H.R. 180 (110th): Darfur Accountability and Divestment Act

110th Congress, 2007–2009. Text as of Aug 03, 2007 (Referred to Senate Committee).

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IIB

110th CONGRESS

1st Session

H. R. 180

IN THE SENATE OF THE UNITED STATES

August 1, 2007

Received

August 3, 2007

Read twice and referred to the Committee on Banking, Housing, and Urban Affairs

AN ACT

To require the identification of companies that conduct business operations in Sudan, to prohibit United States Government contracts with such companies, and for other purposes.

1.

Short title

This Act may be cited as the Darfur Accountability and Divestment Act.

2.

Findings

The Congress finds as follows:

(1)

In the 108th Congress, the House of Representatives adopted House Concurrent Resolution 467 on July 22, 2004, by a unanimous vote of 422–0, which—

(A)

declares that the atrocities unfolding in the Darfur region of Sudan are genocide;

(B)

declares that the Government of Sudan has violated the Convention on the Prevention and Punishment of the Crime of Genocide;

(C)

urges the Administration to seriously consider multilateral intervention to stop genocide in Darfur should the United Nations Security Council fail to act; and

(D)

calls on the Administration to impose targeted sanctions, including visa bans and the freezing of assets of the Sudanese National Congress and affiliated business and individuals directly responsible for the atrocities in Darfur.

(2)

In the 109th Congress, the House of Representatives passed H.R. 3127, the Darfur Peace and Accountability Act of 2006, on April 5, 2006, by a vote of 416–3, which—

(A)

appeals to the international community, including the United Nations, the European Union, and the North Atlantic Treaty Organization (NATO), to immediately mobilize sufficient political, military, and financial resources to support and expand the African Union Mission in Sudan (AMIS);

(B)

blocks assets and restricts travel of any individual the President determines is responsible for acts of genocide, war crimes, or crimes against humanity in the Darfur region of Sudan; and

(C)

offers United States support for the International Criminal Court's efforts to prosecute those responsible for acts of genocide in Darfur.

(3)

On September 9, 2004, former Secretary of State Colin Powell stated before the Committee on Foreign Relations of the Senate that genocide was being committed in the Darfur region of Sudan and that the Government of Sudan and the government-supported Janjaweed militias bear responsibility for the genocide.

(4)

On September 21, 2004, President George W. Bush affirmed the Secretary of State's finding in an address before the United Nations General Assembly, stating that the world is witnessing terrible suffering and horrible crimes in the Darfur region of Sudan, crimes the Government of the United States has concluded are genocide.

(5)

On May 29, 2007, President George W. Bush affirmed that the Government of Sudan is complicit in the bombing, murder, and rape of innocent civilians in Darfur and again declared that these actions rightfully constitute genocide.

(6)

Although the Government of the United States currently bans United States companies from conducting business operations in Sudan, millions of Americans are inadvertently supporting the Government of Sudan by investing in foreign companies that conduct business operations in Sudan that disproportionately benefit the Sudanese regime in Khartoum.

(7)

Several States and governmental entities, through legislation and other means, have expressed their desire, or are considering measures—

(A)

to divest any equity in, or to refuse to provide debt capital to, certain companies that operate in Sudan;

(B)

to disassociate themselves and the beneficiaries of their public pension and endowment funds from directly or indirectly supporting the Darfur genocide; and

(C)

to prohibit themselves from entering into or renewing contracts for the procurement of goods or services with certain companies that have a direct investment in, or conduct business operations in, Sudan.

(8)

California, Colorado, Florida, Hawaii, Indiana, Illinois, Iowa, Kansas, Maine, Minnesota, New Jersey, New York, Oregon, Rhode Island, Texas and Vermont have passed legislation to divest State funds from companies that conduct business operations in Sudan. Massachusetts, Michigan, North Carolina, Ohio, Pennsylvania, South Carolina, and Wisconsin are considering legislation to divest State funds from companies that conduct business operations in Sudan. Arkansas, Connecticut, Maryland, and Ohio have passed non-binding divestment legislation with respect to Sudan.

