The Iran Hostages: Efforts to Obtain Compensation
Released: 2015-11-02T00:00:00

E ven today, after the passage of more than three decades, the 1979-1981 Iran Hostage Crisis remains an event familiar to most Americans. Many might be unaware that the 52 American mostly military and diplomatic personnel held hostage in Tehran for 444 days or their survivors continue to strive for signif icant compensation for their ordeal. The former hostages and their families did receive a number of benefits under various civil service laws, and each hostage received from the U.S. government a cash payment of $50 for each day held hostage. The hostages have never received any compensation from Iran through court actions, all efforts having failed due to foreign sovereign immunity and an executive agreement known as the Algiers Accords, which bars such lawsuits. Congress took action to abrogate Iran's sovereign immunity in the case, but never successfully abrogated the executive agreement, leaving the plaintiffs with jurisdiction to pursue their case but without a judicial cause of action.

Having lost their bids in the courts to obtain recompense, the former hostages have turned to Congress for relief. This report outlines the history of various efforts, including legislative efforts and court cases, and describes several bills currently before Congress, the Justice for Former American Hostages in Iran Act of 2015, S. 868 , a companion bill, H.R. 3338 , and Section 122 of the Department of State Operations Authorization and Embassy Security Act, Fiscal Year 2016, S. 1635 .

The Hostage Relief Act

The 52 Americans taken hostage in Tehran in November 1979 and held until January 1981 included civilian Foreign Service diplomats and other government employees, as well as military servicemembers and one private citizen. Concern about the effects of the ordeal on the hostages and their families led Congress to enact legislation in 1980 designed to make the hostages and their families eligible for the same benefits that were available to prisoners of war and soldiers missing in action during the Vietnam conflict, including their dependents. The Hostage Relief Act of 1980 did not provide for a cash payment to hostages or their families; however, benefits under the act included the following:

creation of an interest-bearing salary savings fund including retroactive interest; reimbursement of medical expenses of the hostages and their family members; extension of relief under the Soldiers and Sailors Act to hostages; tax relief, including deferred assessment of taxes and penalties, tax forgiveness during the period of captivity, and refunding of tax collected prior to enactment; educational expenses for family members of hostages and retraining of hostages.

These benefits were supplemental to benefits to which government employees and servicemembers and their families were already entitled. The Congressional Budget Office estimated that the cost of additional medical benefits for the 1981 fiscal year would amount to $390,000; educational benefits would cost from $80,000 to $307,000 depending on the version of the bill enacted; and internal revenue would decrease by less than $1 million due to the tax benefits. A proposal to provide the hostages each with $1,000 per day to be paid from frozen Iranian assets in the United States met with the objection of the State Department on the grounds that it could complicate negotiations to secure the hostages' release, and it was not adopted.

Algiers Accords

In order to secure the release of the hostages and bring the crisis to an end, the U.S. government sought the good offices of Algeria to broker a deal with the new Iranian government. The result was a set of executive agreements known collectively as the Algiers Accords. The agreements provided not only for the release of the hostages, but also the unfreezing of Iranian assets in the United States and the creation of an international tribunal to settle claims between the two governments, as well as certain private claims against either government by a national of the other, mostly arising as a result of contracts disrupted by the revolution in Iran.

The Algiers Accords contain the following provisions respecting claims arising out of the hostage taking:

[T]he United States ... will thereafter bar and preclude the prosecution against Iran of any pending or future claim of the United States or a United States national arising out of events occurring before the date of this declaration related to (A) the seizure of the 52 United States nationals on Nov. 4, 1979, (B) their subsequent detention, (C) injury to United States property or property of the United States nationals within the United States embassy compound in Tehran after Nov. 3, 1979, and (D) injury to the United States nationals or their property as a result of popular movements in the course of the Islamic Revolution in Iran which were not an act of the Government of Iran. The United States will also bar and preclude the prosecution against Iran in the courts of the United States of any pending or future claims asserted by persons other than the United States nationals arising out of the events specified in the preceding sentence.

To fulfill this commitment, President Carter issued Executive Order 12283, citing the International Emergency Economic Powers Acts (IEEPA), among other authorities, to order the Secretary of the Treasury to promulgate regulations prohibiting any person subject to U.S. jurisdiction from bringing any court claim against Iran arising out of the hostage seizure or subsequent detention. The Office of Foreign Assets Control (OFAC) at the Treasury Department amended the Iranian Assets Control Regulations (31 C.F.R. Part 535) accordingly.

