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S. 1430 (110th): Iran Sanctions Enabling Act

The text of the bill below is as of May 17, 2007 (Introduced).


II

110th CONGRESS

1st Session

S. 1430

IN THE SENATE OF THE UNITED STATES

May 17, 2007

(for himself and Mr. Brownback) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

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.

2.

Findings

Congress finds as follows:

(1)

The Convention on the Prevention and Punishment of the Crime of Genocide, done at Paris December 9, 1948 (commonly referred to as the “Genocide Convention”) defines genocide as, among other things, the act of killing members of a national, ethnic, racial, or religious group with the intent to destroy, in whole or in part, the targeted group. In addition, the Genocide Convention also prohibits conspiracy to commit genocide, as well as [d]irect and public incitement to commit genocide.

(2)

133 member states of the United Nations have ratified the Genocide Convention and thereby pledged to prosecute individuals who violate the Genocide Convention’s prohibition on incitement to commit genocide, as well as those individuals who commit genocide directly.

(3)

On October 27, 2005, at the World Without Zionism Conference in Tehran, Iran, the President of Iran, Mahmoud Ahmadinejad, called for Israel to be “wiped off the map,” described Israel as “a disgraceful blot [on] the face of the Islamic world,” and declared that “[a]nybody who recognizes Israel will burn in the fire of the Islamic nation’s fury.” President Ahmadinejad has subsequently made similar types of comments.

(4)

On December 23, 2006, the United Nations Security Council unanimously approved Resolution 1737, which bans the supply of nuclear technology and equipment to Iran and freezes the assets of certain organizations and individuals involved in Iran’s nuclear program, until Iran suspends its enrichment of uranium, as verified by the International Atomic Energy Agency.

(5)

Following Iran’s failure to comply with Resolution 1737, on March 24, 2007, the United Nations Security Council unanimously approved Resolution 1747, to tighten sanctions on Iran, imposing a ban on arms sales and expanding the freeze on assets, in response to the country’s uranium-enrichment activities.

(6)

There are now signs of domestic discontent within Iran, and targeted financial and economic measures could produce a change in Iranian policy. According to the Economist Intelligence Unit, the nuclear crisis “is imposing a heavy opportunity cost on Iran’s economic development, slowing down investment in the oil, gas, and petrochemical sectors, as well as in critical infrastructure projects, including electricity”.

(7)

Targeted financial measures represent one of the strongest non-military tools available to convince the Government of Iran that it can no longer afford to engage in dangerous, destabilizing activities such as its nuclear weapons program and its support for terrorism.

(8)

Foreign persons that have invested in Iran's energy sector, despite Iran's support of international terrorism and its nuclear program, have provided additional financial means for Iran’s activities in these areas, and many United States persons have unknowingly invested in those same foreign persons.

(9)

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.

(10)

Policy makers and fund managers may find moral, prudential, or reputational reasons to divest assets from persons 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 person would be prohibited from dealing because of economic sanctions imposed by the United States.

3.

Transparency in United States capital markets

(a)

List of persons investing in Iran energy sector

(1)

Publication of list

Not later than 180 days after the date of the enactment of this Act, and every 180 days 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 publish in the Federal Register a list of persons, whether within or outside of the United States, that, as of the date of the publication, have made an investment of more than $20,000,000 in the energy sector of Iran. 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 of the list.

(2)

Prior notice to persons

Not later than 30 days before the list is published under paragraph (1), the Secretary of the Treasury shall notify each person that the Secretary intends to include on the list.

(3)

Delay in including persons on the list

After notifying a person under paragraph (2) that the Secretary intends to include such person on the list, the Secretary may delay including such person on the list for not more than 60 days if the Secretary determines and certifies to Congress that such person has taken specific and effective actions to divest or terminate the investment in the energy sector of Iran that resulted in the notification under paragraph (2).

(4)

Removal of persons from the list

The Secretary of the Treasury may remove a person from the list under paragraph (1) before the next publication of the list if the Secretary, in consultation with, as appropriate, the Secretary of Energy, the Secretary of State, the Securities and Exchange Commission, and the heads of other Federal departments and agencies, determines that the person has divested or terminated the investment in the energy sector of Iran that resulted in the Secretary including such person on the list.

(b)

Publication on website

The Secretary of the Treasury shall maintain on the website of the Department of the Treasury the names of the persons on the list published under subsection (a)(1), updating the list as necessary to take into account any person removed from the list under subsection (a)(4).

(c)

Definition

In this section, the term investment has the meaning given that term in section 14(9) of the Iran Sanctions Act (50 U.S.C. 1701 note).

4.

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

(a)

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, persons that are included on the most recent list published under section 3(a)(1), as modified under section 3(a)(4).

(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 of the assets of the State or local government

The term investment of the assets of the State or local government 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 by a State or local government.

(b)

Preemption

A measure of a State or local government that is authorized by subsection (a) is not preempted by any Federal law or regulation except to the extent that a person is unable to comply with both the measure and the Federal law or regulation.

5.

Safe harbor for changes of investment policies by mutual funds

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 upon the investment company divesting from, or avoiding investing in, securities issued by companies that are included on the most recent list published under section 3(a)(1) of the Iran Sanctions Enabling Act, as modified under section 3(a)(4) 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.

.

6.

Safe harbor for changes of investment policies by employee benefit plans

Section 502 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end the following new subsection:

(n)

Divestment of assets in fiduciaries investing in Iran

No person shall be treated as breaching any of the responsibilities, obligations, or duties imposed upon fiduciaries by this title, and no action may be brought under this section against any person, for divesting plan assets from, or avoiding investing plan assets in, persons that are included on the most recent list published under section 3(a)(1) of the Iran Sanctions Enabling Act, as modified under section 3(a)(4) of such Act.

.

7.

Sense of Congress regarding thrift savings plan

It is the sense of the Congress that—

(1)

the Federal Retirement Thrift Investment Board should initiate efforts to provide a terror-free international investment option among the funds of the Thrift Savings Fund that would invest in stocks in which the International Stock Index Investment Fund may invest under section 8438(b)(4) of title 5, United States Code, other than the stock of companies that do business in any country the government of which the Secretary of State has determined is a government that has repeatedly provided support for acts of international terrorism, for purposes of section 40 of the Arms Export Control Act (22 U.S.C. 2780), section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371), section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)), as continued in effect pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), or any other provision of law relating to governments that provide support for acts of international terrorism; and

(2)

the Federal Retirement Thrift Investment Board should initiate efforts similar to those described in paragraph (1) to provide a genocide-free international investment option.

8.

Definitions

In this Act:

(1)

Iran

The term Iran includes any agency or instrumentality of the Government of Iran.

(2)

Energy sector

The term energy sector refers to activities to develop petroleum or natural gas resources.

(3)

Person

The term person means a natural person as well as a corporation, business association, partnership, society, trust, any other nongovernmental entity, organization, or group, and any governmental entity or instrumentality of a government.

(4)

State

The term State includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

(5)

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; and

(C)

any public institution of higher education, as defined in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002).

9.

Sunset

The provisions of this Act shall terminate 30 days after the date on which the President has certified to 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 40 of the Arms Export Control Act (22 U.S.C. 2780), section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371), section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)), as continued in effect pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), or any other provision of law relating to governments that provide support for acts of international terrorism;

(2)

the Government of Iran has ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology; and

(3)

the Government of Iran has retracted the statements of the President of Iran, Mahmoud Ahmadinejad, calling for the destruction of Israel.