(9)

Denver, Colorado, Los Angeles, California, Miami Beach, Florida, New Haven, Connecticut, Newton, Massachusetts, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Providence, Rhode Island, and San Francisco, California have passed legislation mandating divestment of city funds from companies that conduct business operations in Sudan.

(10)

American University, Amherst College, Andover Newton Theological School, Boston University, Bowdoin College, Brandeis University, Brown University, Colby College, Columbia University, Connecticut College, Cornell University, Dartmouth College, Drew University, Duke University, Emory University, Hampton University, Harvard University, Hendrix College, Howard University, Lee University, Massachusetts Institute of Technology, Middlebury College, Nazareth College, Northwestern University, Oberlin College, Queen’s University, Reconstructionist Rabbinical College, Regis University, Samford University, Seton Hall, Smith College, Stanford University, Swarthmore College, Trinity College, University of California, University of Colorado, University of Connecticut, University of Denver, University of Illinois, University of Maryland, University of Massachusetts, University of Minnesota, University of Pennsylvania, University of Rochester, University of Southern California, University of Vermont, University of Virginia, University of Washington, University of Wisconsin System, Vassar College, Wellesley College, Wheaton College, Williams College, and Yale University have divested their funds from or placed restrictions on investment of their funds in certain companies that conduct business operations in Sudan.

(11)

Divestment has proven effective in similar situations, as in 1986, when State pension funds and university endowments were divested from companies that conducted business operations in South Africa, which was critical to ending apartheid in that country, and by 1994, when the first free elections in South Africa took place, a substantial number of States, counties, cities, universities, and colleges in the United States had adopted partial or total divestment policies.

(12)

Economic pressure against the Government of Sudan has been effective in pushing Sudan to cooperate with the United States on counterterrorism efforts and in part in agreeing to negotiations with the Sudan People’s Liberation Army of South Sudan which resulted in the Comprehensive Peace Agreement of 2005.

(13)

Congress acknowledges that divestment should be used sparingly and under extraordinary circumstances. This Act is based on unique circumstances, specifically, the reprehensible and abhorrent genocide occurring in Sudan.

(14)

The business operations of companies in countries that perpetrate grave abuses of human rights, especially the uniquely monstrous crime of genocide, are of concern to many United States investors and citizens even when these operations represent a small fraction of a company's total business.

(15)

State and city pension funds have routinely but unsuccessfully sought to acquire and utilize data from the Federal Government on companies for investment decisions.

(16)

There is an increasing interest by States, local governments, educational institutions, and private institutions to seek to disassociate themselves from companies that support the Government of Sudan.

(17)

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.

(18)

The world community has a moral obligation to work to do everything possible to stop the ongoing genocidal practices of the Government of Sudan in the Darfur region.

3.

Transparency in capital markets

(a)

List of persons directly investing in or conducting business operations in certain Sudanese sectors

(1)

Publication of list

Not later than 6 months after the date of the enactment of this Act and every 6 months thereafter, the Secretary of the Treasury, in consultation with the Secretary of Energy, the Secretary of State, the Securities and Exchange Commission, and the heads of other appropriate Federal departments and agencies, shall, using only publicly available (including proprietary) information, ensure publication in the Federal Register of a list of each person, whether within or outside of the United States, that, as of the date of the publication, has a direct investment in, or is conducting, business operations in Sudan’s power production, mineral extraction, oil-related, or military equipment industries, subject to paragraph (2). To the extent practicable, the list shall include a description of the investment made by each such person, including the dollar value, intended purpose, and status of the investment, as of the date of the publication.

