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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3445 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 939
110th CONGRESS
  2d Session
                                S. 3445

                          [Report No. 110-443]

To impose sanctions with respect to Iran, 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.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             August 1, 2008

 Mr. Dodd, from the Committee on Banking, Housing, and Urban Affairs, 
 reported the following original bill; which was read twice and placed 
                            on the calendar

_______________________________________________________________________

                                 A BILL

 
To impose sanctions with respect to Iran, 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Comprehensive Iran 
Sanctions, Accountability, and Divestment Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                           TITLE I--SANCTIONS

Sec. 101. Definitions.
Sec. 102. Clarification and expansion of definitions.
Sec. 103. Economic sanctions relating to Iran.
Sec. 104. Liability of parent companies for violations of sanctions by 
                            foreign subsidiaries.
Sec. 105. Increased capacity for efforts to combat unlawful or 
                            terrorist financing.
Sec. 106. Reporting requirements.
Sec. 107. Sense of Congress regarding the imposition of sanctions on 
                            the Central Bank of Iran.
    TITLE II--DIVESTMENT FROM CERTAIN COMPANIES THAT INVEST IN IRAN

Sec. 201. Definitions.
Sec. 202. Authority of State and local governments to divest from 
                            certain companies that invest in Iran.
Sec. 203. Safe harbor for changes of investment policies by asset 
                            managers.
Sec. 204. Sense of Congress regarding certain ERISA plan investments.
TITLE III--PREVENTION OF TRANSSHIPMENT, REEXPORTATION, OR DIVERSION OF 
                        SENSITIVE ITEMS TO IRAN

Sec. 301. Definitions.
Sec. 302. Identification of locations of concern with respect to 
                            transshipment, reexportation, or diversion 
                            of certain items to Iran.
Sec. 303. Destinations of Possible Diversion Concern and Destinations 
                            of Diversion Concern.
Sec. 304. Report on expanding diversion concern system to countries 
                            other than Iran.
                    TITLE IV--EFFECTIVE DATE; SUNSET

Sec. 401. Effective date; sunset.

                           TITLE I--SANCTIONS

SEC. 101. DEFINITIONS.

    In this title:
            (1) Agricultural commodity.--The term ``agricultural 
        commodity'' has the meaning given that term in section 102 of 
        the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
            (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' has the meaning given 
        that term in section 14(2) of the Iran Sanctions Act of 1996 
        (Public Law 104-172; 50 U.S.C. 1701 note).
            (3) Executive agency.--The term ``executive agency'' has 
        the meaning given that term in section 4 of the Office of 
        Federal Procurement Policy Act (41 U.S.C. 403).
            (4) Family member.--The term ``family member'' means, with 
        respect to an individual, the spouse, children, grandchildren, 
        or parents of the individual.
            (5) Information and informational materials.--The term 
        ``information and informational materials''--
                    (A) means information and informational materials 
                described in section 203(b)(3) of the International 
                Emergency Economic Powers Act (50 U.S.C. 1702(b)(3)); 
                and
                    (B) does not include information or informational 
                materials--
                            (i) the exportation of which is otherwise 
                        controlled--
                                    (I) under section 5 of the Export 
                                Administration Act of 1979 (50 U.S.C. 
                                App. 2404) (as in effect pursuant to 
                                the International Emergency Economic 
                                Powers Act (50 U.S.C. 1701 et seq.)); 
                                or
                                    (II) under section 6 of that Act 
                                (50 U.S.C. App. 2405), to the extent 
                                that such controls promote the 
                                nonproliferation or antiterrorism 
                                policies of the United States; or
                            (ii) with respect to which acts are 
                        prohibited by chapter 37 of title 18, United 
                        States Code.
            (6) Investment.--The term ``investment'' has the meaning 
        given that term in section 14(9) of the Iran Sanctions Act of 
        1996 (Public Law 104-172; 50 U.S.C. 1701 note).
            (7) Iranian diplomats and representatives of other 
        government and military or quasi-governmental institutions of 
        iran.--The term ``Iranian diplomats and representatives of 
        other government and military or quasi-governmental 
        institutions of Iran'' has the meaning given that term in 
        section 14(11) of the Iran Sanctions Act of 1996 (Public Law 
        104-172; 50 U.S.C. 1701 note).
            (8) Medical device.--The term ``medical device'' has the 
        meaning given the term ``device'' in section 201 of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 321).
            (9) Medicine.--The term ``medicine'' has the meaning given 
        the term ``drug'' in section 201 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 321).