President's Commission on Hostage Compensation

On the same day the Algiers Accords were signed to secure the release of the hostages, President Carter created the President's Commission on Hostage Compensation and tasked it to provide recommendations as to whether the United States should provide financial compensation to the former hostages. The commission reviewed prior practice regarding governmental compensation for prisoners of war and the value of benefits already received by the former hostages under other laws in making its recommendation. The commission focused on the obligations it found the U.S. government owes as an employer, and concluded that "compensation in the tort sense" was not appropriate. It did, however, recommend a "token" payment of tax-exempt detention benefits in the amount of $12.50 per day of captivity, similar to benefits paid to Vietnam prisoners of war and interned civilians as well as to the crew of the USS Pueblo who were detained by the government of North Korea for 11 months in 1968.

In making this recommendation, the commission was mindful of the fact that the Algiers Accords precluded the former hostages from suing Iran for damages, but agreed with the government's position that this did not constitute a "taking" within the meaning of the Fifth Amendment because:

(1) the President had statutory and constitutional authority to settle the potential hostage claims;

(2) the hostages could not establish for purposes of a taking claim that they suffered an actual uncompensated loss since (a) their claims were settled for considerable value, i.e., their release and (b) their right of action against Iran was of dubious value because of the unlikelihood that the U.S. courts would have been available as a forum in which to sue Iran in light of certain provisions of the Foreign Sovereign Immunities Act.

The commission recommended that the government "assume the costs of restoring the hostages to health, provide disability compensation if their health cannot be restored, provide compensation for material losses and safeguard their employment rights and career prospects."

Court Actions

Notwithstanding the Algiers Accords' provision barring lawsuits, many of the former hostages brought suit against Iran for damages. These lawsuits failed for lack of jurisdiction under the Foreign Sovereign Immunities Act (FSIA) or because of the Algiers Accords, or both.

In Persinger v. Islamic Republic of Iran , the U.S. Court of Appeals for the D.C. Circuit initially found jurisdiction based on the non-commercial tort exception to the FSIA, on the notion that U.S. embassy grounds are within the jurisdiction of the United States. On the merits, however, the court found that the President's order implementing the Algiers Accords extinguished any claim the plaintiff may have had. Despite having won the case, the U.S. government petitioned for rehearing on the foreign sovereign immunity question. The court granted the motion and vacated its earlier opinion, agreeing with the government that the tort exception to sovereign immunity applies only to injuries occurring within the territorial jurisdiction of the United States, which did not include U.S. embassies abroad. The court held it could not, without jurisdiction over the case, reach the question regarding the legitimacy of the President's action.

Some of the former hostages brought suit against the United States seeking compensation for what they viewed as an unconstitutional taking of their claim against Iran, but were ultimately unsuccessful. In Belk v. United States , the United States Claims Court entered summary judgment in favor of the government, holding that the signing of the Algiers Accords did not effect a "taking" of private property because it primarily benefited the plaintiffs, the barring of claims was not novel or unexpected or outside the recognized authority of the President, and alternatively, that the presidential decision to bar claims amounted to a political question. The Court of Appeals for the Federal Circuit affirmed, agreeing that the extinguishment of the plaintiffs' claims was not novel or unexpected, and "cannot be said to have 'interfered with distinct investment-backed expectations.'" The appellate court also agreed that the matter was non-justiciable as a political question:

It involves a policy decision made by the President during a time of crisis. The appellants apparently contend that the President should not have entered into the Algiers Accords because he could have obtained better terms, and that the Accords themselves were illegal because the President was coerced into agreeing to them. The determination whether and upon what terms to settle the dispute with Iran over its holding of the hostages and obtain their release, necessarily was for the President to make in his foreign relations role. That determination was "of a kind clearly for nonjudicial discretion," and there are no "judicially discoverable and manageable standards" for reviewing such a Presidential decision. A judicial inquiry into whether the President could have extracted a more favorable settlement would seriously interfere with the President's ability to conduct foreign relations.

The court concluded that if any compensation of the plaintiffs for their mistreatment and suffering were to be forthcoming, it would have to be provided by "one of the other 'coordinate branches of government.'"