(2)

Exceptions

The Secretary of the Treasury shall exclude a person from the list if all of the business operations by reason of which the person would otherwise be included on the list—

(A)

are conducted under contract directly and exclusively with the regional government of southern Sudan;

(B)

are conducted under a license from the Office of Foreign Assets Control, or are expressly exempted under Federal law from the requirement to be conducted under such a license;

(C)

consist of providing goods or services to marginalized populations of Sudan;

(D)

consist of providing goods or services to an internationally recognized peacekeeping force or humanitarian organization;

(E)

consist of providing goods or services that are used only to promote health or education;

(F)

are conducted by a person that has also undertaken significant humanitarian efforts as described in section 10(14)(B);

(G)

have been voluntarily suspended; or

(H)

will cease within 1 year after the adoption of a formal plan to cease the operations, as determined by the Secretary.

(3)

Consideration of scrutinized business operations

The Secretary of the Treasury should give serious consideration to including on the list any company that has a scrutinized business operation with respect to Sudan (within the meaning of section 10(4)).

(4)

Prior notice to persons

The Secretary of the Treasury shall, at least 30 days before the list is published under paragraph (1), notify each person that the Secretary intends to include on the list.

(5)

Delay in including persons on the list

After notifying a person under paragraph (4), the Secretary of the Treasury may delay including that person on the list for up to 60 days if the Secretary determines and certifies to the Congress that the person has taken specific and effective actions to terminate the involvement of the person in the activities that resulted in the notification under paragraph (4).

(6)

Removal of persons from the list

The Secretary of the Treasury may remove a person from the list before the next publication of the list under paragraph (1) if the Secretary determines that the person no longer has a direct investment in or is no longer conducting business operations as described in paragraph (1).

(7)

Advance notice to congress

Not later than 30 days (or, in the case of the first such list, 60 days) before the date by which paragraph (1) requires the list to be published, the Secretary of the Treasury shall submit to the Committees on Financial Services, on Education and Labor, and on Oversight and Government Reform of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs, on Health, Education, Labor, and Pensions, and on Homeland Security and Governmental Affairs of the Senate a copy of the list which the Secretary intends to publish under paragraph (1).

(b)

Publication on website

The Secretary of the Treasury shall ensure that the list is published on an appropriate, publicly accessible government website, updating the list as necessary to take into account any person removed from the list under subsection (a)(6).

(c)

Definition

In this section, the term investment has the meaning given in section 4(b)(3).

4.

Authority of State and local governments to divest from certain companies directly invested in certain Sudanese sectors

(a)

Statement of policy

It is the policy of the United States to support the decision of any State or local government to divest from, and to prohibit the investment of assets controlled by the State or local government in, persons on—

(1)

the list most recently published under section 3(a)(1), as modified under section 3(a)(6); or

(2)

any list developed by the State or local government for the purpose of divestment from certain persons described in subsection (b)(1)(B) of this section.

(b)

Authority to divest

(1)

In general

Notwithstanding any other provision of law, a State or local government may adopt and enforce measures to divest the assets of the State or local government from, or prohibit investment of the assets of the State or local government in—

(A)

persons that are included on the list most recently published under section 3(a)(1) of this Act, as modified under section 3(a)(6) of this Act; or

(B)

persons having a direct investment in, or carrying on a trade or business (within the meaning of section 162 of the Internal Revenue Code of 1986) in Sudan or with the Government of Sudan, if the measures require the State or local government, as the case may be, to the maximum extent practicable, to—

(i)

provide written notice to each person to whom the measures are to be applied; and

(ii)

not apply the measures to a person—

(I)

before the end of the 90-day period beginning with the date written notice is provided to the person pursuant to clause (i); or

(II)

if the person demonstrates to the State or local government, as the case may be, that the person is no longer involved in the activities by reason of which the measures would otherwise be applied to the person.

(2)

Applicability

This subsection applies to measures adopted by a State or local government before, on, or after the date of the enactment of this Act.

