity 
constitute a political, economic, or other risk to the United 
States, and a determination of whether or not the entity faces 
United States litigation, sanctions, or similar circumstances 
that are reasonably likely to have a material adverse impact on 
the financial condition or operations of the entity.
Sec. 208. Technical and Conforming Amendments.
    This section makes a series of technical and conforming 
amendments to remove references to Libya in the Iran and Libya 
Sanctions Act. It also provides that the law now known as the 
Iran and Libya Sanctions Act will now be known as the Iran 
Sanctions Act, and that any reference in any other provision of 
law, regulation, document, or other record of the United States 
to the ``Iran and Libya Sanctions Act of 1996'' shall be deemed 
to be a reference to the ``Iran Sanctions Act of 1996''.

TITLE III--DIPLOMATIC EFFORTS TO CURTAIL IRANIAN NUCLEAR PROLIFERATION 
               AND SPONSORSHIP OF INTERNATIONAL TERRORISM

Sec. 301. Diplomatic Efforts.
    Sense of Congress Relating to United Nations Security 
Council and the International Atomic Energy Agency.--Subsection 
(a) expresses the sense of Congress that the President should 
instruct the United States Permanent Representative to the 
United Nations to work to secure support at the United Nations 
Security Council for a resolution that would impose sanctions 
on Iran as a result of its repeated breaches of its nuclear 
nonproliferation obligations and that such sanctions should 
remain in effect until Iran has verifiably dismantled its 
weapons of mass destruction programs. This subsection is 
consistent with section 4(a) of ILSA, which calls for broader 
diplomatic efforts in international fora to inhibit Iran's WMD 
efforts and state-sponsorship of terrorism.
    Prohibition on Assistance to Countries that Invest in the 
Energy Sector of Iran.--Subsection (b) provides that, if, on or 
after April 13, 2005, any particular foreign person (as defined 
in section 14 of the Iran Sanctions Act, as renamed pursuant to 
section 208(g)(1)) or any particular agency or instrumentality 
of a foreign government, has more than $20,000,000 invested in 
Iran's energy sector, the President shall, until the date on 
which such person or agency or instrumentality of such 
government terminates such investment, withhold assistance 
under the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et 
seq.) to the government of the country to which such person 
owes allegiance or to which control is exercised over such 
agency or instrumentality. In the view of the Committee, the 
President should apply common-sense aggregation principles to 
avoid sham efforts to conceal the extent of investment by any 
single entity, such as the division of an investing entity into 
several entities. Generally, the Committee believes that 
governments which themselves make, or whose nationals make, 
investments in the Iranian petroleum sector should not, in the 
ordinary course of events, receive foreign assistance from the 
American taxpayer. This provision, however, applies neither to 
aid to entities other than ``governments'' nor to assistance 
other than that provided under the Foreign Assistance Act.
    The withholding of assistance under the provisions 
described immediately above may be waived if the President 
determines that furnishing such assistance is important to the 
national security interests of the United States and furthers 
the goals described in this Act. In addition, not later that 15 
days before obligating such assistance, the President must 
notify the Committee on International Relations of the House of 
Representatives, the Committee on Foreign Relations of the 
Senate, the Committee on Appropriations of the House of 
Representatives, and the Committee on Appropriations of the 
Senate of such determination and submits to such committees a 
report that includes: (a) a statement of the determination; (b) 
a detailed explanation of the assistance to be provided; (c) 
the estimated dollar amount of the assistance; and (d) an 
explanation of how the assistance furthers United States 
national security interests.
Sec. 302. Strengthening the Nuclear Nonproliferation Treaty.
    Findings regarding the Nuclear Nonproliferation Treaty.--
Subsection (a) provides that the Congress finds that Article IV 
of the Treaty on the Non-Proliferation of Nuclear Weapons 
(commonly referred to as the ``Nuclear Nonproliferation 
Treaty'' or ``NPT'') states that countries that are parties to 
the Treaty have the ``inalienable right . . . to develop 
research, production and use of nuclear energy for peaceful 
purposes without discrimination and in conformity with articles 
I and II of this Treaty,'' but that Iran has manipulated 
Article IV of the Nuclear Nonproliferation Treaty to acquire 
technologies needed to manufacture nuclear weapons under the 
guise of developing peaceful nuclear technology. It is also 
found that legal authorities, diplomatic historians, and 
officials closely involved in the negotiation and ratification 
of the Nuclear Nonproliferation Treaty state that the Treaty 
neither recognizes nor protects such a right to all nuclear 
technology, such as enrichment and reprocessing, but rather 
affirms that the right to the use of peaceful nuclear energy is 
qualified.
    Declaration of Congress Regarding United States Policy to 
Strengthen the Nuclear Nonproliferation Treaty.--In subsection 
(b), Congress declares that it should be the policy of the 
United States to support diplomatic efforts to end the 
manipulation of Article IV of the Nuclear Nonproliferation 
Treaty, such as that undertaken by Iran, without undermining 
the Treaty itself.