SEC. 102. CLARIFICATION AND EXPANSION OF DEFINITIONS.

    (a) Person.--Section 14(13)(B) of the Iran Sanctions Act of 1996 
(Public Law 104-172; 50 U.S.C. 1701 note) is amended--
            (1) by inserting ``financial institution, insurer, 
        underwriter, guarantor, and any other business organization, 
        including any foreign subsidiary, parent, or affiliate of the 
        foregoing,'' after ``trust,''; and
            (2) by inserting ``, such as an export credit agency'' 
        before the semicolon.
    (b) Petroleum Resources.--Section 14(14) of the Iran Sanctions Act 
of 1996 (Public Law 104-172; 50 U.S.C. 1701 note) is amended by 
striking ``petroleum and natural gas resources'' and inserting 
``petroleum, petroleum by-products, oil or liquefied natural gas, oil 
or liquefied natural gas tankers, and products used to construct or 
maintain pipelines used to transport oil or liquefied natural gas''.

SEC. 103. ECONOMIC SANCTIONS RELATING TO IRAN.

    (a) In General.--Notwithstanding any other provision of law, and in 
addition to any other sanction in effect, beginning on the date that is 
15 days after the effective date of this Act, the economic sanctions 
described in subsection (b) shall apply with respect to Iran.
    (b) Sanctions.--The sanctions described in this subsection are the 
following:
            (1) Prohibition on imports.--
                    (A) In general.--Except as provided in subparagraph 
                (B), no article that is the growth, product, or 
                manufacture of Iran may be imported directly or 
                indirectly into the United States.
                    (B) Exception.--The prohibition in subparagraph (A) 
                does not apply to imports from Iran of information and 
                informational materials.
            (2) Prohibition on exports.--
                    (A) In general.--Except as provided in subparagraph 
                (B), no article that is the growth, product, or 
                manufacture of the United States may be exported 
                directly or indirectly to Iran.
                    (B) Exceptions.--The prohibition in subparagraph 
                (A) does not apply to exports to Iran of--
                            (i) agricultural commodities, food, 
                        medicine, or medical devices;
                            (ii) articles exported to Iran to provide 
                        humanitarian assistance to the people of Iran;
                            (iii) information or informational 
                        materials; or
                            (iv) goods, services, or technologies 
                        necessary to ensure the safe operation of 
                        commercial passenger aircraft produced in the 
                        United States if the exportation of such goods, 
                        services, or technologies is approved by the 
                        Secretary of the Treasury, in consultation with 
                        the Secretary of Commerce, pursuant to 
                        regulations for licensing the exportation of 
                        such goods, services, or technologies, if 
                        appropriate.
            (3) Freezing assets.--
                    (A) In general.--At such time as the United States 
                has access to the names of persons in Iran, including 
                Iranian diplomats and representatives of other 
                government and military or quasi-governmental 
                institutions of Iran, that are determined to be subject 
                to sanctions imposed under the authority of the 
                International Emergency Economic Powers Act (50 U.S.C. 
                1701 et seq.) or any other provision of law relating to 
                the imposition of sanctions with respect to Iran, the 
                President shall take such action as may be necessary to 
                freeze immediately the funds and other assets belonging 
                to anyone so named and any family members or associates 
                of those so named to whom assets or property of those 
                so named were transferred on or after January 1, 2008. 
                The action described in the preceding sentence includes 
                requiring any United States financial institution that 
                holds funds and assets of a person so named to report 
                promptly to the Office of Foreign Assets Control 
                information regarding such funds and assets.
                    (B) Asset reporting requirement.--Not later than 14 
                days after a decision is made to freeze the property or 
                assets of any person under this paragraph, the 
                President shall report the name of such person to the 
                appropriate congressional committees.
            (4) United states government contracts.--The head of an 
        executive agency may not procure, or enter into a contract for 
        the procurement of, any goods or services from a person that 
        meets the criteria for the imposition of sanctions under 
        section 5(a) of the Iran Sanctions Act of 1996 (Public Law 104-
        172; 50 U.S.C. 1701 note).
    (c) Waiver.--The President may waive the application of the 
sanctions described in subsection (b) if the President--
            (1) determines that such a waiver is in the national 
        interest of the United States; and
            (2) submits to the appropriate congressional committees a 
        report describing the reasons for the determination.