(3)

Definitions

In this subsection:

(A)

Investment

The investment of assets includes—

(i)

a commitment or contribution of assets; and

(ii)

a loan or other extension of credit of assets.

(B)

Assets

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.

(c)

Preemption

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

5.

Sense of the Congress

It is the sense of the Congress that a divestment measure authorized under section 4 or a measure authorized under section 9 to prohibit State or local contracts would not violate the United States Constitution because such a measure—

(1)

is not pre-empted under the Supremacy Clause;

(2)

is authorized by the Congress as an appropriate measure with regard to interstate or foreign commerce; and

(3)

is authorized by the Congress as a measure that promotes the foreign policy of the United States.

6.

Safe harbor for changes of investment policies by asset managers

Section 13 of the Investment Company Act of 1940 (15 U.S.C. 80a–13) is amended by adding at the end the following new subsection:

(c)

Safe harbor for changes in investment policies

Notwithstanding any other provision of Federal or State law, no person may bring any civil, criminal, or administrative action against any registered investment company or person providing services to such registered investment company (including its investment adviser), or any employee, officer, or director thereof, based solely upon the investment company divesting from, or avoiding investing in, securities issued by companies that are included on the list most recently published under section 3(a)(1) of the Darfur Accountability and Divestment Act, as modified under section 3(a)(6) of that Act. For purposes of this subsection the term person shall include the Federal government, and any State or political subdivision of a State.

.

7.

Safe harbor for changes of investment policies by employee benefit plans

Section 404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end the following new subsection:

(n)

No person shall be treated as breaching any of the responsibilities, obligations, or duties imposed upon fiduciaries by this title for divesting plan assets from, or avoiding investing plan assets in, persons that are included on the list most recently published under section 3(a)(1) of the Darfur Accountability and Divestment Act, as modified under section 3(a)(6) of such Act. Any divestiture of plan assets from, or avoidance of investing plan assets in, persons that are included on such list shall be treated as in accordance with this title and the documents and instruments governing the plan.

.

8.

Prohibition on united states government contracts

(a)

Prohibition

Notwithstanding any other provision of law, the Government of the United States shall not enter into or renew a contract for the procurement of goods or services with persons that are included on the list most recently published under section 3(a)(1), as modified under section 3(a)(6).

(b)

Waiver authority

The President may waive the prohibition in subsection (a) on a case-by-case basis if the President determines and certifies in writing to the Congress that it is important to the national security interests of the United States to do so.

9.

Authority of State and local governments to prohibit contracts

(a)

Statement of policy

It is the policy of the United States to support the decision of any State or local government to prohibit the State or local government, as the case may be, from entering into or renewing a contract as described in subsection (b).

(b)

Authority to prohibit contracts

Notwithstanding any other provision of law, a State or local government may adopt and enforce measures to prohibit the State or local government, as the case may be, from entering into or renewing a contract for the procurement of goods or services with persons that are included on the list most recently published under section 3(a)(1), as modified under section 3(a)(6).

10.

Definitions

For purposes of this Act:

(1)

Person

The term person, except in paragraph (6), means—

(A)

a natural person as well as a corporation, company, business association, partnership, society, trust, 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); and

(C)

any successor, subunit, or subsidiary of any entity described in subparagraph (A) or (B).

(2)

State

The term State includes 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.

(3)

State or local government

(A)

In general

The term State or local government includes—

(i)

any State and any agency or instrumentality thereof;

(ii)

any local government within a State, and any agency or instrumentality thereof;

(iii)

any other governmental instrumentality; and

(iv)

any public institution of higher education.

(B)

Public institution of higher education

The term public institution of higher education means a public institution of higher education within the meaning of the Higher Education Act of 1965.

