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106th Congress                                            Rept. 106-315
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
                   IRAN NONPROLIFERATION ACT OF 1999

                                _______
                                

 September 14, 1999.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Gilman, from the Committee on International Relations, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 1883]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on International Relations, to whom was 
referred the bill (H.R. 1883) to provide for the application of 
measures to foreign persons who transfer to Iran certain goods, 
services, or technology, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Iran Nonproliferation Act of 1999''.

SEC. 2. REPORTS ON PROLIFERATION TO IRAN.

  (a) Reports.--The President shall, at the times specified in 
subsection (b), submit to the Committee on International Relations of 
the House of Representatives and the Committee on Foreign Relations of 
the Senate a report identifying every foreign person with respect to 
whom there is credible information indicating that that person, on or 
after January 1, 1999, transferred to Iran--
          (1) goods, services, or technology listed on--
                  (A) the Nuclear Suppliers Group Guidelines for the 
                Export of Nuclear Material, Equipment and Technology 
                (published by the International Atomic Energy Agency as 
                Information Circular INFCIRC/254/Rev.3/Part 1, and 
                subsequent revisions) and Guidelines for Transfers of 
                Nuclear-Related Dual-Use Equipment, Material, and 
                Related Technology (published by the International 
                Atomic Energy Agency as Information Circular INFCIRC/
                254/Rev.3/Part 2, and subsequent revisions);
                  (B) the Missile Technology Control Regime Equipment 
                and Technology Annex of June 11, 1996, and subsequent 
                revisions;
                  (C) the lists of items and substances relating to 
                biological and chemical weapons the export of which is 
                controlled by the Australia Group;
                  (D) the Schedule One or Schedule Two list of toxic 
                chemicals and precursors the export of which is 
                controlled pursuant to the Convention on the 
                Prohibition of the Development, Production, Stockpiling 
                and Use of Chemical Weapons and on Their Destruction; 
                or
                  (E) the Wassenaar Arrangement list of Dual Use Goods 
                and Technologies and Munitions list of July 12, 1996, 
                and subsequent revisions; or
          (2) goods, services, or technology not listed on any list 
        identified in paragraph (1) but which nevertheless would be, if 
        they were United States goods, services, or technology, 
        prohibited for export to Iran because of their potential to 
        make a material contribution to the development of nuclear, 
        biological, or chemical weapons, or of ballistic or cruise 
        missile systems.
  (b) Timing of Reports.--The reports under subsection (a) shall be 
submitted not later than 90 days after the date of the enactment of 
this Act, not later than 6 months after such date of enactment, and not 
later than the end of each 6-month period thereafter.
  (c) Exceptions.--Any foreign person who--
          (1) was identified in a previous report submitted under 
        subsection (a) on account of a particular transfer, or
          (2) has engaged in a transfer on behalf of, or in concert 
        with, the Government of the United States,
 is not required to be identified on account of that same transfer in 
any report submitted thereafter under this section, except to the 
degree that new information has emerged indicating that the particular 
transfer may have continued, or been larger, more significant, or 
different in nature than previously reported under this section.
  (d) Submission in Classified Form.--When the President considers it 
appropriate, reports submitted under subsection (a), or appropriate 
parts thereof, may be submitted in classified form.

SEC. 3. APPLICATION OF MEASURES TO CERTAIN FOREIGN PERSONS.

  (a) Application of Measures.--Subject to sections 4 and 5, the 
President is authorized to apply with respect to each foreign person 
identified in a report submitted pursuant to section 2(a), for such 
period of time as he may determine, any or all of the measures 
described in subsection (b).
  (b) Description of Measures.--The measures referred to in subsection 
(a) are the following:
          (1) Executive order 12938 prohibitions.--The measures set 
        forth in subsections (b) and (c) of section 4 of Executive 
        Order 12938 shall be applied with respect to that person.
          (2) Arms export prohibition.--The United States Government 
        shall not sell to that foreign person any item on the United 
        States Munitions List as in effect on August 8, 1995, and shall 
        terminate sales to that person of any defense articles, defense 
        services, or design and construction services under the Arms 
        Export Control Act.
          (3) Dual use export prohibition.--The President shall deny 
        licenses and suspend existing licenses for the transfer to that 
        person of items the export of which is controlled under the 
        Export Administration Act of 1979 or the Export Administration 
        Regulations.
  (c) Effective Date of Measures.--Measures applied pursuant to 
subsection (a) shall be effective with respect to a foreign person no 
later than--
          (1) 90 days after the report identifying the foreign person 
        is submitted, if the report is submitted on or before the date 
        required by section 2(b);
          (2) 90 days after the date required by section 2(b) for 
        submitting the report, if the report identifying the foreign 
        person is submitted within 60 days after that date; or
          (3) on the date that the report identifying the foreign 
        person is submitted, if that report is submitted more than 60 
        days after the date required by section 2(b).
  (d) Publication in Federal Register.--The application of measures to 
a foreign person pursuant to subsection (a) shall be announced by 
notice published in the Federal Register.

