01/31/2012 09:00 AM Senate STATE AFFAIRS

               SB 131-DIVEST INVESTMENTS IN IRAN                                                                            
                                                                                                                                
9:04:13 AM                                                                                                                    
CHAIR  WIELECHOWSKI,  as  chair   of  the  Senate  State  Affairs                                                               
Standing Committee, sponsor  of SB 131, introduced  the bill. The                                                               
bill  would  help  ensure  that  Alaska  does  not  inadvertently                                                               
support  the current  Iranian regime  by  investing in  companies                                                               
that do more than $20 million  of business in Iranian oil and gas                                                               
fields. Iran  has been listed  as a "State Sponsor  of Terrorism"                                                               
by  the   U.S.  State   department  since   1984  and   is  under                                                               
international sanction. The current  regime has been charged with                                                               
supporting  Iraqi insurgents  targeting  U.S.  soldiers. He  said                                                               
that many Alaskans, himself included,  believe that Alaska should                                                               
not  directly or  indirectly help  to finance  a regime  which is                                                               
targeting our troops.  A legitimate question can  be raised about                                                               
whether Alaska  should be  in the  business of  social investing.                                                               
Each case must be evaluated  separately and decided upon based on                                                               
the specific facts.  He emphasized drawing the  line at financing                                                               
regimes that seek to kill Americans.                                                                                            
                                                                                                                                
SAM GOTTSTEIN,  staff to Senator  Bill Wielchowski,  presented SB
 on behalf of the  Senate State Affairs Standing Committee. He                                                               
related that SB 131, as currently  drafted, is the same as HB 241                                                               
from the  26th legislature and  identical to HB  2 and HB  241 in                                                               
the current  legislative session. He emphasized  that the Iranian                                                               
regime  is a  threat  to  national security  and  Alaska, by  not                                                               
having  a divestment  policy  in  place, is  in  the position  of                                                               
financing America's  enemies. He highlighted  recent developments                                                               
which show that Iran is a  threat to America's way of life. Since                                                               
1984 the  United States has  listed Iran  as a "State  Sponsor of                                                               
Terrorism."  He  recalled the  history  of  Iran as  a  terrorist                                                               
nation.  The   Iranian  regime  is  under   strong  international                                                               
sanctions. Most  recently, the  United States  Treasury announced                                                               
sanctions against  Iran's National  Bank. The European  Union has                                                               
banned the  purchase of  Iranian oil and  gas. Iran  continues to                                                               
work  toward developing  nuclear  weapon capabilities  and has  a                                                               
long history of  human rights violations. He noted  that there is                                                               
strong bi-partisan support for this  legislation. A recent 100 to                                                               
zero vote in  the U.S. Senate to increase  sanctions against Iran                                                               
highlights the bi-partisan support.                                                                                             
                                                                                                                                
9:07:51 AM                                                                                                                    
MR.  GOTTSTEIN continued  to explain  how some  foreign companies                                                               
still invest in  Iran because of its oil resources.  SB 131 would                                                               
not  only  make sure  that  Alaska  does  not invest  in  foreign                                                               
companies that help  line the pockets of the  Iranian regime, but                                                               
it  would also  help to  weaken that  regime. The  intent of  the                                                               
legislation is  to bring  Alaska in  line with  America's foreign                                                               
policy.                                                                                                                         
                                                                                                                                
MR.  GOTTSTEIN explained  how  SB 131  works.  The Department  of                                                               
Revenue would  compile a list  of companies who have  invested an                                                               
aggregate  of  $20  million  or  more  in  Iranian  oil  and  gas                                                               
development. Once  the list  is compiled,  companies on  the list                                                               
will have 90  days to justify the investment. If  a company fails                                                               
to do  so, the Department  of Revenue  will ask the  state's fund                                                               
managers, including  the Permanent  Fund, to liquidate  assets of                                                               
that  company within  90  days. He  stressed  that Alaska  should                                                               
divest  from Iran  now for  several reasons.  Federal legislation                                                               
alone  cannot solve  the problem  because the  federal government                                                               
cannot tell states what they can or cannot invest in.                                                                           
                                                                                                                                
MR.  GOTTSTEIN  pointed out  that  over  20 states  already  have                                                               
divested themselves from  Iran. He referred to a  news article in                                                               
the  members'  packets  about New  York's  legislation  regarding                                                               
divestment. The  legislation has both national  and international                                                               
support.                                                                                                                        
                                                                                                                                
9:11:37 AM                                                                                                                    
MR. GOTTSTEIN  dispelled several misconceptions about  SB 131. He                                                               
said   no  North   Slope  operators   would  be   considered  for                                                               
divestment, including new operators. There  will be no changes to                                                               
Alaska's oil and gas incentives on  the North Slope; SB 131 would                                                               
affect only  foreign companies.  He referred to  a list  of those                                                               
foreign  companies in  members' packets.  He reported  that about                                                               
one-tenth of  1 percent of  Alaska's holdings,  approximately $79                                                               
million, would  be subject to divestment  under this legislation.                                                               
He noted  that the Alaska  Permanent Fund Corporation has  a zero                                                               
fiscal note for the bill.                                                                                                       
                                                                                                                                
MR.  GOTTSTEIN  referred to  written  testimony  from Mr.  Andrew                                                               
Davenport  in members'  packets. Mr.  Davenport, who  has over  a                                                               
decade of experience in risk  management and divestment policies,                                                               
noted  that   there  is  broad,  bi-partisan   support  for  this                                                               
divestment policy. He said that  SB 131 is a "highly conservative                                                               
policy," and would "target an  especially elite category of worst                                                               
offenders."                                                                                                                     
                                                                                                                                