(4)

Scrutinized business operation

A company has a scrutinized business operation with respect to Sudan if—

(A)
(i)

the company has business operations that involve contracts with or provision of supplies or services to—

(I)

the Government of Sudan;

(II)

a company in which the Government of Sudan has any direct or indirect equity share;

(III)

a consortium or project commissioned by the Government of Sudan; or

(IV)

a company involved in a consortium or project commissioned by the Government of Sudan; and

(ii)
(I)
(aa)

more than 10 percent of the revenues or assets of the company that are linked to Sudan involve oil-related activities or mineral extraction activities;

(bb)

less than 75 percent of the revenues or assets of the company that are linked to Sudan involve contracts with, or provision of oil-related or mineral extracting products or services to the regional government of southern Sudan or a project or consortium created exclusively by that regional government; and

(cc)

the company has failed to take substantial action with respect to the business operations referred to in clause (i) of this subparagraph or as described in subparagraph (B) or (C) of paragraph (14); or

(II)
(aa)

more than 10 percent of the revenues or assets of the company that are linked to Sudan involve power production activities;

(bb)

less than 75 percent of the power production activities of the company include projects whose intent is to provide power or electricity to the marginalized populations of Sudan; and

(cc)

the company has failed to take substantial action with respect to the business operations referred to in clause (i) of this subparagraph or as described in subparagraph (B) or (C) of paragraph (14);

(B)

the company supplies military equipment in Sudan, unless the company clearly shows that—

(i)

the military equipment cannot be used to facilitate offensive military actions in Sudan; or

(ii)

the company implements rigorous and verifiable safeguards to prevent use of the equipment by forces actively participating in armed conflict, including through—

(I)

post-sale tracking of the equipment by the company;

(II)

certification from a reputable and objective third party that such equipment is not being used by a party participating in armed conflict in Sudan; or

(III)

sale of the equipment solely to the regional government of southern Sudan or any internationally recognized peacekeeping force or humanitarian organization; or

(C)

the Secretary of the Treasury has determined that the company has been complicit in the Darfur genocide.

(5)

Business operations

The term business operations means engaging in commerce in any form in Sudan, including by acquiring, developing, maintaining, owning, selling, possessing, leasing, or operating equipment, facilities, personnel, products, services, personal property, real property, or any other apparatus of business or commerce.

(6)

Company

The term company means any natural person, legal person, sole proprietorship, organization, association, corporation, partnership, firm, joint venture, franchisor, franchisee, financial institution, utility, public franchise, trust, enterprise, limited partnership, limited liability partnership, limited liability company, or other business entity or association, including all wholly-owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such business entities or associations, that exists for profit-making purposes.

(7)

Complicit

The term complicit means has taken actions in the preceding 20 months which have directly supported or promoted the genocidal campaign in Darfur, including preventing Darfur’s victimized population from communicating with each other, encouraging Sudanese citizens to speak out against an internationally approved security force for Darfur, actively working to deny, cover up, or alter evidence of human rights abuses in Darfur, or other similar actions.

(8)

Government of sudan

The term Government of Sudan means the government in Khartoum, Sudan, which is led by the National Congress Party (formerly known as the National Islamic Front) or any successor government formed on or after October 13, 2006 (including the coalition National Unity Government agreed upon in the Comprehensive Peace Agreement for Sudan), and does not include the regional government of southern Sudan.

(9)

Marginalized populations of sudan

The term marginalized populations of Sudan includes—

(A)

the portion of the population in the Darfur region that has been victimized;

(B)

the portion of the population of southern Sudan victimized by Sudan’s North-South civil war;

(C)

the Beja, Rashidiya, and other similarly affected groups of eastern Sudan;

(D)

the Nubian and other similarly affected groups in Sudan’s Abyei, Southern Blue Nile, and Nuba Mountain regions; and

(E)

the Amri, Hamadab, Manasir, and other similarly affected groups of northern Sudan.

(10)

Military equipment

The term military equipment means—

(A)

weapons, arms, military supplies, and equipment that readily may be used for military purposes, including radar systems or military-grade transport vehicles; or

(B)

supplies or services sold or provided directly or indirectly to any force actively participating in armed conflict in Sudan.

