BILL ANALYSIS
AB 1650
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CORRECTED - 06/02/2010 Technical change (Member name)
ASSEMBLY THIRD READING
AB 1650 (Feuer, Blumenfield and Huffman)
As Amended April 27, 2010
Majority vote
BUSINESS & PROFESSIONS 11-0 JUDICIARY 9-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|Feuer, Tran, Brownley, |
| |Conway, Eng, | |Evans, |
| |Hernandez, Hill, Ma, | |Hagman, Jones, Knight, |
| |Nava, Niello, | |Lieu, |
| |Ruskin, Smyth | |Monning |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 17-0
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|Ayes:|Fuentes, Conway, Ammiano, | | |
| | | | |
| |Bradford, Charles | | |
| |Calderon, Coto, | | |
| |Davis, Monning, Ruskin, | | |
| |Harkey, | | |
| |Miller, Nielsen, Norby, | | |
| |Skinner, | | |
| |Solorio, Torlakson, | | |
| |Torrico | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Prohibits persons engaging in investment activities in
Iran's energy sector, as specified, from bidding or entering
into contracts with a public entity for goods or services.
Specifically, this bill :
1)Prohibits a person that engages in investment activities in
Iran's energy sector from bidding on, submitting a proposal
for, or entering into a contract with a public entity for
goods or services with the public entity.
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2)Requires a public entity to require a person who has engaged
in business outside the United States in the previous three
years to certify that he or she does not engage in investment
activities in Iran's energy sector, when bidding or entering
into a contract.
3)Requires that, if the public body awarding the contract
determines that a person has submitted a false certification,
the person be subject to all of the following:
a) A civil penalty of $250,000 or twice the amount of the
contract involving the false certification, whichever is
greater;
b) Termination of existing contracts with the awarding
body, at the awarding body's discretion; and,
c) Ineligibility to bid on contracts for the next three
years from the date the person submitted the false
certification.
4)Requires an awarding body to report the names of persons who
have submitted false certifications, together with information
as to the false certification, to the Attorney General (AG),
and requires the AG to determine whether to bring a civil
action against the person.
5)Allows an awarding body to report the names of persons who
have submitted false certifications, together with information
as to the false certification, to the city attorney, county
counsel, or district attorney.
6)Requires a person who has engaged in investment activities in
Iran's energy sector to pay all reasonable costs and fees
incurred by the awarding body, AG, city attorney, county
counsel, or district attorney if civil action is taken.
7)Requires an awarding body that determines a person has engaged
in investment activities in Iran's energy sector and has an
existing contract or has submitted a bid proposal, to provide
90 days' written notice of its intent not to enter into or
renew a contract for goods or services, and to inform the
person that he or she may become eligible for public contracts
upon ceasing to engage in investment activities in Iran's
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energy sector.
8)Requires an awarding body to provide a person to demonstrate
that they are not engaged in investment activities in Iran's
energy sector, and if the awarding body subsequently
determines that person is no longer engaging in investment
activities in Iran's energy sector, he or she shall be
eligible to enter into or renew a contract for goods or
services.
9)Becomes operative contingent upon the enactment of federal
legislation authorizing states to adopt and enforce
contracting prohibitions provided for in this bill.
10)Requires the Legislature to submit to the AG a written notice
describing this bill within 30 days after it becomes
operative.
11)States the validity of this bill's provisions are severable.
12)Ceases operation contingent upon the enactment of federal
legislation ceasing to authorize states to adopt and enforce
contracting prohibitions provided for in this bill.
13)Defines a person as engaging in the "investment activities in
Iran's energy sector" if any of the following are true:
a) The person has an investment of $20 million or more in
Iran's energy sector;
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 Iran's energy sector; or
c) The person is a financial institution that extends $20
million or more in credit to another person, for 45 days or
more, if that person will use the credit to invest in
Iran's energy sector.
14)Defines "awarding body" to mean a department, board, agency,
authority, or officer, agent, or other authorized
representative of the public entity awarding a contract for
goods or services.
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15)Defines "energy sector" to mean activities to develop
petroleum or natural gas resources or nuclear power.
