Senate Passes Comprehensive Iran Sanctions, Accountability and Divestment Act

In a surprise move, the Senate this evening passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act (S. 2799) on a voice vote after very little debate.

The vote occurred only a day after Senators John McCain (R-AZ), Evan Bayh (D-IN), Jon Kyl (R-AZ), Joe Lieberman (I-CT), Chuck Schumer (D-NY), Robert Casey (D-PA), Johnny Isakson (R-GA), Ben Cardin (D-MD), and David Vitter (R-LA) sent a letter to President Obama warning that his own year-end deadline for diplomacy with Iran expired and urging the President to make use of existing authorities under U.S. law to pursue "parallel and complementary" measures to increase pressure against Iran.

The Senate bill must now be reconciled with the Iran Refined Petroleum Sanctions Act of 2009 (H.R. 2194), which passed the House by a wide margin in December.

While the bills include many similar concepts, the Senate bill contains several additional provisions, including some export control-related provisions, that are not included in the House bill that will have to be reconciled in a conference committee. In addition, Senator McCain reportedly wants to amend the bill to impose sanctions targeted at Iranian Government officials who have committed human rights abuses or acts of violence against civilians that engage in peaceful political activity.

As we previously reported, both versions of the Iran sanctions bills have been criticized in a variety of circles, including the U.S. business community, groups that oppose the imposition of sanctions that would adversely impact average Iranians and would hamper the President's ability to conduct foreign affairs by requiring the imposition of mandatory additional sanctions. In addition, the bills have been criticized for their extraterritorial application of sanctions.

In addition to the gasoline and refinery equipment sales provisions in the House bill, S. 2799 would, among other things:

1. Restore the prohibitions on imports of carpets and certain food products from Iran that were lifted in 2000;

2. Would make U.S. parent companies liable for the acts of their non-U.S. subsidiaries that engage in transactions with Iran;

3. Would prohibit the U.S. Government from entering into contracting with firms that sell equipment to Iran which can be used to censor or monitor Internet usage in Iran;

4. Require the Director of National Intelligence to submit a report to the Secretary of Commerce, the Secretary of State, the Secretary of the Treasury and the appropriate congressional committees that identifies all countries determined to be of concern with respect to transshipment, reexportation, or diversion of items subject to the provisions of the Export Administration Regulations to Iran.

5. Authorizes the imposition of a new licensing requirement for exports of certain products to countries designated as “Destinations of Possible Diversion Concern.”

6. Authorizes state or local governments to divest from companies that engage in certain enery sector investments in Iran.