SEC. 104. LIABILITY OF PARENT COMPANIES FOR VIOLATIONS OF SANCTIONS BY 
              FOREIGN SUBSIDIARIES.

    (a) Definitions.--In this section:
            (1) Entity.--The term ``entity'' means a partnership, 
        association, trust, joint venture, corporation, or other 
        organization.
            (2) Own or control.--The term ``own or control'' means, 
        with respect to an entity--
                    (A) to hold more than 50 percent of the equity 
                interest by vote or value in the entity;
                    (B) to hold a majority of seats on the board of 
                directors of the entity; or
                    (C) to otherwise control the actions, policies, or 
                personnel decisions of the entity.
            (3) Subsidiary.--The term ``subsidiary'' means an entity 
        that is owned or controlled, directly or indirectly, by a 
        United States person.
            (4) United states person.--The term ``United States 
        person'' means--
                    (A) a natural person who is a citizen, resident, or 
                national of the United States; and
                    (B) an entity that 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 or control the entity.
    (b) In General.--A United States person shall be subject to a 
penalty for a violation of the provisions of Executive Order 12959 (50 
U.S.C. 1701 note) or Executive Order 13059 (50 U.S.C. 1701 note), or 
any other prohibition on transactions with respect to Iran imposed 
under the authority of the International Emergency Economic Powers Act 
(50 U.S.C. 1701 et seq.), if--
            (1) the President determines that the United States person 
        establishes or maintains a subsidiary outside of the United 
        States for the purpose of circumventing such provisions; and
            (2) that subsidiary engages in an act that, if committed in 
        the United States or by a United States person, would violate 
        such provisions.
    (c) Waiver.--The President may waive the application of subsection 
(b) if the President--
            (1) determines that such a waiver is in the national 
        interest of the United States; and
            (2) submits to the appropriate congressional committees a 
        report describing the reasons for the determination.
    (d) Effective Date.--
            (1) In general.--Subsection (b) shall take effect on the 
        date of the enactment of this Act and apply with respect to 
        acts described in subsection (b)(2) that are--
                    (A) commenced on or after the date of the enactment 
                of this Act; or
                    (B) except as provided in paragraph (2), commenced 
                before such date of enactment, if such acts continue on 
                or after such date of enactment.
            (2) Exception.--Subsection (b) shall not apply with respect 
        to an act described in paragraph (1)(B) by a subsidiary owned 
        or controlled by a United States person if the United States 
        person divests or terminates its business with the subsidiary 
        not later than 90 days after such date of enactment.

SEC. 105. INCREASED CAPACITY FOR EFFORTS TO COMBAT UNLAWFUL OR 
              TERRORIST FINANCING.

    (a) Finding.--Congress finds that the work of the Office of 
Terrorism and Financial Intelligence of the Department of the Treasury, 
which includes the Office of Foreign Assets Control and the Financial 
Crimes Enforcement Network, is critical to ensuring that the 
international financial system is not used for purposes of supporting 
terrorism and developing weapons of mass destruction.
    (b) Authorization of Appropriations for Office of Terrorism and 
Financial Intelligence.--There is authorized to be appropriated to the 
Secretary of the Treasury for the Office of Terrorism and Financial 
Intelligence--
            (1) $61,712,000 for fiscal year 2009; and
            (2) such sums as may be necessary for each of the fiscal 
        years 2010 and 2011.
    (c) Authorization of Appropriations for the Financial Crimes 
Enforcement Network.--Section 310(d)(1) of title 31, United States 
Code, is amended by striking ``such sums as may be necessary for fiscal 
years 2002, 2003, 2004, and 2005'' and inserting ``$91,335,000 for 
fiscal year 2009 and such sums as may be necessary for each of the 
fiscal years 2010 and 2011''.

