I 111th CONGRESS 1st Session H. R. 1327 IN THE HOUSE OF REPRESENTATIVES March 5, 2009 Mr. Frank of Massachusetts (for himself, Mr. Berman, Mr. Sherman, and Mr. Meeks of New York) introduced the following bill; which was referred to the Committee on Financial Services A BILL To authorize State and local governments to direct divestiture from, and prevent investment in, companies with investments of $20,000,000 or more in Iran’s energy sector, and for other purposes.

1.

Short title

This Act may be cited as the Iran Sanctions Enabling Act of 2009.

2.

Findings

The Congress finds as follows: (1)There is an increasing interest by States, local governments, educational institutions, and private institutions to seek to disassociate themselves from companies that directly or indirectly support the Government of Iran’s efforts to achieve a nuclear weapons capability. (2)Policy makers and fund managers may find moral, prudential, or reputational reasons to divest from companies that accept the business risk of operating in countries that are subject to international economic sanctions or that have business relationships with countries, governments, or entities with which any United States company would be prohibited from dealing because of economic sanctions imposed by the United States.

3.

Authority of State and local governments to divest from certain companies invested in Iran’s energy sector

(a)

Statement of policy

It is the policy of the United States to support the decision of State governments, local governments, and educational institutions to divest from, and to prohibit the investment of assets they control in, persons that have investments of more than $20,000,000 in Iran’s energy sector. (b)

Authority To divest

Notwithstanding any other provision of law, a State or local government may adopt and enforce measures that meet the requirements of subsection (d) to divest the assets of the State or local government from, or prohibit investment of the assets of the State or local government in, any person that the State or local government determines, using credible information available to the public, engages in investment activities in Iran described in subsection (c). (c)

Investment activities in Iran described

A person engages in investment activities in Iran described in this subsection if the person— (1)has an investment of $20,000,000 or more— (A)in the energy sector of Iran; or (B)in a person that 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 Iran; or (2)is a financial institution that extends $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. (d)

Requirements

The requirements referred to in subsection (b) that a measure taken by a State or local government must meet are the following: (1)

Notice

The State or local government shall provide written notice to each person to whom the State or local government, as the case may be, intends to apply the measure, of such intent. (2)

Timing

The measure shall apply to a person not earlier than the date that is 90 days after the date on which the person receives the written notice required by paragraph (1). (3)

Opportunity for hearing

The State or local government shall provide each person referred to in paragraph (1) with an opportunity to demonstrate to the State or local government, as the case may be, that the person does not engage in investment activities in Iran described in subsection (c). If the person demonstrates to the State or local government that the person does not engage in investment activities in Iran described in subsection (c), the measure shall not apply to the person. (4)

Sense of the Congress on avoiding erroneous targeting

It is the sense of the Congress that a State or local government should not adopt a measure under subsection (b) with respect to a person unless the State or local government has made every effort to avoid erroneously targeting the person and has verified that the person engages in investment activities in Iran described in subsection (c). (e)

Notice to Department of Justice

Not later than 30 days after adopting a measure pursuant to subsection (b), a State or local government shall submit to the Attorney General of the United States a written notice which describes the measure. (f)

Nonpreemption

A measure of a State or local government authorized under subsection (b) is not preempted by any Federal law or regulation. (g)

Definitions

In this section: (1)

Investment

The investment of assets, with respect to a State or local government, includes— (A)a commitment or contribution of assets; (B)a loan or other extension of credit; or (C)the entry into or renewal of a contract for goods or services. (2)

Assets

(A)

In general

Except as provided in subparagraph (B), the term assets refers to public monies and includes any pension, retirement, annuity, or endowment fund, or similar instrument, that is controlled directly or indirectly by a State or local government. (B)

Exception

The term assets does not include employee benefit plans covered by title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.). (h)

Effective date

(1)

In general

Except as provided in paragraph (2), this section shall apply to measures adopted by a State or local government before, on, or after the date of the enactment of this Act. (2)

Notice requirements

Subsections (d) and (e) apply to measures adopted by a State or local government on or after the date of the enactment of this Act.

4.

Safe harbor for changes of investment policies by asset managers

Section 13(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a–13(c)(1)) is amended by inserting before the period the following: or engage in investment activities in Iran described in section 3(c) of the Iran Sanctions Enabling Act of 2009.

5.

Sense of Congress regarding certain ERISA plan investments

It is the sense of Congress that a fiduciary of an employee benefit plan, as defined in section 3(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(3)), may divest plan assets from, or avoid investing plan assets in, any person the fiduciary determines engages in investment activities in Iran described in section 3(c) of this Act, without breaching the responsibilities, obligations, or duties imposed upon the fiduciary by section 404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104), if— (1)the fiduciary makes such determination using credible information that is available to the public; and (2)such divestment or avoidance of investment is conducted in accordance with section 2509.94–1 of title 29, Code of Federal Regulations (as in effect on the day before the date of the enactment of this Act).

6.

Definitions

In this title: (1)

Energy sector

The term energy sector refers to activities to develop petroleum or natural gas resources or nuclear power. (2)

Financial institution

The term financial institution has the meaning given that term in section 14(5) of the Iran Sanctions Act of 1996 (Public Law 104–172; 50 U.S.C. 1701 note). (3)

Iran

The term Iran includes any agency or instrumentality of Iran. (4)

Person

The term person means— (A)a natural person, corporation, 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 section 1701(c)(3) of the International Financial Institutions Act (22 U.S.C. 262r(c)(3))); and (C)any successor, subunit, parent company, or subsidiary of any entity described in subparagraph (A) or (B). (5)

State

The term State means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. (6)

State or local government

The term State or local government includes— (A)any State and any agency or instrumentality thereof; (B)any local government within a State, and any agency or instrumentality thereof; (C)any other governmental instrumentality; and (D)any public institution of higher education within the meaning of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

7.

Sunset

This Act shall terminate 30 days after the date on which the President has certified to the Congress that— (1)the Government of Iran has ceased providing support for acts of international terrorism and no longer satisfies the requirements for designation as a state-sponsor of terrorism for purposes of section 6(j) of the Export Administration Act of 1979, section 620A of the Foreign Assistance Act of 1961, section 40 of the Arms Export Control Act, or any other provision of law; or (2)Iran has ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology.