This chapter shall be known and may be cited as the Iran Contracting Act of 2010.
Administrative ProvisionsIran Contracting Act of
Section § 2200
This section establishes the official name for the chapter as the Iran Contracting Act of 2010.
Iran Contracting Act 2010 official name
Section § 2201
This section explains California's stance in response to Iran's nuclear activities and its support for terrorism, following U.S. sanctions. The U.S. government views Iran's actions as a threat to international security, prompting the state of California to take a stand by not investing in companies that support Iran's energy sector. California aims to align with federal efforts to use economic and political means to deter Iran from developing nuclear weapons. The state emphasizes a moral responsibility not to engage with entities that support human rights violations and terrorism. This statute also highlights the state's respect for the Iranian people and their culture, despite political tensions.
The Legislature hereby finds and declares all of the following:
(a)CA Public Contract Code § 2201(a) In imposing United States sanctions on Iran, 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.
(b)CA Public Contract Code § 2201(b) On September 9, 2009, it was reported that American intelligence agencies have concluded that Iran has already created enough nuclear fuel to develop a nuclear weapon, and United States Ambassador to the International Atomic Energy Agency Glyn Davies declared that Iran had achieved “possible breakout capacity.”
(c)CA Public Contract Code § 2201(c) On September 21, 2009, Iran sent a letter to the International Atomic Energy Agency acknowledging that it is considering a previously undeclared “new pilot fuel enrichment plan.”
(d)CA Public Contract Code § 2201(d) On Sept. 25, 2009, President Barack H. Obama, joined by Prime Minister Gordon Brown of Britain and President Nicolas Sarkozy of France, stated that the secret plant “represents a direct challenge to the basic foundation of the nonproliferation
regime” and “deepens a growing concern that Iran is refusing to live up to those international responsibilities, including specifically revealing all nuclear-related activities. As the international community knows, this is not the first time that Iran has concealed information about its nuclear program.”
(e)CA Public Contract Code § 2201(e) 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 (commonly known as the “Nuclear Non-Proliferation Treaty”).
(f)CA Public Contract Code § 2201(f) 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.
(g)CA Public Contract Code § 2201(g) On October 7, 2008, then-Senator Obama stated, “Iran right now imports gasoline, even though it’s an oil producer, because its oil infrastructure has broken down. If we can prevent them from importing the gasoline that they need and the refined petroleum products, that starts changing their cost-benefit analysis. That starts putting the squeeze on them.”
(h)CA Public Contract Code § 2201(h) The serious and urgent nature of the threat from Iran demands that states, local governments, educational institutions, 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 a nuclear weapons capability.
(i)CA Public Contract Code § 2201(i) There are moral and reputational reasons for this state and local governments to not engage in business with foreign companies that have business activities benefiting foreign states, such as Iran, that commit egregious violations of human rights, proliferate nuclear weapons capabilities, and support terrorism.
(j)CA Public Contract Code § 2201(j) It is the responsibility of the state to decide how, where, and by whom its financial resources should be invested. It also is the prerogative of the state to not invest in, or do business with, companies whose investments with Iran place those companies at risk from the impact of economic sanctions imposed upon the Government of Iran for sponsoring terrorism, committing egregious violations of
human rights, and engaging in illicit nuclear weapons development.
(k)CA Public Contract Code § 2201(k) The human rights situation in Iran has steadily deteriorated in 2009, as punctuated by transparently fraudulent elections and the brutal repression and murder, arbitrary arrests, and show trials of peaceful dissidents.
(l)CA Public Contract Code § 2201(l) During the postelection protests in June 2009, the Iranian government imposed widespread and unjustifiable restrictions on telecommunications services, denying the citizens of Iran their rights and liberties to free speech.
(m)CA Public Contract Code § 2201(m) On October 14, 2007, Governor Arnold Schwarzenegger stated his intention to support “efforts to further prevent terrorism” when signing Assembly Bill 221, which prohibits the state’s pension funds from investing in companies with active business in Iran.
(n)CA Public Contract Code § 2201(n) This state currently honors contracts with foreign companies that may be at financial risk due to business ties with foreign states, such as Iran, that are involved in the proliferation of weapons of mass destruction, commit human rights violations, and support terrorism.
(o)CA Public Contract Code § 2201(o) The concerns of the State of California regarding Iran are strictly the result of the actions of the Government of Iran.
