Legislature(2009 - 2010)CAPITOL 106
02/24/2009 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB92 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 92 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 92-DIVEST INVESTMENTS IN SUDAN 8:08:59 AM CHAIR LYNN announced that the only order of business was HOUSE BILL NO. 92, "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 Sudan, and restricting those investments; and providing for an effective date." 8:09:49 AM REPRESENTATIVE WILSON moved to adopt the proposed committee substitute (CS) for HB 92, Version 26-GH1049\R, Cook, 2/23/09, as a work draft. REPRESENTATIVE JOHNSON objected. 8:10:34 AM REPRESENTATIVE PETERSEN noted that Version R would change the divestment start date from December 31, 2009, to 90 days from the day the bill passes. In response to Chair Lynn, he offered his understanding that the administration said the change would not be a problem. 8:11:54 AM PATRICK GALVIN, Commissioner, Department of Revenue, noted that the language to which Representative Petersen referred occurs on page 2, beginning on line 14, of Version R. Furthermore, he confirmed that the change would not create a hardship for the department. 8:12:41 AM REPRESENTATIVE GRUENBERG noted another change: In the original bill, on page 5, line 26, the language read, "For actions taken in compliance with AS 37.10.072 or inaction done in good faith." Version R changes that language on page 5, line 28, to, "For actions taken, or inaction done in good faith, in compliance with AS 37.10.072." Representative Gruenberg explained that the phrase "or inaction done in good faith" was moved before the reference to statute, "so that this language could not be interpreted as a blanket immunization for these boards and staff and everyone else for any ... inaction done in good faith." COMMISSIONER GALVIN, in response to Representative Gruenberg, confirmed that the administration has no problem with that amendment. 8:14:14 AM REPRESENTATIVE JOHNSON spoke to his objection. He explained that amendments were turned in to the chair's office a few hours before his own amendments, and they were incorporated into Version R, without a vote of the committee. He said he thinks the amendments should have been addressed individually by the committee. He stated, "It makes every amendment that I brought in a few hours later incongruent with the bill, and at that point a conceptual amendment." 8:16:08 AM REPRESENTATIVE SEATON outlined two legislative procedures surrounding the adoption of a committee substitute (CS). He stated that he would not like to set the precedent that a CS cannot be brought forward without all points having been debated in committee, because he said that is not standard procedure. 8:17:48 AM REPRESENTATIVE JOHNSON offered his understanding that typically changes made to the bill outside of committee and brought to the committee as a CS are brought as a sponsor substitute (SS). 8:18:34 AM REPRESENTATIVE GRUENBERG said he thinks the amendments offered by Representative Petersen and himself were pretty well known, and he said he was not under the impression that they were controversial. Regardless of their timing, he opined that Representative Johnson's amendments are more controversial. 8:20:11 AM REPRESENTATIVE JOHNSON reiterated his philosophy. CHAIR LYNN offered his understanding that the administration was contacted about the changes to the bill through Version R. 8:21:20 AM REPRESENTATIVE WILSON said this is her ninth year in the legislature and this is typical procedure. REPRESENTATIVE SEATON concurred. 8:24:13 AM A roll call vote was taken. Representatives Wilson, Gatto, Gruenberg, Petersen, Seaton, and Lynn voted in favor of adopting the committee substitute (CS) for HB 92, Version 26-GH1049\R, Cook, 2/23/09, as a work draft. Representative Johnson voted against it. Therefore, Version R was before the committee. 8:25:21 AM REPRESENTATIVE JOHNSON expressed his full support of stopping genocide in Darfur, but said he does not believe this legislation does that. He said who owns stock is really not relevant to the company and its operation. He warned that investing for social reasons will trigger taxation by the Internal Revenue Service (IRS). 8:28:11 AM REPRESENTATIVE JOHNSON moved to adopt Conceptual Amendment 1, labeled 26-GH1049\A.2, Cook, 2/23/09, which read as follows: Page 1, line 4, following "investments;": Insert "prohibiting the procurement of goods or services by the state or a political subdivision of the state from certain companies that do business in Sudan;" Page 2, following line 8: Insert a new bill section to read: "* Sec. 2. AS 36.95 is amended by adding a new section to read: Sec. 36.95.001. Procurements in companies that do business in Sudan prohibited. Notwithstanding any other provision, the state or a political subdivision of the state may not procure goods or services of any kind in any amount from a company on the list of companies that conduct or have direct investments in business operations in Sudan that is prepared and updated under AS 37.10.072." Renumber the following bill sections accordingly. Page 6, line 18: Delete all material and insert: "REPEAL. Section 1 of this Act, AS 36.95.001, enacted by sec. 2 of this Act, AS 37.10.072 and 37.10.073, enacted by sec. 3 of this Act, AS 37.10.220(d), enacted by sec. 4 of this Act, and AS 37.13.120(f), enacted by sec. 5 of this" REPRESENTATIVE JOHNSON explained that Conceptual Amendment 1 would prohibit the state and its political subdivisions from doing business with businesses on the [divestment] list. He concluded, "So, if we can't buy stock, we can't write them checks out of our treasury." 8:30:12 AM REPRESENTATIVE SEATON objected to the motion to adopt Conceptual Amendment 1. He warned that the proposed amendment would have many unintended consequences. He explained that, for example, state and municipal agents would have to constantly refer to purchases and figure out whether they would comply. Version R has narrowly defined who would be affected, and the proposed amendment would reverse that, he said. 8:32:00 AM COMMISSIONER GALVIN said [House Bill 287], introduced last session to divest from Darfur, would have had unintended consequences, which is why the administration did not support it. The governor's requested bill, HB 92, eliminates those unintended consequences. Commissioner Galvin said it is unlikely that the state would buy from companies that are going to be on the list, because those companies are not likely to be ones that would have services in the state's market. However, the burden and the bureaucratic institution that would have to be set up to implement the amendment would be significant, he stated. He concluded, "So, ... weighing that, we see little benefit in terms of actually moving forward with the primary objective of the legislation while creating tremendous burden on the various institutions ...." CHAIR LYNN concurred. 8:34:00 AM REPRESENTATIVE JOHNSON said he disagrees that the state would not likely be doing business with those companies. He revealed that he has a list of such companies. One of them is Wärtsilä Oyj - a manufacturer of generators that is "powering Nome today." Another is a company that provides the state its motors for its supertankers. He offered other examples. He said when the state writes a check to those companies, the money goes to "their investment in Sudan, to their bottom line." He said if the real goal is to save lives in Sudan, then it is necessary to ensure that state money does not get to that country. The way to do that, he reiterated, is by not doing business with those companies on the list. Representative Johnson said checks are being written from the state treasury, the money from which is going directly to Sudan. In response to Chair Lynn, he said he is not talking about companies three times removed, but "the State of Alaska doing business with companies that are on this list." 8:37:56 AM REPRESENTATIVE GRUENBERG directed attention to Conceptual Amendment 1, line 19, as numbered on the amendment, and asked the committee to contrast that to the language in Version R, page 6, line 21. He said the proposed amendment would repeal AS 37.10.073, which is on page 5 in Version R. The subject is immunity. If that language is repealed, that would mean that "after the date of repeal the immunity goes away." He said that would have terrific legal repercussions, because the board of the permanent fund, the corporation, and employees within the Department of Revenue, "and everybody else," would no longer be immunized for potential causes of action for following the mandate of the proposed bill [if Amendment 1 were adopted]. He stated that he would strongly oppose Conceptual Amendment 1 for that reason. 8:40:32 AM MR. BURNS agreed that immunity should not be eliminated. 8:41:07 AM REPRESENTATIVE JOHNSON said Tam Cook drafted Conceptual Amendment 1, and he related that he would like to hear from her on this issue. The committee took an at-ease from 8:41:31 AM to 8:42:30 AM. 8:42:33 AM REPRESENTATIVE GRUENBERG requested that the committee table Conceptual Amendment 1. There being no objection, Conceptual Amendment 1 was tabled. 8:43:04 AM REPRESENTATIVE JOHNSON moved to adopt Amendment 2, labeled 26- GH1049\A.1, Cook, 2/2/09, which read as follows: Page 1, line 3, following "Sudan": Insert "or that own or operate medical facilities anywhere in the world that provide partial-birth abortions" Page 5, following line 25: Insert new material to read: "Sec. 37.10.073. Medical facilities divestment. (a) The commissioner or any fiduciary of a fund subject to this title may not invest in and, if such securities are owned, shall cause the fund to divest ownership in the publicly traded securities of a company that is placed by the commissioner on a list of companies that own or operate medical facilities anywhere in the world that provide partial-birth abortions. On or before January 31 of each year, if the fund has investments managed by an outside investment manager, the fiduciary shall direct the investment manager not to invest in and, if such securities are owned, to divest ownership in the publicly traded securities of a company that is placed by the commissioner on the list prepared under (c) of this section. (b) If an investment in a fund under (a) of this section is managed as a commingled investment or other business structure in which the fund is not the sole owner of the investment interest or the investment is an index fund, the provisions of (a) of this section do not apply. The commissioner shall require that, on or before January 31 of each year, the fiduciary submit letters to the managers of commingled investments requesting the managers to consider removing from the commingled investment any company on the list prepared under (c) of this section. (c) The commissioner shall prepare and update, on or before December 31 of each year, a list of companies that own or operate medical facilities anywhere in the world that provide partial-birth abortions. (d) On or before January 31 of each year, the commissioner shall advise the president of the senate and the speaker of the house of representatives of the companies on the list prepared under (c) of this section. (e) The commissioner may adopt regulations under AS 44.62 (Administrative Procedure Act) to carry out the purposes of this section. (f) In this section, (1) "commissioner" means the commissioner of revenue; (2) "partial-birth abortion" means a procedure in which a person deliberately and intentionally (A) partially vaginally delivers a living fetus for the purpose of performing an overt act that the person knows will kill the fetus; and (B) performs the overt act, other than completion of delivery, that kills the fetus; (3) "partially vaginally delivers" means brings about the delivery of a fetus through the mother's vagina that causes (A) in the case of a head-first presentation, the entire fetal head to be outside of the mother's body; or (B) in the case of breech presentation, any part of the fetal trunk past the navel to be outside of the mother's body." Page 5, line 25: Delete "Sec. 37.10.073" Insert "Sec. 37.10.074" Following "indemnification.": Insert "(a)" Page 6, following line 11: Insert a new subsection to read: "(b) For actions taken in compliance with AS 37.10.073 or inaction done in good faith, the commissioner of revenue, fiduciary, and the commissioner of revenue's or fiduciary's agents, attorneys, trustees, officers, employees, staff, custodians, research firms and investment managers under contract, and board members complying with AS 37.10.220 or AS 37.13.120 are (1) exempt from any conflicting state statutory or common law obligations, including any obligations with respect to choice of asset managers, investment funds, or investments for the public fund's securities portfolios; (2) immune from liability under state or local law; (3) indemnified and held harmless by the State of Alaska from claims, demands, suits, actions, damages, judgments, costs, charges, and expenses, including attorney fees and costs, and against all liability, losses, and damages of any nature that the commissioner, fiduciary, and the commissioner's or fiduciary's agents, attorneys, trustees, officers, employees, staff, custodians, research firms, and investment managers under contract may at any time sustain by reason of any decision to restrict, reduce, or eliminate investments made in compliance with AS 37.10.073; and (4) immune from adverse licensing actions under AS 08." Page 6, line 12: Delete "a new subsection" Insert "new subsections" Page 6, following line 13: Insert a new subsection to read: "(e) The board shall comply with AS 37.10.073." Page 6, line 14: Delete "a new subsection" Insert "new subsections" Page 6, following line 15: Insert a new subsection to read: "(g) The board shall comply with AS 37.10.073." Page 6, lines 18 - 19: Delete all material and insert: "REPEAL. Section 1 of this Act, AS 37.10.072, and 37.10.074(a), enacted by sec. 2 of this Act, 37.10.220(d), enacted by sec. 3 of this Act; and AS 37.13.120(f), enacted by sec. 4 of this Act, are repealed on the earliest of the day after" Page 7, line 8, following "describing": Insert "sec. 1 of this Act, AS 37.10.072 and 37.10.074(a), enacted by sec. 2 of this Act, AS 37.10.220(d), enacted by sec. 3 of this Act, and AS 37.13.120(f), enacted by sec. 4 of" REPRESENTATIVE SEATON objected to the motion to adopt Amendment 2. REPRESENTATIVE JOHNSON said Amendment 2 would prevent the state from investing in any hospitals that allow partial birth abortion. He said the issue of divesting from Darfur is resulting in litigation - several retirement groups are suing their investment managers for divesting for social purposes - but the issue has not elevated itself to the [U.S.] Supreme Court. On the other hand, the issue of partial birth abortion has been through that high court. 8:45:03 AM CHAIR LYNN emphasized that he has always been "pro-life" and, thus, against partial birth abortion. Furthermore, he said he has consistently co-sponsored and voted on legitimate legislation regarding partial birth abortion. He said the proposal of Amendment 2 disappoints him, because it "pits one good cause against another good cause to the detriment of both." He explained that the proposed amendment illustrates a belief that "if we divest to hinder one injustice, ... other injustices need to be addressed at the same time." He stressed that the situation in Darfur has been declared by Congress to be genocide, and that declaration has been acknowledged by two Presidents. Other injustices in the world have not been declared genocide, whether or not they should have been. He stated his belief that that is the foundation for the governor's bill. Chair Lynn requested that Representative Johnson withdraw Amendment 2, and redraft it into a bill prohibiting partial birth abortion, which he said he would happily co-sign. 8:48:18 AM REPRESENTATIVE JOHNSON responded that genocide and partial birth abortion are similar tragedies, and he stated that he will not withdraw Amendment 2. He said the bill does not do enough. He said, "If we're going to jeopardize the permanent fund for future generations, through taxation by the federal government, I want to at least do it for something where there's an upside." 8:51:23 AM REPRESENTATIVE WILSON directed attention to a publication [included in the committee packet] from the Center for Retirement Research at Boston College, entitled, "Should Public Plans Engage in Social Investing?" The publication discusses state actions that may conflict with federal foreign policy and comments that social divestment can be complicated, costly, and ineffective. However, the end of the publication states, "In more than one instance, federal courts have ruled that state legislation, regarding social investment, was unconstitutional on grounds that it overlapped with federal regulations." She stated that currently the bill is okay because of the federal declaration of genocide; however, she said adding other issues will create conflict with federal legislation and, thus, would be unconstitutional. 8:53:27 AM REPRESENTATIVE JOHNSON responded that both the U.S. Supreme Court and the federal government have ruled that partial birth abortion "is not something that should be done"; therefore, he said [the adoption of Amendment 2] would not be "running afoul of federal law." 8:53:58 AM COMMISSIONER GALVIN said neither he nor Mr. Burns is aware of any legal opinion regarding social investing or changes in investment policy subjecting the permanent fund to risk of taxation. In response to the chair, he stated, "We're not aware of any risk to the permanent fund or to the taxed position of the permanent fund that HB 92 would ... represent." In response to a follow-up question, he said the divestiture proposed through HB 92 would affect less than 1 percent of the permanent fund's investment. 8:55:42 AM COMMISSIONER GALVIN, in response to Representative Johnson, said it is his understanding that some nonprofit organizations have lost their standing after investing for political and social purposes. He clarified, "But that is not the principal on which the state funds are tax exempt." REPRESENTATIVE JOHNSON said for years he has heard from several members of the permanent fund investment board and the banking community that the IRS is anticipating getting its hands on the permanent fund. He asked if that information has just been misleading. COMMISSIONER GALVIN said he does not think Representative Johnson has been mislead, because there are other issues associated with the taxation of the permanent fund; however, he reemphasized that he is not aware of "the connection to the nonprofit tax exempt status." 