States may continue Iran sanctions despite deal

Local legislation eyes foreign companies as main target of rules

As the United States and Iran come closer to a historic nuclear deal, many US states are likely to stick with their own sanctions on Iran, complicating any warming of relations between the longtime foes.

Around two dozen states have enacted measures punishing companies operating in certain sectors of Iran's economy, ordering public pension funds to divest from the firms and sometimes barring them from public contracts.

In more than half those states, the restrictions expire only if Iran is no longer designated to be supporting terrorism or if all US federal sanctions against Iran are lifted - unlikely outcomes even in the case of a final nuclear accord. Two states, Kansas and Mississippi, are even considering new sanctions targeting the country.

"Our investment sanctions are not tied in any way to President Obama's negotiations with the Iranians," said Don Gaetz, a Republican Florida state senator who sponsored legislation in 2007 punishing companies with investments in Iran's energy sector.

Critics of the state laws say they are an unnecessary interference in a crucial area of US policy by states that usually have little expertise in foreign affairs.

"Foreign policy is uniquely a case where the government needs to act with one voice," said William Reinsch, president of the National Foreign Trade Council, which represents major US companies and advocates against unilateral sanctions.

Foreign companies are the main target of the rules since US firms are largely barred from working in Iran by federal law.

Florida's law led to the State Board of Administration, which oversees Florida public investments, pulling more than $1.3 billion out of companies for their involvement in either Sudan or Iran. As of 2014, the Florida board had $177 billion in assets.

Michigan has divested $185 million of its pension funds from companies - including Royal Dutch Shell, Vodafone, HSBC and Nokia - for their activities in Iran.

In 2013 and 2014, Michigan divested $45 million from Becton Dickinson and Co, a US medical supplies company that sells to Iran legally under federal regulations.