Recently, some in Congress have expressed hostilities towards the President’s broad licensing powers under the International Emergency Economic Powers Act (“IEEPA”) and other statutory authorities. This is largely due to the President’s utilization of such authorities to dial back sanctions on Cuba and Iran – both of which are being undertaken despite significant Congressional opposition. Nonetheless, how this antipathy towards current presidential licensing authorities expresses itself has long been an open question, particularly as to whether Congress might take steps to limit such authorities.

H.R. 3662, the ‘Iran Terror Finance Transparency Act’, answers some of those questions, as Section 5 of the proposed legislation – due for markup this morning in the House Foreign Affairs Committee – seeks to establish new rules regulating the President’s use of his licensing authorities, as well as to put in place arduous reporting requirements regarding all licensing matters undertaken by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). As such, H.R 3662 could signify new developments in Congressional pushback against the broad powers currently enjoyed by the President when it comes to the administration of U.S. sanctions programs.

Under Section 5(a) of the Iran Terror Finance Transparency Act, the bill would subject “any rule to amend or otherwise alter a covered regulatory provision” [i.e., a provision of 31 C.F.R. §§ 535, 560, 561, and 1060 – all dealing with Iran] to the rulemaking provisions of 5 U.S.C. Ch. 8. As such, it would deem any such rule to amend or alter 31 C.F.R. Part 560, otherwise known as the Iranian Transaction and Sanctions Regulations (“ITSR”), “a rule or major rule for purposes of [5 U.S.C. Ch. 8].” This would do two things: (1) it would delay the implementation of the proposed rule to amend or alter a provision of the ITSR; and (2) it would provide Congress the authority to disapprove of the proposed rule and thus void it before implementation. This is not an authority that has been previously used by Congress.

Further, Section 5 of the Iran Terror Finance Transparency Act would establish tough reporting requirements regarding OFAC’s licensing activities. Specifically, Section 5(b) would require OFAC’s Director to submit to Congress on a quarterly basis “a report on the operation of the licensing system under each covered regulatory provision…, including:

(1)      the number and types of licenses applied for;

(2)      the number and types of licenses approved;

(3)      a summary of each license approved;

(4)      a summary of transactions conducted pursuant to a general license;

(5)      the average amount of time elapsed from the date of filing of a license application until the date of its approval;

(6)      the extent to which the licensing procedures were effectively implemented; and

(7)      a description of comments received from interested parties about the extent to which the licensing procedures were effective, after the applicable department or agency holds a public 30-day comment period.”

Currently, OFAC is required to provide Congress with statistics on the amount of TSRA (“Trade Sanctions Reform and Export Enhancement Act of 2000”) license applications it receives and approves on a biennial basis. These are license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under the licensing regime set forth in TSRA. The purpose of this provision – as with TSRA, more generally – is to ensure that the President and his inferior agencies and officers are not preventing the export of food, medicine, and medical goods to certain countries under U.S. sanctions. You can find the latest report from OFAC here.

It is difficult to view Section 5(b) of the Iran Terror Finance Transparency Act as anything but carefully designed with the opposite intent – i.e., to ensure that the President and his inferior agencies and officers are not generally or specifically licensing too many activities with Iran. That is why, for instance, the proposed bill seeks “a summary of each license approved” and “a summary of transactions conducted pursuant to a general license.” Proponents of the bill are concerned that the President will generally or specifically license away the U.S. trade embargo with Iran (embodied in the ITSR), especially in consideration of the fact that Congress explicitly gave President Obama the power to do so by virtue of Section 103(d)(1)-(2) of the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”).

Where all this leads is unclear.  Despite HFAC’s markup this morning, there is no companion bill in the Senate, and Democrats in both houses are unlikely to vote for a bill whose implication is to prevent implementation of the nuclear agreement between the U.S., other major world powers, and Iran.  However, the inclusion of provisions targeting the President’s current licensing authorities is evidence of a growing tendency in Congress — one that should be keenly observed if the administration of U.S. sanctions programs is to proceed apace.