MISSISSIPPI LEGISLATURE
2015 Regular Session
To: Finance
By: Senator(s) Collins, Gandy, Hill
AN ACT TO ENACT THE IRAN DIVESTMENT ACT OF 2015; TO PROHIBIT CERTAIN INVESTMENTS AND CONTRACTS WITH PERSONS DEEMED TO BE ENGAGING IN INVESTMENT ACTIVITIES IN IRAN; TO DIRECT THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO DEVELOP OR CONTRACT TO DEVELOP A LIST OF PERSONS HE DETERMINES ENGAGES IN INVESTMENT ACTIVITIES IN IRAN; TO PROVIDE EXCEPTIONS TO STATE CONTRACTING PROHIBITION; TO REQUIRE ANY PERSON CONTRACTING WITH THE STATE TO CERTIFY THAT HE IS NOT IDENTIFIED ON A LIST CREATED PURSUANT TO THIS ACT; TO PROVIDE APPLICATION OF THIS ACT TO POLITICAL SUBDIVISIONS; TO PROVIDE INDEMNIFICATION OF EMPLOYEES AND OFFICIALS FOR COMPLIANCE WITH THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Short title. This act may be known and cited as the "Iran Divestment Act of 2015."
SECTION 2. Legislative findings. (1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) Respect for human rights in Iran has steadily deteriorated as demonstrated by transparently fraudulent elections and the brutal repression and murder, arbitrary arrests, and show trials of peaceful dissidents.
(6) 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.
(7) 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.
(8) It is the intent of the Legislature 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. Definitions. As used in this act, unless the context clearly requires otherwise:
(a) "Energy sector of Iran" means activities to develop petroleum or natural gas resources or nuclear power in Iran.
(b) "Expense" means all explicit costs associated with divesting of investments, including, but not limited to, trading costs, brokerage commissions, and any realized losses, and all implicit costs, including, but not limited to, lost opportunity costs resulting from the prohibition from making certain investments.
(c) "Financial institution" means the term as used in Section 14 of the Iran Sanctions Act of 1996 (Public Law 104—172; 50 USC 1701 note).
(d) "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. It does not include indirect beneficial ownership through index funds, commingled funds, limited partnerships, derivative instruments, or the like.
(e) "Iran" includes the Government of Iran and any agency or instrumentality of Iran.
(f) "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 USC Section 262r(c)(3));
(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.
(g) "State agency" means each state board, commission, department, executive department or officer, institution, and instrumentality.
SECTION 4. Inapplicability to small procurement contracts.
This act does not apply to a procurement or contract valued at One Thousand Dollars ($1,000.00) or less.
SECTION 5. Persons engaged in investment activities. 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 or 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. Duties of the Executive Director of the Department of Finance and Administration. (1) (a) No more than one hundred twenty (120) days after the effective date of this act, 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 it determines engages in investment activities in Iran as described in this section. If the executive director has contracted to develop the list, the list shall be finally developed no more than one hundred twenty (120) days after the effective date of this act. The list, when completed, shall 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 finalizing an initial list or an updated list, the executive director must do all of the following before a person is included on the list:
(i) Provide ninety (90) days' written notice of the executive director's intent to include the person on the list. The notice shall inform the person that inclusion or the list would make the person ineligible to contract with the state. The notice shall specify that the person, if it ceases its engagement in investment activities in Iran, may he 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 shall not be included on the list.
(d) The executive director shall make every effort to avoid erroneously including a person on the list.
(2) A person that is identified on a list created pursuant to subsection (1) of this section as a person engaging in investment activities in Iran as described in Section 5 of this act, is ineligible to contract with the state.
(3) Any contract entered into with a person that is ineligible to contract with the state shall be void a initio.
SECTION 7. Exceptions to state contracting prohibition. Notwithstanding Section 6 of this act, a person engaged in investment activities in Iran as described in Section 5 of this act may contract with the state, on a case-by-case basis, if:
(a) The investment activities in Iran were made before the effective date of this act, the investment activities in Iran have not been expanded or renewed after the effective date of this act, 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 that the commodities or services are necessary to perform its functions and that, absent such an exemption, the state agency would be unable to obtain the commodities or services for which the contract is offered. Such determination shall be entered into the procurement record.
SECTION 8. Certification required. (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 of this act. 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, shall not utilize, on the contract with the state agency or entity, any subcontractor that is identified on a list created pursuant to Section 6 of this act.
