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California’s Iran Contracting Act

The California Legislature adopted the Iran Contracting Act to respond to policies of Iran in a uniform fashion

By Chris Micheli, June 28, 2022 3:17 pm

California has a number of formal acts in statute. The Iran Contracting Act of 2010 is contained in Public Contract Code Division 2 (General Provisions), Part 1 (Administrative Provisions), Chapter 2.7, which contains Sections 2200 to 2208.

Section 2200 provides that Chapter 2.7 is known and as the Iran Contracting Act of 2010. Section 2201 make 17 legislative findings and declarations, including that the concerns of the State of California regarding Iran are strictly the result of the actions of the Government of Iran, and that 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).

Section 2202 defines the following terms: “awarding body,” “energy sector,” “financial institution,” “Iran,” and “person.” Section 2202.5 provides that a person engages in investment activities in Iran if either of the following is true:

  • The person provides goods or services of $20 million 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.
  • The person is a financial institution that extends $20 million 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 as a person engaging in investment activities in Iran.

Section 2203 provides 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 as a person engaging in investment activities in Iran, is ineligible to, and must not, bid on, submit a proposal for, or enter into or renew, a contract with a public entity for goods or services of $1,000,000 or more.

By June 1, 2011, the Department of General Services is required, using credible information available to the public, to develop, or contract to develop, a list of persons it determines engage in investment activities in Iran. Thereafter, the Department of General Services must update the list every 180 days. DGS is required to do specified activities before a person is included on the list.

Section 2204 provides that a public entity must 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 $1 million 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 as a person engaging in investment activities in Iran.

Section 2205 provides that, 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, 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, then specified penalties, contract termination, and other actions are required to apply.

Section 2206 provides that this Act occupies the field with regard to all public contracts for goods or services with a person engaged in investment activities in Iran and the Act preempts 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.

Section 2207 requires the Legislature to 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.

Section 2208 provides that, 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 remains effective and functional notwithstanding such invalidity, illegality, unenforceability, or unconstitutionality.

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