The Omnibus Diplomatic Security and Anti-Terrorism Act of 1986

When Congress returned to the issue of compensation for former hostages in 1985, the House Foreign Affairs Committee rejected the amount recommended by the commission in favor of a per diem payment based on the average government allowance for travel. As referred to the House floor, Section 802 of the Omnibus Diplomatic Security and Anti-Terrorism Act of 1986 provided for compensation in an amount deemed appropriate by the President taking into account the treatment the hostages received during captivity or other factors, but not less than the worldwide per diem rate under 5 U.S.C. Section 5702. The committee explained that:

In determining a level of cash compensation for civilian captives, the committee attempted to weigh the issues presented in the debate over the rate of compensation for the Iran hostages. At the time that the President's Commission on Hostage Compensation presented its findings, many felt that the Commission's recommendation that the hostages receive $12.50 per day for every day in captivity vastly underestimated both the captivity itself and the sympathy of the American people for the captives' plight. Others suggested that any cash award should be upward of $100 per day or more. The per diem rate chosen by the committee is a uniform rate which is a reliable gauge of the Government's obligation to its employees when they are engaged in official business away from the normal duty station.

This formula would have provided compensation in the amount of $66 per day for each former hostage. A floor amendment to reduce the amount to $20 failed, but the provision was amended in conference to provide $50 per day to the Iran hostages and to reduce the minimum per-diem based rate for future victims by half. The conference report provides no explanation for the substitution.

Foreign Sovereign Immunities Act Amendment

After Congress amended the FSIA in 1996 to include a new exception to immunity for acts of terrorism conducted or sponsored by designated terrorist states, the former hostages again brought suit against Iran.

Roeder v. Islamic Republic of Iran

In late 2000 a suit was filed in federal district court on behalf of the 52 embassy staffers and on behalf of their families. Roeder v. Islamic Republic of Iran sought both compensatory and punitive damages from Iran. In August of 2001, the trial court granted a default judgment to the plaintiffs and scheduled a hearing on the damages to be awarded. In October 2001, however, the U.S. government intervened in the proceeding and moved that the judgment be vacated and the case dismissed. The government contended that the suit did not meet all of the requirements of the terrorist State exception to the FSIA (notably, that Iran had not been designated as a state sponsor of terrorism at the time the U.S. personnel were held hostage) and that the suit was barred by the explicit provisions of the 1981 Algiers Accords that led to the release of the hostages.

While that motion was pending before the court, Congress passed as part of the Hollings amendment to the FY2002 Appropriations Act for the Departments of Commerce, Justice, and State a provision specifying that Roeder should be deemed to be included within the terrorist State exception to the FSIA. As amended, the pertinent section of the FSIA excluded suits against terrorist states from the immunity generally accorded foreign states but directed the courts to decline to hear such a case (with the amendment in italics): "if the foreign state was not designated as a state sponsor of terrorism ... at the time the act occurred, unless later so designated as a result of such act or the act is related to Case Number 1:00CV03110 (ESG) in the United States District Court for the District of Columbia ."

The conference report on the bill explained the provision as follows: "Subsection (c) quashes the State Department's motion to vacate the judgment obtained by plaintiffs in Case Number 1:00CV03110 (ESG) in the United States District Court for the District of Columbia. Consistent with current law, subsection (c) does not require the United States government to make any payments to satisfy the judgment."

In signing the appropriations act into law on November 28, 2001, however, President George W. Bush took note of this provision and commented as follows:

[S]ubsection (c) ... purports to remove Iran's immunity from suit in a case brought by the 1979 Tehran hostages in the District Court for the District of Columbia. To the maximum extent permitted by applicable law, the executive branch will act, and will encourage the courts to act, with regard to subsection 626(c) of the Act in a manner consistent with the obligations of the United States under the Algiers Accords that achieved the release of U.S. hostages in 1981.

The government continued to pursue its motion to dismiss the case, arguing, inter alia , that the suit was barred by the Algiers Accords. During the course of the proceeding the judge expressed concern regarding the lack of clarity of the recent congressional enactment with respect to whether Congress had intended to abrogate the Algiers Accords. A week later, in the fiscal 2002 appropriations act for the Department of Defense, the 107 th Congress included a provision making a minor technical correction in the reference to the Roeder case. The accompanying conference report elaborated on what it said was the effect and intent of the earlier amendment of the FSIA with respect to Roeder , seemingly in response to the judge's expression of concern. The conference report explained that:

The language included in Section 626(c) of P.L. 107-77 quashed the Department of State's motion to vacate the judgment obtained by plaintiffs in Case Number 1:00CV03110(EGS) and reaffirmed the validity of this claim and its retroactive application.... The provision included in Section 626(c) of P.L. 107-77 acknowledges that, notwithstanding any other authority, the American citizens who were taken hostage by the Islamic Republic of Iran in 1979 have a claim against Iran under the Antiterrorism Act of 1996 and the provision specifically allows the judgment to stand for purposes of award damages consistent with Section 2002 of the Victims of Terrorism Act of 2000 ( P.L. 106-386 , 114 Stat. 1541).