SEC. 106. REPORTING REQUIREMENTS.

    (a) Foreign Investment in Iran.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the President shall submit to the 
        appropriate congressional committees a report on--
                    (A) any foreign investments of $20,000,000 or more 
                made in Iran's energy sector on or after January 1, 
                2008, and before the date on which the President 
                submits the report; and
                    (B) the determination of the President on whether 
                each such investment qualifies as a sanctionable 
                offense under section 5(a) of the Iran Sanctions Act of 
                1996 (Public Law 104-172; 50 U.S.C. 1701 note).
            (2) Subsequent reports.--Not later than 1 year after the 
        date of the enactment of this Act, and every 180 days 
        thereafter, the President shall submit to the appropriate 
        congressional committees a report on--
                    (A) any foreign investments of $20,000,000 or more 
                made in Iran's energy sector during the 180-day period 
                preceding the submission of the report; and
                    (B) the determination of the President on whether 
                each such investment qualifies as a sanctionable 
                offense under section 5(a) of the Iran Sanctions Act of 
                1996 (Public Law 104-172; 50 U.S.C. 1701 note).
    (b) Form of Reports.--The reports required under subsection (a) 
shall be submitted in unclassified form, but may contain a classified 
annex.

SEC. 107. SENSE OF CONGRESS REGARDING THE IMPOSITION OF SANCTIONS ON 
              THE CENTRAL BANK OF IRAN.

    Congress urges the President, in the strongest terms, to consider 
immediately using the authority of the President to impose sanctions on 
the Central Bank of Iran and any other Iranian bank engaged in 
proliferation activities or support of terrorist groups.

    TITLE II--DIVESTMENT FROM CERTAIN COMPANIES THAT INVEST IN IRAN

SEC. 201. DEFINITIONS.

    In this title:
            (1) Energy sector.--The term ``energy sector'' refers to 
        activities to develop petroleum or natural gas resources or 
        nuclear power.
            (2) Financial institution.--The term ``financial 
        institution'' has the meaning given that term in section 14(5) 
        of the Iran Sanctions Act of 1996 (Public Law 104-172; 50 
        U.S.C. 1701 note).
            (3) Iran.--The term ``Iran'' includes any agency or 
        instrumentality of Iran.
            (4) Person.--The term ``person'' means--
                    (A) a natural person, corporation, company, 
                business association, partnership, society, trust, or 
                any other nongovernmental entity, organization, or 
                group;
                    (B) any governmental entity or instrumentality of a 
                government, including a multilateral development 
                institution (as defined in section 1701(c)(3) of the 
                International Financial Institutions Act (22 U.S.C. 
                262r(c)(3))); and
                    (C) any successor, subunit, parent company, or 
                subsidiary of any entity described in subparagraph (A) 
                or (B).
            (5) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the United States Virgin Islands, Guam, American Samoa, 
        and the Commonwealth of the Northern Mariana Islands.
            (6) State or local government.--The term ``State or local 
        government'' includes--
                    (A) any State and any agency or instrumentality 
                thereof;
                    (B) any local government within a State, and any 
                agency or instrumentality thereof;
                    (C) any other governmental instrumentality; and
                    (D) any public institution of higher education 
                within the meaning of the Higher Education Act of 1965 
                (20 U.S.C. 1001 et seq.).

SEC. 202. AUTHORITY OF STATE AND LOCAL GOVERNMENTS TO DIVEST FROM 
              CERTAIN COMPANIES THAT INVEST IN IRAN.

