89–010 

Calendar No. 215 

111TH CONGRESS REPORT " ! SENATE 1st Session 111–99 

COMPREHENSIVE IRAN SANCTIONS, ACCOUNTABILITY, 

AND DIVESTMENT ACT OF 2009 

NOVEMBER 19, 2009.—Ordered to be printed 

Mr. DODD, from the Committee on Banking, Housing, and Urban 

Affairs, submitted the following 

R E P O R T 

[To accompany S. 2799] 

The Committee on Banking, Housing, and Urban Affairs, having 

had under consideration an original bill (S. 2799) to expand the 

Iran Sanctions Act of 1996, to provide for the divestment of assets 

in Iran by State and local governments and other entities, to identify locations of concern with respect to transshipment, reexportation, or diversion of certain sensitive items to Iran, and for other 

purposes, having considered the same, reports favorably thereon 

and recommends that the bill do pass. 

I. INTRODUCTION

On October 29, 2009, the Senate Committee on Banking, Housing and Urban Affairs considered a Committee Print, entitled the 

‘‘Comprehensive Iran Sanctions, Accountability, and Divestment 

Act of 2009,’’ a bill to impose sanctions with respect to Iran; to provide for the divestment of assets in Iran by State and local governments and others; and to identify countries engaged in transshipment or diversion of certain sensitive items to Iran, and for 

other purposes. The Committee voted 23 to 0 to report the bill to 

the Senate. The Committee’s consideration of the bill comes at a 

time of heightened international tensions surrounding the government of Iran’s uranium enrichment program, and ongoing negotiations with Iran’s leaders designed to bring about an end to that 

government’s illicit nuclear activities and bring Iran into compliance with international non-proliferation rules. 


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II. PURPOSE

The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009 (hereafter ‘the Act’) imposes a number of new 

sanctions on Iran; provides a legal framework by which States, 

local governments and certain other investors can divest Iran-related energy assets from their portfolios, and establishes a mechanism to address concerns about sensitive technologies being diverted to Iran through other countries. 

Specifically, the Act extends current sanctions and imposes new 

sanctions on multinational firms engaged in exportation of refined 

petroleum products to Iran, or in bolstering Iran’s domestic refinery capacity; tightens the current export and import ban on Iran, 

while providing for certain exceptions; requires the freezing of assets of certain Iranian persons involved in providing support for 

terrorism or weapons proliferation, including Iran’s Revolutionary 

Guard Corps, and associated persons; imposes a ban on U.S. Government contracts for entities found to be subject to sanctions 

under the Iran Sanctions Act; expands the definition of persons 

subject to the Act; and imposes certain additional reporting requirements to increase monitoring of investments and transactions 

in Iran’s energy sector. It also allows State and local governments 

and private asset fund managers, if they so choose, to adopt measures to divest from companies who have invested $20 million or 

more in the energy sector in Iran. Such measures may be adopted 

to reduce the financial or reputational risk associated with investments in a country subject to international sanctions. Finally, the 

Act establishes a system to strengthen and improve U.S. efforts to 

combat the diversion of sensitive dual use technologies to Iran. 

III. BACKGROUND AND NEED FOR LEGISLATION

It is in the national interest of the U.S. for Iran to suspend its 

non-compliant uranium enrichment program, end its sponsorship of 

international terrorism, and halt weapons proliferation. The need 

to complement multilateral initiatives with legislation designed to 

address these concerns is also clear. It arises primarily from Iran’s 

persistent failure to address the concerns of the International 

Atomic Energy Agency (IAEA) with regard to its nuclear program. 

Such legislation would enhance current economic sanctions, enable 

divestment from Iran, and combat the diversion of sensitive technologies to Iran. By these means, this legislation is designed to 

maximize the economic leverage on Iran’s government—from the 

US, our allies, and US and international investors—to bring that 

government to the negotiating table, to change its behavior, and to 

constrain its freedom to act in ways inimical to the interests of the 

international community. 

The Committee recognizes that economic and financial sanctions 

are only one tool of statecraft and, to be effective, must be undertaken as part of a broader diplomatic effort. Sanctions are a means 

of providing leverage within a more comprehensive, coherent, coordinated diplomatic and political strategy to prompt Iran to cease 

and forswear all nuclear-related activities that are in contravention 

of its international agreements and responsibilities, and other behaviors that undermine regional peace and stability. The president’s current diplomatic initiative to engage Iran’s government, 


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along with US allies, in negotiations regarding its nuclear programs is part of that effort. 

Multilateral initiatives 

The government of Iran has been designated by the United 

States as a state sponsor of terrorism since 1984 and is a long-time 

financial supporter of designated terrorist organizations such as 

Hezbollah, Hamas, and Palestinian Islamic Jihad. The government 

of Iran has consistently misled the United Nations and the IAEA 

about the objectives and scope of its nuclear activities. For example, IAEA inspections since 2003 have revealed two decades’ worth 

of undeclared nuclear activities in Iran, including uranium enrichment and plutonium separation efforts. Despite a series of agreements to suspend its activities in this area, Iran has persisted in 

these activities, and the several measures adopted thus far by the 

UN Security Council (UNSC) have proved insufficient to curtail 

Iran’s enrichment activities. 

The UNSC has acted on various resolutions in recent years, condemning Iran’s nuclear activities and urging compliance with its 

international obligations. For example, on December 23, 2006, 

UNSC Resolution 1737 was unanimously approved, banning supply 

of nuclear technology and equipment to Iran and freezing the assets of organizations and individuals involved in Iran’s nuclear program, until Iran suspends enrichment of uranium. UNSC Resolution 1747 was unanimously approved on March 24, 2007, imposing 

a ban on arms sales, expanding the freeze on assets, and setting 

a deadline for Iranian compliance two months later. 

