President Obama Signs Enhanced Iran Sanctions Legislation
On July 1, 2010, U.S. President Barack Obama signed the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (hereinafter "the Act"), amending and expanding the Iran Sanctions Act of 1996 to impose enhanced sanctions on individuals and companies aiding Iran in developing petroleum resources and products. The new legislation expands on the previous Iran Sanctions Act in several significant ways, some of which will impact the maritime industry.
- First, the legislation will sanction persons (defined as individuals or companies) that have knowingly made an investment of USD 20 million or more, or any combination of investments of at least USD 5 million which in the aggregate equals or exceeds USD 20 million, that "directly and significantly contributes to the enhancement of Iran's ability to develop petroleum resources."
- The legislation also sanctions persons who knowingly sell or provide goods, services, technology, information or support related to the production of refined petroleum products in Iran, any of which has a fair market value of USD 1 million or more; or that in a twelve (12) month period has an aggregate fair market value of USD 5 million or more.
- Sanctions are also imposed on a person who knowingly sells or provides Iran with refined petroleum products with a fair market value of USD 1 million or more, or which, during a twelve (12) month period, have an aggregate fair market value of USD 5 million or more. In addition, sanctions are imposed if a person "sells, leases, or provides to Iran goods, services, technology, information or support" contributing to the enhancement of Iran's ability to import refined petroleum products, including underwriting or otherwise providing insurance or reinsurance for such goods, services, etc. (unless the President determines that the person has exercised due diligence in establishing and enforcing official policies, procedures and controls to ensure that the person does not underwrite or enter into a contract to provide insurance or reinsurance for such goods and services); financing or brokering the sale, lease or provision of such goods or services; or the provision of ships or shipping services to deliver refined petroleum products to Iran, if the goods/services have a fair market value of USD 1 million or more, or an aggregate fair market value of USD 5 million or more during a twelve (12) month period.
- The Act also prohibits all goods and services of Iranian origin from being imported into the United States (with the exception of informational materials) and all goods, services and technology from being exported to Iran from the United States or by a U.S. company or individual (with the exception of humanitarian assistance; agricultural commodities; food; medicine; and goods or services for commercial aircraft, the International Atomic Energy Agency and for democracy promotion).
The Act expands the definition of "petroleum resources" to include petroleum, refined petroleum products, oil or liquefied natural gas, natural gas resources, oil or liquefied natural gas tankers, and products used to construct or maintain pipelines used to transport oil or liquefied natural gas. The definition of "refined petroleum products" is now expanded to include diesel, gasoline, jet fuel (including naphtha-type and kerosene-type jet fuel), and aviation gasoline.
In addition to the sanctions set forth in the 1996 Iran Sanctions Act, the penalties that may be imposed under the new legislation include (1) prohibition of any transactions in foreign exchange in the United States; (2) prohibition of any U.S. banking transactions; and (3) prohibition on any property transactions in the United States. The Act requires the imposition of three (3) or more sanctions if the President determines that the person "knowingly, on or after the date of the enactment of . . . the Act" (i.e. – July 1, 2010), engaged in any of the conduct prohibited by the new legislation.
At present, it is uncertain when a party is deemed to have "provided" refined petroleum products under the Act, and how the Act will be applied to existing charters, and it is expected that the U.S. Treasury will issue further guidelines now that the legislation has come into force. It is clear, however, that parties will need to be cautious in their trading practices to ensure that the sanctions are not breached.
For more information concerning the Act and its application to the shipping industry, please do not hesitate to contact us at firstname.lastname@example.org