In the wake of recent revelations concerning Iran’s nuclear program, the U.S. House of Representatives today overwhelmingly passed legislation aimed at increasing economic and political pressure on Iran to give up its nuclear ambitions. Approved by a vote of 414-6, H.R. 1327, the Iran Sanctions Enabling Act of 2009, would give Americans the power through their investment decisions to voice their opposition to the internationally condemnable actions of the Iranian regime.

“This bill makes it very clear that Americans who are deeply concerned about the prospect of an Iranian nuclear power and other aspects of Iranian governance are able to act on those concerns. In particular, it says that no one in this country ought to involuntarily have his or her money put to the support of the Iranian economy,” said House Financial Services Committee Chairman Barney Frank (D-MA), the author of the bill.

Patterned after legislation enacted last Congress to enable divestment from firms invested in certain sectors in Sudan, H.R. 1327 provides federal authority to state and local governments to divest their assets from, or prohibit investment of their assets in, any company that:

• invests $20 million or more in the energy sector in Iran;
• provides oil or liquefied natural gas tankers or products used to construct or maintain oil or natural gas pipelines in Iran;
• or extends $20 million or more in credit to be used for investment in the energy sector in Iran.

Although companies based in the U.S. are already barred from doing business with Iran, many foreign companies continue to have extensive dealings in Iran’s energy sector.  The threatened withdrawal from such companies of billions of dollars of state and local pension fund investments can provide such companies with a strong incentive to withdraw from the Iranian market.  Nineteen states, as well as the District of Columbia, have already passed legislation or adopted policies to divest their pension funds from foreign companies doing business with Iran. Because some state laws that touch upon international relations have been subject at times to constitutional challenges, the bill provides explicit federal consent and authorization for States to enact divestment measures in order to remove any doubt as to the constitutionality of those measures.

H.R. 1327 also includes “safe harbor” provisions for private asset managers and private pension fund managers who decide to cut ties with companies that have over $20 million of investments in Iran’s energy sector, so that they will not be vulnerable to any litigation or action brought by shareholders or regulatory agencies.

The bill includes a sunset provision that would terminate the Act 30 days after the President determines and certifies to Congress that Iran has ceased its support for terrorism and is no longer designated by the U.S. as a state sponsor of terrorism, or has ceased the pursuit of nuclear weapons.
 

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