Absent compliance, further sanctions were adopted in UNSC 

Resolution 1803 on March 3, 2008, including a sales ban on dual 

use items; authorization of inspections of cargo suspected of containing WMD-related goods; an expanded Iranian travel ban list; 

and a call to ban transactions with Iran’s Bank Melli and Bank 

Saderat. On August 7, 2008, the EU implemented the sanctions 

specified in Resolution 1803, including asserting the authority to 

inspect suspect shipments, and called on its members to refrain 

from providing new credit guarantees on exports to Iran. On September 27, 2008, the Security Council also adopted Resolution 

1835, calling on Iran to comply with previous resolutions. 

In addition to UNSC efforts, since 2006 the ‘‘Permanent Five 

Plus 1’’ (P5+1), comprised of the United States, Russia, China, 

France, Britain, and Germany, have proposed a blueprint for negotiating with Iran including the following proposed incentives: (1) 

negotiations on EU-Iran trade agreements and acceptance of Iran 

into the World Trade Organization; (2) easing of U.S. sanctions to 

permit sales to Iran of commercial aircraft and aircraft parts; (3) 

sale to Iran of a light-water nuclear reactor and guarantees of nuclear fuel (including a five-year buffer stock of fuel), and possible 

sales of light-water research reactors for medicine and agricultural 

applications; (4) an ‘‘energy partnership’’ between Iran and the European Union, including help for Iran to modernize its oil and gas 

sector and to build export pipelines; (5) support for a regional security forum for the Persian Gulf, and support for the objective of a 

Middle East WMD free zone; (6) the possibility of eventually allowing Iran to resume uranium enrichment if it complies with all outstanding IAEA requirements and proves that its nuclear program 


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1 Congressional Research Service. RL32048—Iran: U.S. Concerns and Policy Responses, October 5, 2009. 

is purely for peaceful purposes. The P5+1’s proposed sanctions for 

noncompliance include: (1) denial of visas for persons involved in 

Iran’s nuclear program and other high-ranking Iranian officials; (2) 

asset freezes of additional Iranian officials and institutions; a 

freeze of Iran’s governmental assets abroad; and a ban on some financial transactions; (3) a ban on sales of advanced technology, 

arms, and refined oil products to Iran; and (4) an end to support 

for Iran’s application to the WTO.1

On June 14, 2008, a ‘‘refreshed’’ package of P5+1-proposed incentives was formally presented to Iran by EU envoy Javier Solana. 

At the same time, the European Union has taken steps to impose 

its own set of targeted financial sanctions, announcing a new round 

of sanctions against critical Iranian financial institutions found to 

be supporting the financing of weapons proliferation and terrorist 

activities. This package of incentives and sanctions, including a 

P5+1 ‘‘freeze for freeze’’ proposal (in which the P5+1 countries 

would freeze further sanctions efforts if Iran agreed to freeze its 

enrichment activity) remains on the table. These initiatives are important steps to increase economic pressure against the Iranian regime to change its proliferation-related behavior. 

Revelations of a secret new uranium enrichment facility being 

built by Iran near the holy city of Qum—in violation of international rules, and previously undisclosed to the IAEA—helped to 

prompt a breakthrough in diplomatic talks. In September 2009 the 

Iranian government agreed to discuss a range of issues with P5+1 

negotiators. Talks took place in October, including the first bilateral meeting between the United States and Iran since the 1979 

revolution. The administration joined other P5+1 governments and 

IAEA officials in insisting on prompt access for IAEA inspectors to 

this facility. 

In general, Iran reportedly agreed to: (1) allow access to the Qum 

facility for IAEA inspectors; (2) allow, in principle, reprocessing for 

medical use of a substantial amount of its uranium stockpile by 

Russia and France under IAEA supervision, details of which were 

to be worked out soon after initial discussions; and (3) join another 

meeting with P5+1 negotiators later in October. As administration 

officials describe it, such an agreement would serve as a confidence-building measure among all parties involved in the talks, 

and a basis upon which to build broader-based non-proliferation negotiations. Should talks fail, intensified multilateral sanctions on 

Iran would follow. 

At the time of the Committee’s reporting, Iran has allowed IAEA 

inspectors access to the Qum facility, but failed to adequately follow-up on the preliminary agreement reached within the P5+1 

forum on low-enriched uranium for the Tehran Research Reactor. 

Iran’s resistance to finalizing an agreement has contributed to a 

greater willingness among some countries to isolate Iran further. 

Thus, if the ‘‘diplomatic track’’ should fail, within a short period, 

the administration has indicated its commitment to pursuing a 

‘‘pressure track,’’ which contemplates stronger multilateral and 

unilateral sanctions on Iran. 


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Iran’s deteriorating record on human rights 

The government of Iran continues to engage in systematic, ongoing, and egregious violations of human rights and religious freedom, including prolonged detention, torture, and executions. The 

government holds political prisoners and has intensified a crackdown against women’s rights groups, religious minorities, ethnic 

minority rights activists, and student activists. Iran’s poor record 

on human rights and religious freedom was again evident in the 

government’s crackdown on protestors and dissidents following the 

contested June 2009 Presidential elections, when Iranian security 

forces brutally quelled any expression of dissent and attacked demonstrators for exercising freedom of expression. The regime also 

has implemented measures to effectively shut down or slow electronic communications. Websites have been blocked, access to the 

Internet limited and Internet use slowed, and cell phones work 

only intermittently. Both the human rights and religious freedom 

reports from the State Department, along with the 2009 Annual 

Report from the U.S. Commission on International Religious Freedom, conclude that the human rights situation worsened in 2008. 