                      TITLE IV--DEMOCRACY IN IRAN

Sec. 401. Declaration of Congress Regarding United States Policy Toward 
        Iran.
    This section makes certain declarations regarding United 
States policy toward Iran. In general, Congress declares that 
it should be the policy of the United States to support 
independent human rights and peaceful pro-democracy forces in 
Iran. However, this section also provides that nothing in this 
Act shall be construed as authorizing the use of force against 
Iran.
Sec. 402. Assistance to Support Democracy in Iran.
    This section authorizes the President to provide financial 
and political assistance (including the award of grants) to 
foreign and domestic individuals, organizations, and entities 
that support democracy and the promotion of democracy in Iran. 
Such assistance may include the award of grants to eligible 
independent pro-democracy radio and television broadcasting 
organizations that broadcast into Iran. None of the funds 
authorized to be appropriated under this section shall be used 
to support the use of force against Iran, including covert 
operations against Iran. Financial and political assistance 
under this section may be provided only to an individual, 
organization, or entity that (a) officially opposes the use of 
violence and terrorism and has not been designated as a foreign 
terrorist organization under section 219 of the Immigration and 
Nationality Act (8 U.S.C. 1189) at any time during the 
preceding four years; (b) advocates the adherence by Iran to 
nonproliferation regimes for nuclear, chemical, and biological 
weapons and materiel; (c) is dedicated to democratic values and 
supports the adoption of a democratic form of government in 
Iran; (d) is dedicated to respect for human rights, including 
the fundamental equality of women; (e) works to establish 
equality of opportunity for people; and (f) supports freedom of 
the press, freedom of speech, freedom of association, and 
freedom of religion.
    Section 402 authorizes the President to provide financial 
and political assistance to foreign and domestic individuals, 
organizations and entities that support democracy and the 
promotion of democracy in Iran. The Committee expects that when 
selecting such individuals, organizations and entities for such 
assistance, the President shall focus on groups that maintain a 
significant political constituency and legitimacy within Iran. 
Section 402(a)(2) provides that none of the funds authorized by 
this act are authorized to be used to support the use of force 
against Iran. It is the intent of the Committee that the 
prohibition referred to in the previous sentence also prohibits 
the use of such funds to support covert operations by United 
States forces in Iran.
    The President may provide assistance under this section 
using funds available to the Middle East Partnership Initiative 
(MEPI), the Broader Middle East and North Africa Initiative, 
and the Human Rights and Democracy Fund. In addition, there are 
authorized to be appropriated for the purposes of carrying out 
this section such sums as may be necessary.
    Not later than 15 days before each obligation of assistance 
under this section, and in accordance with the procedures under 
section 634A of the Foreign Assistance Act of 1961 (22 U.S.C. 
2394-l), the President shall notify the Committee on 
International Relations and the Committee on Appropriations of 
the House of Representatives and the Committee on Foreign 
Relations and the Committee on Appropriations of the Senate. 
Such notification shall include, as practicable, the types of 
programs supported by such assistance and the recipients of 
such assistance.
    This section notes that it is the sense of Congress that 
contacts should be expanded with opposition groups in Iran that 
meet the criteria under the second paragraph of this section. 
Moreover, support for a transition to democracy in Iran should 
be expressed by United States representatives and officials in 
all appropriate international fora.
    Activities authorized under this section should include 
efforts to bring a halt to the nuclear weapons program of Iran, 
including intensifying steps to end the supply of nuclear 
components or fuel to Iran, with particular attention focused 
on the cooperation regarding such program between the 
Government of Iran and the Government of the Russian 
Federation, and between the Government of Iran and individuals 
from China and Pakistan, including the network of Dr. Abdul 
Qadeer (A.Q.) Khan.
    This section provides that officials and representatives of 
the United States should strongly and unequivocally support 
indigenous efforts in Iran calling for free, transparent, and 
democratic elections, and draw international attention to 
violations by the Government of Iran of human rights, freedom 
of religion, freedom of assembly, and freedom of the press.
Sec. 403. Waiver of Certain Export License Requirements.
    This section provides that the Secretary of State may, in 
consultation with the Secretary of Commerce, waive the 
requirement to obtain a license for the export to, or by, any 
person to whom the Department of State has provided a grant 
under a program to promote democracy or human rights abroad, 
any item which is commercially available in the United States 
without government license or permit, to the extent that such 
export would be used exclusively for carrying out the purposes 
of the grant.

                              Agency Views


                        New Advisory Committees

    H.R. 282 does not establish or authorize any new advisory 
committees.

                    Congressional Accountability Act

    H.R. 282 does not apply to the legislative branch.

                            Federal Mandates

    H.R. 282 provides mandates to the degree discussed in the 
report of the Congressional Budget Office.

