The House bill would target officials and companies driving settlement expansion and ban settlement imports, as Democrats increasingly seek economic penalties for Israeli policies they say threaten Palestinian statehood and a two-state solution

A group of leading House Democrats will introduce sweeping legislation that would impose sanctions on foreign individuals and entities driving Israeli settlement expansion and ban imports of settlement goods – a significant effort to attach financial consequences to Israeli policies they warn are destroying prospects for Palestinian statehood.

The Stop the Settlements Act, led by Representative Joaquin Castro, would establish sanctions covering settlement construction, infrastructure investment and the transfer of Israeli civilians into settlements in the West Bank or Gaza. It explicitly targets development in E1, an area east of Jerusalem where lawmakers warn construction would threaten the territorial contiguity of a future Palestinian state.

Castro's bill reflects a widening Democratic push to turn opposition to Israeli settlement expansion into concrete economic penalties. These efforts – including several recent House and Senate bills and resolutions aimed at holding Israel accountable for its policies in the West Bank and using U.S. military assistance as diplomatic leverage – suggest a growing willingness within the party to challenge the terms of Washington's relationship with Israel over actions lawmakers say are extinguishing the possibility of a two-state solution.

The proposed sanctions include asset freezes, entry bans and visa revocations. Their reach would extend to leaders and officials of entities – including government bodies – involved in the activities covered by the bill.

"The Stop the Settlements Act gives any person or company looking to take Palestinian land in the West Bank or Gaza a choice: pursue settlements or do business with the United States," Castro said. Castro is introducing the measure alongside Representatives Madeleine Dean, Don Beyer, Greg Casar, Sara Jacobs and Veronica Escobar. Their announcement lists 34 additional Democratic cosponsors, bringing the total number of House supporters to 40.

The bill would require the U.S. president to impose sanctions on foreign individuals and entities determined to meet its criteria, including participation in settlement construction or facilitating civilian transfers on or after September 30, 2026. It would separately authorize discretionary sanctions over financing, planning or maintaining settlements deemed to undermine a future Palestinian state.

An import ban would take effect 120 days after enactment, covering goods produced wholly or partly in settlements and outposts. A limited exception would permit travelers to bring personal items or gifts in accompanying baggage, excluding commercial quantities and goods intended for resale.

The president could waive sanctions for up to 12 months on national security grounds with advance notification to Congress and renew the waiver once. The sanctions provisions also contain humanitarian exceptions.

The proposal follows President Donald Trump's January 2025 revocation of the executive order underpinning the Biden administration's West Bank sanctions program. The Treasury Department subsequently removed all designations under that order and unblocked affected assets.

It also follows a narrower Senate initiative introduced earlier in September by Senators Elizabeth Warren, Chris Coons, Ron Wyden and Ruben Gallego, targeting individuals and companies facilitating settlement development in E1.

The Castro bill would require reports assessing whether U.S. individuals and financial institutions supplied materials or services supporting settlement construction or expansion. It would also direct the Treasury Department's Financial Crimes Enforcement Network to issue guidance to financial institutions.

The lawmakers said in a statement that Israel had approved more than 100 new West Bank settlements since December 2022, while settlers had established nearly 200 additional unauthorized outposts.

Dean accused Prime Minister Benjamin Netanyahu's government of using settlements to isolate Palestinian communities and prevent a contiguous state, while Jacobs said sanctions were necessary to protect civilians and advance peace.

The bill's announcement comes less than 24 hours after every Senate Democrat except John Fetterman voted to advance a resolution – which ultimately failed – that would have required the State Department to report within 30 days on human rights conditions in the West Bank – including the killing of Americans by Israeli settlers or security forces and Israel's detention of Palestinian children.