Nonetheless, in signing the Department of Defense appropriations measure into law on January 10, 2002, President Bush asserted that:

Section 208 of Division B makes a technical correction to subsection 626(c) of P.L. 107-77 (the FY2002 Commerce, Justice, State, the Judiciary and Related Agencies Appropriations Act), but does nothing to alter the effect of that provision or any other provision of law. Since the enactment of sub-section 626(c) and consistent with it, the executive branch has encouraged the courts to act, and will continue to encourage the courts to act, in a manner consistent with the obligations of the United States under the Algiers Accords that achieved the release of U.S. hostages in 1981.

The judge granted the government's motion to vacate the default judgment against Iran and to dismiss the suit. In a lengthy opinion the court concluded that:

at the time it entered a default judgment for plaintiffs on August 17, 2001, the court did not have jurisdiction over the case and should not have entered a judgment; the cause of action which Congress had adopted in late 1996 did not apply to suits against terrorist states but only against the officials, employees, and agents of those states who perpetrate terrorist acts; the provision of the Algiers Accords committing the United States to bar suits against Iran for the incident constitutes the substantive law of the case, and Congress's two enactments specifically concerning the case were too ambiguous to conclude that Congress specifically intended to override this international commitment.

In addition, the court in dicta suggested that Congress's enactments on the Roeder case might have interfered with its adjudication of the case in a manner that raised constitutional separation of powers concerns.

The U.S. Court of Appeals for the District of Columbia affirmed the decision of the lower court, placing emphasis on the fact that the legislative history plaintiffs sought to use—the joint explanatory statement prepared by House and Senate conferees—is not part of the conference report voted on by both houses of Congress and thus does not carry the force of law.

Executive agreements are essentially contracts between nations, and like contracts between individuals, executive agreements are expected to be honored by the parties. Congress (or the President acting alone) may abrogate an executive agreement, but legislation must be clear to ensure that Congress—and the President—have considered the consequences. The "requirement of clear statement assures that the legislature has in fact faced, and intended to bring into issue, the critical matters involved in the judicial decision." The kind of legislative history offered here cannot repeal an executive agreement when the legislation itself is silent. [Citations omitted].

The appellate court denied that its interpretation rendered any act of Congress futile. On the contrary, it stated that, "[i]f constitutional ... the amendments had the effect of removing Iran's sovereign immunity, which the United States had raised in its motion to vacate."

Efforts to Abrogate the Algiers Accords

Subsequent to the trial court's original decision in Roeder , efforts were made in the 107 th through the 111 th Congresses to enact legislation that would explicitly abrogate the provision of the Algiers Accords barring the hostages' suit. On July 24, 2002, the Senate Appropriations Committee reported the Fiscal 2003 Appropriations Act for the Departments of Commerce, Justice, and State ( S. 2778 ). Section 616 of that bill proposed to amend the FSIA as follows:

SEC. 616. Section 1605 of title 28, United States Code is amended by adding a new subsection (h) as follows:

(h) CAUSE OF ACTION FOR IRANIAN HOSTAGES- Notwithstanding any provision of the Algiers Accords, or any other international agreement, any United States citizen held hostage in Iran after November 1, 1979, and their spouses and children at the time, shall have a claim for money damages against the government of Iran. Any provision in an international agreement, including the Algiers Accords that purports to bar such suit is abrogated. This subsection shall apply retroactively to any cause of action cited in 28 U.S.C. 1605(a)(7)(A).

In explaining the provision, the report of the committee stated that "Section 616 clarifies section 626 of P.L. 107-77 that the Algiers Accord is abrogated for the purposes of providing a cause of action for the Iranian hostages." The measure received no further action prior to the adjournment of the 107 th Congress.

