Legislature(2011 - 2012)CAPITOL 106
02/28/2012 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB316 | |
| HB2 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 316 | TELECONFERENCED | |
| *+ | HB 2 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 2-DIVEST INVESTMENTS IN IRAN
[Contains mention of SB 131.]
9:34:12 AM
CHAIR LYNN announced that the final order of business was HB 2,
"An Act relating to certain investments of the Alaska permanent
fund, the state's retirement systems, the State of Alaska
Supplemental Annuity Plan, and the deferred compensation program
for state employees in certain companies that do business in
Iran, and restricting those investments; and providing for an
effective date."
9:34:34 AM
KAREN SAWYER, Staff, Representative Carl Gatto, Alaska State
Legislature, co-presented HB 2 on behalf of Representative
Gatto, joint prime sponsor. She noted that Senator Wielechowski
has a companion bill, SB 131, in the Senate. She said there is
a committee substitute, Version M, which makes changes to match
HB 2 with SB 131; it adds "or gas" after "oil" in certain
places. She relayed that Sam Gottstein would present a
PowerPoint presentation. She said because of scheduling
conflicts, there would not be a representative from the
Permanent Fund Corporation available to testify.
9:36:11 AM
REPRESENTATIVE KELLER moved to adopt the proposed committee
substitute (CS) for HB 2, Version LS0007\M, Wayne, 2/8/12, as a
work draft.
CHAIR LYNN objected for the purpose of discussion.
9:36:29 AM
SAM GOTTSTEIN, Staff, Senator Bill Wielechowski, Alaska State
Legislature, co-presented HB 2 on behalf of Senator
Wielechowski, sponsor of SB 131, the companion bill to HB 2. He
said HB 2 is the same bill as House Bill 241 of the previous
legislature and is identical to SB 131 of the current
legislature.
9:37:21 AM
MR. GOTTSTEIN gave a PowerPoint presentation. He stated that
the Iranian regime is a threat to national security, and not
having a divestment policy in place is financing America's
enemies. He stated that since 1984, the U.S. has listed Iran as
a state sponsor of terrorism, and Iran has known ties with
Hamas, Hezbollah, and the Taliban - groups that work against the
interests of the U.S. at home and abroad. He said Iran's
military has, in recent weeks, threatened to close the Strait of
Hormuz, which would disrupt worldwide oil supplies.
MR. GOTTSTEIN said the Iranian regime is under strong
international sanctions. Most recently, the U.S. Treasury
announced sanctions against Iran's national bank, and the
European Union has banned the purchase of Iranian oil and gas.
He said these unprecedented sanctions are forcing companies to
decide whether they will do business with the Western World or
with Iran. He stated that Iran continues to work toward
developing nuclear weapon capabilities; a recent International
Atomic Energy Agency Report stated that "information indicates
that Iran has carried out activities relevant to the development
of a nuclear explosion devise." He stated that the Iranian
regime has a long history of human rights violations; today
Amnesty International issued a statement that there are
widespread and persistent human rights violations occurring in
Iran.
MR. GOTTSTEIN stated that for all these reasons, divestment and
sanctioning policies have greater bi-partisan support today than
ever before, which he said is illustrated by a recent 100-0 vote
in the U.S. Senate to increase sanctions. He related that
Alaska Governor Sean Parnell has come out in support of Iran
divestment in a recent Anchorage Daily News "Compass" piece. He
said large companies still invest in Iran, which helps the
Iranian regime bring its oil and gas reserves to market. He
reported that Iran produces approximately 3.6 million barrels of
oil a day and is known to use its oil profits to advance the
regime's agenda. Mr. Gottstein read a quote by Timothy
Geithner, U.S. Secretary of the Treasury, as follows:
Iran's greatest economic resource is its oil exports.
Sales of crude oil line the ... regime's pockets,
sustain its human rights abuses, and feed its nuclear
ambitions like no other sector of the Iranian economy.
9:40:14 AM
MR. GOTTSTEIN opined that HB 2 is what the State of Alaska can
and should do to weaken the Iranian regime by cutting off
investment to Iran. The intent of the proposed legislation, he
said, is "to bring Alaska in line with America's foreign policy"
by slowing down Iran's nuclear program, weakening its ability to
support terrorism, and putting pressure on the regime for
political change.
9:40:37 AM
MR. GOTTSTEIN said under HB 2, the Department of Revenue (DOR)
would be directed to compile a list of companies that have
invested an aggregate of $20 million or more in Iranian oil and
gas development. The department would have some flexibility in
determining which companies would be on the scrutinized list and
could obtain a list from companies around the country that
specialize in Iran divestment policies. Once the list is
compiled, he explained, companies on the list will have 90 days
to justify this investment. If the company fails to do so
within 90 days, the department will ask the state's fund
managers, including the Permanent Fund [Corporation] to
liquidate assets of that company within 90 days. He said many
lists already exist for other states.