16)Defines "financial institution" to mean the term used in the
Iran Sanctions Act of 1996.
17)Defines "Iran" to include any agency or instrumentality of
Iran.
18)Defines "person" to mean any of the following:
a) A natural person, corporation, company, limited
liability company, business association, partnership,
society, trust, or any other nongovernmental entity,
organization, or group;
b) Any governmental entity or instrumentality of a
government, including a multilateral development
institution, as defined in the International Financial
Institutions Act; or,
c) Any successor, subunit, parent company, or subsidiary
of, or company under common ownership or control with, any
entity described above.
19)Makes legislative declarations and findings.
FISCAL EFFECT : According to Assembly Appropriations Committee:
1)The state would experience cost increases in several ways:
a) To the extent the new certification requirement leads to
fewer bidders on state contracts, the reduced competition
would likely result in increased costs on some contracts.
Given the multi-billion dollar volume of annual state
contracts, this impact would likely be at least in the
millions of dollars;
b) One-time costs of around $100,000 for DGS to develop the
certification form; and,
c) The new certification requirement would create a new
basis for bid protests, which will increase contract
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administration cost related to protest hearings, delays in
awarding contracts, and re-bidding of contracts.
1)Local agencies will experience costs similar to those
described above. These costs are not state reimbursable.
COMMENTS : According to the author's office, "The U.S. has
imposed sanctions on Iran, determining that Iran's illicit
nuclear activities, combined with its support of international
terrorism, represent a serious threat to the security of the
U.S., Israel, U.S. allies in Europe, the Middle East, and around
the world.
"Congress is advancing bipartisan federal legislation,
co-sponsored by more than one third of the members of the U.S.
Senate and more than half of the House of Representatives, that
would authorize state and local governments to divest and
otherwise disassociate themselves from companies operating in
Iran's energy sector that support Iran's efforts to achieve a
nuclear weapons capability.
"The International Atomic Energy Agency has called attention
repeatedly to Iran's unlawful nuclear activities, leading the
United Nations Security Council to adopt a range of sanctions
designed to encourage Iran to cease those activities and comply
with obligations under the Nuclear Non-Proliferation Treaty.
"AB 1650 would preclude all public entities in California from
renewing or entering to contracts with companies that have
substantial business in Iran's energy sector, ensuring that
California's tax dollars do not support companies whose
investments either directly or indirectly support Iran's nuclear
program or terrorist activities."
Current pending federal legislation on Iran sanctions was
introduced in response to concern over Iran's engagement in
nuclear proliferation. There are four measures pending, two in
the House and two in the Senate, that seek to strengthen
existing federal sanctions and enable state and local
governments to divest from companies engaging in business in
Iran's energy sector.
Most relevant to this bill are two pieces of legislation now
pending in Congress. H.R. 1327 (Frank) and S. 1065 (Brownback)
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would enact the Iran Sanctions Enabling Act (Act). Each measure
would expressly state that it is U.S. policy to support the
decision of state and local governments to prohibit the
investment of assets that they control in any person or company
with substantial investments in Iran's energy sector.
Specifically, the enabling legislation authorizes a state or
local government to divest assets from, or prohibit the
investment in, any person or entity that: 1) invests $20
million or more in Iran's energy sector; and, 2) provides oil or
liquefied natural gas tankers, or products used to construct or
maintain pipelines used to transport oil or liquefied natural
gas, for that energy sector. The federal enabling legislation
also expressly authorizes state and local governments to divest
its assets from any financial institutions which extends $20
million or more in credit to another person, for 45 days or
more, if that person will use the credit to invest in Iran's
energy sector. Finally, the proposed federal enabling
legislation specifies that the Act will cease 30 days after the
President certifies to Congress that the government of Iran has
ceased: 1) providing support for acts of international
terrorism; and, 2) the pursuit, acquisition, and development of
nuclear, biological, and chemical weapons and ballistic missile
technology.
Analysis Prepared by : Joanna Gin / B., P. & C.P. / (916)
319-3301
FN: 0004620