Preventing Iran from obtaining nuclear weapons capability remains one of the United States’ preeminent national security objectives,. Thus, the United States and its allies have increasingly turned to economic sanctions as a tool to further isolate the Iranian regime by seeking to deprive it of the benefits of international commerce. To this end, over the past three years a series of new laws have continued to expand already restrictive U.S. sanctions programs by, among other things, expanding the extraterritorial reach of U.S. law. In particular, these new sanctions have a direct impact on the energy and petrochemical industries, and on U.S. businesses with foreign subsidiaries.
Specifically, recent U.S. legislative measures include the following:
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The Iran Threat Reduction and Syria Human Rights Act of 2012 (“TRA”), enacted August 10, 2012, expands sanctions against Iran’s financial, energy, and transportation sectors. The TRA arguably imposes the most comprehensive sanctions on transactions involving Iran to date, expanding existing laws and codifying additional prohibitions imposed by executive orders by expanding sanctions against Iran’s financial, energy, petrochemical, and transportation sectors. The TRA also extends sanctions to U.S.-owned or -controlled foreign subsidiaries, joint ventures, and other entities, when those entities knowingly engage in transactions with Iran.
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The Fiscal Year 2012 National Defense Authorization Act (“FY 2012 NDAA”), enacted December 31, 2011, contains provisions imposing sanctions on foreign financial institutions for engaging in transactions related to Iranian oil with the Central Bank of Iran and other Iranian financial institutions.
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The Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”) expands the scope of the Iran Sanctions Act of 1996 (“ISA”) by limiting Iran’s ability to import and produce refined petroleum products and strengthening the President’s authority to impose sanctions on companies that provide refined petroleum products to Iran or assist Iran in expanding its refining capacity.
In 2012, the President signed six Executive Orders that further restrict transactions involving Iran as follows:
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Executive Order 13628, signed October 9, 2012, implements certain provisions of the TRA by expanding sanctions against Iran’s financial, energy, and transportation sectors, and by prohibiting U.S.-owned or -controlled foreign entities from knowingly engaging in transactions with Iran;
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Executive Order 13622, signed July 30, 2012, imposes sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant transactions for the purchase or acquisition of petrochemical products from Iran;
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Executive Order 13608 signed May 1, 2012 imposes sanctions against those who engage in activities intended to evade U.S. sanctions;
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Executive Order 13608, signed May 1, 2012, prohibits certain transactions with and suspends entry into the United States for persons who evade, violate or conspire to violate U.S. sanctions against Iran or Syria;
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Executive Order 13606, signed April 22, 2012, imposes sanctions on persons who facilitate human rights abuses through the use of information technology; and
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Executive Order 13599, signed February 5, 2012, strengthens the U.S. trade embargo against Iran by applying additional sanctions on Iran’s petrochemical sector and expands the existing energy sanctions.
In addition to the Executive Orders, the U.S. Treasury Department recently took action under the existing Iranian Transactions and Sanctions Regulations (“ITSR”) to restrict transactions between U.S. persons and the Bank of Kunlun, a Chinese bank, and Elaf Islamic Bank, an Iraqi bank, by adding these third-country banks to the list of Foreign Financial Institutions Subject to Part 561 for knowingly facilitating significant transactions or providing significant financial services to sanctioned Iranian banks. The Treasury Department also recently implemented, through the ITSR, provisions of the TRA and of certain Executive Orders that prohibit U.S.-owned or -controlled foreign entities from knowingly engaging in transactions with Iran.
Congress has repeatedly stated that a nuclear Iran is strategically untenable and has recently passed the following two measures intended to further curtail Tehran’s military ambitions:
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HR 3783, “Countering Iran in the Western Hemisphere Act of 2012,” passed in enrolled form by the House and Senate on December 19, 2012, provides for a comprehensive strategy to counter Iran’s growing hostile presence and activity in the Western Hemisphere, and for other purposes.
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HR 4310, “Fiscal 2013 Defense Authorization,” passed by the Senate after conference on December 21, 2012, includes provisions that will impose new sanctions against Iran’s energy, ports, shipping and shipbuilding sectors, as well as limiting metals trade with Iran. Most of the new provisions would take effect within 180 days.
The President signed HR 3783 into law on December 28, 2012. At the time of publication, he had not yet signed HR 4310.