          Exchange of Letters Regarding Committee Jurisdiction

Letters between the Committee on Ways and Means and Committee on 
                    International Relations

                                                      April 6, 2006
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Chairman Hyde: I am writing regarding H.R. 282, the 
``Iran Freedom Support Act,'' which the Committee on 
International Relations marked up on March 15, 2006.
    As per the agreement between our Committees, to be included 
in a manager's amendment to H.R. 282, the amended bill would 
modify the language in Section 101(a) so that the import 
sanctions contained in Executive Order 12959 may remain in 
effect under the terms of the Executive Order but would not be 
codified by this bill. In addition, Sections 202(a) and 202(b) 
of the reported bill will remain in the amended version. These 
sections would change current law by striking the statutory 
option the President currently has to ban imports against both 
Iran and Libya.
    Because all of these provisions have the effect of 
modifying and altering the application of an import ban, they 
fall within the jurisdiction of the Committee on Ways and 
Means. However, in order to expedite this legislation for floor 
consideration, the Committee will forgo action on this bill. 
This is being done with the understanding that it does not in 
any way prejudice the Committee with respect to the appointment 
of conferees or its jurisdictional prerogatives on this or 
similar legislation.
    I would appreciate your response to this letter, confirming 
this understanding with respect to H.R. 282, and would ask that 
a copy of our exchange of letters on this matter be included in 
your Committee report.
            Best regards,
                                     Bill Thomas, Chairman,
                               Committee on Ways and Means.

cc:
        The Honorable J. Dennis Hastert
        The Honorable John A. Boehner
        The Honorable Roy Blunt
        The Honorable Nancy Pelosi
        The Honorable Steny Hoyer
        The Honorable Tom Lantos
        The Honorable Charles B. Rangel
        Mr. John Sullivan, Parliamentarian
                                ------                                


                                                      April 7, 2006
Hon. William M. Thomas, Chairman,
Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am writing regarding H.R. 282, the 
``Iran Freedom Support Act,'' which the Committee on 
International Relations marked up on March 15, 2006.
    As per the agreement between our Committees, I will include 
in the manager's amendment to H.R. 282 language which would 
modify the text in Section 101(a) so that the import sanctions 
contained in Executive Order 12959 may remain in effect under 
the terms of the Executive Order but would not be codified by 
this bill. In addition, Sections 202(a) and 202(b) of the 
reported bill will remain in the amended version. These 
sections would change current law by striking the statutory 
option the President currently has to ban imports against both 
Iran and Libya.
    I concur that these provisions have the effect of modifying 
and altering the application of an import ban and, therefore, 
they fall within the jurisdiction of the Committee on Ways and 
Means. I appreciate your willingness to assist in expediting 
this legislation by foregoing action on this bill. This is 
being done with the understanding that it does not in any way 
prejudice the Committee on Ways and Means with respect to the 
appointment of conferees or its jurisdictional prerogatives on 
this or similar legislation.
    As you requested, I will be pleased to include a copy of 
this exchange of letters in the Committee Report on H.R. 282 
and in the Congressional Record during the consideration of 
this bill. If you have any questions regarding this matter, 
please do not hesitate to call me. I thank you for your 
consideration.
            Sincerely,
                                   Henry J. Hyde, Chairman,
                      Committee on International Relations.
HJH:df/mco

cc:
        The Honorable J. Dennis Hastert
        The Honorable John A. Boehner
        The Honorable Roy Blunt
        The Honorable Nancy Pelosi
        The Honorable Steny Hoyer
        The Honorable Tom Lantos
        The Honorable Charles B. Rangel
        The Honorable John Sullivan, Parliamentarian
                              ----------                              


Letters between the Committee on Education and the Workforce and 
                    Committee on International Relations

                                                      April 6, 2006
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am writing to confirm our mutual 
understanding with respect to the consideration of H.R. 282, 
the Iran Freedom Support Act. Section 206, United States 
Pension Plans, of the bill as ordered reported by your 
committee is within the jurisdiction of the Committee on 
Education and Workforce--specifically, section 206 (e), which 
requires certain disclosures by managers of private pension 
plans. In addition, the Senses of Congress contained in 
sections 206 (c) and (d) urge private pension plan managers to 
take certain actions and are also within the jurisdiction of 
the Committee on Education and the Workforce.
    I thank you for your agreement to support the removal of 
section 206 (e) from the bill and to modify sections 206 (c) 
and (d) with the addition of language recognizing the fiduciary 
duties of pension plan managers, as you work to move this 
important legislation forward. Given the importance and 
timeliness of the Iran Freedom Support Act, and your 
willingness to work with us regarding pension issues, I will 
not seek a sequential referral of this legislation. However, I 
do so only with the understanding that this procedural route 
should not be construed to prejudice the Committee on Education 
and the Workforce's jurisdictional interest and prerogatives on 
these provisions or any other similar legislation and will not 
be considered as precedent for consideration of matters of 
jurisdictional interest to my committee in the future. 
Furthermore, should these or similar provisions be considered 
in a conference with the Senate, I would expect members of the 
Committee on Education and the Workforce be appointed to the 
conference committee on these provisions.
    Finally, I would ask that you include a copy of our 
exchange of letters in the Committee Report on H.R. 282 and in 
the Congressional Record during the consideration of this bill. 
If you have any questions regarding this matter, please do not 
hesitate to call me. I thank you for your consideration.
            Sincerely,
                       Howard P. ``Buck'' McKeon, Chairman,
                  Committee on Education and the Workforce.

