Federalism and Iran Sanctions

Occasionally, state governments can play a part in foreign policy.  The Washington Times reports:

Republican governors are rallying to stop state money from flowing to Iran, vowing to do what they can to stymie the lifting of sanctions on the Islamic Republic, independent of President Obama’s nuclear deal.

Under the terms of that deal, Mr. Obama pledged to push states to give up their own sanctions that spurred divestment from or contracting with Iranian interests — but a group of governors has rejected that.

“These state-level sanctions are critically important and must be maintained,” the governors wrote in a letter to the president.

They earned a major backer Tuesday in House Speaker John A. Boehner, who threw his support behind the effort, saying state-level sanctions are an appropriate tool. He urged other governors to join the effort.

Because the deal Mr. Obama negotiated with Iran isn’t deemed a treaty, it cannot override those state-level sanctions. The administration has pledged to Iran, however, that it will encourage states to lift their restrictions.

Federal law explicitly authorizes states and local governments to sanction Iran. From Public Law 111-195:

EC. 202. <> AUTHORITY OF STATE AND LOCAL
GOVERNMENTS TO DIVEST FROM CERTAIN
COMPANIES THAT INVEST IN IRAN.
(a) Sense of Congress.--It is the sense of Congress that the United
States should support the decision of any State or local government that
for moral, prudential, or reputational reasons divests from, or
prohibits the investment of assets of the State or local government in,
a person that engages in investment activities in the energy sector of
Iran, as long as Iran is subject to economic sanctions imposed by the
United States.
(b) Authority to Divest.--Notwithstanding any other provision of
law, a State or local government may adopt and enforce measures that
meet the requirements of subsection (d) to divest the assets of the
State or local government from, or prohibit investment of the assets of
the State or local government in, any person that the State or local
government determines, using credible information available to the
public, engages in investment activities in Iran described in subsection
(c).
(c) Investment Activities Described.--A person engages in investment
activities in Iran described in this subsection if the person--
(1) has an investment of $20,000,000 or more in the energy
sector of Iran, including in a person that provides oil or
liquified natural gas tankers, or products used to construct or
maintain pipelines used to transport oil or liquified natural
gas, for the energy sector of Iran; or
(2) is a financial institution that extends $20,000,000 or
more in credit to another person, for 45 days or more, if that
person will use the credit for investment in the energy sector
of Iran.
(d) Requirements.--Any measure taken by a State or local government
under subsection (b) shall meet the following requirements:
(1) Notice.--The State or local government shall provide
written notice to each person to which a measure is to be
applied.
(2) Timing.-- <> The
measure shall apply to a person not earlier than the date that
is 90 days after the date on which written notice is provided to
the person under paragraph (1).
(3) Opportunity for hearing.--The State or local government
shall provide an opportunity to comment in writing to each
person to which a measure is to be applied. If the person
demonstrates to the State or local government that the person
does not engage in investment activities in Iran described in
subsection (c), the measure shall not apply to the person.
(4) Sense of congress on avoiding erroneous targeting.--It
is the sense of Congress that a State or local government should
not adopt a measure under subsection (b) with respect to a
person unless the State or local government has made every
effort to avoid erroneously targeting the person and has
verified that the person engages in investment activities in
Iran described in subsection (c).