Recognizing this deterioration, the Committee urges the President 

to take certain actions under current law, including prohibiting 

entry into the United States, and freezing immediately the funds 

and other assets belonging to, Iranian government officials responsible for particularly severe human rights abuses. 

Nuclear intentions, technology diversion or transshipment 

In November 2007, a National Intelligence Estimate entitled 

‘‘Iran: Nuclear Intentions and Capabilities’’ was released. This report offered a thorough analysis of Iran’s capability and intentions 

regarding nuclear weapons, taking full account of its dual use uranium fuel cycle and those of its nuclear activities that are at least 

partly civil in nature. The report concluded with high confidence 

that Iran had been pursuing a nuclear weapons program, and halted that program in 2003, but noted with moderate-high confidence 

that Iran is keeping open the option of developing nuclear weapons, 

and that Iran’s uranium enrichment program may ultimately provide Iran with the capability to develop a nuclear weapon. The NIE 

also noted that the program probably was halted primarily in response to international pressure, suggesting that Iran may be more 

vulnerable to influence on the issue than the intelligence community had judged previously. 

In December 2007, the U.S. Government Accountability Office 

submitted a report to Congress assessing the effectiveness of sanctions on Iran and concluding, among other things, that the current 

sanctions regime should be reviewed, and that the current ban on 

most trade with Iran may be circumvented by the transshipment 

of United States exports through third countries. Formal surveys 

conducted by the Commerce Department to assess the verification 

of U.S. exports’ end use also concluded that technology may be easily diverted to Iran through third parties. Such concerns were further affirmed in recent reports by a reputable American non-governmental organization. Black-market enterprises established 

through transshipment networks continue to supply dual use prodVerDate Nov 24 2008 02:54 Nov 21, 2009 Jkt 089010 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\SR099.XXX SR099

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2Government Accountability Office, Institute for Science and International Security, media reports. 3 Congressional Research Service. RL33948—State and Local Economic Sanctions: Constitutional Issues. July 2, 2008. 

ucts to rogue regimes such as Iran and North Korea, facilitating 

development of their nuclear technology.2

State and local divestment efforts 

In the U.S. in recent years, there has been an increasing interest 

by States, local governments, educational institutions, and private 

institutions to disassociate themselves from companies that directly 

or indirectly support the Government of Iran’s efforts to achieve a 

nuclear weapons capability or support international terrorism. Financial advisors, policy makers and fund managers may find prudential or reputational reasons to divest from companies that accept the business risk of operating in countries subject to international economic sanctions or that have business relationships 

with countries, governments, or entities with which any United 

States company would be prohibited from dealing because of economic sanctions imposed by the United States. 

Notwithstanding the wide range of diplomatic and economic 

sanctions that have been pursued by the U.S., many States and localities have begun to enact measures restricting their agencies’ 

economic transactions with firms that do business with, or in, Iran. 

Nineteen States and the District of Columbia have already enacted 

some form of divestment legislation or otherwise adopted divestment measures, and legislation is pending in additional State legislatures. Other States and localities have taken administrative action to facilitate divestment. Also joining this movement are colleges and universities, large cities, non-profit organizations, and 

pension and mutual funds. 

Legal and constitutional challenges regarding divestment 

Constitutional challenges to State measures which touch upon 

international relations typically take one or more of three forms: 

(1) that the State measures conflict with and thus are pre-empted 

by Federal law under the Supremacy Clause; (2) that they violate 

the ‘‘dormant foreign commerce clause;’’ and (3) that they violate 

the so-called ‘‘dormant foreign affairs doctrine.’’ 3

With the reporting of this legislation, the Committee has concluded that, with respect to each of these challenges, Congress and 

the President have the constitutional power to authorize States to 

enact divestment measures, and Federal consent removes any 

doubt as to the constitutionality of those measures. Thus, the Act 

explicitly states the sense of Congress that the United States 

should support the decisions of State and local governments to divest from firms conducting business operations in Iran’s energy 

sector, and clearly authorizes divestment decisions made consistent 

with the standards the legislation articulates. It also provides a 

‘‘safe harbor’’ for changes of investment policies by private asset 

managers, and it expresses the sense of Congress that certain divestments, or avoidance of investment, do not constitute a breach 

of fiduciary duties under the Employee Retirement Income Security 

Act (ERISA). With regard to pre-emption, the legislation supports 

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ness operations in certain sectors in Iran by clearly stating that 

they are not pre-empted by any Federal law or regulation. 

The Committee recognizes that this legislation attempts to balance two important interests. The first is the singular authority of 

the Federal Government to conduct foreign policy. The second is 

the ability of State and local governments and other entities to invest or divest their funds as they see fit. The Committee believes 

it has struck an appropriate balance by targeting State action in 

such a way that permits State divestment measures based on risks 

to profitability, economic well-being, and reputations arising from 

association with investments in a country subject to international 

sanctions. 