(p)CA Public Contract Code § 2201(p) The people of the State of California declare all of the following:
(1)CA Public Contract Code § 2201(p)(1) We have feelings of friendship for the people of Iran.
(2)CA Public Contract Code § 2201(p)(2) We regret that developments in recent decades have created impediments to that friendship.
(3)CA Public Contract Code § 2201(p)(3) We
hold the people of Iran, their culture, and their ancient and rich history in the highest esteem.
(q)CA Public Contract Code § 2201(q) In order to effectively address the need for the governments of 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, and, therefore, the subject is a matter of statewide concern rather than a municipal affair.
(r)CA Public Contract Code § 2201(r) It is the intent of the Legislature to implement the authority granted under Section 202 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (Public Law 111-195).
U.S. sanctions on Iran nuclear activities ballistic missiles
Section § 2202
This section of the California code defines specific terms used in the related chapter.
"Awarding body" refers to any public entity or its representative that grants contracts for goods or services. "Energy sector" of Iran involves activities related to Iran's development of petroleum, natural gas, or nuclear power. "Financial institution" uses the definition from the Iran Sanctions Act of 1996. "Iran" includes its government and related agencies. "Person" includes individuals, businesses, organizations, governmental entities, and associated or related enterprises.
As used in this chapter, the following definitions apply:
(a)CA Public Contract Code § 2202(a) “Awarding body” means a department, board, agency, authority, or officer, agent, or other authorized representative of the public entity awarding a contract for goods or services.
(b)CA Public Contract Code § 2202(b) “Energy sector” of Iran means activities to develop petroleum or natural gas resources or nuclear power in Iran.
(c)CA Public Contract Code § 2202(c) “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).
(d)CA Public Contract Code § 2202(d) “Iran” includes the Government of Iran and any agency or instrumentality of Iran.
(e)CA Public Contract Code § 2202(e) “Person” means any of the following:
(1)CA Public Contract Code § 2202(e)(1) A natural person, corporation, company, limited liability company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group.
(2)CA Public Contract Code § 2202(e)(2) 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)).
(3)CA Public Contract Code § 2202(e)(3) Any successor, subunit, parent entity, or subsidiary of, or any entity under common ownership or control with, any entity described in paragraph (1) or (2).
awarding body public entity contracts Iran energy sector
Section § 2202.5
This law states that a person is considered to be involved in investment activities in Iran if they provide $20 million or more in goods or services to Iran's energy sector. This includes supplying oil or gas tankers or products for building or maintaining pipelines. Additionally, if a financial institution loans $20 million or more to someone for use in Iran's energy sector and that person is on a specific list of investors, they are also considered to be engaged in such activities.
For purposes of this chapter, a person engages in investment activities in Iran if any of the following is true:
(a)CA Public Contract Code § 2202.5(a) The person provides goods or services of twenty million dollars ($20,000,000) 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.
(b)CA Public Contract Code § 2202.5(b) The person is a financial institution that extends twenty million dollars ($20,000,000) or more in credit to another person, for 45 days or more, if that person will use the credit to provide goods or services in the energy sector in Iran and is identified on a list created pursuant to subdivision (b) of Section 2203 as a person engaging in investment activities in Iran as described in subdivision (a).
Iran investment activities energy sector Iran $20 million threshold
Section § 2203
This section prevents any company identified for engaging in specific investment activities in Iran from bidding on or entering into contracts worth $1 million or more with California public entities, unless certain exceptions apply. By June 1, 2011, the Department of General Services must create and update a list of such companies based on credible public information, and efforts must be made to prevent mistakenly listing companies. If a company disagrees with being listed, it can provide proof to have its name removed.
However, exceptions are allowed if the company’s investments in Iran were made before July 1, 2010, have not since been renewed or expanded, and it’s in the state’s interest to contract with them, or if specific public findings indicate that without exception, essential goods or services cannot be obtained. Furthermore, public entities must allow certain financial institutions to contract if they provide necessary energy sector services in Iran.
The law’s prohibitions began in June 2011, reinforcing California’s stance against economic ties with Iran.
(a)Copy CA Public Contract Code § 2203(a)
(1)Copy CA Public Contract Code § 2203(a)(1) A person that, at the time of bid or proposal for a new contract or renewal of an existing contract, is identified on a list created pursuant to subdivision (b) as a person engaging in investment activities in Iran as described in subdivision (a) of Section 2202.5, is ineligible to, and shall not, bid on, submit a proposal for, or enter into or renew, a contract with a public entity for goods or services of one million dollars ($1,000,000) or more.