cc:
        The Honorable J. Dennis Hastert
        The Honorable George Miller
        The Honorable John Sullivan, Parliamentarian
                                ------                                


                                                      April 6, 2006
Hon. Howard P. ``Buck'' McKeon, Chairman,
Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter concerning 
H.R. 282, the Iran Freedom Support Act. I concur with your 
assessment that Section 206 of the bill, as ordered reported by 
the Committee on International Relations, which deals with 
United States Pension Plans, falls within the Rule X 
jurisdiction of the Committee on Education and the Workforce--
specifically Section 206(e), which requires certain disclosures 
by managers of private pension plans. In addition, the Senses 
of Congress contained in Sections 206 (c) and (d), urging 
private pension plan managers to take certain actions, are also 
within the jurisdiction of your Committee.
    I thank you for your agreement to support moving this 
important legislation forward. Based on our discussions, this 
Committee will remove Section 206 (e) from the bill, modify 
Sections 206 (c) and (d), and add language recognizing the 
fiduciary duties of pension plan managers. I appreciate your 
willingness to forego seeking a sequential referral of this 
legislation. I understand your willingness to do so does not in 
any way prejudice the Committee on Education and the 
Workforce's jurisdictional interest and prerogatives on these 
provisions or any other similar legislation and will not be 
considered as precedent for consideration of matters of 
jurisdictional interest to your Committee in the future. Should 
these or similar provisions be considered in a conference with 
the Senate, I will urge the Speaker to appoint members of the 
Committee on Education and the Workforce to the conference 
committee.
    As you requested, I will include a copy of our exchange of 
letters in the Committee Report on H.R. 282 and in the 
Congressional Record during the consideration of this bill.
            Sincerely,
                                   Henry J. Hyde, Chairman,
                      Committee on International Relations.
HJH:df/mco
                              ----------                              


Letters between the Committee on Government Reform and Committee on 
                    International Relations

                                                     April 13, 2006
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am writing to confirm our mutual 
understanding with respect to consideration of H.R. 282, the 
Iran Freedom Support Act, which the Committee on International 
Relations ordered reported on April 13, 2006. In the bill as 
ordered reported by your Committee, section 206, specifically 
the provisions providing Senses of Congress urging U.S. 
government pension plan and thrift savings plan managers to 
take certain actions (section 206(c) and (d)) and the provision 
requiring certain disclosures by managers of U.S. government 
pension plans and thrift savings plans (section 206(e)) are 
within the jurisdiction of the Government Reform Committee.
    I thank you for your agreement to support the removal of 
section 206 (e) from the bill and to modify sections 206 (c) 
and (d) with the addition of language recognizing the fiduciary 
duties of U. S. government pension plan managers, as you work 
to move this important legislation forward. Given the 
importance and timeliness of the Iran Freedom Support Act, and 
your willingness to work with us regarding pension issues, I 
will not request a sequential referral of this legislation to 
the Committee on Government Reform. However, I only do so with 
the understanding that this procedural route should not be 
construed to prejudice the Committee on Government Reform's 
jurisdictional interest and prerogatives on these provisions or 
any other similar legislation and will not be considered as 
precedent for consideration of matters of jurisdictional 
interest to my Committee in the future. Furthermore, should 
these or similar provisions be considered in a conference with 
the Senate, I would expect Members of the Committee on 
Government Reform be appointed to the conference committee on 
these provisions.
    Finally, I would ask that you include a copy of our 
exchange of letters in the Committee Report on H.R. 282 and in 
the Congressional Record during the consideration of this bill. 
If you have any questions regarding this matter, please do not 
hesitate to call me. I thank you for your consideration.
            Sincerely,
                                       Tom Davis, Chairman,
                            Committee on Government Reform.
                                ------                                


                                                     April 14, 2006
Hon. Tom Davis, Chairman,
Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter concerning 
H.R. 282, the Iran Freedom Support Act. I concur with your 
assessment that Section 206 of the bill, as ordered reported by 
the Committee on International Relations, which deals with 
United States Pension Plans, falls within the Rule X 
jurisdiction of the Committee on Government Reform--
specifically Section 206(e), which requires certain disclosures 
by managers of U.S. government pension plans. In addition, the 
Senses of Congress contained in Sections 206 (c) and (d), 
urging U.S. government pension plan managers to take certain 
actions, are also within the jurisdiction of your Committee.
    I thank you for your agreement to support moving this 
important legislation forward. Based on our discussions, this 
Committee will remove Section 206 (e) from the bill, modify 
Sections 206 (c) and (d), and add language recognizing the 
fiduciary duties of pension plan managers. I appreciate your 
willingness to forego seeking a sequential referral of this 
legislation. I understand your willingness to do so does not in 
any way prejudice the Committee on Government Reform's 
jurisdictional interest and prerogatives on these provisions or 
any other similar legislation and will not be considered as 
precedent for consideration of matters of jurisdictional 
interest to your Committee in the future. Should these or 
similar provisions be considered in a conference with the 
Senate, I will urge the Speaker to appoint members of the 
Committee on Government Reform to the conference committee.
    As you requested, I will include a copy of our exchange of 
letters in the Committee Report on H.R. 282 and in the 
Congressional Record during the consideration of this bill.
            Sincerely,
                                   Henry J. Hyde, Chairman,
                      Committee on International Relations.
HJH:df/mco
                              ----------                              