SEC. 4. PROCEDURES IF MEASURES ARE NOT APPLIED.

  (a) Requirement To Notify Congress.--Should the President not 
exercise the authority of section 3(a) to apply any or all of the 
measures described in section 3(b) with respect to a foreign person 
identified in a report submitted pursuant to section 2(a), he shall so 
notify the Committee on International Relations of the House of 
Representatives and the Committee on Foreign Relations of the Senate no 
later than the effective date under section 3(c) for measures with 
respect to that person.
  (b) Written Justification.--Any notification submitted by the 
President under subsection (a) shall include a written justification 
describing in detail the facts and circumstances relating specifically 
to the foreign person identified in a report submitted pursuant to 
section 2(a) that support the President's decision not to exercise the 
authority of section 3(a) with respect to that person.
  (c) Submission in Classified Form.--When the President considers it 
appropriate, the notification of the President under subsection (a), 
and the written justification under subsection (b), or appropriate 
parts thereof, may be submitted in classified form.

SEC. 5. DETERMINATION EXEMPTING FOREIGN PERSON FROM SECTIONS 3 AND 4.

  (a) In General.--Sections 3 and 4 shall not apply to a foreign person 
15 days after the President reports to the Committee on International 
Relations of the House of Representatives and the Committee on Foreign 
Relations of the Senate that the President has determined, on the basis 
of information provided by that person, or otherwise obtained by the 
President, that--
          (1) the person did not, on or after January 1, 1999, 
        knowingly transfer to Iran the goods, services, or technology 
        the apparent transfer of which caused that person to be 
        identified in a report submitted pursuant to section 2(a);
          (2) the goods, services, or technology the transfer of which 
        caused that person to be identified in a report submitted 
        pursuant to section 2(a) did not materially contribute to 
        Iran's efforts to develop nuclear, biological, or chemical 
        weapons, or ballistic or cruise missile systems;
          (3) the person is subject to the primary jurisdiction of a 
        government that is an adherent to one or more relevant 
        nonproliferation regime, and the transfer of goods, services, 
        or technology which caused that person to be identified in a 
        report submitted pursuant to section 2(a) was made consistent 
        with the guidelines and parameters of all such relevant regimes 
        of which such government is an adherent; or
          (4) the government with primary jurisdiction over the person 
        has imposed meaningful penalties on that person on account of 
        the transfer of the goods, services, or technology which caused 
        that person to be identified in a report submitted pursuant to 
        section 2(a).
  (b) Submission in Classified Form.--When the President considers it 
appropriate, the determination and report of the President under 
subsection (a), or appropriate parts thereof, may be submitted in 
classified form.

SEC. 6. RESTRICTION ON EXTRAORDINARY PAYMENTS IN CONNECTION WITH THE 
                    INTERNATIONAL SPACE STATION.