    (a) Sense of Congress.--It is the sense of Congress that the United 
States Government should support the decision of any State or local 
government to divest from, or to prohibit the investment of assets of 
the State or local government in, a person that the State or local 
government determines poses a financial or reputational risk.
    (b) Authority To Divest.--Notwithstanding any other provision of 
law, a State or local government may adopt and enforce measures that 
meet the requirements of subsection (d) to divest the assets of the 
State or local government from, or prohibit investment of the assets of 
the State or local government in, any person that the State or local 
government determines, using credible information available to the 
public, engages in investment activities in Iran described in 
subsection (c).
    (c) Investment Activities Described.--A person engages in 
investment activities in Iran described in this subsection if the 
person--
            (1) has an investment of $20,000,000 or more--
                    (A) in the energy sector of Iran; or
                    (B) in a person that provides oil or liquified 
                natural gas tankers, or products used to construct or 
                maintain pipelines used to transport oil or liquified 
                natural gas, for the energy sector in Iran; or
            (2) is a financial institution that extends $20,000,000 or 
        more in credit to another person, for 45 days or more, if that 
        person will use the credit to invest in the energy sector in 
        Iran.
    (d) Requirements.--Any measure taken by a State or local government 
under subsection (b) shall meet the following requirements:
            (1) Notice.--The State or local government shall provide 
        written notice to each person to which a measure is to be 
        applied.
            (2) Timing.--The measure shall apply to a person not 
        earlier than the date that is 90 days after the date on which 
        written notice is provided to the person under paragraph (1).
            (3) Opportunity for hearing.--The State or local government 
        shall provide an opportunity to comment in writing to each 
        person to which a measure is to be applied. If the person 
        demonstrates to the State or local government that the person 
        does not engage in investment activities in Iran described in 
        subsection (c), the measure shall not apply to the person.
            (4) Sense of congress on avoiding erroneous targeting.--It 
        is the sense of Congress that a State or local government 
        should not adopt a measure under subsection (b) with respect to 
        a person unless the State or local government has made every 
        effort to avoid erroneously targeting the person and has 
        verified that the person engages in investment activities in 
        Iran described in subsection (c).
    (e) Notice to Department of Justice.--Not later than 30 days after 
adopting a measure pursuant to subsection (b), a State or local 
government shall submit written notice to the Attorney General 
describing the measure.
    (f) Nonpreemption.--A measure of a State or local government 
authorized under subsection (b) is not preempted by any Federal law or 
regulation.
    (g) Definitions.--In this section:
            (1) Investment.--The ``investment'' of assets, with respect 
        to a State or local government, includes--
                    (A) a commitment or contribution of assets;
                    (B) a loan or other extension of credit; and
                    (C) the entry into or renewal of a contract for 
                goods or services.
            (2) Assets.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``assets'' refers to public monies and 
                includes any pension, retirement, annuity, or endowment 
                fund, or similar instrument, that is controlled by a 
                State or local government.
                    (B) Exception.--The term ``assets'' does not 
                include employee benefit plans covered by title I of 
                the Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1001 et seq.).
    (h) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), this 
        section applies to measures adopted by a State or local 
        government before, on, or after the date of the enactment of 
        this Act.
            (2) Notice requirements.--Subsections (d) and (e) apply to 
        measures adopted by a State or local government on or after the 
        date of the enactment of this Act.

SEC. 203. SAFE HARBOR FOR CHANGES OF INVESTMENT POLICIES BY ASSET 
              MANAGERS.

    (a) In General.--Section 13(c)(1) of the Investment Company Act of 
1940 (15 U.S.C. 80a-13(c)(1)) is amended to read as follows:
            ``(1) In general.--Notwithstanding any other provision of 
        Federal or State law, no person may bring any civil, criminal, 
        or administrative action against any registered investment 
        company, or any employee, officer, director, or investment 
        adviser thereof, based solely upon the investment company 
        divesting from, or avoiding investing in, securities issued by 
        persons that the investment company determines, using credible 
        information available to the public--
                    ``(A) conduct or have direct investments in 
                business operations in Sudan described in section 3(d) 
                of the Sudan Accountability and Divestment Act of 2007 
                (50 U.S.C. 1701 note); or
                    ``(B) engage in investment activities in Iran 
                described in section 202(c) of the Comprehensive Iran 
                Sanctions, Accountability, and Divestment Act of 
                2008.''.
    (b) SEC Regulations.--Not later than 120 days after the date of the 
enactment of this Act, the Securities and Exchange Commission shall 
issue any revisions the Commission determines to be necessary to the 
regulations requiring disclosure by each registered investment company 
that divests itself of securities in accordance with section 13(c) of 
the Investment Company Act of 1940 to include divestments of securities 
in accordance with paragraph (1)(B) of such section, as added by 
subsection (a).

