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107th Congress                                            Rept. 107-107
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

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



 
                       ILSA EXTENSION ACT OF 2001

                                _______
                                

 July 16, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Thomas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1954]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 1954) to extend the authorities of the Iran and 
Libya Sanctions Act of 1996 until 2006, having considered the 
same, report favorably thereon with amendments and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
 I. Introduction......................................................2
        A. Background and Summary................................     2
        B. Legislative History...................................     3
II. Explanation of the Bill...........................................3
III.Vote of the Committee.............................................6

IV. Budget Effects of the Bill........................................6
        A. Committee Estimates of Budgetary Effects..............     6
        B. Budget Authority and Tax Expenditures.................     6
        C.  Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     6
 V. Other Matters to be Discussed Under the Rules of the House........8
        A. Committee Oversight Findings and Recommendations......     8
        B. Summary of Findings and Recommendations of the 
            Committee on Government Reform and Oversight.........     8
        C. Constitutional Authority Statement....................     8
VI. Changes in Existing Law Made by the Bill, as Reported.............8

    The amendments are as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``ILSA Extension Act of 2001''.

SEC. 2. REPORTS REQUIRED.

  Section 10 of the Iran and Libya Sanctions Act of 1996 (Public Law 
104-172; 50 U.S.C. 1701 note) is amended--
          (1) by redesignating subsection (b) as subsection (c); and
          (2) by inserting after subsection (a) the following:
  ``(b) Report on Effectiveness of Actions Under This Act.--Not later 
than 18 months after the date of the enactment of the ILSA Extension 
Act of 2001, the President shall transmit to Congress a report that 
describes--
          ``(1) the extent to which actions relating to trade taken 
        pursuant to this Act--
                  ``(A) have been effective in achieving the objectives 
                of section 3 and any other foreign policy or national 
                security objectives of the United States with respect 
                to Iran and Libya; and
                  ``(B) have affected humanitarian interests in Iran 
                and Libya, the country in which the sanctioned person 
                is located, or in other countries; and
          ``(2) the impact of actions relating to trade taken pursuant 
        to this Act on other national security, economic, and foreign 
        policy interests of the United States, including relations with 
        countries friendly to the United States, and on the United 
        States economy.''.

SEC. 3. EXTENSION OF IRAN AND LIBYA SANCTIONS ACT OF 1996.

  Section 13(b) of the Iran and Libya Sanctions Act of 1996 (Public Law 
104-172; 50 U.S.C. 1701 note) is amended by striking ``5 years'' and 
inserting ``10 years''.

SEC. 4. RESOLUTION TO TERMINATE IRAN AND LIBYA SANCTIONS ACT OF 1996.

  The Iran and Libya Sanctions Act of 1996 (Public Law 104-172; 50 
U.S.C. 1701 note) is amended by inserting after section 13 the 
following:

``SEC. 13A. RESOLUTION TO TERMINATE ACT.

  ``(a) In General.--Notwithstanding section 13(b) of this Act, at any 
time after the date on which the report described in section 10(b) is 
transmitted to Congress, this Act shall cease to be effective if a 
joint resolution described in subsection (b) is enacted into law.
  ``(b) Joint Resolution Described.--For purposes of this section, the 
term `joint resolution' means only a joint resolution of the two Houses 
of Congress, the matter after the resolving clause of which is as 
follows: `That the Iran and Libya Sanctions Act of 1996 (50 U.S.C 1701 
note; Public Law 104-172) shall cease to be effective beginning on the 
date of the enactment of this joint resolution.'.
  ``(c) Procedures in House and Senate.--The provisions of subsections 
(b) through (f) of section 152 of the Trade Act of 1974 shall apply to 
a joint resolution described in this section.''.

  Amend the title so as to read:

      A bill to extend the authorities of the Iran and Libya 
Sanctions Act of 1996 until 2006, and for other purposes.