  (a) Restriction on Extraordinary Payments in Connection With the 
International Space Station.--Notwithstanding any other provision of 
law, no agency of the United States Government may make extraordinary 
payments in connection with the International Space Station to the 
Russian Space Agency, any organization or entity under the jurisdiction 
or control of the Russian Space Agency, or any other organization, 
entity, or element of the Government of the Russian Federation, unless, 
during the fiscal year in which the extraordinary payments in 
connection with the International Space Station are to be made, the 
President has made the determination described in subsection (b), and 
reported such determination to the Committee on International Relations 
and the Committee on Science of the House of Representatives and the 
Committee on Foreign Relations and the Committee on Commerce, Science, 
and Transportation of the Senate.
  (b) Determination Regarding Russian Cooperation in Preventing 
Proliferation to Iran.--The determination referred to in subsection (a) 
is a determination by the President that--
          (1) it is the policy of the Government of the Russian 
        Federation to oppose the proliferation to Iran of weapons of 
        mass destruction and missile systems capable of delivering such 
        weapons;
          (2) the Government of the Russian Federation (including the 
        law enforcement, export promotion, export control, and 
        intelligence agencies of such government) has demonstrated and 
        continues to demonstrate through the implementation of concrete 
        steps a sustained commitment to seek out and prevent the 
        transfer to Iran of goods, services, and technology that could 
        make a material contribution to the development of nuclear, 
        biological, or chemical weapons, or of ballistic or cruise 
        missile systems, including through the imposition of meaningful 
        penalties on persons who make such transfers; and
          (3) neither the Russian Space Agency, nor any organization or 
        entity under the jurisdiction or control of the Russian Space 
        Agency, has, during the 1-year period prior to the date of the 
        determination pursuant to this subsection, made transfers to 
        Iran reportable under section 2(a) of this Act (other than 
        transfers with respect to which a determination pursuant to 
        section 5 has been or will be made).
  (c) Prior Notification.--Not less than 30 days before making a 
determination under subsection (b), the President shall notify the 
Committee on International Relations and the Committee on Science of 
the House of Representatives and the Committee on Foreign Relations and 
the Committee on Commerce, Science, and Transportation of the Senate of 
his intention to make such determination.
  (d) Written Justification.--A determination of the President under 
subsection (b) and a prior notification under subsection (c) shall 
include a written justification describing in detail the facts and 
circumstances supporting the President's conclusion.
  (e) Submission in Classified Form.--When the President considers it 
appropriate, a determination of the President under subsection (b), a 
prior notification under subsection (c), and a written justification 
under subsection (d), or appropriate parts thereof, may be submitted in 
classified form.
  (f) Service Module Exception.--(1) The National Aeronautics and Space 
Administration may make extraordinary payments that would otherwise be 
prohibited under this section to the Russian Space Agency, any 
organization or entity under the jurisdiction of the Russian Space 
Agency, or any subcontractor thereof for the construction, testing, 
preparation, delivery, launch, or maintenance of the Service Module 
if--
          (A) the President has notified Congress at least 5 days 
        before making such payments;
          (B) no report has been made under section 2 with respect to 
        an activity of the entity to receive such payment, and the 
        President has no information of any activity that would require 
        such a report; and
          (C) the United States will receive a share of ownership of 
        the Service Module commensurate with the value of the 
        extraordinary payments made.
  (2) For purposes of this subsection, the term ``maintenance'' means 
activities which cannot be performed by the National Aeronautics and 
Space Administration and which must be performed in order for the 
Service Module to provide environmental control, life support, and 
orbital maintenance functions which cannot be performed by an 
alternative means at the time of payment.
  (3) This subsection shall cease to be effective 60 days after a 
United States propulsion module is in place at the International Space 
Station.

SEC. 7. DEFINITIONS.

  For purposes of this Act, the following terms have the following 
meanings:
          (1) Extraordinary payments in connection with the 
        international space station.--The term ``extraordinary payments 
        in connection with the International Space Station'' means 
        payments in cash or in kind made or to be made by the United 
        States Government--
                  (A) for work on the International Space Station which 
                the Russian Government pledged at any time to provide 
                at its expense; or
                  (B) for work on the International Space Station, or 
                for the purchase of goods or services relating to human 
                space flight, that are not required to be made under 
                the terms of a contract or other agreement that was in 
                effect on January 1, 1999, as those terms were in 
                effect on such date.
          (2) Foreign person; person.--The terms ``foreign person'' and 
        ``person'' mean--
                  (A) a natural person that is an alien;
                  (B) a corporation, business association, partnership, 
                society, trust, or any other nongovernmental entity, 
                organization, or group, that is organized under the 
                laws of a foreign country or has its principal place of 
                business in a foreign country;
                  (C) any foreign governmental entity operating as a 
                business enterprise; and
                  (D) any successor, subunit, or subsidiary of any 
                entity described in subparagraph (B) or (C).
          (3) Executive order 12938.--The term ``Executive Order 
        12938'' means Executive Order 12938 as in effect on January 1, 
        1999.
          (4) Adherent to relevant nonproliferation regime.--A 
        government is an ``adherent'' to a ``relevant nonproliferation 
        regime'' if that government--
                  (A) is a member of the Nuclear Suppliers Group with 
                respect to a transfer of goods, services, or technology 
                described in section 2(a)(1)(A);
                  (B) is a member of the Missile Technology Control 
                Regime with respect to a transfer of goods, services, 
                or technology described in section 2(a)(1)(B), or is a 
                party to a binding international agreement with the 
                United States that was in effect on January 1, 1999, to 
                control the transfer of such goods, services, or 
                technology in accordance with the criteria and 
                standards set forth in the Missile Technology Control 
                Regime;
                  (C) is a member of the Australia Group with respect 
                to a transfer of goods, services, or technology 
                described in section 2(a)(1)(C);
                  (D) is a party to the Convention on the Prohibition 
                of the Development, Production, Stockpiling and Use of 
                Chemical Weapons and on Their Destruction with respect 
                to a transfer of goods, services, or technology 
                described in section 2(a)(1)(D); or
                  (E) is a member of the Wassenaar Arrangement with 
                respect to a transfer of goods, services, or technology 
                described in section 2(a)(1)(E).
          (5) Organization or entity under the jurisdiction or control 
        of the russian space agency.--(A) The term ``organization or 
        entity under the jurisdiction or control of the Russian Space 
        Agency'' means an organization or entity that--
                  (i) was made part of the Russian Space Agency upon 
                its establishment on February 25, 1992;
                  (ii) was transferred to the Russian Space Agency by 
                decree of the Russian Government on July 25, 1994, or 
                May 12, 1998;
                  (iii) was or is transferred to the Russian Space 
                Agency by decree of the Russian Government at any other 
                time before, on, or after the date of the enactment of 
                this Act; or
                  (iv) is a joint stock company in which the Russian 
                Space Agency has at any time held controlling interest.
          (B) Any organization or entity described in subparagraph (A) 
        shall be deemed to be under the jurisdiction or control of the 
        Russian Space Agency regardless of whether--
                  (i) such organization or entity, after being part of 
                or transferred to the Russian Space Agency, is removed 
                from or transferred out of the Russian Space Agency; or
                  (ii) the Russian Space Agency, after holding a 
                controlling interest in such organization or entity, 
                divests its controlling interest.

