Iran General NewsLegal fights loom over state laws targeting Iran

Legal fights loom over state laws targeting Iran

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Wall Street Journal: When Congress expanded U.S. sanctions on Iran in 2010, it authorized states to blacklist companies that have business interests with that country. But a legal fight over a highway bridge contract in New Jersey shows just how tricky it can be for states to manage their own sanctions policy. The Wall Street Journal

By Ted Mann

When Congress expanded U.S. sanctions on Iran in 2010, it authorized states to blacklist companies that have business interests with that country.

But a legal fight over a highway bridge contract in New Jersey shows just how tricky it can be for states to manage their own sanctions policy.

Buried deep in the Comprehensive Iran Sanctions, Accountability and Divestment Act was a section that allowed statehouses to draw up lists of companies with business ties to Iran’s energy sector and prohibit them from entering into contracts with state and local governments. Since then, New York, New Jersey and other states have passed Iran divestment laws.

In New Jersey, the state transportation department in June awarded a contract for a large chunk of the rebuilding of the 80-year-old Pulaski Skyway to CCA Civil, Inc., a China-backed firm based in the U.S. CCA has done a range of infrastructure work, from a train station at the new Yankee Stadium to a major ongoing project rebuilding the highway bridge connecting Manhattan and the Bronx.

But now, CCA faces an unusual court challenge from the company it narrowly beat out for the job. The rival company, Conti Enterprises, Inc., alleges that the government of China has an indirect ownership interest in CCA and should be considered an affiliate of other China-linked firms that do work in Iran’s energy sector. That makes CCA in violation of U.S. sanctions, Conti claims.

“CCA Civil is committed to performing the work, and it has and will comply with all contract terms,” said Michael Guiffre, an attorney for the company.

A representative from Conti declined comment.

CCA and its corporate parent entities don’t appear on any state or federal debarment lists, according to the company’s attorneys and the New Jersey Department of Transportation. The department ultimately awarded the $123 million contract to CCA in late June after rejecting Conti’s administrative appeal to stop it.

Conti is now pushing ahead with a legal appeal through the New Jersey courts, arguing that the state and federal laws should be interpreted broadly.

That may sound like a tiff between rival contractors, or even sour grapes from a losing bidder, as CCA suggests in its legal filings. But as other states pass divestment laws, expect more clashes of this sort, according to Lori Damrosch, a professor of international law at Columbia Law School.

She said business groups in the past have waged efforts to try “to strike down what they perceive as impediments to ordinary foreign trade.”

In 2000, the U.S. Supreme Court struck down a Massachusetts law that banned state government work for companies doing business in Myanmar. The court held that the state law conflicted with the federal government’s power to set international policy.

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