(11)

Mineral extraction activities

The term mineral extraction activities includes—

(A)

exploring, extracting, processing, transporting, or wholesale selling or trading of elemental minerals or associated metal alloys or oxides (ore), including gold, copper, chromium, chromite, diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, and

(B)

facilitating any activity described in subparagraph (A), including by providing supplies or services in support of the activity.

(12)

Oil-related activities

(A)

In general

Except as provided in subparagraph (B), the term oil-related activities includes—

(i)

exporting, extracting, producing, refining, processing, exploring for, transporting, selling, or trading oil;

(ii)

constructing, maintaining, or operating a pipeline, refinery, or other oilfield infrastructure; and

(iii)

facilitating any activity described in clause (i) or (ii), including by providing supplies or services in support of the activity.

(B)

Special rules

(i)

A company that is involved in the retail sale of gasoline or related consumer products in Sudan but is not involved in any other activity described in subparagraph (A) shall not be considered to be involved in an oil-related activity.

(ii)

A company that is involved in leasing, or that owns, rights to an oil block in Sudan but is not involved in any other activity described in subparagraph (A) shall not be considered to be involved in an oil-related activity.

(13)

Power production activities

The term power production activities means—

(A)

any business operation that involves a project commissioned by the National Electricity Corporation of Sudan or other similar Government of Sudan entity whose purpose is to facilitate power generation and delivery, including establishing power-generating plants or hydroelectric dams, selling or installing components for the project, providing service contracts related to the installation or maintenance of the project; and

(B)

facilitating an activity described in subparagraph (A), including by providing supplies or services in support of the activity.

(14)

Substantial action

The term substantial action means—

(A)

adopting, publicizing, and implementing a formal plan to cease scrutinized business operations within 1 year after the date of the enactment of this Act, and refraining from any new scrutinized business operations;

(B)

undertaking significant humanitarian efforts—

(i)

in conjunction with an international development or humanitarian organization, the regional government of southern Sudan, or a non-profit entity;

(ii)

substantial in relationship to the size and scope of the business operations with respect to Sudan;

(iii)

of benefit to 1 or more marginalized populations of Sudan; and

(iv)

evaluated and certified by an independent third party to meet the requirements of clauses (i) through (iii); or

(C)

materially improving conditions for the victimized population in Darfur.

11.

Sense of the Congress

It is the sense of the Congress that the governments of all other countries should adopt measures, similar to those contained in this Act, to publicize the activities of all persons that, through their financial dealings, knowingly or unknowingly enable the Government of Sudan to continue to oppress and commit genocide against people in the Darfur region and other regions of Sudan, and to authorize divestment from, and the avoidance of further investment in, the persons.

12.

Sunset

This Act shall terminate 30 days after the date on which—

(1)

the President has certified to Congress that—

(A)

the Darfur genocide has been halted for at least 12 months; and

(B)

the Government of Sudan has honored its commitments to—

(i)

abide by United Nations Security Council Resolution 1706;

(ii)

cease attacks on civilians;

(iii)

demobilize and demilitarize the Janjaweed and associated militias;

(iv)

grant free and unfettered access for delivery of humanitarian assistance; and

(v)

allow for the safe and voluntary return of refugees and internally displaced persons; and

(2)

the United States has revoked all sanctions against the Government of Sudan and the officials of such government, including sanctions authorized by—

(A)

the Sudan Peace Act (Public Law 107–245);

(B)

the Comprehensive Peace in Sudan Act of 2004 (Public Law 108–497);

(C)

the USA PATRIOT Improvement and Reauthorization Act of 2005 (Public Law 109–177);

(D)

the Darfur Peace and Accountability Act of 2006 (Public Law 109–344); and

(E)

any other Federal law or Executive order.

Passed the House of Representatives July 31, 2007.

Lorraine C. Miller,

Clerk.