04/14/2005 03:30 PM Senate STATE AFFAIRS

          SB  12-LIMIT RELATIONS WITH CERTAIN NATIONS                                                                       
                                                                                                                              
5:07:30 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT announced  SB 12 to be up  for consideration. He                                                               
asked  for a  motion  to  adopt the  \I  version  as the  working                                                               
document.                                                                                                                       
                                                                                                                                
SENATOR CHARLIE HUGGINS so moved.                                                                                               
                                                                                                                                
JASON  HOOLEY, Staff  to Senator  Dyson, explained  the bill  was                                                               
introduced  to  support  the  federal   effort  to  combat  human                                                               
trafficking for sexual and labor purposes.                                                                                      
                                                                                                                                
The  U.S. State  Department compiles  an annual  report giving  a                                                               
tier  ranking to  foreign countries  based on  its tolerance  for                                                               
human trafficking.  Tier 3 includes the  most egregious countries                                                               
that  have the  most permissive  climate for  trafficking. SB  12                                                               
relies on  those rankings and  allows state  procurement agencies                                                               
to restrict business with those countries.                                                                                      
                                                                                                                                
The \I version makes the following changes:                                                                                     
                                                                                                                                
Sections 2,  3, and 4 have  identical language and relate  to the                                                               
procurement  agencies  for  the  legislative  branch,  the  court                                                               
system, and  the executive branch respectively.  It mandates that                                                               
state  procurement agencies  conduct no  business with  companies                                                               
headquartered in Tier 3 countries.  They are given flexibility to                                                               
restrict business  as they  see fit  with companies  that conduct                                                               
business but aren't headquartered in Tier 3 countries.                                                                          
                                                                                                                                
Section 5 deals  with the fiduciaries of state  funds. The Alaska                                                               
Permanent  Fund   Corporation  (APFC)  found   previous  versions                                                               
problematic, but has indicated that  the proposed language in the                                                               
\I version  would not  pose a problem  to its  investment scheme.                                                               
The  proposed language  says that  a  fiduciary of  a state  fund                                                               
shall  restrict direct  financial investments  with countries  in                                                               
Tier  3.  That's the  section  in  statute  that deals  with  the                                                               
Prudent Investor Rule.                                                                                                          
                                                                                                                                
CHAIR  THERRIAULT  asked  for  elaboration  on  direct  financial                                                               
investment.                                                                                                                     
                                                                                                                                
MR.  HOOLEY replied  the  word "countries"  is  used rather  than                                                               
"organizations" so that the state  isn't making direct investment                                                               
in  the  countries  or  governments  themselves  as  compared  to                                                               
businesses located there.                                                                                                       
                                                                                                                                
CHAIR THERRIAULT  asked whether  business through  a corporation,                                                               
investment in a corporation, or  joint ownership of property with                                                               
the corporation would be allowed.                                                                                               
                                                                                                                                
MR. HOOLEY responded that's our intent.                                                                                         
                                                                                                                                
CHAIR  THERRIAULT  asked  if anything  in  the  findings  section                                                               
needed to be kept.                                                                                                              
                                                                                                                                
MR. HOOLEY said it isn't essential.                                                                                             
                                                                                                                                
SENATOR ELTON asked if there's a definition for "headquarters".                                                                 
                                                                                                                                
MR. HOOLEY  responded he  didn't have a  definition but  he would                                                               
look into that with legal services.                                                                                             
                                                                                                                                
SENATOR ELTON  questioned whether the problems  originally voiced                                                               
by  the APFC  wouldn't apply  to  the PERS/TRS  fund managers  as                                                               
well.                                                                                                                           
                                                                                                                                
MR.  HOOLEY acknowledged  that the  PERS/TRS  boards hadn't  been                                                               
contacted yet, but he'd be happy to do so.                                                                                      
                                                                                                                                
CHAIR  THERRIAULT  asked  for  verification  that  the  APFC  had                                                               
reviewed Section 5 and had expressed no concern.                                                                                
                                                                                                                                
MR.  HOOLEY replied  he received  a letter  from the  corporation                                                               
expressing  the view  that the  \I version  would not  affect the                                                               
APFC's investments or fiduciary contracts.                                                                                      
                                                                                                                                
CHAIR THERRIAULT  asked for  a copy  of the  letter for  the bill                                                               
file.                                                                                                                           
                                                                                                                                
CHAIR  THERRIAULT  moved to  strike  Section  1. There  being  no                                                               
objection, Section 1 was deleted.                                                                                               
                                                                                                                                
He noted two zero fiscal notes.                                                                                                 
                                                                                                                                
5:17:55 PM                                                                                                                    
                                                                                                                                
SENATOR  ELTON   asked  if  Mr.   Jones  had  a   definition  for                                                               
"headquarters"  and  whether  it would  include  subsidiaries  or                                                               
wholly owned subsidiaries of larger corporations.                                                                               
                                                                                                                                
MR.   JONES,    Chief   Procurement   Officer,    Department   of                                                               
Administration,  said he  was  wrestling with  how  to make  that                                                               
determination. However, he understands  the intent and would give                                                               
it his best shot.                                                                                                               
                                                                                                                                
5:20:30 PM                                                                                                                    
                                                                                                                                
CHAIR  THERRIAULT  noted  the  bill  has  a  Judiciary  Committee                                                               
referral.                                                                                                                       
                                                                                                                                
SENATOR  HUGGINS motioned  to  report CSSB  12,  as amended,  and                                                               
attached   fiscal   notes    from   committee   with   individual                                                               
recommendations.                                                                                                                
                                                                                                                                
CHAIR THERRIAULT  announced that without objection,  CSSB 12(STA)                                                               
moved from committee.