Executive Order 13590

Executive Order 13590 in 2011

United States views on international law (based on the document “Digest of U.S. Practice in International Law”): On November 19, 2011, President Obama signed Executive Order 13590, “Authorizing the Imposition of Certain Sanctions With Respect to the Provision of Goods, Services, Technology, or Support for Iran's Energy and Petrochemical Sectors.” 76 Fed. Reg. 72,609 (Nov. 23, 2011). President Obama acted under the authority of the Constitution and U.S. laws including the International Emergency Economic Powers Act (“IEEPA”), the National Emergencies Act, and 3 U.S.C. § 301. The State Department fact sheet on the November measures, available at (internet link) state.gov/r/pa/prs/ps/2011/11/177609.htm, excerpted below, outlines the main provisions of the new executive order.

Developments

…E.O. 13590 … significantly expands existing energy-related sanctions on Iran to authorize sanctions on persons that knowingly provide:

1. Goods, Services, Technology, or Support for the Development of Petroleum Resources: The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly contribute to the enhancement of Iran's ability to develop petroleum resources located in Iran could trigger sanctions if a single transaction has a fair market value of $1 million or more, or if a series of transactions from the same entity have a fair market value of $5 million or more in a 12-month period.

2. Goods, Services, Technology, or Support for the Maintenance or Expansion of the Petrochemical Sector: The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly facilitate the maintenance or expansion of its domestic production of petrochemical products could trigger sanctions if a single transaction has a fair market value of $250,000 or more, or if a series of transactions from the same entity have a fair market value of $1 million or more in a 12-month period.

If a person is found to have provided a good, service, technology, or support described in E.O. 13590, the Secretary of State, in consultation with other agencies, has the authority to impose sanctions, including prohibitions on: foreign exchange transactions; banking transactions; property transactions in the United States; U.S. Export-Import Bank financing; U.S. export licenses; imports into the United States; loans of more than $10 million from U.S. financial institutions; U.S. Government procurement contracts; and, for financial institutions, designation as a primary dealer or repository of U.S. Government funds.

Details

In a background briefing on the November 2011 measures against Iran, one senior U.S. government official explained how the new executive order fits in with existing sanctions targeting Iran's energy sector, such as those authorized by the Iran Sanctions Act (“ISA”), as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”):

U.S. law already prohibits large-scale investment in these upstream oil and gas activities. And what's happened is the major oil companies have all left Iran, and what Iran has done to circumvent this sanction is to get domestic Iranian companies and smaller foreign companies to provide technology, equipment, and engineering services to help them develop their oil and gas resources. They're desperately in need of capital and technology because their oil production is declining. And what this measure will do is to impede their efforts to reverse this decline. And this is critical because oil production is critical to the Iranian economy. It's the main source of revenue for Iran. So this is a very important step.

A second step was also covered by this Executive Order 13590 and that is it allows us to impose sanctions on companies that provide goods, services, and technology to Iran's petrochemical industry. This is the first time we have targeted Iran's petrochemical industry. It's a very important sector of the Iranian economy. After crude oil, it's the biggest export earner for Iran. Indeed, about 50 percent of Iran's non crude oil exports come from the sale of petrochemicals.

More about the Issue

…Currently, the ISA-CISADA legislation covers large-scale investments in upstream oil and gas activities like exploration, development, extraction, so on. CISADA deals with refined petroleum in one of two ways: It sanctions the provision of goods and services and technology for Iran's refinery industry; it also sanctions the provision of refined petroleum products, for example the sale of gasoline to Iran. That's what existing measures call for.

This … Executive Order does two very different things. For upstream oil and gas activities, it goes beyond investment to the provision of goods and services, for example, the sale of drilling equipment, the provision of engineering services. These are very, very important to help Iran develop its energy, its petroleum resources. And they're vital to enable Iran to reverse this long-term decline in its production of oil, which means a decline in oil revenue. So that's a vital loophole to fill.

Second, it deals for the first time with Iran's … petrochemical industry, which is distinct from its refinery industry. And it allows us to sanction companies providing goods and services and technology to help maintain and expand the petrochemical industry. And as I also said, we're launching a diplomatic campaign to discourage purchases of Iran's petrochemical products, which are a major source of export earnings for Iran.

Background briefing on the recently announced sanctions on Iran, available at (internet link) state.gov/r/pa/prs/ps/2011/11/177613.htm.

Section 1 of the order, describing activity that subjects a person to sanctions, is set forth below.

Executive Order 13590

Executive Order 13590