                         Background and Purpose

    The Committee on International Relations believes that one 
of the most serious threats to the national security of the 
United States arises from the continued transfer to Iran of 
goods, services, and technology relevant to the development of 
weapons of mass destruction and ballistic and cruise missile 
systems capable of delivering such weapons. The Clinton 
Administration also has recognized the importance of stopping 
such proliferation to Iran, and has made this issue a priority 
in U.S. relations with Russia.
    The Committee sought to address this threat during the 
105th Congress by approving the Iran Missile Proliferation 
Sanctions Act, H.R. 1883, in October of 1997. This legislation 
subsequently was approved by the House and the Senate, and 
vetoed by the President on June 23, 1998.
    On July 15, 1998, shortly before a possible vote in the 
House of Representatives on overriding the President's veto, 
the Vice President announced that the United States would 
impose sanctions on seven Russian entities that were subject to 
``special investigations'' by the Russian government for 
possibly transferring weapons technology to Iran. The Russian 
government stated two months later that these ``special 
investigations'' failed to uncover any evidence of misconduct 
by all but two entities. Nevertheless, the U.S. sanctions on 
all seven entities remain in effect. In addition, on January 
12, 1999, the Clinton Administration announced that U.S. 
sanctions would be imposed on three additional Russian entities 
for making material contributions to Iran's nuclear weapons and 
missile programs.
    Notwithstanding the Administration's diplomatic efforts, 
the threat of U.S. legislation, and the imposition of sanctions 
by the Administration on ten Russian entities, entities in 
Russia and elsewhere have continued to transfer dangerous 
weapons technology to Iran without significant interruption. 
Many analysts believe that the volume and pattern of continued 
transfers from Russia could not exist without the acquiescence, 
if not encouragement, of at least some elements of the Russian 
government.
    In order to address this persistent problem, the Committee 
has again developed legislation designed to give the 
Administration additional tools with which to address the 
problem and the countries that are transferring dangerous 
weapons technology to Iran powerful new reasons to stop 
proliferating. The legislation also will enhance significantly 
the ability of Congress to monitor proliferation to Iran and 
oversee Administration efforts to combat it.
    The Iran Nonproliferation Act of 1999 takes account of some 
of the concerns expressed by the Administration with regard to 
the Iran Missile Proliferation Sanctions Act. The Iran 
Nonproliferation Act is not a mandatory sanctions bill. It 
applies principally to transfers of goods, services, and 
technology that appear on the official control lists of the 
multilateral nonproliferation regimes. It contains exceptions 
for transfers that were made unknowingly, that did not 
contribute materially to Iran's weapons programs, that were 
consistent with existing multilateral regimes, and where the 
transferring entity is subject to meaningful penalties. It is, 
however, broader in scope than the Iran Missile Proliferation 
Sanctions Act, applying not only to transfers of missile 
technology, but also to transfers of technology that have the 
potential of making a material contribution to the development 
of nuclear, chemical, biological, and certain advanced 
conventional weapons. In addition, it seeks to create new 
incentives for the Russian Space Agency to cooperate in efforts 
to stem the proliferation of weapons technology to Iran.
    The Committee believes that enactment of the Iran 
Nonproliferation Act will make a vital contribution to efforts 
to reverse the proliferation of dangerous weapons technology to 
Iran.

