22 U.S.C. § 2779a — Prohibition on incentive payments

Page 1264 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2779a 1 See References in Text note below. Executive Documents DELEGATION OF FUNCTIONS For delegation of functions of the President under subsec. (b) of this section, with certain conditions, see section 1(o) of Ex. Ord. No. 13637, Mar. 8, 2013, 78 F.R. 16130, set out as a note under section 2751 of this title. Functions were previously delegated by Ex. Ord. No. 11958, which was formerly set out as a note under sec- tion 2751 of this title and was revoked, subject to a sav- ings provision, by section 4 of Ex. Ord. No. 13637. § 2779a. Prohibition on incentive payments (a) In general No United States supplier of defense articles or services sold or licensed under this chapter or exported pursuant to a treaty referred to in sec- tion 2778(j)(1)(C)(i) of this title, nor any em- ployee, agent, or subcontractor thereof, shall, with respect to the sale or export of any such de- fense article or defense service to a foreign country, make any incentive payments for the purpose of satisfying, in whole or in part, any offset agreement with that country. (b) Civil penalties Any person who violates the provisions of this section shall be subject to the imposition of civil penalties as provided for in this section. (c) Presidential authority In the enforcement of this section, the Presi- dent is authorized to exercise the same powers concerning violations and enforcement and im- position of civil penalties which are conferred upon departments, agencies and officials by sub- sections (c), (d), (e), and (f) of section 11 1 of the Export Administration Act of 1979, and section 12(a) 1 of such Act, subject to the same terms and conditions as are applicable to such powers under that Act, except that section 11(c)(2)(B) of such Act shall not apply, and instead, as pre- scribed in regulations issued under this section, the Secretary of State may assess civil penalties for violations of this chapter and regulations prescribed thereunder and further may com- mence a civil action to recover such civil pen- alties, and except further that notwithstanding section 11(c) of that Act, the civil penalty for each violation of this section may not exceed $500,000 or five times the amount of the prohib- ited incentive payment, whichever is greater. (d) Definitions For purposes of this section— (1) the term ‘‘offset agreement’’ means an agreement, arrangement, or understanding be- tween a United States supplier of defense arti- cles or defense services and a foreign country under which the supplier agrees to purchase or acquire, or to promote the purchase or acqui- sition by other United States persons of, goods or services produced, manufactured, grown, or extracted, in whole or in part, in that foreign country in consideration for the purchase by the foreign country of defense articles or de- fense services from the supplier; (2) the term ‘‘incentive payments’’ means di- rect monetary compensation made by a United States supplier of defense articles or defense services or by any employee, agent or subcon- tractor thereof to any other United States per- son to induce or persuade that United States person to purchase or acquire goods or serv- ices produced, manufactured, grown, or ex- tracted, in whole or in part, in the foreign country which is purchasing those defense ar- ticles or services from the United States sup- plier; and (3) the term ‘‘United States person’’ means— (A) an individual who is a national or per- manent resident alien of the United States; and (B) any corporation, business association, partnership, trust, or other juridical enti- ty— (i) organized under the laws of the United States or any State, the District of Columbia, or any territory or possession of the United States; or (ii) owned or controlled in fact by indi- viduals described in subparagraph (A) or by an entity described in clause (i). (Pub. L. 90–629, ch. 3, § 39A, as added Pub. L. 103–236, title VII, § 733, Apr. 30, 1994, 108 Stat. 504; amended Pub. L. 106–113, div. B, § 1000(a)(7) [div. B, title XII, § 1246, title XIII, § 1303], Nov. 29, 1999, 113 Stat. 1536, 1501A–502, 1501A–511; Pub. L. 111–266, title I, § 103(d), Oct. 8, 2010, 124 Stat. 2799.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a) and (c), was in the original ‘‘this Act’’, meaning Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1321, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 2751 of this title and Tables. The Export Administration Act of 1979, referred to in subsec. (c), is Pub. L. 96–72, Sept. 29, 1979, 93 Stat. 503, which was classified principally to chapter 56 (§ 4601 et seq.) of Title 50, War and National Defense, prior to re- peal by Pub. L. 115–232, div. A, title XVII, § 1766(a), Aug. 13, 2018, 132 Stat. 2232, except for sections 11A, 11B, and 11C thereof (50 U.S.C. 4611, 4612, 4613). Sections 11 and 12 of the Act were classified to sections 4610 and 4614, re- spectively, of Title 50 prior to repeal. AMENDMENTS 2010—Subsec. (a). Pub. L. 111–266 inserted ‘‘or ex- ported pursuant to a treaty referred to in section 2778(j)(1)(C)(i) of this title’’ after ‘‘under this chapter’’. 