BILL NUMBER: AB 1650 AMENDED
AMENDED IN SENATE JUNE 23, 2010
AMENDED IN ASSEMBLY APRIL 27, 2010
AMENDED IN ASSEMBLY APRIL 13, 2010
AMENDED IN ASSEMBLY FEBRUARY 23, 2010
INTRODUCED BY Assembly Members Feuer, Blumenfield, and Huffman
(Coauthors: Assembly Members Anderson, Bass, Block, De Leon, Hill,
Jones, Lieu, Miller, John A. Perez, Portantino, Silva,
Pavley Coauthors: Senators
Padilla, Pavley, and Price )
JANUARY 13, 2010
An act to add Chapter 2.7 (commencing with Section 2200) to Part 1
of Division 2 of the Public Contract Code, relating to public
LEGISLATIVE COUNSEL'S DIGEST
AB 1650, as amended, Feuer. Public contracts: state and local
contract eligibility: energy sector investment activities in Iran.
Existing law sets forth the requirements for the solicitation and
evaluation of bids and the awarding of contracts by public entities.
This bill would prohibit a person that is engaged in investment
activities in the energy sector in Iran , as described,
from bidding on or entering into or renewing a contract
with a public entity for goods or services. The bill would require a
prospective bidder for those contracts, that currently or within the
previous 3 years has had business activities or other operations
outside of the United States, to certify that it is not engaged in
investment activities in the energy sector in Iran and would impose
civil penalties, as specified, for a person that
provides a false certification. This bill would require the awarding
body of a public entity, if the awarding body determines that a
person is a person that engages in investment activities in the
energy sector in Iran, to provide written notice of its intent
to not not to enter into or renew a
contract for goods or services with the person. This bill would
require the awarding body to provide a person that is alleged to be
engaging engaged in investment
activities in the energy sector in Iran with an opportunity to
demonstrate it is not involved engaged
in specified investment activities in Iran
those activities .
This bill would make legislative finding
findings and declarations regarding a statewide concern.
This bill would become operative only if federal law authorizes
states to adopt and enforce contracting prohibitions of the type
provided for in this bill, and would become inoperative upon the date
that federal authorization ceases.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 2.7 (commencing with Section 2200) is added to
Part 1 of Division 2 of the Public Contract Code, to read:
CHAPTER 2.7. IRAN CONTRACTING ACT OF 2010
2200. This chapter shall be known and may be cited as the Iran
Contracting Act of 2010.
2201. The Legislature hereby finds and declares all of the
(a) In imposing United States sanctions on Iran, Congress and the
President have determined that the illicit nuclear activities of the
Government of Iran, combined with its development of unconventional
weapons and ballistic missiles, and its support of international
terrorism, represent a serious threat to the security of the United
States, Israel, and other United States allies in Europe, the Middle
East, and around the world.
(b) On September 9, 2009, it was reported that American
intelligence agencies have concluded that Iran has already created
enough nuclear fuel to develop a nuclear weapon, and United States
Ambassador to the International Atomic Energy Agency Glyn Davies
declared that Iran had achieved "possible breakout capacity."
(c) On September 21, 2009, Iran sent a letter to the International
Atomic Energy Agency acknowledging that it is considering a
previously undeclared "new pilot fuel enrichment plan."
(d) On Sept. 25, 2009, President Barack H. Obama, joined by Prime
Minister Gordon Brown of Britain and President Nicolas Sarkozy of
France, stated that the secret plant "represents a direct challenge
to the basic foundation of the nonproliferation regime" and "deepens
a growing concern that Iran is refusing to live up to those
international responsibilities, including specifically revealing all
nuclear-related activities. As the international community knows,
this is not the first time that Iran has concealed information about
its nuclear program."
(e) The International Atomic Energy Agency has repeatedly called
attention to Iran's unlawful nuclear activities, and, as a result,
the United Nations Security Council has adopted a range of sanctions
designed to encourage the Government of Iran to cease those
activities and comply with its obligations under the Treaty on the
Non-Proliferation of Nuclear Weapons (commonly known as the "Nuclear
(f) It is anticipated that Congress will declare its intent that
state and local governments be able to direct divestiture from,
prevent investment in, and prohibit entry into or renewal of
contracts with, companies operating in Iran's energy sector. Under
bipartisan federal legislation advancing in the 111th Congress and
cosponsored by more than one-third of the members of the United
States Senate and more than half of the members of the House of
Representatives, state and local governments would be expressly
authorized to divest and otherwise disassociate themselves from
companies with investments that have the result of directly or
indirectly supporting the efforts of the Government of Iran to
achieve a nuclear weapons capability.