8:58:00 AM MR. BURNS noted that there is a legal opinion, a number of years old, regarding the exemption from taxation of the permanent fund. The issue of whether or not the permanent fund is taxable has been raised, but this opinion says it is not taxable, because it is part of the state. 8:59:09 AM REPRESENTATIVE JOHNSON asked if Mr. Burns knows of any language in that legal opinion which shows that the state could be taxed if it starts investing for any other reason than for the good of the state. MR. BURNS deferred to others more qualified to answer that question. 8:59:58 AM CHAIR LYNN opined that it is within the purview of state how it spends its money. 9:00:28 AM REPRESENTATIVE GRUENBERG directed attention to language in Amendment 2, on page 1, line 10, as numbered on the amendment, which would require the commissioner to develop a list of all the companies that deal with partial birth abortions around the world. He said this is quite a bit different from the requirement in the bill that would allow the state to rely on federal lists. He asked Commissioner Galvin if that would result in considerable expense to the department. COMMISSIONER GALVIN surmised that the result would be a higher cost than that expected for "the base bill"; however, without further study, he said he really cannot answer the question. REPRESENTATIVE GRUENBERG noted that language in Amendment 2, on page 4, lines 6 and 11, as numbered on the amendment, references AS 37.10.074(a). He said, "I find no such statute in the bill or in the amendment or in current law." Finally, he pointed to language in Amendment 2 on page 3, line 1, as numbered on the amendment, and noted that it does not contain the immunization amendatory language that the committee just incorporated through Version R. The result, he said, would be a potential blanket immunization and the undoing of Version R. 9:03:49 AM COMMISSIONER GALVIN, in response to Representative Gatto, said "instrument of the state" and "nonprofit" are two distinct and separate terms. MR. BURNS, in response to a remark by Representative Gatto, said he cannot recall any link the state has had to being called nonprofit. 9:05:39 AM A roll call vote was taken. Representative Johnson voted in favor of Amendment 2. Representatives Gatto, Gruenberg, Petersen, Seaton, Wilson, and Lynn voted against it. Therefore, Amendment 2 failed by a vote of 1-6. 9:06:20 AM CHAIR LYNN brought Conceptual Amendment 1 back before the committee. REPRESENTATIVE GRUENBERG questioned whether the drafter of Amendment 1 had mistakenly typed AS 37.10.073 instead of AS 36.95.001. 9:08:56 AM COMMISSIONER GALVIN suggested that if [Amendment 2] had been [adopted], it would have created a new [AS] 37.10.073; therefore, he surmised that [Amendment 1] had been written as if [Amendment 2] were to be approved. 9:09:32 AM TAMARA COOK, Director, Legislative Legal and Research Services, Legislative Affairs Agency, as the drafter of Amendments 1 and 2, said she does not believe that [Amendment 1] was drafted in contemplation of another amendment being [approved]. REPRESENTATIVE GRUENBERG noted that in Amendment 1, there is no repealer for AS 36.95.001; therefore the section regarding procurements would never be repealed. MS. COOK pointed out that the repealer is on line 18, as numbered on the amendment. REPRESENTATIVE GRUENBERG said there is no reference in Amendment 1 to Section 6 of the bill, which is in regard to the notice to the legislature; therefore there would be no requirement to notify the legislature of the effect of the procurement amendment. MS. COOK responded, "It's not an issue that is addressed at all in this amendment." REPRESENTATIVE GRUENBERG said he thinks that is a defect in the amendment. 9:11:39 AM REPRESENTATIVE JOHNSON reiterated his aforementioned points in support of Amendment 1. 9:13:19 AM A roll call vote was taken. Representative Johnson voted in favor of Amendment 1. Representatives Gruenberg, Petersen, Seaton, Wilson, Gatto, and Lynn voted against it. Therefore, Amendment 1 failed by a vote of 1-6. 9:13:54 AM CHAIR LYNN opened public testimony. 