1999—Subsec. (a). Pub. L. 106–113, § 1000(a)(7) [title XII, § 1246(a)], inserted ‘‘or licensed’’ after ‘‘sold’’ and ‘‘or export’’ after ‘‘sale’’. Subsec. (c). Pub. L. 106–113, § 1000(a)(7) [title XIII, § 1303], inserted ‘‘section 11(c)(2)(B) of such Act shall not apply, and instead, as prescribed in regulations issued under this section, the Secretary of State may assess civil penalties for violations of this chapter and regulations prescribed thereunder and further may commence a civil action to recover such civil penalties, and except further that’’ after ‘‘except that’’. Subsec. (d)(3)(B)(ii). Pub. L. 106–113, § 1000(a)(7) [title XII, § 1246(b)], inserted ‘‘or by an entity described in clause (i)’’ after ‘‘subparagraph (A)’’. Executive Documents DELEGATION OF FUNCTIONS Functions of President under this section delegated to Secretary of State by Memorandum of President of Page 1265 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2780 the United States, July 26, 1994, 59 F.R. 40205, set out as a note under section 2370a of this title. § 2780. Transactions with countries supporting acts of international terrorism (a) Prohibited transactions by United States Government The following transactions by the United States Government are prohibited: (1) Exporting or otherwise providing (by sale, lease or loan, grant, or other means), di- rectly or indirectly, any munitions item to a country described in subsection (d) under the authority of this chapter, the Foreign Assist- ance Act of 1961 [22 U.S.C. 2151 et seq.], or any other law (except as provided in subsection (h)). In implementing this paragraph, the United States Government— (A) shall suspend delivery to such country of any such item pursuant to any such trans- action which has not been completed at the time the Secretary of State makes the de- termination described in subsection (d), and (B) shall terminate any lease or loan to such country of any such item which is in ef- fect at the time the Secretary of State makes that determination. (2) Providing credits, guarantees, or other fi- nancial assistance under the authority of this chapter, the Foreign Assistance Act of 1961 [22 U.S.C. 2151 et seq.], or any other law (except as provided in subsection (h)), with respect to the acquisition of any munitions item by a coun- try described in subsection (d). In imple- menting this paragraph, the United States Government shall suspend expenditures pursu- ant to any such assistance obligated before the Secretary of State makes the determination described in subsection (d). The President may authorize expenditures otherwise required to be suspended pursuant to the preceding sen- tence if the President has determined, and re- ported to the Congress, that suspension of those expenditures causes undue financial hardship to a supplier, shipper, or similar per- son and allowing the expenditure will not re- sult in any munitions item being made avail- able for use by such country. (3) Consenting under section 2753(a) of this title, under section 505(a) of the Foreign As- sistance Act of 1961 [22 U.S.C. 2314(a)], under the regulations issued to carry out section 2778 of this title, or under any other law (except as provided in subsection (h)), to any transfer of any munitions item to a country described in subsection (d). In implementing this para- graph, the United States Government shall withdraw any such consent which is in effect at the time the Secretary of State makes the determination described in subsection (d), ex- cept that this sentence does not apply with re- spect to any item that has already been trans- ferred to such country. (4) Providing any license or other approval under section 2778 of this title for any export or other transfer (including by means of a technical assistance agreement, manufac- turing licensing agreement, or coproduction agreement) of any munitions item to a coun- try described in subsection (d). In imple- menting this paragraph, the United States Government shall suspend any such license or other approval which is in effect at the time the Secretary of State makes the determina- tion described in subsection (d), except that this sentence does not apply with respect to any item that has already been exported or otherwise transferred to such country. (5) Otherwise facilitating the acquisition of any munitions item by a country described in subsection (d). This paragraph applies with re- spect to activities undertaken— (A) by any department, agency, or other instrumentality of the Government, (B) by any officer or employee of the Gov- ernment (including members of the United States Armed Forces), or (C) by any other person at the request or on behalf of the Government. The Secretary of State may waive the require- ments of the second sentence of paragraph (1), the second sentence of paragraph (3), and the second sentence of paragraph (4) to the extent that the Secretary determines, after consulta- tion with the Congress, that unusual and com- pelling circumstances require that the United States Government not take the actions speci- fied in that sentence. (b) Prohibited transactions by United States per- sons (1) In general A United States person may not take any of the following actions: (A) Exporting any munitions item to any country described in subsection (d). (B) Selling, leasing, loaning, granting, or otherwise providing any munitions item to any country described in subsection (d). (C) Selling, leasing, loaning, granting, or otherwise providing any munitions item to any recipient which is not the government of or a person in a country described in sub- section (d) if the United States person has reason to know that the munitions item will be made available to any country described in subsection (d). (D) Taking any other action which would facilitate the acquisition, directly or indi- rectly, of any munitions item by the govern- ment of any country described in subsection (d), or any person acting on behalf of that government, if the United States person has reason to know that that action will facili- tate the acquisition of that item by such a government or person. (2) Liability for actions of foreign subsidiaries, etc. A United States person violates this sub- section if a corporation or other person that is controlled in fact by that United States person (as determined under regulations, which the President shall issue) takes an action de- scribed in paragraph (1) outside the United States. (3) Applicability to actions outside the United States Paragraph (1) applies with respect to actions described in that paragraph which are taken