MR. GOTTSTEIN stated that Iran poses any even greater threat
today to the security of the U.S. than it did a few years ago.
The country is closer to obtaining nuclear weapons and
"continues to threaten to destabilize the region." He said
Alaska has a better understanding about the impacts of
divestment policies and what it would mean to the production on
the North Slope and rates of return for the permanent fund and
other accounts. Furthermore, he said, recent federal
legislation provides greater cover for state and local
governments to divest from Iran. Mr. Gottstein said federal
legislation alone cannot be relied upon for divestment, and the
federal government cannot dictate to states where they can and
cannot make investments. He said the federal legislation of
2010, urging states to divest from Iran, is as far as the
federal government can go.
9:42:34 AM
MR. GOTTSTEIN reported that over 20 states already have Iran
divestment policies in place, including: California, Florida,
Minnesota, Nevada, Colorado, Texas, and Washington. He said New
York recently passed Iran divestment legislation this year. He
reiterated that the European Union has banned the purchase of
Iranian oil and gas.
9:43:05 AM
MR. GOTTSTEIN offered some points targeted at common
misconceptions regarding HB 2, as follows:
First, no North Slope operators should be considered
for investment; this includes new entrants like ENI,
who have committed to pulling out of Iran. A great
legislative research report is included in your
committee packet to explain this, and I highly
recommend that committee members take the time to read
it.
Second, even if there were a North Slope operator that
did business with Iran, there will be no changes to
Alaska's oil and gas incentives on the North Slope for
any company through HB 2.
Third, because the United States does not allow any
domestic companies to invest in Iran, only foreign
companies would be subject to divestment. A good list
can be found in the legislative research report, and
you will see that under this legislation, we would
likely divest from companies based in China, Russia,
India, Malaysia, and Thailand.
Fourth, the legislative research report estimates that
about one-tenth of one percent of the state's holdings
would likely be subject to divestment, which was
valued at approximately $79 million as of September
30, 2011. ... There are three fiscal notes for this
bill, including two from the Permanent Fund
Corporation.
MR. GOTTSTEIN said Alaska is "behind the curve on this issue";
the state's inaction works against its own foreign policy
objectives. He quoted the late Martin Luther King, Jr., as
having said, "He who passively accepts evil is as much involved
in it as he who helps to perpetuate it." Mr. Gottstein opined
that Alaska should not passively stand by and accept the Iranian
regime's aggression. The proposed legislation would direct the
state to divest from companies that do business in Iranian oil
and gas to "ensure that our funds do not support our enemies."
9:45:11 AM
CHAIR LYNN posited that the state should not invest a single
penny in Iran. He relayed a story he had read about man who was
being executed in Iran for refusing to renounce his faith.
9:46:13 AM
REPRESENTATIVE KELLER indicated that he had read an article in
The Economist, which said the occurrence of a "strike" was a
matter of "when" not "if." He supported the movement of HB 2 as
timely.
9:46:36 AM
REPRESENTATIVE JOHANSEN noted that in a prior legislative
session there had been a bill to divest from Sudan, and
Worksilla was one of the companies on the list. He said that at
the same time, the state was writing checks from its capital
budget directly to Worksilla, to buy generators for rural
communities. He said this was not investing, but was direct
capital spending, and he asked if there has been any thought
given to "that."
9:48:21 AM
MR. GOTTSTEIN responded that as written, HB 2 would affect only
the Permanent Dividend Corporation and the Department of
Revenue; it would not affect purchases made by the state from
specific companies.
REPRESENTATIVE JOHANSEN said he thinks it is probably just as
egregious to buy products from a company on the list using
capital funds as it is to invest in a company on the list, and
he encouraged Representative Gatto and Senator Wielechowski to
find a way to let legislators know when the money they
appropriate is going to support Iran.
9:49:43 AM
CHAIR LYNN, after ascertaining that there was no one who wished
to testify, closed public testimony.
9:50:02 AM
REPRESENTATIVE JOHANSEN remarked upon the short time spent on a
complicated bill. He said, "Sometimes we mistake activity for
achievement."
9:50:32 AM
REPRESENTATIVE SEATON said social considerations in investing
have been made by Alaska for a while now, the countries in
question changing with time. He said he is happy to see repeal
language in HB 2 that would make it unnecessary for the
legislature to pass new legislation if, for example, Iran was
taken off the list in the future.
9:52:07 AM
CHAIR LYNN said there are social aspects of bill, but the
primary focus of HB 2 is national security.
9:52:46 AM
CHAIR LYNN removed his objection to the motion to adopt the
proposed committee substitute (CS) for HB 2, Version LS0007\M,
Wayne, 2/8/12, as a work draft. There being no further
objection, Version M was before the committee.
9:52:49 AM
REPRESENTATIVE KELLER moved to report CSHB 2, Version LS0007\M,
Wayne, 2/8/12, out of committee with individual recommendations
and the accompanying fiscal notes. There being no objection,
CSHB 2(STA) was reported out of the House State Affairs Standing
Committee.