IV. DESCRIPTION OF THE BILL

The Act is meant to strengthen all three major categories of U.S. 

sanctions on Iran: the U.S. trade ban against Iran; restrictions on 

foreign entities investing over $20 million in Iran’s energy sector; 

and targeted financial measures against entities providing financial 

support for Iran’s proliferation and terrorist activities. The Act 

would: 

• Expand the scope of foreign companies subject to the Iran 

Sanctions Act (ISA) to include certain financial institutions, 

subsidiaries, export credit agencies and other entities; 

• Extend ISA sanctions to firms engaged in activities involving exportation of refined petroleum products to Iran, or involving the development of oil refineries in Iran; 

• Require a semi-annual report on qualifying investments in 

and activities engaged in by companies sanctionable under 

ISA, including a determination by the President of whether 

such investment or activity is sanctionable; 

• Mandate a U.S. government procurement ban against ISAsanctionable companies, while providing a national interest 

waiver; 

• Codify U.S. export and import bans on Iran, with allowances for food/medicine export licenses, export and import of 

certain informational materials, goods and services necessary 

to ensure safe commercial aviation; and assistance to the 

IAEA, and for democracy promotion; 

• Require the freezing of assets of Iranian officials (including 

Iran’s Revolutionary Guard Corps, its ‘‘front organizations’’ and 

affiliates) supporting terrorism and proliferation; 

• Extend sanctions liability of U.S. companies to foreign subsidiaries established to circumvent U.S. sanctions law and 

which invest substantially in Iran’s energy sector; 

• Authorize appropriations for the Terrorism and Financial 

Intelligence Office at the Department of the Treasury; 

• Authorize States, local governments and private asset 

managers to divest from Iran-related energy businesses; and 

• Combat transshipment of sensitive technology to Iran, by 

aiding countries to improve export controls and by further restricting U.S. exports to uncooperative countries. 


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V. SECTION-BY-SECTION ANALYSIS OF BILL

Section 1.—Short title: This section establishes the short title of 

the bill as the ‘‘Comprehensive Iran Sanctions, Accountability, and 

Divestment Act of 2009’’. 

Section 2.—Findings: This section outlines Congressional findings regarding Iran’s illicit nuclear activities and continuing 

human rights abuses by Iranian security forces. 

Section 3.—Sense of Congress: This section expresses the Sense 

of Congress regarding Iran’s continuing illicit nuclear activities and 

ongoing violations of human rights in Iran. 

Title I.—Sanctions 

Section 101.—Definitions: This section defines terms used in this 

title, including: agricultural commodity, executive agency, appropriate Congressional Committees, information and informational 

materials, investment, Iranian diplomats and representatives of 

other government and military or quasi-governmental institutions 

of Iran, medical device, and medicine. 

Section 102.—Energy sanctions: ISA recognizes the dominant role 

of Iran’s oil and gas industry in generating revenue for the regime’s 

proliferation and international terrorism activities, and requires 

the President to impose at least two out of a menu of sanctions on 

foreign ‘‘persons’’ that make an ‘‘investment’’ of more than $20 million annually in Iran’s energy sector. The sanctions (Section 6) include (1) denial of Export-Import Bank loans, credits, or credit 

guarantees for U.S. exports to the sanctioned entity; (2) denial of 

licenses for the U.S. export of military or militarily-useful technology to the entity; (3) denial of U.S. bank loans exceeding $10 

million in one year to the entity; (4) if the entity is a financial institution, a prohibition on its service as a primary dealer in U.S. government bonds; and/or a prohibition on its serving as a repository 

for U.S. government funds (each counts as one sanction); (5) prohibition on U.S. government procurement from the entity; and (6) restriction on imports from the entity, in accordance with the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. 

1701). The President may temporarily waive the sanctions on a national of a country if he determines that it is vital to the national 

security interest of the U.S. to do so (Section 4(c)), or if he certifies 

that a broader waiver is otherwise important to the U.S. national 

interest (Section 9(c)). 

This section restates the thresholds in ISA, expands key definitions within that law, and extends ISA sanctions to firms that provide goods, services, technology, information or support related to 

the production of refined petroleum products in Iran, or that engage in the exportation of refined petroleum products to Iran, subject to a de minimus threshold of $200,000, or an aggregate of $1 

million in any 12-month period. Activities with respect to exportation are defined to include providing insurance underwriting, financing, brokering, ships or shipping services for these purposes. 

In addition to the two or more sanctions (from the existing ‘‘menu’’ 

of ISA sanction options) to be imposed under current law, this section also provides for mandatory imposition of three additional 

sanctions on sanctioned firms: on foreign exchange transactions, 

banking transactions, and property transactions. Like existing ISA 


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sanctions, these new mandatory sanctions are subject to a national 

interest waiver by the President. More detailed waiver reporting 

requirements are also provided for in this section, along with a definition of petroleum products that includes gasoline, diesel fuel, jet 

fuel and aviation gasoline. Finally, this section would clarify that 

foreign companies subject to ISA include financial institutions, subsidiaries, and other entities, and that the relevant investments in 

Iran’s energy industry involve not only petroleum and oil or liquefied gas, but also certain means of shipping such products, such as 

tankers and pipelines. 

Section 103.—Other economic sanctions: This section codifies critical restrictions on imports from and exports to Iran, currently authorized by the President in accordance with IEEPA. Consistent 

with IEEPA, exceptions to the import ban are made for informational materials that may be used, for example, in the conduct of 

news reporting, or in mapping for air travel over land. Similarly, 

exceptions to the export ban include food, medicine, humanitarian 

assistance, informational materials, goods used to ensure safety of 

flight for U.S.-made aircraft, aid necessary to support IAEA efforts 

in Iran, and democracy promotion initiatives. Consistent with his 

authority under Executive Order 13059, the President is authorized to, and shall, as necessary, issue such regulations, orders, and 

licenses to implement these provisions. In addition, this section requires asset freezes for persons, including officials of Iranian agencies specified in ISA and certain of their affiliates that have engaged in activities such as terrorism or weapons proliferation 

under IEEPA sanction. To limit sanctioned persons’ ability to evade 

U.S. scrutiny and penalty, this section further stipulates that the 

assets freeze should extend to those assets which sanctioned persons transfer to family members or associates. The Committee recognizes that agencies involved in implementing these measures will 

require time to prepare appropriate evidentiary materials before 

executing corresponding sanctions, which this section requires to be 

imposed as soon as possible. This section would also prohibit U.S. 

or foreign firms from entering into procurement contracts with the 

federal government if the entity meets the criteria for sanctions 

under ISA. Finally, the provisions of this section may be waived if 

such a waiver is deemed by the President to be in the national interest. 