SEC. 204. SENSE OF CONGRESS REGARDING CERTAIN ERISA PLAN INVESTMENTS.

    It is the sense of Congress that a fiduciary of an employee benefit 
plan, as defined in section 3(3) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(3)), may divest plan assets from, 
or avoid investing plan assets in, any person the fiduciary determines 
engages in investment activities in Iran described in section 202(c) of 
this Act, without breaching the responsibilities, obligations, or 
duties imposed upon the fiduciary by section 404 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1104), if--
            (1) the fiduciary makes such determination using credible 
        information that is available to the public; and
            (2) such divestment or avoidance of investment is conducted 
        in accordance with section 2509.94-1 of title 29, Code of 
        Federal Regulations (as in effect on the day before the date of 
        the enactment of this Act).

TITLE III--PREVENTION OF TRANSSHIPMENT, REEXPORTATION, OR DIVERSION OF 
                        SENSITIVE ITEMS TO IRAN

SEC. 301. DEFINITIONS.

    In this title:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on Banking, Housing, and Urban 
                Affairs, the Committee on Foreign Relations, and the 
                Select Committee on Intelligence of the Senate; and
                    (B) the Committee on Financial Services, the 
                Committee on Foreign Affairs, and the Permanent Select 
                Committee on Intelligence of the House of 
                Representatives.
            (2) End-user.--The term ``end-user'' means an end-user as 
        that term is used in the Export Administration Regulations.
            (3) Entity owned or controlled by the government of iran.--
        The term ``entity owned or controlled by the Government of 
        Iran'' includes--
                    (A) any corporation, partnership, association, or 
                other entity in which the Government of Iran owns a 
                majority or controlling interest; and
                    (B) any entity that is otherwise controlled by the 
                Government of Iran.
            (4) Export administration regulations.--The term ``Export 
        Administration Regulations'' means subchapter C of chapter VII 
        of title 15, Code of Federal Regulations.
            (5) Government.--The term ``government'' includes any 
        agency or instrumentality of a government.
            (6) Iran.--The term ``Iran'' includes any agency or 
        instrumentality of Iran.
            (7) State sponsor of terrorism.--The term ``state sponsor 
        of terrorism'' means any country the government of which the 
        Secretary of State has determined has repeatedly provided 
        support for acts of international terrorism pursuant to--
                    (A) section 6(j)(1)(A) of the Export Administration 
                Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)) (or any 
                successor thereto);
                    (B) section 40(d) of the Arms Export Control Act 
                (22 U.S.C. 2780(d)); or
                    (C) section 620A(a) of the Foreign Assistance Act 
                of 1961 (22 U.S.C. 2371(a)).
            (8) Transshipment, reexportation, or diversion.--The term 
        ``transshipment, reexportation, or diversion'' means the 
        exportation, directly or indirectly, of items that originated 
        in the United States to an end-user whose identity cannot be 
        verified or to an entity owned or controlled by the Government 
        of Iran in violation of the laws or regulations of the United 
        States by any means, including by--
                    (A) shipping such items through 1 or more foreign 
                countries; or
                    (B) by using false information regarding the 
                country of origin of such items.

SEC. 302. IDENTIFICATION OF LOCATIONS OF CONCERN WITH RESPECT TO 
              TRANSSHIPMENT, REEXPORTATION, OR DIVERSION OF CERTAIN 
              ITEMS TO IRAN.

    Not later than 180 days after the date of the enactment of this 
Act, and annually thereafter, the Director of National Intelligence 
shall submit to the Secretary of Commerce, the Secretary of State, the 
Secretary of the Treasury, and the appropriate congressional committees 
a report that identifies all countries that the Director determines are 
of concern with respect to transshipment, reexportation, or diversion 
of items subject to the provisions of the Export Administration 
Regulations to an entity owned or controlled by the Government of Iran.

