Guidelines About the Provision of Jet Fuel to the Government of Iran
JET FUEL CONSIDERATIONS UNDER THE IRAN SANCTIONS ACT
Under the Iran Sanctions Act (ISA), as amended, the knowing provision of jet fuel to Iran with a fair market value of $1 million, or $5 million cumulatively over 12 months, is sanctionable. The Government of Iran owns six airlines: Iran Air (includes cargo flights), Iran Air Tours, Saha Airlines, Payam Air, Iran Aseman Airlines, and Yas Air (formerly Pars Air). Providing jet fuel above the monetary thresholds to any of those airlines, or their successors, is sanctionable under the ISA. The sale of jet fuel to privately owned Iranian airlines, such as Mahan Air, might also be sanctionable in certain circumstances. We urge companies, including jet fuel suppliers, to minimize their exposure to the Iran and to exercise as much due diligence as possible in doing business, directly or indirectly, with Iranian entities. The information in this document will be updated periodically to reflect changes in legislation or industry practice.
Monetary thresholds and potential sanctionability:
Every potentially sanctionable situation will be evaluated on a case-by-case basis. Under the amended Iran Sanctions Act, any person or entity who, after July 1, 2010, knowingly "sells or provides" refined petroleum products with a fair market value of $1 million or more, or an aggregate value of $5 million or more over 12 months, to Iran can be sanctioned.
Is the time period a rolling 12-month period or does it go by the calendar year?
The time period in the legislation is for any 12 months, not the calendar year.
Does the monetary threshold apply for a single company or to a group of companies?
The thresholds in ISA as amended by CISADA apply to individual companies. However, these restrictions would also apply to, among other entities, a business association, partnership, society, or any other business organization.
Are all the branches and divisions of one company seen as an individual entity? Or, would each entity in an individual country be considered separately?
One company would be considered a single person for purposes of the ISA. The thresholds for jet fuel sales would include the sales of all its branches. For example, if a company sold $3 million in jet fuel to a government of Iran-owned airline in City A, and another $3 million in City B, the total $6 million in sales would be considered to be the total sales of the company pursuant to the ISA.
What would the penalty be if a company mistakenly engages in sanctionable activity?
Any company that triggers the provisions of CISADA is at risk of being sanctioned. The State Department looks at each incident individually, on a case-by-case basis. Under CISADA, a given company can be subject to sanctions if it knew, or should have known, that it was violating sanctions.
Is there a difference in the enforcement of the sanctions between providing fuel and selling fuel?
The enforcement would be the same. The monetary thresholds are based on the fair market value of the fuel in dollars, not the actual sale price.
Private Iranian airlines:
The sale of jet fuel outside Iran to privately owned Iranian airlines could also raise concerns under the Iran Sanctions Act. For example, if a private Iranian airline was delivering a portion of the fuel, in excess of the above-mentioned statutory monetary thresholds, to the territory of Iran or to agencies or instrumentalities of the Iranian government, this activity would be sanctionable. Fuel sales to a private airline might also be sanctionable if that private airline is acting for the Government of Iran. A jet fuel supplier could be sanctioned if a private airline enters Iran on a regular basis, and the cumulative total of fuel in its tanks has a fair market value above the statutory monetary thresholds.
The ISA defines "knowingly" to mean that a person has actual knowledge, or should have known in the circumstances. Companies can be subjected to sanctions if they knew or should have known that they were providing refined petroleum, or other qualifying goods or services, to Iran.
Involvement of U.S. Persons:
Additional restrictions apply to U.S. persons, which includes a corporation located in the United States, and transactions subject to U.S. jurisdiction in addition to the provisions of the ISA. United States persons are prohibited from almost all business with Iran, under the Iranian Transactions Regulations (ITR).
United States persons and others conducting transactions subject to U.S. jurisdiction should consult the ITR, administered by the Department of Treasury’s Office of Foreign Assets Control, before providing, directly or indirectly, goods, technology, or services to Iran.