                            COMMITTEE ACTION

    H.R. 1883 was introduced on May 20, 1999 by Mr. Gilman. It 
was referred to the Committee on International Relations, and 
in addition to the Committee on Science, for a period to be 
subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the 
jurisdiction of the committee concerned.
    The Committee on International Relations marked up the bill 
in open session, pursuant to notice, on September 9, 1999. An 
amendment in the nature of a substitute was offered by Mr. 
Gilman on behalf of himself and Mr. Gejdenson. An amendment to 
the amendment in the nature of a substitute was offered by Mr. 
Brady to conform a provision of the bill to the text as 
approved by the Subcommittee on Space and Aeronautics of the 
Committee on Science, by permitting payments otherwise barred 
by the bill to the Russian Space Agency in extraordinary 
circumstances relating to the maintenance of the Service 
Module. The Brady amendment was agreed to by voice vote. The 
amendment in the nature of a substitute was agreed to by 
unanimous consent. The Full Committee agreed to a motion 
offered by Mr. Bereuter to favorablyreport the bill to the 
House of Representatives, by record vote of 33 to 0.

            Record Votes on Amendments and Motion to Report

    Clause (3)(b) of rule XIII of the Rules of the House of 
Representatives requires that the results of each record vote 
on an amendment or motion to report, together with the names of 
those voting for or against, be printed in the committee 
report. The following votes developed during the course of the 
consideration of H.R. 1883:
    Bereuter motion to order the bill reported with the 
recommendation that the bill, as amended, to pass:
    Voting yes: Gilman, Goodling, Bereuter, Smith, Ros-
Lehtinen, Ballenger, Rohrabacher, Royce, Chabot, Sanford, 
Salmon, Houghton, McHugh, Brady, Gillmor, Radanovich, Cooksey, 
Tancredo, Gejdenson, Lantos, Berman, Ackerman, Menendez, Brown, 
Danner, Hilliard, Sherman, Rothman, Davis, Pomeroy, Lee, 
Crowley, and Hoeffel.
    Voting no: No members.
    The motion passed 33 ayes, 0 noes.

                             Other Matters


                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                Committee on Government Reform Findings

    Clause 3(c)(4) of rule XIII of the Rules of the House of 
Representatives requires each committee report to contain a 
summary of the oversight findings and recommendations made by 
the Government Reform Committee pursuant to clause 4(c)(2) of 
rule X of those Rules. The Committee on International Relations 
has received no such findings or recommendations from the 
Committee on Government Reform.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                   Constitutional Authority Statement

    In compliance with clause 3(d)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee cites the 
following specific powers granted to the Congress in the 
Constitution as authority for enactment of H.R. 1883 as 
reported by the Committee: Article I, section 8, clause 1 
(relating to providing for the common defense and general 
welfare of the United States); Article I, section 8, clause 3 
(relating to the regulation of commerce with foreign nations); 
and Article I, section 8, clause 18 (relating to making all 
laws necessary and proper for carrying into execution powers 
vested by the Constitution in the government of the United 
States).

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1974 
requires the report of any committee on a bill or joint 
resolution to include a committee statement on the extent to 
which the bill or joint resolution is intended to preempt state 
or local law. The Committee states that H.R. 1883 is not 
intended to preempt any state or local law.

New Budget Authority and Tax Expenditures, Congressional Budget Office 
             Cost Estimate, and Federal Mandates Statements