(2)CA Public Contract Code § 2203(a)(2) A person that, at the time of bid or proposal for a new contract or renewal of an existing contract, engages in investment activities in Iran as described in subdivision (b) of Section 2202.5, is ineligible to, and shall not, bid on, submit a
proposal for, or enter into or renew, a contract with a public entity for goods or services of one million dollars ($1,000,000) or more.
(b)Copy CA Public Contract Code § 2203(b)
(1)Copy CA Public Contract Code § 2203(b)(1) By June 1, 2011, the Department of General Services shall, using credible information available to the public, develop, or contract to develop, a list of persons it determines engage in investment activities in Iran as described in subdivision (a) of Section 2202.5.
(2)CA Public Contract Code § 2203(b)(2) The Department of General Services shall update the list every 180 days.
(3)CA Public Contract Code § 2203(b)(3) Before finalizing an initial list pursuant to paragraph (1) or an updated list pursuant to paragraph (2), the Department of General Services shall do all of the following before a person is included on the list:
(A)CA Public Contract Code § 2203(b)(3)(A) Provide 90 days’ written notice
of its intent to include the person on the list. The notice shall inform the person that inclusion on the list would make the person ineligible to bid on, submit a proposal for, or enter into or renew, a contract for goods or services of one million dollars ($1,000,000) or more with a public entity. The notice shall specify that the person, if it ceases its engagement in investment activities in Iran as described in subdivision (a) of Section 2202.5, may become eligible for a future contract, or contract renewal, for goods or services of one million dollars ($1,000,000) or more with a public entity upon removal from the list.
(B)CA Public Contract Code § 2203(b)(3)(B) The Department of General Services shall provide a person with an opportunity to comment in writing to the Department of General Services that it is not engaged in investment activities in Iran. If the person demonstrates to the Department of General Services that the person is not engaged in investment activities in
Iran as described in subdivision (a) of Section 2202.5, the person shall not be included on the list, and shall be eligible to enter into or renew a contract for goods or services of one million dollars ($1,000,000) or more with a public entity, unless the person is otherwise ineligible to bid on a contract as described in paragraph (3) of subdivision (a) of Section 2205.
(4)CA Public Contract Code § 2203(b)(4) The Department of General Services shall make every effort to avoid erroneously including a person on the list.
(5)CA Public Contract Code § 2203(b)(5) The Department of General Services may assess a fee upon persons that use this list to comply with the provisions of this act, in order to pay for the necessary, actual costs of creating and maintaining this list. The Department of General Services shall provide the list free of charge to any public entity and to the Legislature, upon request.
(6)CA Public Contract Code § 2203(b)(6) A person that has a contract with CalPERS or CalSTRS, or both, shall not be deemed a person that engages in investment activities in Iran on the basis of those investments with CalPERS or CalSTRS.
(c)CA Public Contract Code § 2203(c) Notwithstanding subdivision (a), a public entity may permit a person engaged in investment activities in Iran, on a case-by-case basis, to be eligible for, or to bid on, submit a proposal for, or enter into or renew, a contract for goods or services of one million dollars ($1,000,000) or more with a public entity if either of the following are true:
(1)CA Public Contract Code § 2203(c)(1) All of the following occur:
(A)CA Public Contract Code § 2203(c)(1)(A) The investment activities in Iran were made before July 1, 2010.
(B)CA Public Contract Code § 2203(c)(1)(B) The investment activities in Iran have not been expanded or renewed after July 1,
2010.
(C)CA Public Contract Code § 2203(c)(1)(C) The awarding body determines that it is in the best interest of the state or local public entity to contract with the person. For purposes of state contracts for goods or services of one million dollars ($1,000,000) or more, “awarding body” means the Department of General Services. For purposes of local contracts for goods or services of one million dollars ($1,000,000) or more, “awarding body” means the representative of the local public entity awarding the contract, as described in subdivision (a) of Section 2202.
(D)CA Public Contract Code § 2203(c)(1)(D) 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.
(2)CA Public Contract Code § 2203(c)(2) One of the following occurs:
(A)CA Public Contract Code § 2203(c)(2)(A) For a contract
for goods or services of one million dollars ($1,000,000) or more with a local public entity, the local public entity makes a public finding that, absent such an exemption, the local public entity would be unable to obtain the goods or services for which the contract is offered.