9:14:14 AM                                                                                                                    
CHAIR WIELECHOWSKI requested the administration to testify.                                                                     
                                                                                                                                
ANGELA  RODELL,  Deputy   Commissioner,  Department  of  Revenue,                                                               
offered to answer questions related to SB 131.                                                                                  
                                                                                                                                
SENATOR  PASKVAN asked  if the  department has  a position  on SB
.                                                                                                                            
                                                                                                                                
MS.   RODELL  agreed   with  Senator   Wielechowski  that   these                                                               
situations  should  be evaluated  on  a  case-by-case basis.  She                                                               
added that  the legislation  would not cost  the state  any money                                                               
because  it does  not invest  in  companies that  do business  in                                                               
Iran.                                                                                                                           
                                                                                                                                
SENATOR  PASKVAN  asked  for   clarification  if  the  department                                                               
supports the bill.                                                                                                              
                                                                                                                                
MS. RODELL  replied that the  department supports the bill  as it                                                               
is currently written.                                                                                                           
                                                                                                                                
SENATOR  MEYER inquired  about  the  impact of  the  bill on  the                                                               
Permanent Fund.                                                                                                                 
                                                                                                                                
MS.  RODELL said  she could  not speak  for the  Alaska Permanent                                                               
Fund  Corporation. She  reiterated  her  belief that  investments                                                               
should be evaluated on a case-by-case basis.                                                                                    
                                                                                                                                
SENATOR MEYER questioned how far to go with these protests.                                                                     
                                                                                                                                
MS. RODELL shared  the concern about where to draw  the line. She                                                               
said each case should be reviewed and taken up independently.                                                                   
                                                                                                                                
9:17:38 AM                                                                                                                    
SENATOR PASKVAN questioned the phrase "taken up independently".                                                                 
                                                                                                                                
MS.  RODELL explained  her reasoning  that  it was  not a  global                                                               
decision on global investing, but  rather a specific issue of not                                                               
investing in Iran.                                                                                                              
                                                                                                                                
9:18:39 AM                                                                                                                    
AKIVA  TOR,  Israel  Council   General,  Pacific  Northwest,  San                                                               
Francisco,  California, spoke  in favor  of SB  131. He  said the                                                               
prevention  of  the  Islamic  Republic  of  Iran  from  achieving                                                               
nuclear  weapons is  a vital  security  issue, not  only for  the                                                               
state of Israel,  but for the United States and  the entire West.                                                               
Investments in Iran  cannot be safe. He stressed that  it was the                                                               
right thing and the fiscally wise  thing to do. He concluded that                                                               
the legislation is  a message to Iran and  is significant, moral,                                                               
wise, prudent, and commendable.                                                                                                 
                                                                                                                                
9:21:05 AM                                                                                                                    
MICHAEL  MAKOVSKY, Foreign  Policy  Director, Bi-Partisan  Policy                                                               
Center,  Washington, D.C,  testified  in support  of  SB 131.  He                                                               
maintained  that the  threat  of  a nuclear  Iran  is a  national                                                               
security  threat. He  thought  the legislation  was  in the  best                                                               
interest of  the United  States and was  a bi-partisan  issue. He                                                               
listed reasons  why Iran  was a  threat. He  called on  Alaska to                                                               
join many other states in supporting the legislation.                                                                           
                                                                                                                                
9:25:03 AM                                                                                                                    
DAVID GOTTSTEIN,  Anchorage, Alaska, testified on  his own behalf                                                               
in support of  SB 131. He strongly suggested  setting a precedent                                                               
to help U.S.  military by passing this legislation.  He said that                                                               
federal  legislation  has  granted  a waiver  from  the  "prudent                                                               
investor rule." He agreed with  the Council General that by being                                                               
in a  position of having  investments in  an enemy state  that is                                                               
vulnerable  to military  action would  expose investments  there.                                                               
Trustees  are in  favor  of  this action.  This  request is  very                                                               
different because it has to do with national security.                                                                          
                                                                                                                                
MR. GOTTSTEIN  spoke of  investments on the  North Slope  and the                                                               
state's wish to not profit by investments in Iran.                                                                              
                                                                                                                                
CHAIR  WIELECHOWSKI asked  if  there was  a  link between  Iran's                                                               
funding of  organizations that are harming  American soldiers and                                                               
oil money.                                                                                                                      
                                                                                                                                
MR. GOTTSTEIN  reported that Iran  has been a  prime manufacturer                                                               
of improvised explosive  devices, and most of the  deaths of U.S.                                                               
soldiers  in   Iraq  from  explosive  devices   were  from  those                                                               
manufactured in Iran.  He stated that the U.S. is  at war against                                                               
Iran. He  concluded that SB 131  is an opportunity for  Alaska to                                                               
prevent Iran from developing a nuclear weapon.                                                                                  
                                                                                                                                
CHAIR  WIELECHOWSKI  noted  two fiscal  notes;  an  indeterminate                                                               
fiscal  note from  the Department  of Revenue  and a  zero fiscal                                                               
note from  the Alaska Permanent  Fund Corporation,  Department of                                                               
Revenue.                                                                                                                        
                                                                                                                                
9:30:44 AM                                                                                                                    
SENATOR  MEYER  commented  on the  importance  of  becoming  less                                                               
reliant on foreign oil. He  named several floundering attempts at                                                               
domestic oil development.                                                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI  said  3.6   million  barrels  of  oil  are                                                               
imported from Iran.                                                                                                             
                                                                                                                                
SB 131 was held in committee.