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives requires each committee report that accompanies 
a measure providing new budget authority, new spending 
authority, or new credit authority or changing revenues or tax 
expenditures to contain a cost estimate, as required by section 
308(a)(1) of the Congressional Budget Act of 1974, as amended, 
and, when practicable with respect to estimates of new budget 
authority, a comparison of the estimated funding level for the 
relevant program (or programs) to the appropriate levels under 
current law.
    Clause 3(d) of rule XIII of the Rules of the House of 
Representatives requires committees to include their own cost 
estimates in certain committee reports, which include, 
whenpracticable, a comparison of the total estimated funding level for 
the relevant program (or programs) with the appropriate levels under 
current law.
    Clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives requires the report of any committee on a 
measure which has been approved by the Committee to include a 
cost estimate prepared by the Director of the Congressional 
Budget Office, pursuant to section 403 of the Congressional 
Budget Act of 1974, if the cost estimate is timely submitted.
    Section 423 of the Congressional Budget Act requires the 
report of any committee on a bill or joint resolution that 
includes any Federal mandate to include specific information 
about such mandates. The Committee states that H.R. 1883 does 
not include any Federal mandate. The Committee states further 
that H.R. 1883 is necessary for the national security and thus 
is excluded from the application of Part B of the Congressional 
Budget Act by operation of Section 422(5) of that Act.
    The Committee adopts the cost estimate of the Congressional 
Budget Office as its own submission of any new required 
information with respect to H.R. 1883 on new budget authority, 
new spending authority, new credit authority, or an increase or 
decrease in the national debt. It also adopts, subject to the 
preceding paragraph, the estimate of Federal mandates prepared 
by the Director of the Congressional Budget Office pursuant to 
section 423 of the Unfunded Mandates Reform Act. The estimate 
and report which has been received is set out below.

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 14, 1999.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office (CBO) 
has prepared the enclosed cost estimate for H.R. 1883, the Iran 
Nonproliferation Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Joseph C. 
Whitehill and Kathleen Gramp.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1883--Iran Nonproliferation Act of 1999

    H.R. 1883 would require the President to prepare biannual 
reports identifying any foreign country, corporation, or 
individual that has transferred sensitive nuclear, chemical, 
biological, or missile technology, goods, or services to Iran. 
The President would be required to impose sanctions against 
those responsible for the transfer or report the reasons for 
not doing so. In addition, the bill would make payments to 
Russian entities for certain goods or services related to the 
International Space Station contingent upon Presidential 
determinations that Russia is complying with the 
nonproliferation policies outlined in the bill.
    H.R. 1883 would increase the number and complexity of 
reports required from the President. Based on information from 
the Administration, CBO estimates that preparing the reports 
would involve the work of 10 to 15 full-time personnel and 
would cost $1 million to $2 million per year, assuming the 
appropriation of the necessary funds. The determinations 
required by the bill could delay the timing of discretionary 
outlays by the National Aeronautics and Space Administration 
(NASA) if additional funds are appropriated for payments to 
Russia for the Space Station, but CBO cannot project such 
future appropriations. NASA does not expect to make any 
additional payments to Russia from its fiscal year 1999 
appropriations.
    Section 4 of the Unfunded Mandates Reform Act excludes from 
the application of that act any legislative provisions that are 
necessary for the national security. CBO has determined that 
the provisions of H.R. 1883 either fall within that exclusion 
or do not contain any private-sector or intergovernmental 
mandates.
    The estimate was prepared by Joseph C. Whitehill and 
Kathleen Gramp. This estimate was approved by Robert A. 
Sunshine, Assistant Director for Budget Analysis.

                      section-by-section analysis

Section 1. Short title

    Provides that the Act may be cited as the ``Iran 
Nonproliferation Act of 1999''.

Section 2. Reports on proliferation to Iran

    Requires the President to submit periodic reports on 
proliferation to Iran to the Committee on International 
Relations of the House of Representatives and the Committee on 
Foreign Relations of the Senate. Such reports are required to 
be submitted not later than 90 days after the date of 
enactment, not later than six months after the date of 
enactment, and not later than the end of each six-month period 
thereafter.
    Each such report must identify every foreign person with 
respect to whom there is credible information indicating that 
that person, on or after January 1, 1999, transferred to Iran 
goods, services, or technology--
          (1) listed on the respective control lists of the 
        Nuclear Suppliers Group, the Missile Technology Control 
        Regime, the Australia Group, the Chemical Weapons 
        Convention, or the Wassenaar Arrangement, or
          (2) not listed on one of the control lists referred 
        to in paragraph (1) above, but which nevertheless would 
        be, if they were United States goods, services, or 
        technology, prohibited for export to Iran because of 
        their potential to make a material contribution to the 
        development of nuclear, biological, or chemical 
        weapons, or of ballistic or cruise missile systems.
    The only foreign persons otherwise required to be 
identified in a report under this section who need not be so 
identified are any foreign persons who--
          (1) were identified in a previous report submitted 
        under this section; or
          (2) have engaged in a transfer on behalf of, or in 
        concert with, the Government of the United States.
    The exception to the requirement to identify foreign 
persons otherwise required to be identified under this section 
extends only to the same transfer that gave rise to the 
exception. Credible information regarding any additional 
transfer by that same foreign person gives rise to a new and 
separate requirement to identify that foreign person in a 
report under this section, which is overcome only if that 
additional transfer independently satisfies the requirements 
for an exception under this section.
    The ``credible information'' requirement of this section is 
intended to be a very low evidentiary standard. For purposes of 
this Act, ``credible information'' is information that is 
sufficiently believable that a reasonable person would conclude 
that there is a substantial possibility that a foreign person 
may have transferred goods, services, or technology of the type 
described in subsection (a) of this section. ``Credible 
information'' is information that induces a firm suspicion but, 
by itself, may not be sufficient to permit a reasonable person 
to conclude with confidence that a foreign person has 
transferred goods, services, or technology subject to this Act.
    The Committee adopts this very low evidentiary standard 
because of its concern with the manner in which other counter-
proliferation laws have been applied. Under these laws, 
including section 73 of the Arms Export Control Act (relating 
to missile proliferation), section 81 of the Arms Export 
Control Act (relating to chemical and biological weapons 
proliferation), and the Iran-Iraq Arms Non-Proliferation Act, 
sanctions for proscribed transfers need not be imposed until 
the President determines that such a transfer in fact occurred. 
The standard for application of sanctions under these laws was 
intended to amount to a ``preponderance of the evidence'' 
standard. In practice, however, the Executive branch generally 
has delayed imposing sanctions until it has arrived at a much 
higher degree of certainty. The Committee believes that this 
practice has undermined the effectiveness of our non-
proliferation laws by blunting their intended deterrent effect. 
In order to ensure the effectiveness of this Act, and in light 
of the fact that foreign persons identified in reports 
submitted pursuant to this section are not subject to mandatory 
sanctions, the Committee has adopted a lower evidentiary 
standard than a ``preponderance of the evidence'' standard.