(B)CA Public Contract Code § 2203(c)(2)(B) For a contract for goods or services of one million dollars ($1,000,000) or more with a state agency, other than the office of a state constitutional officer, the Governor makes a public finding that absent such an exemption, the state agency would be unable to obtain the goods or services for which the contract is offered.
(C)CA Public Contract Code § 2203(c)(2)(C) For a contract for goods or services of one million dollars ($1,000,000) or more with an office of a state constitutional officer, if the state constitutional officer makes a public finding that, absent such an exemption, his or her office would be unable to obtain the goods or
services for which the contract is offered.
(d)CA Public Contract Code § 2203(d) Notwithstanding subdivision (a), a public entity shall permit a financial institution described in subdivision (b) of Section 2202.5 to be eligible for, or to bid on, submit a proposal for, or enter into or renew, a contract for goods or services of one million dollars ($1,000,000) or more with a public entity if the person using the credit to provide goods or services in the energy sector of Iran is a person permitted to submit a bid or proposal to the public entity pursuant to subdivision (c).
(e)CA Public Contract Code § 2203(e) The prohibition described in paragraph (1) of subdivision (a) applies on and after June 1, 2011. The prohibition described in paragraph (2) of subdivision (a) applies on and after July 1, 2011.
investment activities in Iran Department of General Services public contracts
Section § 2204
This law requires anyone who wants to bid or renew a contract with a public agency for goods or services worth $1,000,000 or more to confirm they’re not on a list of people who invest in Iran. This applies from June 1, 2011, but banks and similar institutions have until July 1, 2011, to start certifying. If they’re on an updated list, they’ve got a 30-day grace period to certify based on the previous list. Certain exceptions exist if the public entity already approved someone's proposal, as per specific sections not covered here.
(a)CA Public Contract Code § 2204(a) A public entity shall require a person that submits a bid or proposal to, or otherwise proposes to enter into or renew a contract with, a public entity with respect to a contract for goods or services of one million dollars ($1,000,000) or more to certify, at the time the bid is submitted or the contract is renewed, that the person is not identified on a list created pursuant to subdivision (b) of Section 2203 as a person engaging in investment activities in Iran
described in subdivision (a) of Section 2202.5, or as a person described in subdivision (b) of Section 2202.5, as applicable. A state agency shall submit the certification information to the Department of General Services.
(b)CA Public Contract Code § 2204(b) A public entity shall not require a person that submits a bid or proposal to, or otherwise proposes to enter into a contract with, the public entity with respect to a contract for goods or services of one million dollars ($1,000,000) or more to certify that the person is not identified on a list created pursuant to subdivision (b) of Section 2203 as a person engaging in investment activities in Iran described in subdivision (a) of Section 2202.5, or as a person described in subdivision (b) of Section 2202.5, as applicable, if the person has been permitted to submit a bid or proposal to the public entity pursuant to subdivision (c) or (d) of Section 2203.
(c)Copy CA Public Contract Code § 2204(c)
(1)Copy CA Public Contract Code § 2204(c)(1) Subject to paragraph (2), the certification requirement described in subdivision (a) applies on and after June 1, 2011.
(2)CA Public Contract Code § 2204(c)(2) A person that is a financial institution shall not be required to certify as provided in subdivision (a) until July 1, 2011. For any subsequent list created pursuant to subdivision (b) of Section 2203, a person that is a financial institution shall not be required to certify with respect to that subsequent list until 30 days after that list becomes available, but shall certify with respect to the immediately prior list for those 30 days.
public contract bidding Iran investment certification goods or services contracts
Section § 2205
This law addresses penalties for entities that falsely certify they are not engaged in investment activities in Iran when working with public contracts. If it's found someone lied about this, they must stop such activities within 90 days. If they don't, they face a civil penalty of at least $250,000 or twice the contract amount, cancellation of the contract, and a three-year ban from bidding on new contracts.
The Department of General Services or the local entity will report false certifications to the Attorney General, who can decide to take legal action to collect penalties. If legal action proves the certification was falsely submitted, the entity must cover all incurred legal and investigative costs. Such legal action must start within three years of the false certification. Importantly, there's no private right to enforce penalties or protest contract awards over false certifications according to this statute.
