[Federal Register Volume 61, Number 242 (Monday, December 16, 1996)]
[Notices]
[Pages 66067-66068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31853]
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DEPARTMENT OF STATE
[Public Notice No. 2476]
Additional Information for the Iran and Libya Sanctions Act
This notice provides additional information about the Iran and
Libya Sanctions Act of 1996 (P.L. 104-172--``the Act'').
Enactment and Delegation
The Act, signed by the President on August 5, 1996, does not
replace or supersede existing sanctions against Iran or Libya. The
Iranian Assets Control Regulations (31 C.F.R. Part 535), the Iranian
Transactions Regulations (31 C.F.R. Part 560), and the Libyan Sanctions
Regulations (31 C.F.R. Part 550) remain in effect and will continue to
be administered by the Office of Foreign Assets Control at the U.S.
Department of the Treasury.
On November 21, 1996, the President delegated to the Secretary of
State responsibilities in the following sections of the Act, in some
cases to be exercised in consultation with other agencies: Sections 4,
5, 6(1), 6(2), 9, and 10 (see, 61 Fed. Reg. 64249 (Dec. 4, 1996)). The
Office of Economic Sanctions Policy will administer the Act for the
Department of State.
Public inquiries regarding the Act may be sent to: Iran and Libya
Sanctions Act Unit, Office of Economic Sanctions Policy, Room 3329,
U.S. Department of State, 2201 C Street N.W., Washington, DC 20520;
Attn.: John Finkbeiner, Telephone: (202) 647-7299.
Investment Definition
Section 14(9) INVESTMENT--The term ``investment'' means any of the
following activities if such activity is undertaken pursuant to an
agreement, or pursuant to the exercise of rights under such an
agreement, that is entered into with the Government of Iran or a
nongovernmental entity in Iran, or with the Government of Libya or a
nongovernmental entity in Libya, on or after the date of enactment of
the Act:
(A) The entry into a contract that includes responsibility for
the development of petroleum resources located in Iran or Libya (as
the case may be), or the entry into a contract providing for the
general supervision and guarantee of another person's performance of
such a contract.
(B) The purchase of a share of ownership, including an equity
interest, in that development.
(C) The entry into a contract providing for the participation in
royalties, earnings, or profits in that development without regard
to the form of the participation.
The term ``investment'' does not include the entry into,
performance, or financing of a contract to sell or purchase goods,
services, or technology.
Timing of Investment
In order for a contract or the purchase of a share of ownership to
be considered under the definition of investment it must be undertaken
``pursuant to an agreement * * * that is entered into with the
Government of Iran or a nongovernmental entity in Iran, or with the
Government of Libya or a nongovernmental entity in Libya on or after
the date of enactment of the Act.'' The House Ways and Means Committee
Report states that ``Companies may perform existing contracts, and
complete existing investments, such as subcontracts, farm-in
arrangements, and the like in connection with contracts entered into
prior to the date of enactment.'' The term ``agreement'' includes,
inter alia, option contracts and contracts subject to extension.
What is ``Responsibility for the Development of Petroleum
Resources?''
Section 14(4) defines ``development'' as ``the exploration for, or
the extraction, refining, or transportation by pipeline of, petroleum
resources.'' Therefore, the entry into a contract that includes
responsibility for those activities could be considered an investment.
The investment definition specifically excludes contracts for the
sale or purchase of goods, services or technology.
The definitions contained in Section 16 of the Export
Administration Act (whose provisions are being carried out under the
authority of the International Emergency Economic Powers Act) will be
used for the terms ``goods'' and ``technology.'' The term ``good'' is
defined as ``any article, natural or manmade substance, material,
supply or manufactured product, including inspection and test
equipment, and excluding technical data. ``Technology'' means ``the
information know-how (whether in tangible form, such as models,
prototypes, drawings, sketches,
[[Page 66068]]
diagrams, blueprints, or manuals, or in intangible form, such as
training or technical services) that can be used to design, produce,
manufacture, utilize, or reconstruct goods, including software and
technical data, but not the goods themselves.''
With respect to the definition of ``services'', the House Ways and
Means Committee Report states that the term investment is meant to
include ``entry into a contract for the provision of management
services entailing overall responsibility for the development of
Iranian or Libyan petroleum resources or entailing general supervision
and guarantee of another person's performance of such a contract.''
General concepts of investment can be used to determine whether a
contract for such management services is an ``investment'' rather than
a ``service contract.'' In making such a determination, factors such as
whether capital is put at risk by the person involved, whether the
person receives a share in the income or profits of the development
(bearing in mind that the entry into a contract providing for such
participation already falls within the definition of investment),
whether the person receives an equity stake in the petroleum resources
(bearing in mind that the purchase of a share of ownership in the
development of petroleum resources already falls within the
definition), whether compensation is based on the investment's
performance, whether the person receives a share in the assets of the
enterprise upon dissolution, can all be considered.
Any contract that includes overall responsibility for the
development of petroleum resources could be captured by the definition,
regardless of the parties involved, as long as the contract is entered
into pursuant to an agreement with the Government of Iran, a
nongovernmental entity in Iran, the Government of Libya, or a
nongovernmental entity in Libya.
Parents and Subsidiaries
Section 5(c) states that sanctions will be imposed on:
(1) any person the President determines has carried out
[sanctionable activities]; and
(2) any person the President determines--
(A) is a successor entity to the person referred to in paragraph
(1);
(B) is a parent or subsidiary of the person referred to in
paragraph (1) if that parent or subsidiary, with actual knowledge,
engaged in the activities referred to in paragraph (1); or
(C) is an affiliate of the person referred to in paragraph (1)
if that affiliate, with actual knowledge, engaged in the activities
referred to in paragraph (1) and if that affiliate is controlled in
fact by the person referred to in paragraph (1).
For parents of sanctioned persons, the term ``engaged in'' refers
to facilitation and authorization of the entry into a contract that
falls within the definition of investment. For subsidiaries and
affiliates, it refers to actual participation in the implementation of
the contract--for example, if the contract provided for certain
elements to be carried out by subsidiary companies.
Dated: December 11, 1996.
Robert M. Maxim,
Acting, Deputy Assistant Secretary, Energy, Sanctions, and Commodities.
[FR Doc. 96-31853 Filed 12-13-96; 8:45 am]
BILLING CODE 4710-07-M