Section 104.—Liability of parent companies for sanctions violations by foreign subsidiaries: This section strengthens U.S. law by 

holding parent companies liable for activities conducted by foreign 

subsidiaries that were established for the purpose of circumventing 

U.S. sanctions statutes and who engage in activities which, if committed in the U.S. or by a U.S. person, would violate U.S. sanctions 

law. The President may waive the provisions of this section on national interest grounds. 

Section 105.—Prohibition of procurement contracts with persons 

that export sensitive technology to Iran: This section would prohibit 

the head of any U.S. executive agency from entering into procurement contracts with an entity that the President determines has 

exported to Iran sensitive communications technology to be used 

for monitoring, jamming, or other disruption of communications by 

the people of Iran. 


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4 Congressional Research Service. RS20871—The Iran Sanctions Act (ISA). November 6, 2009. 

Section 106.—Increased capacity for efforts to combat unlawful or 

terrorist financing: This section authorizes funding of $64.6 million 

for the Office of Terrorism and Financial Intelligence of the Department of the Treasury, and of $104.2 million for the Financial 

Crimes Enforcement Network. 

Section 107.—Reporting requirement to increase monitoring of investment in Iran: ISA requires the President to impose sanctions on 

a U.S. or foreign natural person if the President determines that 

the person invested $20,000,000 or more in Iran’s petroleum or natural gas sectors, but the President has for years failed to do so 

even though foreign companies have invested more than the specified amount.4 The measure requires the President, within 180 days 

of enactment of the bill and every 180 days thereafter, to report to 

the appropriate Congressional Committees on eligible foreign investments made in Iran’s energy sector since January 1, 2009, or 

eligible transactions related to bolstering Iran’s refinery capacity or 

to exportation of refined petroleum products to Iran, the dates of 

such investments or activity, the name of the person engaged in 

such activity, any federal contracts to which they are parties, and 

the determination of the President on whether such investments or 

activities qualify as sanctionable offenses. To address any national 

security concerns about the impact of publicizing certain parts of 

this report, this section allows for a classified annex. 

Section 108.—Sense of Congress on Iran’s Central Bank: This section urges the President to consider immediately using his authority to impose sanctions on Iran’s Central Bank and any other Iranian bank engaged in proliferation activities or support for terrorist 

groups. 

Section 109.—Sense of Congress on Iran’s Revolutionary Guard 

Corps (IRGC): Expresses the Sense of Congress that the U.S. 

should continue to target with sanctions Iran’s Revolutionary 

Guard Corps, its supporters and affiliates, and any foreign governments determined to be providing material support for the IRGC. 

Section 110.—Sense of Congress on Iran and Hezbollah: Expresses the Sense of Congress that the U.S. should continue to: (1) 

work to counter support for Hezbollah from Iran and other foreign 

governments; (2) target with sanctions Hezbollah, its affiliates and 

supporters; (3) urge other nations to do the same; and (4) take 

steps to renew international efforts to disarm Hezbollah. 

Section 111.—Sense of Congress on multilateral sanctions: Expresses the Sense of Congress that, in general, multilateral sanctions are more effective than unilateral sanctions against countries 

like Iran, and that the President should continue to work with our 

allies to impose multilateral sanctions if diplomatic efforts to end 

Iran’s illicit nuclear activities fail. 

Title II.—Divestment 

Section 201.—Definitions: This section defines terms used in this 

title including: energy sector, financial institution, Iran, person, 

State, and State or local government. 

Section 202.—Authority of state and local governments to divest 

from certain companies that invest in Iran: This section authorizes 

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ments of $20 million or more in Iran’s energy sector and sets 

standards for them to do so. While not mandating divestment, this 

section authorizes State and local governments, if they so choose, 

to divest public assets from certain companies doing business in 

Iran. In its formulation of this section, the Committee recognized 

that divestment actions are being taken by investors for prudential 

and economic reasons, as expressed in subsection (a), including to 

address investor concerns about reputational and financial risks associated with investment in Iran and to sever indirect business ties 

to a government that is subject to international sanctions. 

The Committee requires that a State or local government provide 

notice to the Department of Justice when it enacts an Iran-related 

divestment law. Companies are to be informed in writing by the 

State or local government before divestment. Companies then have 

at least 90 days to comment on that decision. 

Section 203.—Safe harbor for changes in investment policies by 

asset managers: This section adds to measures authored by the 

Committee and enacted last year authorizing divestment from certain Sudan-related assets (Public Law 110–174), allowing private 

asset managers, if they so choose, to divest from the securities of 

companies investing $20 million or more in Iran’s energy sector, 

and provides a ‘‘safe harbor’’ for divestment decisions made in accordance with the Act. A major concern inhibiting divestment has 

been the possibility of a breach of fiduciary responsibility by asset 

managers who decide to divest. The Committee thus finds that 

fund managers may have financial or reputational reasons to divest from companies that accept the business risk of operating in 

countries subject to international economic sanctions. Fund managers will still be required to observe all other normal fiduciary responsibilities. The Securities and Exchange Commission is required 

to promulgate rules as necessary that require fund managers to 

disclose their divestment decisions made pursuant to Section 203 

of this legislation in regular periodic reports filed with the Commission. 

