Legislature(2011 - 2012)CAPITOL 106

02/28/2012 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Moved CSHB 2(STA) Out of Committee
+ Bills Previously Heard/Scheduled 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                                                               
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                                                               
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                                                                    
     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                                                                    
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                                                               
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                                                               
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                                                               

Document Name Date/Time Subjects
00 HB 2 CS for HB 2 work draft version M 2-8-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
00-1 HB2- Explanation of differences from original version to CS work draft-Iran Divestiture 2-27-12 HSTA.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
01 HB 2A Original bill 1-18-11.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
02 HB 2-sponsor statement 02-02-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
03 HB 2 Governor Parnell's letter 1 31 12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
04 HB 2-Leg Research report 2-6-12 compliments of Sen. Wielechowski potential effects on AK' .pdf HSTA 2/28/2012 8:00:00 AM
HB 2
05 HB 2-quick facts 2-6-12 compliments of Sen. Wielechowski.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
06 HB 2 AP Article 1-23-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
07 HB 2 WSJ Article 2-6-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
08 HB 2-backup material 2-6-12 compliments of Sen. Wielechowski.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
09 HB002-REV-APFCCMF-02-24-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
10 HB002-REV-APFCO-02-24-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
11 HB002-DOR-TRS-02-25-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 2
01 HB0316 ver I- Bill.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
02 HB 316 - Sponsor Statement.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
04 HB316-DCCED-AIDEA-02-10-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
05 HB316-Fiscal Note-DMVA-MVA-CO-02-13-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
06 HB316-DOR-AHFC-02-10-12.pdf HSTA 2/28/2012 8:00:00 AM
HB 316
03 HB316 Sectional Analysis.pdf HSTA 2/28/2012 8:00:00 AM
HB 316