Did You Know Your Texas Legislature Sanctioned Iran?

Companies and investors dealing with Iran aid a threatening foreign regime that is pursuing nuclear- weapons capability, brutally repressing its citizens while knowingly violating human rights, and sponsoring insidious forms of terrorism. Based on these dangerous actions antithetical to American security and prosperity, U.S. state governments, which manage trillions of dollars of taxpayer money through pension funds, should divest from and deny contracts to companies that do business in Iran, as is expressly allowed for by federal law.

In the 83rd Texas legislative session, we as lawmakers enacted SB 200 to do precisely that. Under the bill, all “state governmental entities”, including the Employees Retirement System, the Teacher Retirement System, and all municipal, county, and local retirement systems, are required to divest from companies that are engaged in business activities in Iran. In addition, the State Pension Review Board is instructed to create a list of all “scrutinized” Texas companies that have contracts with or provide supplies (both military and non-) or services to the government of Iran, as well as ones in which the Iranian government has a direct or indirect equity share. The list must be updated annually and distributed to the legislature and attorney general. For each company engaged in active business operations in Iran:

• A state governmental entity must send a notice warning the company that it may become subject to divestment by state governmental entities.
• The company has an opportunity to clarify its Iran-related activities and whether they are subject to the state’s divestment scheme. If the company continues to have scrutinized active business operations in Iran following the warning, the state must sell, redeem, divest, or withdraw all publicly-traded securities of the company.
• All of the divested assets must be removed from state’s investment portfolio.
• Each year, a publicly available report is filed that identifies all securities sold, redeemed, divested.

[1]See Douglas F. Gansler, “Uniting States Against Iran,” Wall Street Journal, March 8, 2013, available at http://www.wsj.com/articles/SB10001424127887324662404578332622153212746#articleTabs=article(citing National Association of State Budget Officers study).

[2] 22 U.S.C. 8532 § 202(b).