Section 204.—Sense of Congress regarding certain ERISA Plan 

investments: This section expresses the sense of Congress affirming 

pension managers’ rights to divest from companies investing $20 

million or more in Iran’s energy sector in accordance with an interpretative bulletin issued by the Department of Labor in 1994, and 

printed in the Code of Federal Regulations in section 2509.94–1 of 

title 29. Under the regulations, making such ‘‘economically targeted 

investment’’ (ETI) decisions is allowed under sections 403 and 404 

of the Employee Retirement Income Security Act of 1974 (ERISA), 

as long as the fiduciary making such a decision has diversified his 

portfolio adequately and has made the decisions in the interest of 

the plan’s participants and beneficiaries. 

Title III.—Prevention of transshipment, reexportation or diversion of 

sensitive technologies 

Section 301.—Definitions: This section defines terms used in this 

title including: end user, entity owned or controlled by the Government of Iran, Export Administration Regulations, government, 

Iran, state sponsor of terrorism, as well as transshipment, reexportation, or diversion. 


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Section 302.—Transshipment, reexportation or diversion to Iran: 

This section responds to concerns that companies and black market 

proliferation networks are circumventing the U.S. trade ban on 

Iran by shipping major weapons components through one or more 

foreign countries or by deceiving foreign customs agencies with 

false information regarding the items’ country of origin. This section requires the Director of National Intelligence to identify countries where sensitive U.S. technology is being illegally transshipped 

to Iran via other countries, and to report annually to the Secretaries of Commerce, State and the Treasury, as well as to Congress. 

Section 303.—Destinations of possible diversion concern and of 

diversion concern: This section establishes incentives for countries 

to improve their export control regimes. First, it requires the Administration to initiate government-to-government contact with 

countries of ‘‘possible diversion concern.’’ Such contact would include technical assistance to develop or strengthen export control 

systems, facilitate export control enforcement, improve information 

sharing, support legitimate trade in high-technology goods, and 

prevent terrorists and state sponsors of terrorism from obtaining 

nuclear, biological, and chemical weapons, defense technology, and 

components of improvised explosive devices. 

If countries fail to cooperate with such initiatives, then, under 

subsection (b), the Administration would be required to designate 

a country as a ‘‘Destination of Diversion Concern,’’ consistent with 

the Department of Commerce’s proposed rule, which was published 

as 15 CFR Part 740 [Docket No. 0612242560–7024–01], but never 

implemented. Such a measure would stop transshipment flows 

that, according to the Department of Commerce, are augmenting 

the capabilities of terrorists and state sponsors of terrorism, and 

significantly undermining international counterproliferation efforts. 

The Department of Commerce stated in its proposed rule that in 

recent years, diversions have contributed to a number of major 

cases involving the violation of U.S. export control laws for dual 

use goods. Under this section, exports to a country designated as 

a ‘‘Destination of Diversion Concern’’ would be subject to additional 

licensing requirements; more stringent license review, which could 

result in fewer approvals or more conditions on licenses; delayed 

authorizations due to increased end user checks; and finally, a decrease in authorizations due to diversion risks for such countries. 

This section provides 45 days for the Secretary of Commerce to assemble a list of controlled items, which should include items already on an existing Commerce Control List linked to Iranian terrorist activities as well as products from the Control List developed 

for restricting North Korea’s proliferation activities. Licensing requirements under this section are required within 180 days after 

the date of the Act’s enactment. The President may waive the imposition of the licensing requirement on national interest grounds. 

Section 304.—Report on expanding diversion concern system to 

countries other than Iran: This section requires the Director of National Intelligence to report to Congress on whether or not to extend the measures in this title to countries that allow diversion to 

other countries seeking weapons of mass destruction or supporting 

international terrorism. 


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Title IV.—Effective date and sunset 

Section 401.—This section sets an effective date for the Act 120 

days after the date of the enactment of this Act. It also describes 

the circumstances under which the provisions of the Act will terminate, including certification by the President that Iran has ceased 

to provide support for acts of international terrorism, and stopped 

the pursuit, acquisition, and development of weapons of mass destruction. 

VI. HEARINGS

On July 30, 2009, the Committee on Banking, Housing, and 

Urban Affairs held a public hearing entitled ‘‘Minimizing Potential 

Threats from Iran: Assessing Economic Sanctions and Other Policy 

Options.’’ Witnesses included: Honorable Joseph Lieberman, United 

States Senator, Connecticut; Ambassador R. Nicholas Burns, Professor of the Practice of Diplomacy and International Politics, John 

F. Kennedy School of Government, Harvard University; Dr. Matthew Levitt, Director, Stein Center on Counterterrorism and Intelligence, Washington Institute for Near East Policy; Dr. Suzanne 

Maloney, Senior Fellow, Saban Center for Middle East Policy, The 

Brookings Institution; and Ms. Danielle Pletka, Vice President, 

Foreign and Defense Policy Studies, American Enterprise Institute. 

On October 6, 2009, the Committee held another public hearing 

entitled, ‘‘Minimizing Potential Threats from Iran: Administration 

Perspectives on Economic Sanctions and Other U.S. Policy Options.’’ Witnesses included: Honorable Sam Brownback, United 

States Senator, Kansas; and Honorable Robert P. Casey, United 

States Senator, Pennsylvania; Honorable James B. Steinberg, Deputy Secretary of State, U.S. Department of State; Honorable Stuart 

A. Levey, Under Secretary for Terrorism and Financial Intelligence, U.S. Department of the Treasury, and Mr. Daniel O. Hill, 

Acting Undersecretary for Industry and Security, U.S. Department 

of Commerce. 

VII. COMMITTEE CONSIDERATION

The Committee on Banking, Housing, and Urban Affairs met in 

open session on October 29, 2009, and by a vote of 23–0 ordered 

the bill reported, as amended. 