SEC. 303. DESTINATIONS OF POSSIBLE DIVERSION CONCERN AND DESTINATIONS 
              OF DIVERSION CONCERN.

    (a) Destinations of Possible Diversion Concern.--
            (1) Designation.--The Secretary of Commerce shall designate 
        a country as a Destination of Possible Diversion Concern if the 
        Secretary, in consultation with the Secretary of State and the 
        Secretary of the Treasury, determines that such designation is 
        appropriate to carry out activities to strengthen the export 
        control systems of that country based on criteria that 
        include--
                    (A) the volume of items that originated in the 
                United States that are transported through the country 
                to end-users whose identities cannot be verified;
                    (B) the inadequacy of the export and reexport 
                controls of the country;
                    (C) the unwillingness or demonstrated inability of 
                the government of the country to control diversion 
                activities; and
                    (D) the unwillingness or inability of the 
                government of the country to cooperate with the United 
                States in interdiction efforts.
            (2) Strengthening export control systems of destinations of 
        possible diversion concern.--If the Secretary of Commerce 
        designates a country as a Destination of Possible Diversion 
        Concern under paragraph (1), the United States shall initiate 
        government-to-government activities described in paragraph (3) 
        to strengthen the export control systems of the country.
            (3) Government-to-government activities described.--The 
        government-to-government activities described in this paragraph 
        include--
                    (A) cooperation by agencies and departments of the 
                United States with counterpart agencies and departments 
                in a country designated as a Destination of Possible 
                Diversion Concern under paragraph (1) to--
                            (i) develop or strengthen export control 
                        systems in the country;
                            (ii) strengthen cooperation and facilitate 
                        enforcement of export control systems in the 
                        country; and
                            (iii) promote information and data 
                        exchanges among agencies of the country and 
                        with the United States; and
                    (B) efforts by the Office of International Programs 
                of the Department of Commerce to strengthen the export 
                control systems of the country to--
                            (i) facilitate legitimate trade in high-
                        technology goods; and
                            (ii) prevent terrorists and state sponsors 
                        of terrorism, including Iran, from obtaining 
                        nuclear, biological, and chemical weapons, 
                        defense technologies, components for improvised 
                        explosive devices, and other defense items.
    (b) Destinations of Diversion Concern.--
            (1) Designation.--The Secretary of Commerce shall designate 
        a country as a Destination of Diversion Concern if the 
        Secretary, in consultation with the Secretary of State and the 
        Secretary of the Treasury, determines--
                    (A) that the government of the country is directly 
                involved in transshipment, reexportation, or diversion 
                of items that originated in the United States to end-
                users whose identities cannot be verified or to 
                entities owned or controlled by the Government of Iran; 
                or
                    (B) 12 months after the Secretary of Commerce 
                designates the country as a Destination of Possible 
                Diversion Concern under subsection (a)(1), that the 
                country has failed--
                            (i) to cooperate with the government-to-
                        government activities initiated by the United 
                        States under subsection (a)(2); or
                            (ii) based on the criteria described in 
                        subsection (a)(1), to adequately strengthen the 
                        export control systems of the country.
            (2) Licensing controls with respect to destinations of 
        diversion concern.--
                    (A) Report on suspect items.--
                            (i) In general.--Not later than 45 days 
                        after the date of the enactment of this Act, 
                        the Secretary of Commerce, in consultation with 
                        the Director of National Intelligence, the 
                        Secretary of State, and the Secretary of the 
                        Treasury, shall submit to the appropriate 
                        congressional committees a report containing a 
                        list of items that, if the items were 
                        transshipped, reexported, or diverted to Iran, 
                        could contribute to--
                                    (I) Iran obtaining nuclear, 
                                biological, or chemical weapons, 
                                defense technologies, components for 
                                improvised explosive devices, or other 
                                defense items; or
                                    (II) support by Iran for acts of 
                                international terrorism.
                            (ii) Considerations for list.--In 
                        developing the list required under clause (i), 
                        the Secretary of Commerce shall consider--
                                    (I) the items subject to licensing 
                                requirements under section 742.8 of 
                                title 15, Code of Federal Regulations 
                                (or any corresponding similar 
                                regulation or ruling) and other 
                                existing licensing requirements; and
                                    (II) the items added to the list of 
                                items for which a license is required 
                                for exportation to North Korea by the 
                                final rule of the Bureau of Export 
                                Administration of the Department of 
                                Commerce issued on June 19, 2000 (65 
                                Fed. Reg. 38148; relating to export 
                                restrictions on North Korea).
                    (B) Licensing requirement.--Not later than 180 days 
                after the date of the enactment of this Act, the 
                Secretary of Commerce shall require a license to export 
                an item on the list required under subparagraph (A)(i) 
                to a country designated as a Destination of Diversion 
                Concern.
            (3) Waiver.--The President may waive the imposition of the 
        licensing requirement under paragraph (2)(B) with respect to a 
        country designated as a Destination of Diversion Concern if the 
        President--
                    (A) determines that such a waiver is in the 
                national interest of the United States; and
                    (B) submits to the appropriate congressional 
                committees a report describing the reasons for the 
                determination.
    (c) Termination of Designation.--The designation of a country as a 
Destination of Possible Diversion Concern or a Destination of Diversion 
Concern shall terminate on the date on which the Secretary of Commerce 
determines, based on the criteria described in subparagraphs (A) 
through (D) of subsection (a)(1), and certifies to Congress and the 
President that the country has adequately strengthened the export 
control systems of the country to prevent transshipment, reexportation, 
and diversion of items through the country to end-users whose 
identities cannot be verified or to entities owned or controlled by the 
Government of Iran.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 304. REPORT ON EXPANDING DIVERSION CONCERN SYSTEM TO COUNTRIES 
              OTHER THAN IRAN.