Section 3. Application of measures to certain foreign persons

    Authorizes the President to apply with respect to each 
foreign person who has been identified in a report under 
section 2, for such period of time as he may determine, any or 
all of the following measures--
          (1) the measures set forth in subsections (b) and (c) 
        of section 4 of Executive Order 12938 (prohibiting 
        procurement from that foreign person by the United 
        States Government and prohibiting the provision of 
        assistance to that foreign person by the United States 
        Government);
          (2) prohibition of sales to that foreign person of 
        items on the United States Munitions List as in effect 
        on August 8, 1995, and termination of sales of defense 
        articles, defense services, and design and construction 
        services under the Arms Export Control Act; and
          (3) denial of licenses and suspension of existing 
        licenses for the transfer to that person of items the 
        export of which is controlled under the Export 
        Administration Act of 1979 or the Export Administration 
        Regulations.
    Because of the very low evidentiary standard in section 2, 
this section does not impose mandatory sanctions, but gives 
discretion subject to section 4 as to whether and for how long 
to apply these measures.
    Measures applied pursuant to this section generally shall 
be effective no later than 90 days after the report identifying 
the foreign person is required to be submitted pursuant to 
section 2.
    The application of measures pursuant to this section shall 
be announced by notice published in the Federal Register.

Section 4. Procedures if measures are not applied

    If the President does not exercise the authority of section 
3 to apply measures with respect to a foreign person identified 
in a report submitted pursuant to section 2, he is required to 
so notify the Committee on International Relations of the House 
of Representatives and the Committee on Foreign Relations of 
the Senate no later than the effective date under section 3 for 
measures with respect to that person. Any such notification 
shall include a written justification for the President's 
decision not to apply measures with respect to that person.

Section 5. Determination exempting foreign person from sections 3 and 4

    This section provides a mechanism for exempting foreign 
persons from the procedures of sections 3 and 4 when the 
President determines that certain facts, akin to affirmative 
defenses, have been established. Specifically, sections 3 and 4 
shall not apply to a foreign person 15 days after the President 
reports to the Committee on International Relations of the 
House of Representatives and the Committee on Foreign Relations 
of the Senate that the President has determined, on the basis 
of information provided by that person, or otherwise obtained 
by the President, that--
          (1) the foreign person either did not transfer to 
        Iran, or did not knowingly transfer to Iran, the goods, 
        services, or technology the possible transfer of which 
        caused that person to be identified in a report 
        submitted pursuant to section (2);
          (2) the goods, services, or technology transferred by 
        the foreign person did not materially contribute to 
        Iran's efforts to develop nuclear, biological, or 
        chemical weapons, or ballistic or cruise missile 
        systems;
          (3) the foreign person is subject to the primary 
        jurisdiction of a government that is an adherent to one 
        or more relevant nonproliferation regime, and the 
        transfer of goods, services, or technology to Iran by 
        that foreign person was made consistent with the 
        guidelines and parameters of all such relevant regimes 
        of which such government is an adherent; or
          (4) the government with primary jurisdiction over the 
        foreign person has imposed meaningful penalties on that 
        person on account of the transfer by that person of 
        goods, services, or technology to Iran.
    The authority of this section may be utilized at any time 
before the foreign person is identified in a report submitted 
pursuant to section 2, when such a report is submitted, or any 
time after such a report is submitted.

