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 131 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 131. 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.