Letters between the Committee on Financial Services and Committee on 
                    International Relations

                                                      April 6, 2006
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am writing to confirm our mutual 
understanding with respect to the consideration of H.R. 282, 
the Iran Freedom Support Act. This bill was ordered reported by 
the Committee on International Relations on March 15, 2006. 
Section 206, ``United States pension plans'', and section 207, 
``Report by Office of Global Security Risks'', of the bill as 
ordered reported by your committee are within the jurisdiction 
of the Committee on Financial Services under clause 1(g) of 
rule X of the Rules of the House of Representatives.
    Ordinarily, the Committee on Financial Services would be 
entitled to receive a sequential referral of the bill. However, 
I thank you for your agreement to support in moving this 
important legislation forward the removal of section 206 (e) 
and section 207 from the bill and to modify section 206 (b) by 
inserting the Secretary of State in lieu of the President. 
Given the importance and timeliness of the Iran Freedom Support 
Act, and your willingness to work with us regarding these 
issues, I will not seek a sequential referral of this 
legislation. However, I do so only with the understanding that 
this procedural route should not be construed to prejudice the 
jurisdictional interest of the Committee on Financial Services 
on these provisions or any other similar legislation and will 
not be considered as precedent for consideration of matters of 
jurisdictional interest to my committee in the future. 
Furthermore, should these or similar provisions be considered 
in a conference with the Senate, I would expect members of the 
Committee on Financial Services be appointed to the conference 
committee on these provisions.
    Finally, I would ask that you include a copy of our 
exchange of letters in the Committee Report on H.R. 282 and in 
the Congressional Record during the consideration of this bill. 
If you have any questions regarding this matter, please do not 
hesitate to call me. I thank you for your consideration.
            Yours truly,
                                Michael G. Oxley, Chairman,
                           Committee on Financial Services.
                                ------                                


                                                      April 7, 2006
Hon. Michael G. Oxley, Chairman,
Committee on Financial Services
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter concerning 
H.R. 282, the Iran Freedom Support Act. I concur that the bill, 
as ordered reported by the Committee on International Relations 
on March 15, 2006, contains language which falls within the 
Rule X jurisdiction of the Committee on Financial Services. 
Specifically, Section 206, ``United States Pension Plans,'' and 
Section 207, ``Report by Office of Global Security Risks,'' of 
the bill are within your Committee's jurisdiction.
    Our two committees have reached agreement that, in the 
interest of moving this important legislation forward, the text 
of the bill which we will place in the manager's amendment will 
remove Section 206 (e) and Section 207 from the bill and will 
modify Section 206 (b) by inserting the ``Secretary of State'' 
in lieu of ``the President.'' Given the importance and 
timeliness of the Iran Freedom Support Act, I appreciate your 
willingness to work with us regarding these issues and to 
forego sequential referral of this legislation. I understand 
that by doing so, it should not be construed to prejudice the 
jurisdictional interest of the Committee on Financial Services 
on these provisions or any other similar legislation and will 
not be considered as precedent for consideration of matters of 
jurisdictional interest to your Committee in the future. 
Furthermore, should these or similar provisions be considered 
in a conference with the Senate, I will request the Speaker to 
name members of the Committee on Financial Services to the 
conference committee.
    As you requested, I will be pleased to include a copy of 
this exchange of letters in the Committee Report on H.R. 282 
and in the Congressional Record during the consideration of 
this bill. If you have any questions regarding this matter, 
please do not hesitate to call me. I thank you for your 
consideration.
            Sincerely,
                                   Henry J. Hyde, Chairman,
                      Committee on International Relations.
HJH:df/mco

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                  IRAN AND LIBYA SANCTIONS ACT OF 1996

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Iran [and Libya] Sanctions 
Act of 1996''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
            (1) * * *

           *       *       *       *       *       *       *

            [(4) The failure of the Government of Libya to 
        comply with Resolutions 731, 748, and 883 of the 
        Security Council of the United Nations, its support of 
        international terrorism, and its efforts to acquire 
        weapons of mass destruction constitute a threat to 
        international peace and security that endangers the 
        national security and foreign policy interests of the 
        United States and those countries with which it shares 
        common strategic and foreign policy objectives.]

SEC. 3. DECLARATION OF POLICY.

    [(a) Policy With Respect to Iran.--]The Congress declares 
that it is the policy of the United States to deny Iran the 
ability to support acts of 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.
    [(b) Policy With Respect to Libya.--The Congress further 
declares that it is the policy of the United States to seek 
full compliance by Libya with its obligations under Resolutions 
731, 748, and 883 of the Security Council of the United 
Nations, including ending all support for acts of international 
terrorism and efforts to develop or acquire weapons of mass 
destruction.]