9:14:22 AM DEBORAH BOCK, Member, Save Darfur, testified in support of HB 92. She reported that 27 states have already adopted similar legislation, and Save Darfur wants Alaska to be the twenty- eighth. She said the organization is delighted with HB 92 as a bill that provides "straight-forward divestment procedures that can be carried out at virtually no cost to the State of Alaska." She relayed that the bill has been endorsed by the Alaska Retirement Management (ARM) Board and the Alaska Permanent Fund Corporation. Regarding the concern over lawsuits, she noted that there has been one lawsuit filed in the State of Illinois, and that suit was resolved by the Sudan Accountability and Divestment Act (SADA), which provides encouragement to states to divest through protection of fund managers. Ms. Bock expressed appreciation to the committee for taking the time to study this issue, and she urged its members to vote in favor of HB 92. In response to a question from Representative Gruenberg, she said she does not know how many other states are currently considering similar legislation. 9:16:16 AM NANCY DAWSON testified in support of HB 92. She talked about a Cambodian who experienced genocide in his country and has said that the only thing that keeps those in refugee camps going is the thought that someone, somewhere will help them. She said she is happy that the differences were resolved regarding the bill introduced last year, and she emphasized her hope that HB 92 would pass out of committee expeditiously. 9:17:30 AM AMY KEARNS, Save Darfur, testified in support of HB 92. She said she is glad that previous conflicts were resolved and the bill is being heard. She stated, "I add my name to the list because I was concerned about some of the amendments that have now been taken out of the bill." She said she would like to reiterate what Ms. Bock said. 9:18:37 AM LAUREN TIBITS, Representative, STAND Juneau, explained that she is a high school junior who not only represents STAND Juneau - a student anti-genocide coalition - but also represents STAND as a whole, which she said is the student division of the Genocide Intervention Network. She indicated her involvement with [SADA], and said she is currently working on the Sudanese Divestment Task Force for Alaska. MS. TIBITS said she thinks HB 92 is an important piece of legislation that will affect thousands of people. She said she has conversed with countless refugees living in New York, Washington, D.C., and across America, which she indicated was in relation to a STAND conference, and those people all share in common the desire to see genocide end. She stated her belief that those responsible for genocide are not only its perpetrators, but also any one who knows about it and does nothing. She mentioned her belief in the interconnectivity of all humans. Ms. Tibits expressed her support of HB 92, and thanked all the legislators for their consideration of this legislation. REPRESENTATIVE GRUENBERG commented on Ms. Tibits' presentation and her prospects for the future. 9:22:30 AM RICKY TAGABEN told the committee that he graduated from Juneau- Douglas High School in 2008. He shared that last year two of the "Lost Boys" - survivors of genocide - came to JDHS, and he was asked to welcome them in Tlingit. He said while speaking to them, he was reminded of the origin of the Tlingit National Anthem, one of the lines in which is: "So it may never be forgotten, our voices will be heard on our grandfather's land." He told the two visitors that although it may not be in this lifetime, "Dinka voices will be heard on Dinka land." MR. TAGABEN thanked the committee for its consideration of this topic of legislation again this year, and urged its members to vote in favor of HB 92. He related a story of former legislator, Elizabeth Peratrovich, who presented an anti- discrimination bill that did not pass after its first time being heard and was asked upon her second try if the bill would end discrimination. Mr. Tagaben related that Ms. Peratrovich's response was to point out that there are already laws against larceny and murder, yet those crimes still occur, but introducing legislation is a way to express to the world how one feels about discrimination. Mr. Tagaben concluded that he is testifying because he wants to tell the world, along with his fellow statesmen, "how we feel about this." 9:24:45 AM CHAIR LYNN closed public testimony. 9:24:59 AM REPRESENTATIVE GRUENBERG moved to report CSHB 92 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 92(STA) was reported out of the House State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 92 - Amendment 26-GH1049-A.1.pdf |
HSTA 2/24/2009 8:00:00 AM |
HB 92 |
| HB 92 - Amendment 26-GH1049-A.2.pdf |
HSTA 2/24/2009 8:00:00 AM |
HB 92 |
| sudan_company_rankings.pdf |
HSTA 2/24/2009 8:00:00 AM |
|
| HB 92 - Amendment 26-GH1049-A.3.pdf |
HSTA 2/24/2009 8:00:00 AM |
HB 92 |
| HB 92 - Amendment 26-GH1049-A.4.pdf |
HSTA 2/24/2009 8:00:00 AM |
HB 92 |
| Sudan implementation timeline.pdf |
HSTA 2/24/2009 8:00:00 AM |