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.