VIII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE AND

REGULATORY IMPACT STATEMENT

Section 11(b) of the Standing Rules of the Senate, and Section 

403 of the Congressional Budget Impoundment and Control Act, require that each committee report on a bill contain a statement estimating the cost and regulatory impact of the proposed legislation. 

The Congressional Budget Office has provided the following cost estimate and regulatory impact statement. 


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NOVEMBER 17, 2009. 

Hon. CHRISTOPHER J. DODD, 

Chairman, Committee on Banking, Housing, and Urban Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is John Chin. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

Comprehensive Iran Sanctions, Accountability, and Divestment Act 

of 2009 

Summary: The bill would authorize appropriations for two programs in the Department of the Treasury that combat financial 

crimes, and for the Bureau of Industry Security (BIS) in the Department of Commerce, which helps certain countries improve controls over their exports. The bill also would require the Department 

of State to impose new sanctions on persons that supply refined petroleum products to Iran or support the production of such products 

in Iran. In addition, the bill would expand an existing ban on imports from Iran to cover all products of Iranian origin and would 

extend the application of existing sanctions to foreign subsidiaries 

of U.S. parent corporations. 

CBO estimates that implementing the bill would cost $550 million over the 2010–2014 period, assuming appropriation of the necessary amounts. CBO estimates that the bill would have no significant effects on direct spending and revenues. 

The bill contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments. 

The bill would impose private-sector mandates, as defined in 

UMRA, by prohibiting imports from and exports to Iran and by expanding sanctions under the Iran Sanctions Act. The cost of complying with those mandates would depend on the value of lost profits to importers and exporters under the trade ban, and whether 

and how some measures would be applied under the bill. Therefore, 

CBO cannot determine whether the aggregate cost to comply with 

the mandates in the bill would exceed the annual threshold for private-sector mandates established in UMRA ($139 million in 2009, 

adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of the bill is shown in the following table. Most of the 

costs of this legislation falls within budget functions 150 (international affairs), 370 (commerce and housing credit), and 800 (general government). 


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By fiscal year, in millions of dollars— 

2010 2011 2012 2013 2014 2010– 

2014 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Department of Treasury Programs: 

Estimated Authorization Level ......................................................... 169 177 180 0 0 526 

Estimated Outlays ........................................................................... 128 175 179 44 0 526 

Department of Commerce Programs: 

Estimated Authorization Level ......................................................... 3 3 3 3 3 15 

Estimated Outlays ........................................................................... 2 3 3 3 3 14 

Department of State Programs: 

Estimated Authorization Level ......................................................... 2 2 1 0 0 5 

Estimated Outlays ........................................................................... 2 2 1 0 0 5 

Reports: 

Estimated Authorization Level ......................................................... 1 1 1 1 1 5 

Estimated Outlays ........................................................................... 1 1 1 1 1 5 

Total Changes: 

Estimated Authorization Level ................................................ 175 183 185 4 4 551 

Estimated Outlays .................................................................. 133 181 184 48 4 550 

Basis of estimate: For this estimate, CBO assumes that the bill 

will be enacted early in calendar year 2010 and that spending will 

follow historical patterns for existing and similar programs. 

Spending subject to appropriation 

The bill would authorize appropriations for programs in the Department of Treasury and the Department of Commerce and would 

authorize new sanctions administered by the Department of State. 

In total, CBO estimates that implementing those programs and 

sanctions would cost $550 million over the 2010–2014 period, assuming appropriation of the necessary amounts. 

Department of the Treasury programs. Section 106 would authorize the appropriation of $169 million for 2010 and such sums as 

may be necessary for 2011 and 2012 for the Office of Financial Terrorism and Financial Intelligence and the Financial Crimes Enforcement Network. Those offices received a total of about $165 

million in 2009. Based on information from the Department of the 

Treasury, CBO expects that $169 million, adjusted for anticipated 

inflation, would be sufficient for fiscal years 2011 and 2012 to continue the efforts of those offices. On that basis, CBO estimates that 

implementing section 106 would cost $526 million over the 2010– 

2014 period. 

Department of Commerce programs. Title III would establish new 

programs within BIS to improve controls over certain domestic exports. The bill would require the Secretary of Commerce, in consultation with the Secretary of State and the Secretary of the 

Treasury, to identify a list of countries that have inadequate export 

and reexport controls and fail to control exports that divert U.S. 

goods to unknown parties. 

BIS would be authorized to help those countries strengthen their 

systems to control exports. If, after one year, a country on the list 

fails to cooperate with efforts to improve its export control system 

or is found to be involved in the illegal diversion of U.S. exports, 

it would be subject to more stringent export licensing requirements 

for certain technologies. 


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Based on information from BIS, CBO estimates that about 20 

staff members would be needed to track export enforcement trends, 

to monitor activities within the countries of concern, to help such 

countries improve their export control systems, and to implement 

the new licensing requirements. CBO estimates that implementing 

those provisions would cost $14 million over the 2010–2014 period. 

Department of State programs. Section 102 would amend the 

Iran Sanctions Act of 1996 (which will expire on December 31, 

2011) to prohibit any foreign exchange, banking, and property 

transaction with a person that the President determines has supplied refined petroleum products to Iran or supported the production of such products in Iran. Based on information from the Department of State, CBO estimates that about 10 additional staff 

members would be needed to gather and analyze information, provide advisory opinions, and administer blocked property. CBO estimates that implementing this provision would cost $5 million over 

the 2010–2012 period. 

Reports. Several sections of the bill would require the Director of 

National Intelligence and the President to provide the Congress 

with a variety of reports about Iran, including details of investments in and trade with Iran by the United States and other countries. Based on the costs to prepare similar reports, CBO estimates 

that, in total, preparing those reports would cost about $1 million 

annually. 