SEC. 4. MULTILATERAL REGIME.

    (a) * * *
    [(b) Reports to Congress.--The President shall report to 
the appropriate congressional committees, not later than 1 year 
after the date of the enactment of this Act, and periodically 
thereafter, on the extent that diplomatic efforts described in 
subsection (a) have been successful. Each report shall 
include--
            [(1) the countries that have agreed to undertake 
        measures to further the objectives of section 3 with 
        respect to Iran, and a description of those measures; 
        and
            [(2) the countries that have not agreed to measures 
        described in paragraph (1), and, with respect to those 
        countries, other measures (in addition to that provided 
        in subsection (d)) the President recommends that the 
        United States take to further the objectives of section 
        3 with respect to Iran.
    [(c) Waiver.--The President may waive the application of 
section 5(a) with respect to nationals of a country if--
            [(1) that country has agreed to undertake 
        substantial measures, including economic sanctions, 
        that will inhibit Iran's efforts to carry out 
        activities described in section 2 and information 
        required by subsection (b)(1) has been included in a 
        report submitted under subsection (b); and
            [(2) the President, at least 30 days before the 
        waiver takes effect, notifies the appropriate 
        congressional committees of his intention to exercise 
        the waiver.]
    (b) Reports to Congress.--Not later than six months after 
the date of the enactment of the Iran Freedom Support Act and 
every six months thereafter, the President shall submit 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).
    (c) Waiver.--
            (1) In general.--The President may, on a case by 
        case basis, waive for a period of not more than six 
        months the application of section 5(a) with respect to 
        a national of a country, if the President certifies to 
        the appropriate congressional committees at least 30 
        days before such waiver is to take effect that--
                    (A) such waiver is vital to the national 
                security interests of the United States; and
                    (B) the country of the national has 
                undertaken substantial measures to prevent the 
                acquisition and development of weapons of mass 
                destruction by the Government of Iran.
            (2) Subsequent renewal of waiver.--If the President 
        determines that, in accordance with paragraph (1), such 
        a waiver is appropriate, the President may, at the 
        conclusion of the period of a waiver under paragraph 
        (1), renew such waiver for subsequent periods of not 
        more than six months each.

           *       *       *       *       *       *       *

    (f) Investigations.--
            (1) In general.--The President shall initiate an 
        investigation into the possible imposition of sanctions 
        against a person upon receipt by the United States of 
        credible information indicating that such person is 
        engaged in activity related to investment in Iran as 
        described in section 5(a).
            (2) Determination and notification.--
                    (A) In general.--Not later than 180 days 
                after an investigation is initiated in 
                accordance with paragraph (1), the President 
                shall determine, pursuant to section 5(a), 
                whether or not to impose sanctions against a 
                person engaged in activity related to 
                investment in Iran as described in such section 
                as a result of such activity and shall notify 
                the appropriate congressional committees of the 
                basis for such determination.
                    (B) Extension.--If the President is unable 
                to make a determination under subparagraph (A), 
                the President shall notify the appropriate 
                congressional committees and shall extend such 
                investigation for a subsequent period, not to 
                exceed 180 days, after which the President 
                shall make the determination required under 
                such subparagraph and shall notify the 
                appropriate congressional committees of the 
                basis for such determination in accordance with 
                such subparagraph.
            (3) Determinations regarding pending 
        investigations.--Not later than 90 days after the date 
        of the enactment of this Act, the President shall, with 
        respect to any investigation that was pending as of 
        January 1, 2006, concerning a person engaged in 
        activity related to investment in Iran as described in 
        section 5(a), determine whether or not to impose 
        sanctions against such person as a result of such 
        activity and shall notify the appropriate congressional 
        committees of the basis for such determination.
            (4) Publication.--Not later than 10 days after the 
        President notifies the appropriate congressional 
        committees under paragraphs (2) and (3), the President 
        shall ensure publication in the Federal Register of the 
        identification of the persons against which the 
        President has made a determination that the imposition 
        of sanctions is appropriate, together with an 
        explanation for such determination.

SEC. 5. IMPOSITION OF SANCTIONS.