Section 6. Restriction on extraordinary payments in connection with the 
        International Space Station

    Prohibits extraordinary payments in connection with the 
International Space Station by the United States Government to 
the Russian Space Agency and other specified entities during 
any fiscal year in which the President has not made a 
determination regarding Russian cooperation in preventing 
proliferation to Iran. In order to make such payments during a 
fiscal year, the President must determine that--
          (1) it is the policy of the Government of the Russian 
        Federation to oppose the proliferation to Iran of 
        weapons of mass destruction and missile systems capable 
        of delivering such weapons;
          (2) the Government of the Russian Federation 
        (including the law enforcement, export promotion, 
        export control, and intelligence agencies of such 
        government) has demonstrated and continues to 
        demonstrate through the implementation of concrete 
        steps a sustained commitment to seek out and prevent 
        the transfer to Iran of goods, services, and technology 
        that could make a material contribution to the 
        development of nuclear, biological, or chemical 
        weapons, or of ballistic or cruise missile systems, 
        including through the imposition of meaningful 
        penalties on persons who makesuch transfers; and
          (3) neither the Russian Space Agency, nor any 
        organization or entity under the jurisdiction or 
        control of the Russian Space Agency, has, during the 1-
        year period prior to the date of the determination 
        pursuant to this subsection, made transfers to Iran 
        reportable under section 2 (other than transfers with 
        respect to which a determination pursuant to section 5 
        has been or will be made).
    The President shall notify the Committees on International 
Relations and Science of the House of Representatives and the 
Committees on Foreign Relations and Commerce, Science, and 
Transportation of the Senate of his intention to make any 
determination pursuant to this section at least 30 days before 
making such a determination. Any determination or prior 
notification under this section shall be accompanied by a 
written justification.
    The Committee recognizes that, under this section, the 
Russian Space Agency could be precluded from entering into 
certain new contracts with the United States Government as a 
result of actions by organizations or entities that are 
technically under the jurisdiction or control of the Russian 
Space Agency, but over which the Russian Space Agency does not 
exercise day-to-day control. The Committee believes this is 
warranted by the magnitude of the threat to international peace 
and security posed by continued proliferation of weapons 
technology to Iran from Russia. It is the hope of the Committee 
that this section will give the Russian Space Agency more 
incentive than it has had in the past to seek to prevent 
transfers to Iran of sensitive goods, services, and technology 
from organizations and entities under the jurisdiction or 
control of the Russian Space Agency.
    The Committee believes that there are at least three levels 
at which the Russian Space Agency can act to prevent such 
transfers. First, it may have the legal or operational 
authority over certain organizations and entities. With respect 
to such entities, the Russian Space Agency can simply direct 
that they not proliferate to Iran.
    Second, the Russian Space Agency has economic leverage 
(including with respect to purchasing and the sale or transfer 
of goods and technology) over many organizations and entities, 
even if it does not have legal or operational authority over 
them. It is the hope of the Committee that it will become the 
policy of the Russian Space Agency that its economic relations 
with any business entity in Russia that proliferates to Iran 
will be irreparably harmed. As additional information is 
provided on the transfer of goods, services, and technology to 
Iran, the Committee hopes the President will be able to provide 
more information regarding the relationship between the Russian 
Space Agency and entities under its jurisdiction or control.
    Third, in instances where the legal authority and economic 
leverage of the Russian Space Agency are insufficient to 
prevent an organization or entity under its jurisdiction or 
control from proliferating to Iran, the Russian Space Agency 
can still become a proponent within the Russian government of 
strong law enforcement action against such entities. If the 
Russian government imposes meaningful penalties on a person who 
has proliferated to Iran, the authority of section 5(a)(4) may 
be exercised with respect to that person, and this will ensure 
that the Russian Space Agency suffers no adverse consequences 
as a result of the actions of that person.

Section 7. Definitions

    Provides definitions of the terms ``extraordinary payments 
in connection with the International Space Station'', ``foreign 
person'', ``person'', ``Executive Order 12938'', ``adherent to 
a relevant nonproliferation regime'', and ``organization or 
entity under the jurisdiction or control of the Russian Space 
Agency'' for purposes of this Act.