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                                                   Calendar No. 189

116th Congress}                                          { Report
                                 SENATE
 1st Session  }                                          { 116-85

======================================================================
 
                         VENEZUELA CONTRACTING 
                            RESTRICTION ACT

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              TO ACCOMPY

                                S. 1151

             TO PROHIBIT CONTRACTING WITH PERSONS THAT HAVE
   BUSINESS OPERATIONS WITH THE MADURO REGIME, AND FOR OTHER PURPOSES

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               September 10, 2019.--Ordered to be printed
               
                              __________
               
               
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
                           WASHINGTON : 2019                     
          
-----------------------------------------------------------------------------------         
               
               
               
               
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio                    GARY C. PETERS, Michigan
RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma             MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah                    KAMALA D. HARRIS, California
RICK SCOTT, Florida                  KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming             JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri

                Gabrielle D'Adamo Singer, Staff Director
                   Joseph C. Folio III, Chief Counsel
       Patrick J. Bailey, Chief Counsel for Governmental Affairs
               David M. Weinberg, Minority Staff Director
               Zachary I. Schram, Minority Chief Counsel
              Michelle M. Benecke, Minority Senior Counsel
                     Laura W. Kilbride, Chief Clerk
                     
                     
                                                   Calendar No. 189

116th Congress}                                          { Report
                                 SENATE
 1st Session  }                                          { 116-85

======================================================================
                VENEZUELA CONTRACTING RESTRICTION ACT

                                _______
                                

               September 10, 2019.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 1151]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 1151) to prohibit 
contracting with persons that have business operations with the 
Maduro regime, and for other purposes, having considered the 
same, reports favorably thereon with an amendment (in the 
nature of a substitute) and recommends that the bill, as 
amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
 IV. Section-by-Section Analysis......................................3
  V. Evaluation of Regulatory Impact..................................4
 VI. Congressional Budget Office Cost Estimate........................4
VII. Changes in Existing Law Made by the Bill, as Reported............5

                         I. PURPOSE AND SUMMARY

    The purpose of S. 1151, the Venezuelan Contracting 
Restriction Act, is to prohibit Federal agencies from 
contracting for the procurement of goods or services with any 
person that has business operations with an authority of the 
government of Venezuela that is not recognized as the 
legitimate government of Venezuela by the United States 
Government. This prohibition does not apply to contracts that 
support United States Government activities in Venezuela, to 
those who have a valid license from the Office of Foreign 
Assets Control, or to contracts related to the American 
diplomatic mission in Venezuela. The legislation also provides 
exceptions for instances where the Secretary of State 
determines that the business operations with the illegitimate 
Venezuelan government are necessary for the provision of 
humanitarian assistance, disaster relief, other urgent life-
saving measures, noncombatant evacuations, or is otherwise in 
the national security interests of the United States.

