MISSISSIPPI LEGISLATURE

2015 Regular Session

To: Appropriations

By: Representatives Turner, Dixon

House Bill 1127

(As Passed the House)

AN ACT TO BE KNOWN AS THE "IRAN DIVESTMENT ACT OF 2015"; TO DECLARE LEGISLATIVE FINDINGS AND INTENT; TO DEFINE CERTAIN TERMS USED IN THE ACT; TO EXEMPT SMALL PROCUREMENT CONTRACTS FROM THE PROVISIONS OF THIS ACT; TO REQUIRE THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO DEVELOP AND PUBLISH A LIST OF PERSONS DEEMED TO BE ENGAGING IN INVESTMENT ACTIVITIES IN IRAN; TO PROHIBIT THE STATE AND ITS POLITICAL SUBDIVISIONS FROM ENTERING INTO CONTRACTS WITH PERSONS INCLUDED ON THE LIST; TO CREATE LIMITED EXCEPTIONS TO THE PROHIBITION AGAINST PUBLIC CONTRACTS WITH PERSONS ENGAGED IN INVESTMENT ACTIVITIES IN IRAN; TO REQUIRE AN ANNUAL REPORT TO BE SUBMITTED TO THE GOVERNOR, LIEUTENANT GOVERNOR AND HOUSE SPEAKER ON THE STATUS AND EFFECT OF THIS ACT; TO PROHIBIT THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE STATE TREASURER FROM INVESTING WITH PERSONS ENGAGED IN INVESTMENT ACTIVITIES IN IRAN; TO HOLD HARMLESS OFFICERS, EMPLOYEES AND AGENTS OF THE RETIREMENT SYSTEM AND STATE TREASURER'S OFFICE FOR CLAIMS ARISING FROM DECISIONS TO RESTRICT INVESTMENTS UNDER THIS ACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Iran Divestment Act of 2015."

SECTION 2. (1) The Mississippi Legislature finds the following:

(a) 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 allies of the United States in Europe, the Middle East and around the world.

(b) The International Atomic Energy Agency has called attention repeatedly 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.

(c) On July 1, 2010, President Barack Obama signed into law H.R. 2194, the "Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010" (Public Law 111-195), which expressly authorizes states and local governments to prevent investment in, including prohibiting entry into or renewing contracts with, companies operating in Iran's energy sector with investments that have the result of directly or indirectly supporting the efforts of the Government of Iran to achieve nuclear weapons capability.

(d) The serious and urgent nature of the threat from Iran demands that states, local governments 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 nuclear weapons capability.

(e) Respect for human rights in Iran has deteriorated steadily, as demonstrated by transparently fraudulent elections and the brutal repression and murder, arbitrary arrests and show trials of peaceful dissidents.

(f) The concerns of the State of Mississippi regarding Iran are strictly the result of the actions of the Government of Iran and should not be construed as enmity towards the Iranian people.

(g) In order to effectively address the need for this state to respond to the policies of Iran in a uniform fashion, prohibiting contracts with persons engaged in investment activities in the energy sector of Iran must be accomplished on a statewide basis.

(2) The intent of the Legislature and the purpose of this act are to fully implement the authority granted under Section 202 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (Public Law 111-195).

SECTION 3. As used in this act, the following words and phrases have the meanings ascribed in this section unless the context clearly indicates otherwise:

(a) "Energy sector of Iran" means activities to develop petroleum or natural gas resources or nuclear power in Iran.

(b) "Financial institution" means the term as used in Section 14 of the Iran Sanctions Act of 1996 (Public Law 104-172; 50 U.S.C. 1701 note).

(c) "Investment" means a commitment or contribution of funds or property, whatever the source, a loan or other extension of credit, and the entry into or renewal of a contract for goods or services. The term "investment" does not include indirect beneficial ownership through index funds, commingled funds, limited partnerships, derivative instruments or the like.

(d) "Iran" includes the Government of Iran and any agency or instrumentality of Iran.

(e) "Person" means any of the following:

(i) A natural person, corporation, company, limited liability company, business association, partnership, society, trust or any other nongovernmental entity, organization or group;

(ii) 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)); or

(iii) Any successor, subunit, parent entity or subsidiary of, or any entity under common ownership or control with, any entity described in subparagraphs (i) and (ii) of this paragraph.