                            I. INTRODUCTION


                       A. Background and Summary

    The Iran and Libya Sanctions Act (P.L. 104-172), approved 
August 5, 1996, mandates sanctions against foreign investment 
in the petroleum sectors of Iran and Libya, as well as exports 
of weapons, oil equipment, and aviation equipment to Libya in 
violation of United Nations Resolutions 748 and 883.
    In general, ILSA requires the President to impose at least 
two out of a menu of six sanctions on foreign companies that 
make an investment of $20 million in one year in Iran's energy 
sector, or $40 million in one year in Libya's energy sector. 
Prior to the suspension of U.N. sanctions against Libya, which 
was triggered by Libya's handover of the two Pan Am 103 
suspects in April 1999, foreign firms were also subject to 
sanctions if they exported technology to Libya that could be 
used to develop its energy sector, to develop weapons of mass 
destructions (WMD), to enhance its conventional military, or to 
maintain its aviation capabilities. These exports had been 
banned under Pan Am 103 related Security Council Resolutions 
748 and 883.
    There are two grounds on which the President may waive 
sanctions with respect to Iran. First, under Section 4(c) of 
P.L. 104-172, the President may waive sanctions for investment 
in Iran for firms of countries that join a multilateral 
sanctions regime, including economic sanctions, against Iran. 
(Section 4(d) lowers the threshold of permissible investment 
from $40 million to $20 million for firms of countries that do 
not join such a regime.) Under ILSA, the waiver for a 
multilateral sanctions regime and the enhanced sanction does 
not apply to Libya. Second, under Section 9(c) of the law, the 
President may waive sanctions on the grounds that doing so is 
important to the U.S. national interest. This waiver applies to 
Iran and Libya.
    H.R. 1954, the ``ILSA Extension Act of 2001'' was ordered 
reported by the Committee on International Relations on June 
20, 2001, and sequentially referred to the Committee on Ways 
and Means. As reported by the Committee on Ways and Means, H.R. 
1954 would extend the Act for five years. The Committee 
approved an amendment that would establish a review mechanism 
to allow Congress to consider termination of the Act after the 
receiving a Presidential report on the effectiveness of the 
sanctions and assessing their impact on other foreign policy 
and national security interest of the United States.

                         B. Legislative History

    H.R. 1954, The ``ILSA Extension Act of 1996'' was ordered 
reported by the Committee on International Relations on June 
20, 2001 and sequentially referred to the Committee on Ways and 
Means.
    On July 12, 2001, the full Committee met to consider H.R. 
1954. At that time, the Committee adopted an amendment in the 
nature of a substitute offered by Chairman Thomas. The bill, as 
amended, was ordered favorably reported by voice vote.

                      II. EXPLANATION OF THE BILL


                               SECTION 1

    The title of the bill is the ``Iran and Libya Sanctions 
Extension Act of 2001.''

                      SECTION 2--Reports Required

Present law

    P.L. 104-172, the Iran and Libya Sanctions Act of 1996, 
requires the President to report periodically to the 
appropriate congressional Committees on: (1) multilateral 
efforts to pressure Iran to cease its weapons of mass 
destruction and missile weapons programs and support of 
international terrorism; (2) efforts to persuade other 
governments to ask Iran to reduce the presence of Iranian 
diplomats and other personnel and withdraw any of them who 
participated in the takeover of the United States embassy in 
Tehran on November 4, 1979; (3) the extent to which the 
International Atomic Energy Agency has established regular 
inspections of all nuclear facilities in Iran; and (4) Iran's 
use of Iranian diplomats and representatives of other 
institutions of Iran to promote acts of international terrorism 
or to develop Iran's nuclear, chemical, biological, and missile 
weapons programs. P.L. 104-172 also requires the President to 
ensure continued reports to the Congress on Iran's: (1) nuclear 
and other military capabilities; and (2) support for acts of 
international terrorism.

Explanation of the provision

    Section 2 requires a Presidential report eighteen months 
after enactment on the effectiveness of the legislation, after 
which, Congress may reevaluate results of the Act and consider 
action to terminate it.
    The report would contain an assessment of the effectiveness 
of the actions relating to trade taken to achieve the 
objectives of P.L. 104-172, as well as any other U.S. foreign 
policy or national security objectives with respect to Iran and 
Libya. The reporting requirement would also instruct the 
Administration to examine the impact of this law on 
humanitarian interests and on national security, economic, and 
foreign policy interests of the United States, including 
relations with countries friendly to the United States, and on 
the U.S. economy.

Reason for change

    The Members recognize that efforts by Iran and Libya to 
acquire weapons of mass destruction and the means to deliver 
them, and their support of acts of international terrorism, are 
very real problems and endanger the national security and 
foreign policy interests of the United States. However, the 
Committee questions the effectiveness of trade-related actions, 
which are within the Committee's jurisdiction, to achieve the 
objectives of this law. The Committee agrees with the 
Administration that trade sanctions should be reviewed 
frequently and that legislation extending the law for five 
years without a formal review would perpetuate a sanctions 
regime of doubtful utility. In addition, the Committee shares 
the Administration's view that the imposition of sanctions 
under the Act could precipitate tensions with key allies whose 
cooperation is needed to achieve changes in the rogue behavior 
of the Governments of Iran and Libya. The Administration is 
currently undertaking a policy review that will include 
examining the cost and effectiveness of sanctions efforts in 
general and with respect to this law. In addition, the new 
Administration is also conducting a policy review to assess 
recent political developments in Iran and to assess the 
``effectiveness of the range of policies in place'' with 
respect to this country. The Committee looks forward to the 
results of these to reviews and to the President's 
recommendation on whether the Iran and Libya Sanctions Act 
should be extended.
    In short, the reporting requirement would allow the 
Administration and Congress to examine the costs, impact, and 
effectiveness of actions relating to trade in changing Iranian 
and Libyan behavior with respect to the acquisition of weapons 
of mass destruction and support for acts of international 
terrorism. If, after examining the required report, both Houses 
of Congress enact a joint resolution under the expedited 
procedures, the legislation would terminate.
    It is the Committee's intent that the Administration submit 
the report no sooner then 18 months after date of enactment and 
that the resolution be considered only after that point. The 
Committee believes that this schedule would provide an 
opportunity for review of the sanctions regime that maximizes 
the report's utility and validity.

        SECTION 3--Extension of the Iran and Libya Sanctions Act

Present law

    P.L. 104-172 expires on August 4, 2001.

Explanation of provision

    Section 3 would extend the Iran and Libya Sanctions Act for 
five years.

Reason for change

    The Government of Iran continues to sponsor international 
terrorism, developing weapons of mass destruction and otherwise 
engaging in behavior adverse to the national interest of the 
United States and to world stability. Likewise the failure of 
the Government of Libya to comply with United Nations 
Resolution 731, and its efforts to acquire weapons of mass 
destruction constitute a threat to international peace and 
security that endangers the national security of the United 
States.
    The Committee's intent is to extend the law but to combine 
it with a reporting requirement and an opportunity to terminate 
the sanctions if they are not achieving their purpose. The 
Committee has long opposed unilateral sanctions and is willing 
to support an extension here only to give the new 
Administration an opportunity to develop a policy toward Iran 
and Libya that is more effective than sanctions. It is the 
Committee's hope that at the time the report is done, the 
Administration is able to present a more effective policy so 
that Congress can then move to terminate the sanctions.

      SECTION 4--Resolution to Terminate Iran and Libya Sanctions

Present law

    No provision.