(g) On October 7, 2008, then-Senator Obama stated, "Iran right now
imports gasoline, even though it's an oil producer, because its oil
infrastructure has broken down. If we can prevent them from importing
the gasoline that they need and the refined petroleum products, that
starts changing their cost-benefit analysis. That starts putting the
squeeze on them."
(h) The serious and urgent nature of the threat from Iran demands
that states, local governments, educational institutions, and private
institutions work together with the federal government and American
allies to do everything possible diplomatically, politically, and
economically to prevent Iran from acquiring a nuclear weapons
(i) There are moral and reputational reasons for this state and
local governments to not engage in business with foreign companies
that have business activities benefiting foreign states, such as
Iran, that commit egregious violations of human rights, proliferate
nuclear weapons capabilities, and support terrorism.
(j) It is the responsibility of the state to decide how, where,
and by whom its financial resources should be invested. It also is
the prerogative of the state to not invest in, or do business with,
companies whose investments with Iran place those companies at risk
from the impact of economic sanctions imposed upon the Government of
Iran for sponsoring terrorism, committing egregious violations of
human rights, and engaging in illicit nuclear weapons development.
(k) The human rights situation in Iran has steadily deteriorated
in 2009, as punctuated by transparently fraudulent elections and the
brutal repression and murder, arbitrary arrests, and show trials of
(l) During the postelection protests in June 2009, the Iranian
government imposed widespread and unjustifiable restrictions on
telecommunications services, denying the citizens of Iran their
rights and liberties to free speech.
(m) On October 14, 2007, Governor Arnold Schwarzenegger stated his
intention to support "efforts to further prevent terrorism" when
signing Assembly Bill 221, which prohibits the state's pension funds
from investing in companies with active business in Iran.
(n) This state currently honors contracts with foreign companies
that may be at financial risk due to business ties with foreign
states, such as Iran, that are involved in the proliferation of
weapons of mass destruction, commit human rights violations, and
(o) The concerns of the State of California regarding Iran are
strictly the result of the actions of the Government of Iran.
(p) The people of the State of California declare all of the
(1) We have feelings of friendship for the people of Iran.
(2) We regret that developments in recent decades have created
impediments to that friendship.
(3) We hold the people of Iran, their culture, and their ancient
and rich history in the highest esteem.
(q) In order to effectively address the need for the governments
of this state to respond to the policies of Iran in a uniform
fashion, prohibiting contracts with persons doing business
engaged in investment activities in the energy sector
in Iran must be accomplished on a statewide basis, and,
therefore, the subject is a matter of statewide concern rather than a
2202. As used in this chapter, the following definitions apply:
(a) "Awarding body" means a department, board, agency, authority,
or officer, agent, or other authorized representative of the public
entity awarding a contract for goods or services.
(b) "Energy sector" means activities to develop petroleum or
natural gas resources or nuclear power.
(c) "Financial institution" means the term as used in Section 14
(5) of the Iran Sanctions Act of 1996 (Public Law 104-172; 50 U.S.C.
(d) "Iran" includes any agency or instrumentality of Iran.
(e) "Person" means any of the following:
(1) A natural person, corporation, company, limited liability
company, business association, partnership, society, trust, or any
other nongovernmental entity, organization, or group.
(2) Any governmental entity or instrumentality of a government,
including a multilateral development institution, as defined in
Section 1701(c)(3) of the International Financial Institutions Act
(22 U.S.C. 262r(c)(3)).
(3) Any successor, subunit, parent company, or subsidiary of, or
company under common ownership or control with, any entity described
in paragraph (1) or (2).
2202.5. For purposes of this chapter, a
person engages in "investment investment
activities in the energy sector in Iran"
Iran if any of the following is true:
(a) The person has an investment of twenty million
dollars ($20,000,000) or more in the energy sector in Iran.