(f) "State agency" means a state board, commission, department, executive department or officer, institution and instrumentality.

SECTION 4. This act does not apply to a procurement or contract valued at One Thousand Dollars ($1,000.00) or less.

SECTION 5. For purposes of this act, a person engages in investment activities in Iran if the person provides goods or services valued at Twenty Million Dollars ($20,000,000.00) or more in the energy sector of Iran, including a person that provides oil liquefied natural gas tankers or products used to construct or maintain pipelines used to transport oil or liquefied natural gas for the energy sector of Iran.

SECTION 6. (1) (a) Before November 1, 2015, the Executive Director of the Department of Finance and Administration shall develop or contract to develop, using credible information available to the public, a list of persons determined to engage in investment activities in Iran, as described in Section 5. If the executive director elects to contract for the development of the list, the list must be developed before November 1, 2015. When completed, the list must be posted on the website of the Department of Finance and Administration.

(b) The executive director shall update the list every one hundred eighty (180) days.

(c) Before a person is included on the finalized initial list or updated list, the executive director must do all of the following:

(i) Provide ninety (90) days written notice of the executive director's intent to include the person on the list. The notice must inform the person that inclusion on the list will make the person ineligible to contract with the state. The notice also must specify that the person, if it ceases its engagement in investment activities in Iran, may be removed from the list.

(ii) The executive director shall provide a person with an opportunity to comment in writing that it is not engaged in investment activities in Iran. If the person demonstrates to the executive director that the person is not engaged in investment activities in Iran, the person may not be included on the list.

(d) The executive director shall make every effort to avoid including a person on the list erroneously.

(2) Except as otherwise provided in Section 7, a person that is identified on a list created pursuant to subsection (1) as a person engaging in investment activities in Iran, as described in Section 5, is ineligible to contract with the state.

(3) Any contract entered into with a person that is ineligible to contract with the state is void ab initio.

SECTION 7. A person engaged in investment activities in Iran, as described in Section 5, may contract with the state, on a case by case basis, only if:

(a) The investment activities in Iran were made before July 1, 2015, the investment activities in Iran have not been expanded or renewed after July 1, 2015, and the person has adopted, publicized and is implementing a formal plan to cease the investment activities in Iran and to refrain from engaging in any new investments in Iran; or

(b) The state agency makes a determination, which must be entered into the procurement record, that the commodities or services are necessary to perform its functions and that, absent the exemption, the state agency will be unable to obtain the commodities or services for which the contract is offered.

SECTION 8. (1) A state agency or entity shall require a person that attempts to contract with the state, including a contract renewal or assumption, to certify, at the time the bid is submitted or the contract is entered into, renewed or assigned, that the person or the assignee is not identified on a list created pursuant to Section 6. A state agency shall include certification information in the procurement record.

(2) A person that contracts with the state, including a contract renewal or assumption, may not utilize any subcontractor that is identified on a list created pursuant to Section 6 on the contract with the state agency or entity.

(3) Upon receiving information that a person who has made the certification required under subsection (1) is in violation of this act, the state agency or entity shall review the information and offer the person an opportunity to respond. If the person fails to demonstrate that it has ceased its engagement in the investment that is in violation of this act within ninety (90) days after the determination of the violation, then the state agency or entity must take such action as may be appropriate and authorized by law, rule or contract, including, but not limited to, imposing sanctions, seeking compliance, recovering damages or declaring the contractor in default.

SECTION 9. Beginning in 2016, the executive director shall report annually to the Governor, Lieutenant Governor and Speaker of the House of Representatives before October 1 on the status and effect of this act and any related rules or regulations and the federal Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (Public Law 111-195).

SECTION 10. A person that is identified on a list created pursuant to Section 6 as a person engaging in investment activities in Iran, as described in Section 5, is ineligible to contract with any political subdivision of this state. Any contract entered into by a political subdivision of this state with a person that is ineligible to contract with the state is void ab initio.