Revenues and direct spending 

The bill would have an insignificant effect on revenues and direct 

spending. 

Prohibition on imports. Under current law, nearly all goods of 

Iranian origin are prohibited from being imported into the United 

States. Exceptions now exist for certain foodstuffs and carpets. Section 103 would impose a complete ban on all Iranian goods. 

Based on data from the United States International Trade Commission on recent imports from Iran and CBO’s most recent forecast of total U.S. imports, CBO estimates that the bill would reduce 

revenues by less than $500,000 over the 2010–2019 period, net of 

income and payroll tax offsets. 

In recent years, most of the taxable value of imports from Iran 

consisted of fruit juice, caviar, and certain nuts and dried fruits. 

The remaining imports, which are not subject to tariffs, consisted 

largely of other foodstuffs and carpets. In 2008, the value of imports subject to tariffs was about $26 million, yielding roughly 

$500,000 in customs duties. If the bill were to be enacted, CBO assumes that most of the newly banned imports would be replaced 

with taxable imports from other countries, reducing the loss of customs duties. 

Under the bill, the ban on imports would terminate if the President certifies that Iran no longer satisfies the requirements for designation as a state sponsor of terrorism and has ceased efforts to 

acquire and develop certain weapons technologies. For this estimate, CBO assumes that the President will not make such a certification during the 2010–2019 period. 

Civil and criminal penalties. Section 104 would impose civil and 

criminal penalties for violations of existing sanctions on the part of 

foreign subsidiaries of U.S. parent companies. Collections of civil 


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penalties are recorded in the budget as revenues. Collections of 

criminal penalties also are recorded in the budget as revenues, deposited in the Crime Victims Fund, and later spent without further 

appropriation. CBO estimates that any additional revenues and direct spending that would result from those penalties would not be 

significant because of the relatively small number of cases likely to 

be involved. 

Estimated impact on state, local, and tribal governments: The 

bill contains no intergovernmental mandates as defined in UMRA 

and would impose no costs on state, local, or tribal governments. 

Estimated impact on the private sector: The bill contains privatesector mandates, as defined in UMRA. Because the cost of complying with most of the mandates would depend on the value of lost 

profits to importers and exporters and whether and how some 

measures would be applied under the bill, CBO cannot determine 

whether the aggregate cost the mandates in the bill would exceed 

the annual threshold for private-sector mandates established in 

UMRA ($139 million in 2009, adjusted annually for inflation). 

The bill would impose mandates on some businesses by banning 

all imports from and some exports to Iran. The cost to comply with 

the mandates would be the forgone net income attributed to the 

sale of those items prohibited under the sanctions. According to the 

United States International Trade Commission, in 2008 entities in 

the United States imported from Iran $102 million in goods, mostly 

food items and collectible works of art, and exported about $40 million in goods, which would be prohibited. The cost of the ban, measured as the forgone net income, is uncertain because the value assigned to those goods as marked for sales or distribution cannot be 

determined. 

By expanding sanctions under the Iran Sanctions Act, the bill 

could impose mandates on entities in the United States that engage in transactions with businesses or countries sanctioned under 

that act. The bill would require the President to sanction any entity that provides Iran with refined petroleum resources, or engages 

in an activity that could contribute to Iran’s ability to import such 

resources. Entities sanctioned for those actions would effectively be 

prohibited from engaging in business with persons in the United 

States. In addition, the bill would require the President to impose 

certain sanctions on entities that invest more than a specified 

amount of money in businesses involved in Iran’s petroleum industry. Should the President impose sanctions, persons in the United 

States involved in transactions with entities sanctioned under the 

bill would be required to cease those transactions. The bill would 

allow the President the discretion to make exceptions in applying 

such sanctions in cases deemed to be important for the national interests of the United States. The cost of the mandates, if imposed, 

would be the forgone net income from the prohibited transactions 

and would depend on the sanctions applied by the President. 

The bill also could impose private-sector mandates by directing 

the President to freeze the funds and other assets of certain Iranian persons, and the assets of their family members and associates to whom they have transferred assets on or after January 1, 

2009. Some of those individuals may reside in the United States. 

Because those subject to sanctions have not been identified, the 

cost of that mandate is uncertain. 


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Finally, by imposing new license requirements on exporters of 

certain products, conditioned upon whether the country where exports are sent has been designated as a Destination of Possible Diversion Concern, the bill could impose a mandate. Because of uncertainty about what countries would be designated, if any, and 

what products would be subject to additional licensing requirements for export to those countries, the cost of complying with this 

mandate cannot be determined. 

Previous CBO estimate: On May 13, 2009, CBO transmitted a 

cost estimate for H.R. 1327, the Iran Sanctions Enabling Act of 

2009 as ordered reported by the House Committee on Financial 

Services on April 28, 2009. H.R. 1327 would authorize state and 

local governments to adopt or enforce measures to sell certain of 

their investments in Iran’s energy sector—or prohibit buying such 

investments—without concern they are interfering with the federal 

government’s conduct of foreign affairs. Title II of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009 

contains similar language concerning divestment from certain companies that invest in Iran. CBO estimates that neither H.R. 1327 

nor Title II of the Comprehensive Iran Sanctions, Accountability, 

and Divestment Act of 2009 would have a significant effect on the 

federal budget. 

Estimate prepared by: Federal Spending: Department of the 

Treasury Programs—Matthew Pickford; Department of Commerce 

Programs—Susan Willie; Department of State Programs and Reports—John Chin; Federal Revenues: Zachary Epstein; Impact on 

state, local, and tribal governments: Burke Doherty; Impact on the 

private sector: Marin Randall. 

Estimate approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

Æ 


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