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California regulator sues state agency over Iran sanctions

California Insurance Commissioner Steve Poizner on Tuesday sued an obscure state agency, alleging it illegally threw out a proposed regulation aimed at pressuring insurers who invest in Iran.

In June 2009, Poizner, a Republican set to leave office at the end of the year, ordered all 1,300 insurance companies that operate in California to report their investments in corporations that do business with the defense, energy or nuclear areas of the Iranian economy.

The move was designed to put pressure on the Islamic republic, which has been identified by the U.S. State Department as a sponsor of terrorism.

"Insurance premium dollars that Californians pay should not end up supporting a regime that has shown time and time again its disregard for the concerns of the global community," Poizner said.

California-based insurance trade groups challenged Poizner's act, calling it an "underground regulation" that does not comply with the state's Administrative Procedure Act. Last month, the California Office of Administrative Law agreed with the insurers by invalidating Poizner's rule making.

Poizner's suit in Los Angeles County Superior Court seeks to uphold his authority to call into question the appropriateness of the insurance company investments in major multinational corporations, such as Royal Dutch Shell and Siemens, whose subsidiaries operate in Iran.

Susan Lapsley, the director of the Office of Administrative Law, defended her decision to toss out Poizner's ruling. "Our mission of regulatory oversight makes it our responsibility and statutory obligation to issue an opinion if we believe an agency is acting outside the law using underground regulations," she said. "We stand by our opinion."

--Marc Lifsher

 
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