(a)CA Public Contract Code § 2205(a) If the local public entity, or the Department of General Services in the case of state contracts, determines, using credible information available to the public and after providing 90 days written notice and an opportunity to comment in writing for the person to demonstrate that it is not engaged in investment activities in Iran, that the person has submitted a false certification under Section 2204, and the person fails to demonstrate to the local public entity
or the Department of General Services that the person has ceased its engagement in the investment activities in Iran within 90 days after the determination of a false certification, the following shall apply:
(1)CA Public Contract Code § 2205(a)(1) Pursuant to an action under subdivision (b), a civil penalty in an amount that is equal to the greater of two hundred fifty thousand dollars ($250,000) or twice the amount of the contract for which the false certification was made. Only one civil penalty may be imposed with respect to one or more certifications made to any public entity that are false as a result of a particular investment.
(2)CA Public Contract Code § 2205(a)(2) Termination of an existing contract with the awarding body at the option of the awarding body or the Department of General Services.
(3)CA Public Contract Code § 2205(a)(3) Ineligibility to bid on a contract for a period of three years from the date of
the determination that the person submitted the false certification.
(b)CA Public Contract Code § 2205(b) The local public entity, or the Department of General Services in the case of state contracts, shall report to the Attorney General the name of the person that the local public entity, or the Department of General Services in the case of state contracts, determines has submitted a false certification under Section 2204, together with its information as to the false certification, and the Attorney General shall determine whether to bring a civil action against the person to collect the penalty described in paragraph (1) of subdivision (a). The awarding body of a local public entity may also report to the city attorney, county counsel, or district attorney the name of the person that the awarding body determines has submitted a false certification under Section 2204, together with its information as to the false certification, and the city attorney, county counsel, or
district attorney may determine whether to bring a civil action against the person to collect the penalty described in paragraph (1) of subdivision (a). If it is determined in that action that the person submitted a false certification, the person shall pay all reasonable costs and fees incurred in a civil action, including costs incurred by the awarding body for investigations that led to the finding of the false certification and all reasonable costs and fees incurred by the Attorney General, city attorney, county counsel, or district attorney. Only one civil action against the person to collect the penalty described in paragraph (1) of subdivision (a) may be brought for a false certification on a contract.
(c)CA Public Contract Code § 2205(c) A civil action to collect the penalties described in paragraph (1) of subdivision (a) must commence within three years from the date the certification is made.
(d)CA Public Contract Code § 2205(d) An
unsuccessful bidder, or any other person other than the awarding body, shall have no right to protest the award of a contract or contract renewal on the basis of a false certification.
(e)CA Public Contract Code § 2205(e) This act does not create, nor authorize, a private right of action or enforcement of the penalties provided for in this act.
false certification investment activities in Iran civil penalty
Section § 2206
This law sets a statewide rule for all public contracts involving goods or services with anyone investing in Iran, overriding any local laws or rules about such contracts.
This act shall occupy the field with regard to all public contracts for goods or services with a person engaged in investment activities in Iran and shall preempt any law, ordinance, rule, or regulation of any local public entity involving public contracts for goods or services with a person engaged in investment activities in Iran.
public contracts goods and services investment activities in Iran
Section § 2207
This law requires the California Legislature to inform the U.S. Attorney General in writing about this specific legal chapter within 30 days of the act's effective date.
The Legislature shall submit to the Attorney General of the United States a written notice describing this chapter within 30 days after the effective date of this act.
California Legislature Attorney General notification written notice
Section § 2208
This law states that if any part of this act is found to be invalid or against the law, those parts can be removed without affecting the rest of the act. The remaining parts will still be valid and enforceable. The Legislature also confirms that they intend for the entire act to be valid even if some sections are later deemed incorrect or illegal.
(a)CA Public Contract Code § 2208(a) If any one or more provisions, sections, subdivisions, sentences, clauses, phrases, or words of this act or the application thereof to any person or circumstance is found to be invalid, illegal, unenforceable, or unconstitutional, the same is hereby declared to be severable and the balance of this act shall remain effective and functional notwithstanding such invalidity, illegality, unenforceability, or unconstitutionality.
(b)CA Public Contract Code § 2208(b) The Legislature hereby declares that it would have passed this act, and each provision, section, subdivision, sentence, clause, phrase, or word thereof, irrespective of the fact that any one or more provisions, sections, subdivisions, sentences, clauses, phrases, or words are declared invalid, illegal, unenforceable, or unconstitutional.
severability clause invalid provisions unenforceable sections