In the 108 th Congress the Senate added amendments to three appropriations bills that expressly would have abrogated the Algiers Accords, but in each case the amendment was deleted in conference. The 109 th Congress did not take up any legislation to abrogate the Algiers Accords. One bill, H.R. 3358 , would have declared the Algiers Accords abrogated and inapplicable, and would have directed the Secretary of the Treasury to pay the Roeder plaintiffs $1,000 per day of captivity (family members were to be awarded $500 per day of captivity of the hostages), to be paid out of Iran's Foreign Military Sales (FMS) Fund and frozen assets belonging to Iran. No action was taken on the bill, but new versions were introduced in the 110 th Congress as H.R. 394 and in the 111 th Congress as H.R. 4025 .

There were also some efforts to provide compensation for the former hostages without abrogating the Algiers Accords. H.R. 6305 / S. 3878 , 109 th Congress, would have provided up to $500,000 for victims of hostage-taking, including specifically the Iran hostages and family members named in the Roeder case, who would have been eligible for additional compensation from the FMS account. The bill did not mention the Algiers Accords, and it would have prohibited recipients from commencing or maintaining a civil action in U.S. court against a foreign state. Similar legislation was introduced in the 110 th Congress as H.R. 3369 and H.R. 3346 . The Justice for the American Diplomats Held Hostage in Tehran Act, H.R. 5796 (112 th Congress), would not have directly abrogated the Algiers Accords, but would have found that liquidating any property in which Iran or its surrogates has an interest in order to pay compensation to former hostages is consistent with the Algiers Accords. It would have barred prosecution of hostage claims against Iran only after such payments were made. None of these bills received committee action. H.R. 5796 was introduced in the 113 th Congress as H.R. 904 (see below).

Roeder II

When Congress again amended the FSIA in 2008 to overhaul the terrorist state exception to immunity, it retained the language granting jurisdiction to the Roeder plaintiffs but did not mention the Algiers Accords or clearly indicate whether the refiling of a suit no longer pending in any court would be permitted. Nothing in the statute expressly abrogated the Algiers Accords, and the conference report explained only that "The provision would also provide for courts to hear a claim under this section if the terrorist act is related to Case Number 1:00CV03110 (EGS) in the United States District Court for the District of Columbia. The conferees intend that nothing in this section would prejudice the claimants or their representatives in that case."

The former hostages and their families attempted to revive their suit on the basis that the new exception permitted pending suits against state sponsors of terrorism to be refiled under certain conditions. Plaintiffs sought to persuade the district court that the 2008 amendment, by providing a cause of action and permitting revival of the lawsuit, unambiguously conflicted with the terms of the agreement and should therefore be read to abrogate them, but the district court disagreed, declaring "with an equal measure of frustration, regret, and compassion," that "Congress has failed to provide plaintiffs with a cause of action against Iran." The standard for clarity necessary for abrogation of the Algiers Accords was not met.

The appellate court affirmed the decision on the basis that language describing how "pending cases" and "related actions" are to be treated does not clearly permit the plaintiffs to revive their lawsuit, and that language in the new exception covering jurisdiction over the hostages' claim does not differ meaningfully from the version in effect when that court dismissed the suit in 2003. While the 2008 amendment to the FSIA preserved jurisdiction for the case, it did not include the case in the language providing for a cause of action. Thus, the statute was found too ambiguous to overcome the bar presented by the Algiers Accords. The Supreme Court denied certiorari in May 2012.

Legislative Proposals

S. 559 (113th Cong.)

The Senate Committee on Foreign Relations of the 113 th Congress reported favorably on S. 559 , the Justice for Former American Hostages in Iran Act of 2013, which would have established a fund to compensate the former hostages ( S.Rept. 113-104 ). No further action was taken on the bill. The American Hostages in Iran Compensation Fund, administered by the Secretary of State, would have paid to each former hostage, or estate of a former hostage, $150,000 plus $5,000 per each day of captivity ($2.37 million total per former hostage). The Secretary of State would have administered claims, and each recipient would have been required to "waive and forever release all existing claims against Iran and the United States" arising out of the hostage crisis. It appears that the Secretary of State would have had some discretion to deny claims or reduce the amount of the award, although the bill did not clarify the basis for such an action. An individual whose claim was denied or who received a reduced award would have been entitled to submit further information, but would not have been permitted to challenge the decision in court. The Secretary of State would have been required to submit to Congress an annual report describing the status of the fund, including deposits, payments, and the rules and processes established to administer the fund. The bill would have financed the fund through a 30% surcharge on "any fine or monetary penalty assessed, in whole or in part, on a person for a violation of a law or regulation" or "the monetary amount of a settlement entered into by a person with respect to a suspected violation of a law or regulation" that "provides for a civil or criminal fine or other monetary penalty for any economic activity relating to Iran that is administered by the Department of the Treasury, the Department of Justice, or the Department of Commerce." Surcharges would have ceased five years after enactment or, if later, once all payments to recipients were completed, with any surplus to be deposited into the general fund of the Treasury.