(3) Upon receiving information that a person who has made the certification required by subsection (1) is in violation thereof, the state agency or entity shall review such information and offer the person an opportunity to respond. If the person fails to demonstrate that it has ceased its engagement in the investment which is in violation of this act within ninety (90) days after the determination of such violation, then the state agency or entity shall take such action as may he appropriate and provided for by law, rule, or contract, including, but not limited to, imposing sanctions, seeking compliance, recovering damages, or declaring the contractor in default.
SECTION 9. Annual reporting by the Executive Director of the Department of Finance and Administration. The executive director shall report to the Governor, Lieutenant Governor, and the Speaker of the House of Representatives annually by October 1st, on the status of the federal "Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010" (Public Law 111—195), the "Iran Divestment Act of 2015," and any rules or regulations adopted thereunder.
SECTION 10. Application to political subdivisions. A person that is identified on a list created pursuant to Section 6 of this act as a person engaging in investment activities in Iran as described in Section 5 of this act shall be ineligible to contract with any political subdivision of this state and any contract entered into with a political subdivision of this state shall he void ab initio.
SECTION 11. Certification required. After this act takes effect, every bid or proposal made to a political subdivision of the state or any public department, agency or official thereof 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, shall contain the following statement subscribed by the bidder and affirmed by such 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 that each bidder is not on the list created pursuant to Section 6 of this act."
(2) Notwithstanding subsection (1) of this section, the statement of noninvestment in the Iranian energy sector may be submitted electronically.
(3) A bid shall not be considered for award nor shall any award he made where the condition set forth in subsection (1) of this section has not been complied with; provided, however, that if in any case the bidder cannot make the foregoing certification, the bidder shall so state and shall furnish with the bid a signed statement which sets forth in detail the reasons therefor. A political subdivision may award a bid to a bidder who cannot make the certification pursuant to subsection (1) of this section, on a case-by-case basis, if:
(a) The investment activities in Iran were made before the effective date of this act, the investment activities in Iran have not been expanded or renewed after the effective date of this act, 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 such an exemption, the political subdivision would be unable to obtain the goods or services for which the contract is offered. Such determination shall be made in writing and shall be a public document.
SECTION 12. Limitation on retirement and State Treasury investments. (1) Neither the Public Employees' Retirement System of Mississippi or the State Treasurer may invest funds with a person that is identified on a list created pursuant to Section 6 of this act as a person engaging in investment activities in Iran as described in Section 5 of this act.
(2) Any existing investments in violation of subsection (1) as of the effective date of this act must be divested when prudent to do so but within a period not to exceed one hundred twenty (120) days after the posting is made on the website of the Department of Finance and Administration.
SECTION 13. Exception to investment prohibition. Notwithstanding Section 12 of this act, an investment may be made in a person engaged in investment activities in Iran as described in Section 5 of this act, on a case-by-case basis, if:
(a) The investment activities in Iran were made before the effective date of this act, the investment activities in Iran have not been expanded or renewed after the effective date of this act, 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 to perform its functions.
SECTION 14. Limitation of act due to fiduciary obligations. Nothing in this act requires the Public Employees' Retirement System of Mississippi or its agents to take action as described in this act unless it is determined, in good faith, that the action described in this act is consistent with the fiduciary responsibilities of the Public Employees' Retirement System of Mississippi or its agents and there are appropriated funds of the state to absorb the expenses necessary to implement this act.
SECTION 15. Indemnification of employees and officials for compliance with this act. Present, future and former board members, officers and employees of the Department of Finance and Administration, the Public Employees' Retirement System of Mississippi, and agents retained by the commission, as well as present, future and former State Treasurers, officers and employees of the State Treasurer, and agents retained by the State Treasurer must be indemnified from the General Fund of the state 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 shall or may at any time sustain by reason of any decision to restrict, reduce or eliminate investments pursuant to this act.
SECTION 16. Continued application of this act. The restrictions provided for in 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. Notice to the Attorney General of the United States. 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 within thirty (30) days after the effective date of this act.
SECTION 18. Severability. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the Legislature hereby declaring 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 hereof may be declared to be unconstitutional, invalid or otherwise ineffective.
SECTION 19. This act shall take effect and be in force from and after July 1, 2015, and shall stand repealed from and after June 30, 2015.