BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1650|
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THIRD READING
Bill No: AB 1650
Author: Feuer (D), et al
Amended: 8/31/10 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 7-0, 6/29/10
AYES: Wright, Calderon, Florez, Negrete McLeod, Padilla,
Price, Yee
NO VOTE RECORDED: Harman, Denham, Oropeza, Wyland
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland, Yee
ASSEMBLY FLOOR : 74-0, 6/1/10 - See last page for vote
SUBJECT : Public contracts: state and local contract
eligibility: energy
Sector investment activities in Iran
SOURCE : Author
DIGEST : This bill enacts the Iran Contracts Act of 2010
which prohibits a person from bidding or renewing contract
with a public agency entity for goods and services of $1
million who is identified on a list maintained by the
Department of General Services (DGS) and engaging in
investment activities in Iran, as specified (applies to a
person that provides goods and services for $20 million).
This bill also prohibits a person or entity that is a
CONTINUED
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financial institution that extends $20 million or more in
credit to another person, for 45 days or more, if the
person will use the credit to invest in the energy sector
in Iran from bidding or renewing a contract with a public
entity for goods and services of $1 million or more, and is
also identified on the DGS list as a person engaging in
investment activities in Iran. Requires DGS to develop
this list by June 1, 2011 and update it every 180 days as
specified. This bill states the intent of the Legislature
to implement the authority granted in H.R.2194, 111th
Congress (2009-2010), the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010.
ANALYSIS : Existing federal law requires the President of
the United States, under the federal Iran Sanctions Act of
1996, as subsequently amended, to impose specified
sanctions on foreign companies that make substantial
investments in Iran's energy sector.
Existing law prohibits the California Public Employees'
Retirement System and the State Teachers' Retirement System
from investing public employee retirement funds in a
company with active business relations in Sudan or that has
invested or engaged in business operations with entities
involved in the development of petroleum or natural gas
resources of Iran.
Existing law authorizes contracting between state agencies
and private contractors and sets forth the requirements for
the procurement of goods and services and for the
solicitation and evaluation of bids and the awarding of
contracts by public entities.
Existing law prohibits companies involved in specified
business activities in Sudan from entering into a contract
with a state agency for goods and services and requires a
prospective bidder for a state contract to certify that the
company is not engaged in such activities. Existing law
specifies penalties for submitting a false certification.
The United States and much of the international community
has condemned the Government of Iran for its human rights
violations, its support of international terrorism, and its
efforts to develop nuclear weapons under the guise of
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developing nuclear power for domestic energy uses. The
Iran Sanctions Act expresses U.S. policy to work with
international organizations to pressure the government of
Iran to cease its illicit nuclear activity, and it
authorizes the President, by Executive Order, to impose
sanctions and limit the ability of U.S. persons and
business from engaging in business activities with the
Government of Iran and other designated groups. In light
of recent confrontations between the Government of Iran and
the international community over its nuclear activity, its
support of international terrorism, and its suppression of
civil rights and liberties, legislation is currently
pending in Congress that would strengthen existing
sanctions and enable state and local governments to adopt
restrictions consistent with federal policy.
This bill:
1. Prohibits the State of California and its subdivisions
from contracting for over $1 million dollars with
companies that have specified business activities in
Iran's petroleum sector. The prohibition applies to new
contracts or contract renewals.
2. Requires a company seeking to bid on state and local
government contracts to certify that they are not
engaged in developing Iran's petroleum resources.
3. Requires the Department of General Services (DGS) to
maintain a list of companies engaged in the offending
investments, which will be available to companies
interested in bidding for contracts with the State.
Provides that any costs to DGS for maintaining the list
shall be recovered, as specified.
4. Requires companies to be given 90 days written notice to
challenge their disqualification for prohibited
activities.
5. Provides that companies that cease these activities
shall become eligible to do business with the State of
California and its subdivisions.
6. Establishes fines for companies that submit a false
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certification in an amount that is equal to the greater
of $250,000 or twice the amount of the contract for
which a bid was submitted.
7. Specifies that companies who submit a false
certification shall be ineligible to bid on government
contracts for three years.
Background
The U.S. also has imposed sanctions on the Government of
Iran, determining that Iran's illicit nuclear activities,
combined with 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.
On June 24, 2010, President Obama signed into law H. R.
2194, the "Comprehensive Iran Sanctions, Accountability,
and Divestment Act of 2010" (Public Law 111-195), which
enacted new sanctions legislation against Iran, authorizing
states 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
Comments
According to the author's office, this bill is intended to
support federal and international efforts by precluding
private companies from entering into or renewing state
contracts if they have substantial business dealings in
Iran's energy sector, thereby "ensuring that California's
tax dollars do not support companies whose investments
either directly or indirectly support Iran's nuclear or
terrorist activities."
The author's office contends that "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 not to 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
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egregious violations of human rights, and engaging in
illicit nuclear weapons development."
The author's office notes that for decades California has
engaged in socially responsible investing, ranging from
divesting state pension funds from companies that supported
apartheid in South Africa in the 1980s to sanctions for
human rights violations in Sudan.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/31/10)
30 Years After
Anti-Defamation League
American Jewish committee - Los Angeles
Center for the Promotion of Democracy and Human Rights
City of Beverly Hills
City of Los Angeles
City of West Hollywood
County of Los Angeles
Jewish Community Relations Council of Sacramento
Jewish Community Relations Council of San Francisco, the
Peninsula, Marin, Sonoma, Alameda, and Contra Costa
Counties
Jewish Federation of San Diego
Jewish Labor Committee, Western Region
Jewish Public Affairs Committee of California
Los Angeles County Board of Supervisors
Simon Wiesenthal Center
United Against a Nuclear Iran
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill
Berryhill, Blakeslee, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman,
Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal,
Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello,
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Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NO VOTE RECORDED: Tom Berryhill, Fuentes, Fuller, Norby,
Audra Strickland, Vacancy
DLW:nl 8/31/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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