S. 868 (114th Cong.)

The Justice for Former American Hostages in Iran Act of 2015, S. 868 , a bill similar to S. 559 (113 th Cong.), was introduced in the Senate at the end of March and referred to the Committee on Foreign Relations. Like its predecessor bill, S. 868 would establish the American Hostages in Iran Compensation Fund in the U.S. Treasury to be funded through a 30% surcharge on penalties, fines, and settlements collected from violators of U.S. sanctions prohibiting economic activity with Iran. The 2015 bill, however, would permit payments from the fund to be administered by the plaintiffs' representative and principal agent in Roeder I , under the supervision of the Secretary of the Treasury. The surcharge would apply to sanctions administered by Department of State, the Department of the Treasury, the Department of Justice, the Department of Commerce, or the Department of Energy. Surcharges would be required to be paid to the Secretary of the Treasury without regard to whether the fine or penalty is paid directly to the federal agency that imposed it or it is deemed satisfied by a payment to another federal agency.

The purpose of the fund would be to make payments to the former hostages and their family members who are identified as members of the proposed class in Roeder I , as well as to settle their claims against Iran. The proposed class in Roeder I appears to consist of "Americans taken hostage by [Iran] from the American Embassy or from the Foreign Ministry in Iran in 1979, their spouses, and their children who are victims of [d]efendants' conduct ...," as well as "[r]epresentatives, administrators and/or executors of the estates of all diplomatic and military personnel and the civilian support staff who were working at the United States Embassy in Iran during November 1979 and were seized from the United States Embassy grounds, or the Iranian Foreign ministry, and held hostage from 1979 to 1981."

Accordingly, it is unclear whether all spouses and children of the former hostages qualify for payments from the fund, nor is it clear how or by whom members of the proposed class are to be identified.

Payments would be made in the following amounts and according to this order of priority:

(A) To each living former hostage identified as a member of the proposed class described in subsection (a)(1), $10,000 for each day of captivity of the former hostage [$4.44 million per former hostage].

(B) To the estate of each deceased former hostage identified as a member of the proposed class described in subsection (a)(1), $10,000 for each day of captivity of the former hostage [$4.44 million per estate of a former hostage].

(C) To each spouse and child of a former hostage identified as a member of the proposed class described in subsection (a)(1) if the spouse or child is identified as a member of that proposed class, $5,000 for each day of captivity of the former hostage [$2.22 million per qualifying spouse or child of a former hostage].

The bill would not appear to provide compensation for former hostages who were released from captivity prior to 1981.

Under the bill, once a class member consents and receives payments from the fund, the recipient would be barred from bringing a lawsuit against Iran related to the hostage crisis. Once all payments are distributed according to the above plan, all such claims against Iran would be deemed waived and released.

The fund would be closed out and all remaining amounts in it returned to the Treasury's general fund once all payments are made or five years after the bill's enactment, whichever occurs later, although surcharges would end once all payments are made. The Secretary of State would be required to report to Congress no later than 60 days after a relevant sanctions law or regulation is suspended, or after determining that amounts in the fund are insufficient to make the required payments to all recipients within 444 days after enactment, providing recommendations for expediting remaining payments.

S. 1635 (114th Cong.)

In June 2015, the Senate Foreign Relations Committee reported S. 1635 , the Department of State Operations Authorization and Embassy Security Act, Fiscal Year 2016. Section 122 of that bill is substantially similar to S. 868 , but it limits the amount of compensation to former hostages and estates of former hostages to $6,750 per day of captivity ($3,330,000 in total per former hostage), cuts payments to their spouses to $600,000, and eliminates payments to their children.