    (a) Sanctions With Respect [to Iran] to the Development of 
Petroleum Resources of Iran.--Except as provided in subsection 
(f), the President shall impose 2 or more of the sanctions 
described in paragraphs (1) through [(6)] (5) of section 6 if 
the President determines that a person has, [with actual 
knowledge,] on or after the date of the enactment of this Act, 
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 and significantly contributed to the 
enhancement of Iran's ability to develop petroleum resources of 
Iran.
    [(b) Mandatory Sanctions With Respect to Libya.--
            [(1) Violations of prohibited transactions.--Except 
        as provided in subsection (f), the President shall 
        impose 2 or more of the sanctions described in 
        paragraphs (1) through (6) of section 6 if the 
        President determines that a person has, with actual 
        knowledge, on or after the date of the enactment of 
        this Act, exported, transferred, or otherwise provided 
        to Libya any goods, services, technology, or other 
        items the provision of which is prohibited under 
        paragraph 4(b) or 5 of Resolution 748 of the Security 
        Council of the United Nations, adopted March 31, 1992, 
        or under paragraph 5 or 6 of Resolution 883 of the 
        Security Council of the United Nations, adopted 
        November 11, 1993, if the provision of such items 
        significantly and materially--
                    [(A) contributed to Libya's ability to 
                acquire chemical, biological, or nuclear 
                weapons or destabilizing numbers and types of 
                advanced conventional weapons or enhanced 
                Libya's military or paramilitary capabilities;
                    [(B) contributed to Libya's ability to 
                develop its petroleum resources; or
                    [(C) contributed to Libya's ability to 
                maintain its aviation capabilities.
            [(2) Investments that contribute to the development 
        of petroleum resources.--Except as provided in 
        subsection (f), the President shall impose 2 or more of 
        the sanctions described in paragraphs (1) through (6) 
        of section 6 if the President determines that a person 
        has, with actual knowledge, on or after the date of the 
        enactment of this Act, made an investment of 
        $20,000,000 or more (or any combination of investments 
        of at least $10,000,000 each, which in the aggregate 
        equals or exceeds $20,000,000 in any 12-month period), 
        that directly and significantly contributed to the 
        enhancement of Libya's ability to develop its petroleum 
        resources.]
    (b) Mandatory Sanctions With Respect to Development of 
Weapons of Mass Destruction or Other Military Capabilities.--
Notwithstanding any other provision of law, the President shall 
impose two or more of the sanctions described in paragraphs (1) 
through (5) of section 6 if the President determines that a 
person has, on or after the date of the enactment of this Act, 
exported, transferred, or otherwise provided to Iran any goods, 
services, technology, or other items knowing that the provision 
of such goods, services, technology, or other items would 
contribute to the ability of Iran to--
            (1) acquire or develop chemical, biological, or 
        nuclear weapons or related technologies; or
            (2) acquire or develop destabilizing numbers and 
        types of advanced conventional weapons.
    (c) Persons Against Which the Sanctions Are To Be 
Imposed.--The sanctions described in subsections (a) and (b) 
shall be imposed on--
            (1) * * *
            (2) any person the President determines--
                    (A) * * *
                    (B) is a parent or subsidiary of the person 
                referred to in paragraph (1) if that parent or 
                subsidiary[, with actual knowledge,] engaged in 
                the activities referred to in paragraph (1); 
                [or]
                    (C) is an affiliate of the person referred 
                to in paragraph (1) if that affiliate[, with 
                actual knowledge,] engaged in the activities 
                referred to in paragraph (1) and if that 
                affiliate is controlled in fact by the person 
                referred to in paragraph (1)[.]; or
                    (D) is a private or government lender, 
                insurer, underwriter, or guarantor of the 
                person referred to in paragraph (1) if that 
                private or government lender, insurer, 
                underwriter, or guarantor 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''.

           *       *       *       *       *       *       *


SEC. 8. TERMINATION OF SANCTIONS.

    [(a) Iran.--]The requirement under section 5(a) to impose 
sanctions shall no longer have force or effect with respect to 
Iran 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) * * *

           *       *       *       *       *       *       *

                    (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[.]; and
            (3) poses no significant threat to United States 
        national security, interests, or allies.
    [(b) Libya.--The requirement under section 5(b) to impose 
sanctions shall no longer have force or effect with respect to 
Libya if the President 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, United Nations Security Council 
Resolution 748, adopted March 31, 1992, and United Nations 
Security Council Resolution 883, adopted November 11, 1993.]

SEC. 9. DURATION OF SANCTIONS; PRESIDENTIAL WAIVER.

    (a) * * *

           *       *       *       *       *       *       *

    (c) Presidential Waiver.--
            (1) * * *
            (2) Contents of report.--Any report under paragraph 
        (1) shall provide a specific and detailed rationale for 
        the determination under paragraph (1), including--
                    (A) * * *

           *       *       *       *       *       *       *

                    [(C) an estimate as to the significance--
                            [(i) of the provision of the items 
                        described in section 5(a) to Iran's 
                        ability to develop its petroleum 
                        resources, or
                            [(ii) of the provision of the items 
                        described in section 5(b)(1) to the 
                        abilities of Libya described in 
                        subparagraph (A), (B), or (C) of 
                        section 5(b)(1), or of the investment 
                        described in section 5(b)(2) on Libya's 
                        ability to develop its petroleum 
                        resources,
                as the case may be; and]
                    (C) an estimate of the significance of the 
                provision of the items described in section 
                5(a) or section 5(b) to Iran's ability to, 
                respectively, develop its petroleum resources 
                or its weapons of mass destruction or other 
                military capabilities; and

           *       *       *       *       *       *       *


SEC. 10. REPORTS REQUIRED.

