Enrolled HB 215: Relating to the investment responsibilities of the Alaska Permanent Fund Corporation; relating to regulations proposed and adopted by the Board of Trustees of the Alaska Permanent Fund Corporation and providing procedures for the adoption of regulations by the board; and providing for an effective date.

00Enrolled HB 215 01 Relating to the investment responsibilities of the Alaska Permanent Fund Corporation; 02 relating to regulations proposed and adopted by the Board of Trustees of the Alaska 03 Permanent Fund Corporation and providing procedures for the adoption of regulations by the 04 board; and providing for an effective date. 05 _______________ 06 * Section 1. AS 37.13.120 is repealed and reenacted to read: 07 Sec. 37.13.120. Investment responsibilities. (a) The board shall adopt 08 regulations specifically designating the types of income-producing investments 09 eligible for investment of fund assets. When adopting regulations authorized by this 10 section or managing and investing fund assets, the prudent-investor rule shall be 11 applied by the corporation. The prudent-investor rule as applied to investment activity 12 of the fund means that the corporation shall exercise the judgment and care under the 13 circumstances then prevailing that an institutional investor of ordinary prudence, 14 discretion, and intelligence exercises in the designation and management of large

01 investments entrusted to it, not in regard to speculation, but in regard to the permanent 02 disposition of funds, considering preservation of the purchasing power of the fund 03 over time while maximizing the expected total return from both income and the 04 appreciation of capital. 05 (b) The corporation may not borrow money or guarantee from principal of the 06 fund the obligations of others, except as provided in this subsection. With respect to 07 investments of the fund, the corporation may, either directly or through an entity in 08 which the investment is made, borrow money if the borrowing is nonrecourse to the 09 corporation and the fund. 10 (c) The board shall maintain a reasonable diversification among investments 11 unless, under the circumstances, it is clearly prudent not to do so. The board shall 12 invest the assets of the fund in in-state investments to the extent that in-state 13 investments are available and if the in-state investments 14 (1) have a risk level and expected return comparable to alternate 15 investment opportunities; and 16 (2) are eligible for investment of fund assets under (a) of this section. 17 (d) The corporation may enter into and enforce all contracts necessary, 18 convenient, or desirable for managing the fund's assets and corporate operations, 19 including contracts for future delivery to implement asset allocation strategies or to 20 hedge an existing equivalent ownership position in an investment. 21 (e) Before adoption of a regulation under (a) of this section, the regulation, in 22 electronic format, shall be provided to the Legislative Budget and Audit Committee 23 for review and comment. The board shall submit investment reports to the committee 24 at least quarterly. 25 * Sec. 2. AS 37.13 is amended by adding a new section to article 1 to read: 26 Sec. 37.13.206. Regulations. (a) The board may adopt regulations to carry 27 out the purposes of this chapter and shall adopt regulations under AS 37.13.120(a). 28 The provisions of AS 44.62 (Administrative Procedure Act) regarding the adoption of 29 regulations do not apply to regulations of the corporation. 30 (b) The board may adopt regulations under this section by motion, by 31 resolution, or in any other manner permitted by the bylaws of the corporation.

01 (c) Except as provided in (f) of this section, at least 15 days before the 02 adoption, amendment, or repeal of a regulation, the corporation shall give public 03 notice of the proposed action by 04 (1) publishing the notice in a newspaper of general circulation or trade 05 or industry publication that the corporation prescribes; 06 (2) posting the notice on the Alaska Online Public Notice System; 07 (3) furnishing the notice, by electronic format, to all legislators; and 08 (4) providing a copy of the notice to every person who has filed a 09 request for notice of proposed regulation with the corporation. 10 (d) The public notice must include a statement of the time, place, and nature of 11 the proceedings for the adoption, amendment, or repeal of the regulation and an 12 informative summary of the subject of the proposed action. 13 (e) On the date and at the time and place designated in the notice, the 14 corporation shall give each interested person or the person's authorized representative, 15 or both, the opportunity to present statements, arguments, or contentions in writing, 16 with or without opportunity to present them orally. The board may accept material 17 presented by any form of communication and shall consider all factual, substantive, 18 and other relevant matter presented to it before adopting, amending, or repealing a 19 regulation. A regulation adopted, amended, or repealed by the board may vary from 20 the informative summary specified in (d) of this section if the subject of the action 21 taken on the regulation remains the same and if the original notice of the proposed 22 action was written so as to ensure that members of the public are reasonably notified 23 of the subject of the proposed action in order for members of the public to determine 24 whether their interests could be affected by the board's proposed action on that subject. 25 (f) A regulation or order of repeal of a regulation under this section may be 26 made as an emergency regulation if, in the order of adoption, the board states the facts 27 constituting the emergency and makes a finding that the adoption of the regulation or 28 repeal is necessary for the immediate preservation of the orderly operation of the 29 corporation. The requirements of (c) - (e) of this section do not apply to the initial 30 adoption of an emergency regulation or repeal under this subsection; however, upon 31 adoption of an emergency regulation or repeal under this subsection, the corporation

01 shall, within 10 days after that adoption, comply with the notice procedures specified 02 in (c) - (e) of this section. An emergency regulation or repeal adopted under this 03 subsection does not remain in effect for more than 120 days unless, before the 04 expiration of that period, the corporation complies with the procedures specified in (c) 05 - (e) of this section. 06 (g) A regulation adopted under this section takes effect immediately upon its 07 adoption by the board or at another time specified in the order of adoption. The 08 regulation shall be submitted to the lieutenant governor for publication in the Alaska 09 Administrative Code and Register. Within 45 days after adoption of a regulation 10 under this section, the corporation shall provide a copy of the adopted regulation to the 11 chair of the Administrative Regulation Review Committee (AS 24.20.400). 12 * Sec. 3. AS 37.13.205 is repealed. 13 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 REGULATIONS. The Board of Trustees of the Alaska Permanent Fund Corporation 16 may immediately adopt regulations under AS 37.13.206, added by sec. 2 of this Act, 17 necessary to implement the changes made by sec. 1 of this Act. The regulations may not take 18 effect before January 1, 2006. 19 * Sec. 5. Sections 2 - 4 of this Act take effect immediately under AS 01.10.070(c). 20 * Sec. 6. Section 1 of this Act takes effect January 1, 2006.