(b) The person provides oil or liquified natural gas
tankers, or products used to construct or maintain pipelines used to
transport oil or liquified natural gas, for the energy sector in
(c) The person is a financial institution that extends
twenty million dollars ($20,000,000) or more in credit to another
person, for 45 days or more, if that person will use the credit to
invest in the energy sector in Iran.
2203. A person that engages in investment activities in the
energy sector in Iran is ineligible to, and shall not, bid on, submit
a proposal for, or enter into or renew , a contract with
a public entity for goods or services.
2204. A public entity shall require a person that submits a bid
or proposal to, or otherwise proposes to enter into or renew
a contract with, a public entity with respect to a contract for
goods or services, that currently or within the previous three years
has had business activities or other operations outside of the
United States, to certify that the person does not engage in
investment activities in the energy sector in Iran.
2205. (a) If the awarding body determines that a person has
submitted a false certification under Section 2204, the person shall
be subject to all of the following:
(1) Pursuant to an action under subdivision (b), a civil penalty
in an amount that is equal to the greater of two hundred fifty
thousand dollars ($250,000) or twice the amount of the contract for
which the false certification was made.
(2) Termination of an existing contract with the awarding body at
the option of the awarding body.
(3) Ineligibility to bid on a contract for a period of three years
from the date of the determination that the person submitted the
(b) The awarding body shall report to the Attorney General the
name of the person that the awarding body determines has submitted a
false certification under Section 2204, together with its information
as to the false certification, and the Attorney General shall
determine whether to bring a civil action against the person to
collect the penalty described in paragraph (1) of subdivision (a).
The awarding body of a local public entity may also report to the
city attorney, county counsel, or district attorney the name of the
person that the awarding body determines has submitted a false
certification under Section 2204, together with its information as to
the false certification, and the city attorney, county counsel, or
district attorney may determine whether to bring a civil action
against the person to collect the penalty described in paragraph (1)
of subdivision (a). If it is determined in that action that the
person submitted a false certification, the person shall pay all
reasonable costs and fees incurred in a civil action, including costs
incurred by the awarding body for investigations that led to the
finding of the false certification and all reasonable costs and fees
incurred by the Attorney General, city attorney, county counsel, or
2206. (a) If the awarding body, using credible information
available to the public, determines that a person that has an
existing contract with the awarding body, or has submitted a pending
bid or contract proposal to, or otherwise proposes to enter into a
contract with, the awarding body, engages in investment activities in
the energy sector in Iran, the awarding body shall provide 90 days'
written notice of its intent to not enter into or renew a contract
for goods or services with the person. The notice shall specify that
the person, if it ceases its engagement in investment activities in
the energy sector in Iran, may become eligible for a future contract
, or contract renewal, for goods or services with the
(b) The awarding body shall provide a person with an opportunity
to demonstrate to the awarding body that it is not engaged in
investment activities in the energy sector in Iran. If the awarding
body determines that the person is not engaged in investment
activities in the energy sector in Iran, the person shall be eligible
to enter into or renew a contract for goods or services with the
(c) This section shall not apply in the case of a person subject
to Section 2205.
(d) This section shall apply to contracts entered into, or
renewed, on and after the date that is 90 days after the operative
date of this chapter.
2207. The Legislature shall submit to the Attorney General of the
United States a written notice describing this chapter within 30
days after the operative date of this chapter.
2208. (a) If any one or more provisions, sections, subdivisions,
sentences, clauses, phrases, or words of this act or the application
thereof to any person or circumstance is found to be invalid,
illegal, unenforceable, or unconstitutional, the same is hereby
declared to be severable and the balance of this act shall remain
effective and functional notwithstanding such invalidity, illegality,
unenforceability, or unconstitutionality.
(b) The Legislature hereby declares that it would have passed this
act, and each provision, section, subdivision, sentence, clause,
phrase, or word thereof, irrespective of the fact that any one or
more provisions, sections, subdivisions, sentences, clauses, phrases,
or words are declared invalid, illegal, unenforceable, or
SEC. 2. (a) Section 1 of this act shall become operative only if
federal legislation authorizing states to adopt and enforce
contracting prohibitions of the type provided for in that section is
enacted and, in that event, shall become operative on the later of
January 1, 2011, or the operative date of the authorizing federal
(b) Section 1 of this act shall become inoperative upon the date
that federal law ceases to authorize the states to adopt and enforce
the contracting prohibitions of the type provided for in that