HB 241-DIVEST INVESTMENTS IN IRAN  9:17:22 AM CHAIR LYNN announced that the next order of business was HOUSE BILL NO. 241, "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 companies that do business in Iran, and restricting those investments; and providing for an effective date." The committee took an at-ease from 9:17:27 AM to 9:19:19 AM. [Due to technical difficulties with the official recording, the testimony from 9:20 a.m. through 9:28 a.m. was reconstructed from an alternative audio source.] 9:20:34 AM REPRESENTATIVE GATTO, sponsor, moved that the committee rescind its action, on 2/16/10, in failing to report from committee the proposed committee substitute (CS) for HB 241, Version 26- LS0680\S, Kane, 2/15/10, as amended. 9:20:44 AM REPRESENTATIVE JOHNSON objected. 9:21:33 AM A roll call vote was taken. Representatives Seaton, Wilson, Gatto, Gruenberg, Petersen, and Lynn voted in favor of the motion to rescind the committee's action in failing to report from committee the proposed committee substitute (CS) for HB 241, Version 26-LS0680\S, Kane, 2/15/10, as amended. Representative Johnson voted against it. Therefore, the motion to rescind the committee's action passed by a vote of 6-1. 9:21:51 AM REPRESENTATIVE GATTO spoke to the reason to pass HB 241. He said the State of Alaska currently has approximately $1 billion invested in Iran. The federal government has clearly stated that it wants sanctions on Iran, to put pressure on the country. He indicated that the bill would not require investigation of every mutual stock in every fund, but would establish a $20,000 threshold. He reminded the committee that the Permanent Fund Corporation had indicated that it has no issue with the proposed legislation. Investments would be transferred to other investments, he said. Representative Gatto offered his understanding that Iran will have the capability to send a nuclear weapon via missile to the U.S. within the next 10 years. 9:25:22 AM PATRICK GALVIN, Commissioner, Department of Revenue, testified that the department appreciates the bill sponsor's efforts to minimize the administrative costs and burden in the structure of the bill. He said the governor recognizes that there are instances where it is appropriate to make investment decisions in response to national security issues. In response to Chair Lynn, he said the governor has not taken a position on HB 241, but recognizes that there are instances when it is appropriate for the state to "join with others in isolating nations that are not taking actions that are in our national interest." In response to a follow-up question, he indicated that the governor would not take action on his own, but would cooperate if the bill passed. 9:26:15 AM REPRESENTATIVE JOHNSON spoke to his objection. He said if he thought the proposed legislation would effectively prevent the construction of nuclear weapons or even "do any good at all," he would support it. He said the cost per share difference, at two cents, will not impact Iran. He opined that if the State of Alaska really wants to have an effect on Iran, it would refuse to do business with companies that do business in Iran. He offered an example. He stated that he does not like what is happening to soldiers in Iran, but reiterated that he does not think the proposed legislation will do one bit of good. 9:29:44 AM REPRESENTATIVE GATTO speculated that soldiers overseas follow the actions of their government, and the federal government is saying pressure on Iran is needed. He mentioned companies in Alaska that are pulling out their investments in Iran, and he asked, "Is it economics or is it public pressure?" He stated, "This is where the public pressure originates." He said the state has the ability to put public pressure "on people who kill our soldiers." 9:31:17 AM REPRESENTATIVE GRUENBERG remarked, "A journey begins with a single step." 9:31:23 AM REPRESENTATIVE SEATON stated that the fighting is in Pakistan, which is also where the Taliban is. He related that there are 500,000-800,000 Afghani refugees in Iran. He said he has not heard of cross-border conflicts or missiles being fired into Iran. He stated that there is concern about potential nuclear weaponry, but the testimony by the Chief of Staff and commanders in the field has not shown that Iranians are shooting American soldiers. REPRESENTATIVE SEATON mentioned companies from around the world, which Alaska has tried to work with in developing the state's oil fields. He questioned how moral the state would be in divesting from all these companies while still being in partnership with them and giving them tax credits to develop oil fields and leases on Alaska lands. 9:35:22 AM REPRESENTATIVE GATTO stated that HB 241 is not an omnibus bill, but it is a powerful first step, "especially in light of the fact that we've seen major oil companies pull out of Iran." He said parts for improvised explosive devices are being made in Iran and then being shipped out and sold. He stated, "So, while they're not actually throwing the bombs at us, they're making the parts." 9:36:28 AM REPRESENTATIVE JOHNSON said he trusts Representative Gatto to accurately report that there are companies pulling out of Iran, but he is not comfortable concluding that the reason those companies are leaving is in response to public opinion. 9:37:18 AM REPRESENTATIVE GATTO read some news release headlines indicating that Iran is tied to the killing of U.S. soldiers and involved in supplying weapons to the Taliban. 9:37:42 AM REPRESENTATIVE GRUENBERG moved [to report the proposed committee substitute (CS) for HB 241, Version 26-LS0680\S, Kane, 2/15/10, as amended, from the House State Affairs Standing Committee.] 9:37:54 AM REPRESENTATIVE JOHNSON objected. 9:37:58 AM A roll call vote was taken. Representatives Wilson, Gatto, Gruenberg, Petersen, and Lynn voted in favor of the motion to report the proposed committee substitute (CS) for HB 241, Version 26-LS0680\S, Kane, 2/15/10, as amended, from the House State Affairs Standing Committee. Representatives Johnson and Seaton voted against it. Therefore, CSHB 241(STA) was reported out of the House State Affairs Standing Committee by a vote of 5-2.