    (a) * * *
    (b) Report on Effectiveness of Actions Under This Act.--Not 
earlier than 24 months, and not later than 30 months, after the 
date of the enactment of the ILSA Extension Act of 2001, the 
President shall transmit to Congress a report that describes--
            (1) the extent to which actions relating to trade 
        taken pursuant to this Act--
                    (A) have been effective in achieving the 
                objectives of section 3 and any other foreign 
                policy or national security objectives of the 
                United States with respect to Iran [and Libya]; 
                and
                    (B) have affected humanitarian interests in 
                Iran [and Libya], the country in which the 
                sanctioned person is located, or in other 
                countries; and

           *       *       *       *       *       *       *


SEC. 13. EFFECTIVE DATE[; SUNSET].

    [(a) Effective Date.--]This Act shall take effect on the 
date of the enactment of this Act.
    [(b) Sunset.--This Act shall cease to be effective on the 
date that is 10 years after the date of the enactment of this 
Act.]

SEC. 14. DEFINITIONS.

    As used in this Act:
            (1) * * *

           *       *       *       *       *       *       *

            (9) Investment.--The term ``investment'' means any 
        of the following activities if such activity is 
        undertaken pursuant to an agreement, or pursuant to the 
        exercise of rights under such an agreement, that is 
        entered into with the Government of Iran or a 
        [nongovenmental] nongovernmental entity in Iran[, or 
        with the Government of Libya or a nongovernmental 
        entity in Libya,] on or after the date of the enactment 
        of this Act:
                    (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.

           *       *       *       *       *       *       *

            [(12) Libya.--The term ``Libya'' includes any 
        agency or instrumentality of Libya.]
            [(13)] (12) 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 
        11(aa) 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).
            [(14)] (13) Person.--The term ``person'' means--
                    (A) * * *
                    (B) a corporation, business association, 
                partnership, society, trust, financial 
                institution, insurer, underwriter, guarantor, 
                any other business organization, including any 
                foreign subsidiaries of the foregoing, any 
                other nongovernmental entity, organization, or 
                group, and any governmental entity operating as 
                a business enterprise, such as an export credit 
                agency; and
                    (C) any successor to any entity described 
                in subparagraph (B).
            [(15)] (14) Petroleum resources.--The term 
        ``petroleum resources'' includes petroleum, petroleum 
        by-products, and natural gas resources.
            [(16)] (15) 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.
            [(17)] (16) 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.

           *       *       *       *       *       *       *

                            Additional Views

    I am appalled by the Iranian regime's behavior, of which 
the continuing effort to develop nuclear weapons is only one 
component. President Mahmoud Ahmadinejad's genocidal threats 
against Israel and denial of the Holocaust, the continued 
suppression of dissent and basic freedoms, and support for 
terrorist groups like al-Qaeda and Hamas all paint a picture of 
a dangerous regime.
    As H.R.282, the ``Iran Freedom Support Act,'' has started 
to move its way through the legislative process, I appreciate 
that positive changes have already occurred in the course of 
discussions with Chairman Hyde and the administration. I 
appreciate the willingness of Ms. Ros-Lehtinen and Mr. Lantos 
to accept my amendment prohibiting assistance to groups that 
have been on the State Department's list of Foreign Terrorist 
Organizations over the previous four years and to include 
report language urging that funding go to groups who have a 
significant political constituency and legitimacy within Iran. 
Continuing to tighten these provisions is necessary to ensure 
that we don't face the same situation as we did in Iraq, where 
the U.S. was misled by exile groups with little legitimacy 
inside the country.
    Presidents of both parties have declined to place sanctions 
on allies, or companies within those countries, whose support 
we need to deal effectively with Iran. Certainly, no one would 
accuse our current president of being weak-willed on the nexus 
of terror and nuclear proliferation, yet, despite its 
widespread support in Congress, even the Administration is 
still unable to support the bill in its current form.
    I believe that we will be most successful at crafting an 
effective strategy for denying Iran nuclear capability if 
Congress and the administration can reach a consensus as to 
what tools the President and the Secretary of State need to 
employ strong, coercive diplomacy. Because we have not yet 
reached this point, I voted ``no'' on the bill, yet I remain 
open to supporting it in the future.
    I continue to believe that the 5-year sunset should be 
restored to the base Iran-Libya Sanctions Act and look forward 
to working on efforts to do so. Congress usually finds it much 
easier to implement sanctions than to engage in regular reviews 
to ensure that they are advancing our intended goals. The 
United States needs an effective policy on how to use 
sanctions: What are we trying to achieve? What works? What 
doesn't? What criteria do we use to figure out when sanctions 
would and wouldn't work? How do we know if we've been 
successful? How do we know when to call them off, either 
because we've succeeded or failed? Until we develop this kind 
of policy, however, it is important to restore the sunset 
provision and require a periodic review of sanctions.
    Both the administration and Chairman Hyde have recognized 
the trade-off in this bill between any gains in leverage over 
Iran through enhanced sanctions and the impact on our efforts 
with our allies. We should also pay attention to the 
perspectives of those democracy advocates within Iran whom we 
intend to help, who must balance the benefits of any increased 
resources from the United States and the negative impact of 
being tarred as tools of U.S. interests. I hope that striking 
the right balance in these trade-offs will be at the forefront 
of our discussions as this bill moves through the legislative 
process.

                                   Earl Blumenauer.

                                  
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