Like S. 868 , Section 122 would create the "American Hostages in Iran Compensation Fund" in the U.S. Treasury for the purpose of compensating former hostages and their family members, and for releasing all claims against Iran arising out of the hostage-taking. However, payments from the fund would be administered directly by the Secretary of State rather than the class representative in the Roeder I case. Fund sources would include a 30% surcharge on civil and criminal fines and monetary penalties assessed against, or agreed to, by Iran sanctions violators, as well as donations "by individuals, business concerns, governments, or other entities" and such other funds that may be identified by the President for the purpose of compensating the bill's beneficiaries.

Section 122 contains a provision at subsection (g) to preclude judicial or administrative review of decisions made under it. Section 122 does not appear to contemplate a great deal of discretion on the part of any official, and does not assign any agency the responsibility for enforcing and collecting the sanctions surcharges it would impose, so it is not clear which decisions are intended to be shielded from review. If it is interpreted to cover decisions regarding the payment of surcharges, which could be deemed punitive in nature, there may be due process implications with respect to the surcharge scheme, or it may turn out to be effectively unenforceable.

H.R. 3338 (114th Cong.)

The Justice for Former American Hostages in Iran Act of 2015, H.R. 33 3 8 , a companion bill to the measures described above, was introduced in June and referred to the House Committee on the Judiciary, as well as the Committees on Foreign Affairs and Ways and Means. It is substantially similar to Section 122 of S. 1635 , but it provides for compensation for qualifying children of former hostages in the amount of $600,000 and clarifies that, in the event of a deceased former hostage whose estate lacks immediate direct heirs, state intestacy laws will apply and recipients under such laws are to be paid last from the fund. Although the bill expressly includes the estates of qualifying spouses and children, it does not define how or when compensation is distributed in the event there are no immediate direct heirs. Compensation paid under the bill would be exempt from income tax and estate tax requirements under federal law. Because the bill would preclude judicial or administrative review of any decisions made under it, it appears that heirs would be unable to contest decisions denying them compensation.

Sanctions Violations Involving Iran

In order to assess how much revenue the fund envisioned by the bills described above could likely be expected to accrue, CRS has compiled data available from several sources in order to estimate the total revenue from penalties and settlement agreements connected with violations of regulations proscribing economic activity with Iran for the calendar years 2005-2014. Information was obtained from the Department of the Treasury, Office of Foreign Assets Control (OFAC) website; the Department of Commerce, Bureau of Industry and Security (BIS) Annual Reports to Congress for the years 2005-2014; and a report of major violations from the Department of Justice. CRS identified 373 penalties stemming at least in part from violations of sanctions against Iran (there may be more than one penalty per violation). The data include criminal fines, forfeitures, significant special assessments, and civil penalties that were reported to have some connection with Iran. Because the data sets are not complete through the time covered, and because it is not always easily ascertained whether the enforcement action summarized pertained to Iran, the following should be considered an estimate only. Moreover, CRS has not undertaken a thorough legal analysis of the bills' language concerning which laws and regulations might be deemed to be included under the definition of covered penalties and settlements. It is not clear, for example, whether laws providing for forfeiture are necessarily included.

So far in 2015, OFAC and the Department of Justice report a total of $1,958,030,478.00 in forfeitures and fines having to do in part with violations of sanctions against Iran, some of which has gone to state law enforcement and regulatory agencies. It should be noted that a few large penalties primarily against banks account for the bulk of the total, as shown in Table 2 . These large penalties involved violations of other sanctions programs in addition to the Iran sanctions. The imposition of a 30% surcharge could result in a restructuring of future similar settlement agreements in order to isolate the violations related to Iran. As an example of how such restructuring might reduce expected penalties subject to surcharge, it might be useful to survey the case against Credit Agricole resolved in October 2015. Included in the assessment of a total of $787.3 million in civil forfeitures and penalties assessed against Credit Agricole were some factors that might mean that a surcharge would not be applicable. For example, only 16 of the 4,055 transactions found to be in violation of federal economic sanctions laws involved Iranian transactions. Moreover, although all of the civil money penalties were premised on transactions violating the economic sanctions regulations, some of the penalties were imposed pursuant to New York State law or pursuant to federal or state banking laws or regulations. Sanctions relief envisioned under the Joint Comprehensive Plan of Action (JCPOA) addressing Iran's nuclear capabilities could reduce the future expected assessment of penalties, particularly involving foreign banks. For information about sanctions relief under the JCPOA, see CRS Report R43333, Iran Nuclear Agreement , by [author name scrubbed] and [author name scrubbed].