SECTION 11. (1) Beginning July 1, 2015, every bid or proposal made to a political subdivision of the state or any public department, agency or official of the political subdivision, where competitive bidding is required by statute, rule, regulation or local law, for work or services performed or to be performed or goods sold or to be sold, must contain the following statement subscribed to and affirmed by the bidder as true under the penalties of perjury: "By submission of this bid, each bidder and each person signing on behalf of any bidder certifies, and in the case of a joint bid each party thereto certifies, as to its own organization, under penalty of perjury, that to the best of its knowledge and belief, each bidder is not on the list created pursuant to Section 6."

(2) The statement of noninvestment in the Iranian energy sector required under this section may be submitted electronically.

(3) A bid may not be considered for award, nor may any award be made, if the condition set forth in subsection (1) is not satisfied; however, if the bidder cannot make the certification, the bidder may furnish, along with the bid, a signed statement setting forth in detail the reasons the bidder cannot make the certification. A political subdivision may award a bid to a bidder that cannot make the certification pursuant to subsection (1), on a case by case basis, if:

(a) The investment activities in Iran were made before July 1, 2015, the investment activities in Iran have not been expanded or renewed after July 1, 2015, and the person has adopted, publicized and is implementing a formal plan to cease the investment activities in Iran and to refrain from engaging in any new investments in Iran; or

(b) The political subdivision makes a determination that the goods or services are necessary for the political subdivision to perform its functions and that, absent an exemption, the political subdivision will be unable to obtain the goods or services for which the contract is offered. A determination made under this paragraph must be made in writing and is deemed to be a public document.

SECTION 12. (1) Except as otherwise provided in Section 13, the Public Employees' Retirement System and the State Treasurer may not invest funds with a person that is identified on a list created pursuant to Section 6 as a person engaging in investment activities in Iran, as described in Section 5.

(2) Any existing investments in violation of subsection (1) as of the July 1, 2015, must be divested within one hundred twenty (120) days of July 1, 2015.

SECTION 13. An investment may be made by the Public Employees' Retirement System or the State Treasurer in a person engaged in investment activities in Iran, as described in Section 5, on a case by case basis, only if:

(a) The investment activities in Iran were made before July 1, 2015, the investment activities in Iran have not been expanded or renewed after July 1, 2015, and the person has adopted, publicized and is implementing a formal plan to cease the investment activities in Iran and to refrain from engaging in any new investments in Iran; or

(b) The investor makes a determination that the investments are necessary in order to perform its functions.

SECTION 14. Sections 12 through 15 of this act may not be construed to require the Public Employees' Retirement System or its agents to take any action unless it is determined, in good faith, that: the action is consistent with the fiduciary responsibilities of the retirement system or its agents; and there are appropriated funds of the state to absorb the expenses necessary to implement the action.

SECTION 15. Present, future and former board members, officers, employees and agents of the Public Employees' Retirement System and the Department of Finance and Administration, as well as present, future and former State Treasurers and employees of and agents retained by the State Treasurer, must be indemnified from the State General Fund and held harmless by the state from all claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including court costs and attorney's fees, and against all liability, losses and damages of any nature whatsoever that these present, future or former board members, officers, employees, agents or contract investment managers may sustain by reason of any decision to restrict, reduce or eliminate investments pursuant to this act.

SECTION 16. The restrictions established under this act apply only until:

(a) The President or Congress of the United States, by means including, but not limited to, legislation, executive order or written certification, declares that divestment of the type provided for in this act interferes with the conduct of United States foreign policy; or

(b) The United States revokes its current sanctions against Iran.

SECTION 17. The Secretary of State, in consultation with the Mississippi Attorney General, shall submit to the Attorney General of the United States a written notice describing this act before August 1, 2015.

SECTION 18. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase or word of this act is for any reason held to be unconstitutional or invalid, the holding shall not affect the constitutionality or validity of the remaining portions of this act. The Legislature hereby declares that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases or words thereof may be declared to be unconstitutional, invalid or otherwise ineffective.

SECTION 19. Immediately upon approval of this act by the Governor, any rule or regulation that must be amended or repealed to implement this act is authorized.

SECTION 20. Sections 1 through 19 of this act shall stand repealed on July 1, 2020.

SECTION 21. This act shall take effect and be in force from and after July 1, 2015, except for Section 19, which shall take effect and be in force from and after the passage of this act.