Explanation of provision

    Section 4 amends section 13 of P.L. 104-172 to establish 
expedited procedures under which Congress may consider 
termination of the Act. At anytime after the date on which the 
report described above relating to the effectiveness of actions 
taken under thisAct is transmitted to Congress, the Iran and 
Libya Sanctions Act shall cease to be effective if a joint resolution 
is enacted into law. The procedures of Section 152 of the Trade Act of 
1974 would apply to consideration of a resolution to terminate the Act. 
Under Section 152, any member of Congress may introduce a non-amendable 
termination resolution. If the House Ways and Means Committee or the 
Senate Finance Committee has not reported the resolution by the end of 
30 days after its introduction, it would be in order to discharge the 
Committee of the resolution and any other resolution introduced with 
respect to the same matter. A motion to proceed to consideration of a 
resolution would be highly privileged and debate on the resolution 
would be limited to not more than 20 hours.

Reason for change

    The Committee believes that efforts by Iran and Libya to 
acquire weapons of mass destruction and the means to deliver 
them, and their support of acts of international terrorism, are 
very real problems which endanger the national security and 
foreign policy interests of the United States. Recognizing 
that, after five years, the Iran and Libya Sanctions Act has 
failed in achieving its stated objectives, the Committee has 
many questions about the utility of imposing unilateral and 
extraterritorial trade sanctions against foreign firms (such as 
allies like Canada and Japan) as a method of achieving 
behavioral changes by the Governments of Iran and Libya.
    The new reporting requirement would allow the 
Administration and Congress to examine the costs, impact, and 
effectiveness of actions relating to trade in changing Iranian 
and Libyan behavior with respect to the acquisition of weapons 
of mass destruction and support for acts of international 
terrorism. If, after examining the required report, both Houses 
of Congress enacts a joint resolution as described above, the 
legislation would terminate.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee in its consideration of 
the bill, H.R. 1954.

                       MOTION TO REPORT THE BILL

    H.R. 1954 was ordered favorably reported, with an amendment 
in the nature of a substitute, by voice vote, on July 12, 2001, 
with a quorum present.

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made:
    The Committee agrees with the estimate prepared by the 
Congressional Budget Office (CBO), which is included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with subdivision 3(c)(2) of rule XIII of the 
Rules of the House of Representatives, the Committee states 
that the provisions of H.R. 1954 do not affect receipts or 
direct spending and would not be subject to pay-as-you-go 
procedures under section 252 of the Balanced Budget and 
Emergency Deficit Control Act of 1985.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with subdivision 3(c)(3) of rule XIII of the 
Rules of the House of Representatives, requiring a cost 
estimate prepared by the Congressional Budget Office, the 
following report prepared by CBO is provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 16, 2001.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1954, the ILSA 
Extension Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Joseph C. 
Whitehill (for federal costs) and Paige Piper/Bach (for the 
private-sector impact).
            Sincerely,
                                         Barry B. Anderson,
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1954--ILSA Extension Act of 2001

    H.R. 1954 would extend the authorities of the Iran and 
Libya Sanctions Act (ILSA) of 1996 for an additional five years 
through 2006. The bill would require the President to report to 
the Congress on the effectiveness of actions taken under ILSA 
within 18 months after enactment, and it would provide for the 
early termination of that act at any time after submission of 
the report. CBO estimates that implementing H.R. 1954 would not 
significantly affect discretionary spending. The bill would not 
affect direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply.
    Based on information from the Department of State, CBO 
estimates that preparing the required report would increase the 
department's spending by less than $500,000, assuming the 
availability of appropriated funds.
    By extending the Iran and Libya Sanctions Act, H.R. 1954 
could impose a private-sector mandate as defined by the 
Unfunded Mandates Reform Act (UMRA). The President would be 
required to impose certain sanctions on U.S. entities or 
foreign companies that invest over a specific amount of money 
in developing the petroleum and natural gas resources of Iran 
or Libya. Among the sanctions available under the act, the 
President could impose certain restrictions on U.S. offices of 
a sanctioned company or on entities and financial institutions 
engaged in business transactions with a sanctioned entity. The 
act does, however, allow the President the discretion to make 
exceptions in applying such sanctions. Since passage of ILSA, 
no such sanctions have been imposed. Consequently, CBO expects 
that sanctions are unlikely to be imposed under H.R. 1954 and 
that the direct cost of the mandate would fall below the annual 
threshold established by UMRA for private-sector mandates ($113 
million in 2001, adjusted annually for inflation).
    H.R. 1954 contains no intergovernmental mandates as defined 
in UMRA and would not affect the budgets of state, local, or 
tribal governments.
    On June 21, 2001, CBO prepared an estimate for H.R. 1954 as 
ordered reported by the House Committee on International 
Relations. That version of the bill would lower the threshold 
of investments in Libya that could trigger sanctions under ILSA 
from $40 million to $20 million and would revise the definition 
of investment to include any amendment or modification of 
existing contracts that would exceed the threshold amount. CBO 
estimated that implementing that version of H.R. 1954 would not 
significantly affect discretionary spending and that the cost 
of the private-sector mandate in that version of the bill would 
fall below the annual threshold established by UMRA.
    The CBO staff contact for federal costs is Joseph C. 
Whitehill. The CBO staff contact for private-sector mandates is 
Paige Piper/Bach. This estimate was approved by Robert A. 
Sunshine, Assistant Director for Budget Analysis.

 V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives (relating to oversight 
findings), the Committee, based on information from the 
Administration, concluded that it is appropriate and timely to 
enact the provisions included in the bill as reported.

B. Summary of Findings and Recommendations of the Government Operations 
                               Committee

    In compliance with clause 3(c)(4) of Rule XIII of the Rules 
of the House of Representatives, the Committee state that no 
oversight findings and recommendations have been submitted to 
this Committee by the Committee on Government Operations with 
respect to the provisions contained in H.R. 1954.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States * * *'').

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                IRAN AND LIBYA SANCTIONS ACT OF 1996

           *       *       *       *       *       *       *



SEC. 10. REPORTS REQUIRED.

  (a) * * *
  (b) Report on Effectiveness of Actions Under This Act.--Not 
later than 18 months after the date of the enactment of the 
ILSA Extension Act of 2001, the President shall transmit to 
Congress a report that describes--
          (1) the extent to which actions relating to trade 
        taken pursuant to this Act--
                  (A) have been effective in achieving the 
                objectives of section 3 and any other foreign 
                policy or national security objectives of the 
                United States with respect to Iran and Libya; 
                and
                  (B) have affected humanitarian interests in 
                Iran and Libya, the country in which the 
                sanctioned person is located, or in other 
                countries; and
          (2) the impact of actions relating to trade taken 
        pursuant to this Act on other national security, 
        economic, and foreign policy interests of the United 
        States, including relations with countries friendly to 
        the United States, and on the United States economy.
  [(b)] (c) Other Reports.--The President shall ensure the 
continued transmittal to the Congress of reports describing--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 13. EFFECTIVE DATE; SUNSET.

  (a) * * *
  (b) Sunset.--This Act shall cease to be effective on the date 
that is [5] 10 years after the date of the enactment of this 
Act.

SEC. 13A. RESOLUTION TO TERMINATE ACT.

  (a) In General.--Notwithstanding section 13(b) of this Act, 
at any time after the date on which the report described in 
section 10(b) is transmitted to Congress, this Act shall cease 
to be effective if a joint resolution described in subsection 
(b) is enacted into law.
  (b) Joint Resolution Described.--For purposes of this 
section, the term ``joint resolution'' means only a joint 
resolution of the two Houses of Congress, the matter after the 
resolving clause of which is as follows: ``That the Iran and 
Libya Sanctions Act of 1996 (50 U.S.C 1701 note; Public Law 
104-172) shall cease to be effective beginning on the date of 
the enactment of this joint resolution.''.
  (c) Procedures in House and Senate.--The provisions of 
subsections (b) through (f) of section 152 of the Trade Act of 
1974 shall apply to a joint resolution described in this 
section.

           *       *       *       *       *       *       *