    Not later than 180 days after the date of the enactment of this 
Act, the Director of National Intelligence, in consultation with the 
Secretary of Commerce, the Secretary of State, and the Secretary of the 
Treasury, shall submit to the appropriate congressional committees a 
report that--
            (1) identifies any country that the Director determines may 
        be transshipping, reexporting, or diverting items subject to 
        the provisions of the Export Administration Regulations to 
        another country if such other country--
                    (A) is seeking to obtain nuclear, biological, or 
                chemical weapons, defense technologies, components for 
                improvised explosive devices, or other defense items; 
                or
                    (B) provides support for acts of international 
                terrorism; and
            (2) assesses the feasability and advisability of expanding 
        the system established under section 303 for designating 
        countries as Destinations of Possible Diversion Concern and 
        Destinations of Diversion Concern to include countries 
        identified under paragraph (1).

                    TITLE IV--EFFECTIVE DATE; SUNSET

SEC. 401. EFFECTIVE DATE; SUNSET.

    (a) Effective Date.--Except as provided in sections 202 and 
303(b)(2)(A), the provisions of, and amendments made by, this Act shall 
take effect on the date that is 120 days after the date of the 
enactment of this Act.
    (b) Sunset.--The provisions of this Act shall terminate on the date 
that is 30 days after the date on which the President certifies to 
Congress that--
            (1) the Government of Iran has ceased providing support for 
        acts of international terrorism and no longer satisfies the 
        requirements for designation as a state sponsor of terrorism 
        under--
                    (A) section 6(j)(1)(A) of the Export Administration 
                Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)) (or any 
                successor thereto);
                    (B) section 40(d) of the Arms Export Control Act 
                (22 U.S.C. 2780(d)); or
                    (C) section 620A(a) of the Foreign Assistance Act 
                of 1961 (22 U.S.C. 2371(a)); and
            (2) Iran has ceased the pursuit, acquisition, and 
        development of nuclear, biological, and chemical weapons and 
        ballistic missiles and ballistic missile launch technology.
                                                       Calendar No. 939

110th CONGRESS

  2d Session

                                S. 3445

                          [Report No. 110-443]

_______________________________________________________________________

                                 A BILL

To impose sanctions with respect to Iran, 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.

_______________________________________________________________________

                             August 1, 2008

                 Read twice and placed on the calendar
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