              II. BACKGROUND AND THE NEED FOR LEGISLATION

    Nicolas Maduro was elected President of Venezuela on April 
14, 2013, following the death of former Socialist Party 
President Hugo Chavez. Under Maduro, the Venezuelan government 
has abused the rights of the Venezuelan people through 
violence, control, repression and by cracking down on public 
demonstrations.\1\ Security forces have repressed opposition 
parties through detention, military prosecution, and the 
excessive use of force against protestors.\2\ Opponents and 
critics of the regime risk being detained, imprisoned, 
tortured, and assassinated.\3\ According to a 2019 United 
Nations Human Rights report, Venezuelan security forces killed 
at least 5,287 people during security operations, alleging 
``resistance to authority.'' Between January 1, 2019, and May 
19, 2019, another 1,569 people were killed.\4\
---------------------------------------------------------------------------
    \1\Human Rights Watch, World Report 2017: Events of 2016, 661-668, 
https://www.hrw.org/sites/default/files/world_report_download/wr2017-
web.pdf.
    \2\Id.
    \3\Id.
    \4\Press Release, Office of the High Commissioner, United Nations, 
UN Human Rights report of Venezuela urges immediate measures to halt 
and remedy grave rights violations (July 4, 2019), https://
www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=24788&Lang 
ID=E.
---------------------------------------------------------------------------
    In addition to committing pervasive human rights abuses, 
Maduro's regime has exploited the economy and engaged in 
widespread corruption.\5\ Despite having among the world's 
largest oil reserves, millions of Venezuelans starve because 
the government fails to import sufficient food for the 
Venezuelan people, engages in rampant corruption of the food 
distribution program, and rejects offers of humanitarian 
aid.\6\ Maduro's regime has been compared to a criminal 
organization,\7\ is involved in drug trafficking, money 
laundering,\8\ illegal gold transfers,\9\ and is said to 
associate with terrorist groups.\10\ For years, Maduro's inner 
circle has enriched themselves by capitalizing on a network of 
corruption while his people struggle to survive.\11\
---------------------------------------------------------------------------
    \5\Fact Sheet, Office of the Spokesperson, U.S. Department of 
State, Nicolas Maduro: Corruption and Chaos in Venezuela (Aug. 6, 
2019), https://www.state.gov/nicolas-maduro-corruption-and-chaos-in-
venezuela-2/.
    \6\Id.; Siobhan O'Grady, The U.S. says Maduro is blocking aid to 
starving people. The Venezuelan says his people aren't beggars, Wash. 
Post (Feb. 8, 2019), https://www.washingtonpost.com/world/2019/02/08/
us-says-maduro-is-blocking-aid-starving-people-venezuelan-says-his-
people-arent-beggars/.
    \7\Antonio Maria Delgado, Jim Wyss, Study finds Venezuela criminal 
enterprise is blunting effects of U.S. sanctions, Miami Herald (May 15, 
2019, 5:37 PM), https://www.miamiherald.com/news/nation-world/world/
americas/venezuela/article230420019.html.
    \8\Lesley Wroughton, U.S. accuses Maduro, Venezuelan party official 
of drug trade profiteering, Reuters (May 18, 2018, 3:09 PM), https://
www.reuters.com/article/us-usa-venezuela-sanctions/u-s-accuses-maduro-
venezuelan-party-official-of-drug-trade-profiteering-idUSKCN1IJ2JZ.
    \9\Pamela Kalkman, These are the refineries processing Venezuela's 
``blood gold''--and helping Maduro stay in power, Miami Herald (July 
23, 2019, 8:00 AM), https://www.miamiherald.com/news/nation-world/
world/americas/venezuela/article232452267.html.
    \10\Venezuela Is Terrorist Sanctuary: Colombian President, U.S. 
News (July 29, 2019), https://www.usnews.com/news/world/articles/2019-
07-29/venezuela-is-terrorist-sanctuary-colombian-president.
    \11\Marta Oliver Craviotto, How Miami, a major destination for 
Venezuelan gold, is helping prop up Maduro's regime, Miami Herald (July 
23, 2019, 8:00 AM), https://www.miamiherald.com/news/nation-world/
world/americas/venezuela/article230669164.html; see also, Fact Sheet, 
Office of the Spokesperson, U.S. Department of State, Nicolas Maduro: 
Corruption and Chaos in Venezuela (Aug. 6, 2019), https://
www.state.gov/nicolas-maduro-corruption-and-chaos-in-venezuela-2/.
---------------------------------------------------------------------------
    The United States has sanctioned entities affiliated with 
the Maduro regime,\12\ while allowing transactions with the 
legitimate Venezuelan government, the Interim President Juan 
Guaido and the Venezuelan National Assembly. Sanctions are 
enforced through the Office of Foreign Assets Control (OFAC) 
and State Department diplomatic actions. However, U.S. dollars 
continue to flow to Maduro despite OFAC restrictions. One 
factor is that current law does not prevent U.S. contractors 
from both doing business with Maduro while also contracting 
with the U.S. Government unless they are businesses 
specifically identified by OFAC as prohibited from doing so.
---------------------------------------------------------------------------
    \12\Press Release, U.S. Department of Treasury, Treasury Sanctions 
Nicholas Maduro's Son for Serving in Venezuela's Illegitimate 
Government (June 28, 2019), https://home.treasury.gov/news/press-
releases/sm719.
---------------------------------------------------------------------------
    The Venezuelan Contracting Restriction Act closes this 
loophole. It complements existing efforts, such as sanctions, 
by prohibiting an executive agency from entering into a 
contract for the procurement of goods or services with any 
person that has business operations with the illegitimate 
government of the Maduro regime, as well as any successor 
governments not recognized as legitimate by the United States. 
The bill outlines particular exceptions.

                        III. LEGISLATIVE HISTORY

    S. 1151 was introduced on April 11, 2019, by Senators Rick 
Scott (R-FL), Marco Rubio (R-FL), and Tom Cotton (R-AL).
    The bill was referred to the Committee on Homeland Security 
and Governmental Affairs. The Committee considered S. 1151 at a 
business meeting on June 19, 2019. S. 1151 passed by voice vote 
en bloc as amended by a substitute amendment offered by Senator 
Scott, with Senators Johnson, Portman, Paul, Lankford, Romney, 
Scott, Enzi, Hawley, Peters, Carper, Hassan, Sinema, and Rosen 
present.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section establishes the short title of the bill as the 
``Venezuelan Contracting Restriction Act of 2019.''

Section 2. Prohibition on contracting with persons that have business 
        operations with the Maduro regime

    This section prohibits Federal agencies from contracting 
for goods and service with any person that engages in 
significant business operations with an authority of the 
Government of Venezuela that is not recognized as the 
legitimate Government of Venezuela. This prohibition does not 
apply to contracts that support United States Government 
activities in Venezuela, to those who have a valid license from 
the Office of Foreign Assets Control, or to contracts related 
to the American diplomatic mission in Venezuela.
    This section also provides exceptions for instances where 
the Secretary of State determines that the business operations 
with the illegitimate Venezuelan government are necessary for 
the provision of humanitarian assistance, disaster relief, 
other urgent life-saving measures, noncombatant evacuations, or 
is otherwise in the national security interests of the United 
States. It requires that Congress be notified of any exception 
for those reasons.
    Finally, the bill provides that the Secretary of State may 
waive the prohibition after determining it is in the national 
interest to do so.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATES

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 16, 2019.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1151, the Venezuelan 
Contracting Restriction Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Chinmayee 
Balabhadrapatruni and Matthew Pickford.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    S. 1151 would prohibit any executive agency from entering 
into a contract with any person that has business operations 
with any authority of the Venezuelan government that is not 
recognized as the legitimate government by the United States.
    CBO is unaware of any contracts that executive agencies 
have with entities associated with the Venezuelan government. 
CBO estimates that implementing S. 1151 would not change 
spending by any federal agency.
    The CBO staff contacts for this estimate are Chinmayee 
Balabhadrapatruni and Matthew Pickford. The estimate was 
reviewed by H. Samuel Papenfuss, Deputy Assistant Director for 
Budget Analysis.

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

    Because S. 1151 would not repeal or amend any provision of 
current law, it would make no changes in existing law within 
the meaning of clauses (a) and (b) of paragraph XXVI of the 
Standing Rules of the Senate.

                                  [all]