CS for HB 703 & HB 1431

1	A bill to be entitled
2	An act relating to State Board of Administration
3	investments; creating s. 215.442, F.S.; providing
4	reporting requirements for the executive director of the
5	State Board of Administration; requiring the State Board
6	of Administration to publish certain quarterly reports on
7	its website; creating s. 215.473, F.S.; providing
8	legislative findings; providing definitions; requiring the
9	State Board of Administration to identify all companies in
10	which public moneys are invested that are doing certain
11	types of business in or with Sudan and Iran; requiring the
12	board to create and maintain certain scrutinized companies
13	lists that name all such companies; requiring the board to
14	periodically contact all scrutinized companies and
15	encourage them to refrain from engaging in certain types
16	of business in or with Sudan or Iran; requiring the board
17	to inform scrutinized companies of their status as a
18	scrutinized company and to ask for clarification as to the
19	nature of each company's business activities; providing
20	that a company may be removed from the list under certain
21	conditions; providing for reintroduction of a company onto
22	the list; requiring the board to divest of all publicly
23	traded securities of a scrutinized company under certain
24	conditions; providing exceptions to the divestment
25	requirement; prohibiting the board from acquiring
26	securities of scrutinized companies that have active
27	business operations; providing exceptions to the
28	investment prohibition; providing an additional exception
29	from the divestment requirement and the investment
30	prohibition to certain indirect holdings in actively
31	managed investment funds; requiring the board to request
32	that the managers of such investment funds consider
33	removing scrutinized companies from the fund or create a
34	similar fund that excludes such companies; requiring the
35	board to file a report with the Board of Trustees of the
36	State Board of Administration and the Legislature within a
37	specified period after creation of each scrutinized
38	companies list; requiring the annual filing of an updated
39	report; requiring that all such reports be made available
40	to the public; requiring that the report include certain
41	information; providing for the expiration of the act;
42	exempting the board from certain statutory or common law
43	obligations; authorizing the board to cease divesting or
44	to reinvest in certain scrutinized companies if the value
45	for all assets under management by the board becomes equal
46	to or less than a specified amount; requiring the board to
47	provide a written report to the Board of Trustees of the
48	State Board of Administration and the Legislature before
49	such reinvestment; requiring that the report contain
50	certain information; requiring semiannual updates to such
51	reports when applicable; providing for severability;
52	providing an effective date.
53
54	WHEREAS, on July 23, 2004, the United States Congress
55	declared that "the atrocities unfolding in Darfur, Sudan, are
56	genocide," and
57	WHEREAS, on December 7, 2004, the United States Congress
58	noted that the genocidal policy in Darfur has led to reports of
59	"systematic rape of thousands of women and girls, the abduction
60	of women and children, and the destruction of hundreds of
61	ethnically African villages, including the poisoning of their
62	wells and the plunder of their crops and cattle upon which the
63	people of such villages sustain themselves," and
64	WHEREAS, on December 7, 2004, Congress found that "the
65	Government of Sudan has restricted access by humanitarian and
66	human rights workers to the Darfur area through intimidation by
67	military and security forces, and through bureaucratic and
68	administrative obstruction, in an attempt to inflict the most
69	devastating harm on those individuals displaced from their
70	villages and homes without any means of sustenance or shelter,"
71	and
72	WHEREAS, on September 25, 2006, Congress reaffirmed that
73	"the genocide unfolding in the Darfur region of Sudan is
74	characterized by acts of terrorism and atrocities directed
75	against civilians, including mass murder, rape, and sexual
76	violence committed by the Janjaweed and associated militias with
77	the complicity and support of the National Congress Party-led
78	faction of the Government of Sudan," and
79	WHEREAS, on September 26, 2006, the United States House of
80	Representatives stated that "an estimated 300,000 to 400,000
81	people have been killed by the Government of Sudan and its
82	Janjaweed allies since the crisis began in 2003, more than
83	2,000,000 people have been displaced from their homes, and more
84	than 250,000 people from Darfur remain in refugee camps in
85	Chad," and
86	WHEREAS, the Darfur crisis represents the first time the
87	United States Government has labeled ongoing atrocities as
88	genocide, and
89	WHEREAS, the Federal Government has imposed sanctions
90	against the Government of Sudan since 1997. These sanctions are
91	monitored through the United States Treasury Department's Office
92	of Foreign Assets Control (OFAC), and
93	WHEREAS, according to a former chair of the United States
94	Securities and Exchange Commission, "the fact that a foreign
95	company is doing material business with a country, government,
96	or entity on OFAC's sanctions list is, in the SEC staff's view,
97	substantially likely to be significant to a reasonable
98	investor's decision about whether to invest in that company,"
99	and
100	WHEREAS, since 1993, the United States Secretary of State
101	has determined that Sudan is a country whose government has
102	repeatedly provided support for acts of international terrorism,
103	and, as a result, the United States has restricted assistance,
104	defense exports, defense sales, financial transactions, and
105	various other transactions with the Government of Sudan, and
106	WHEREAS, a 2006 report by the United States House of
107	Representatives states that "a company's association with
108	sponsors of terrorism and human rights abuses, no matter how
109	large or small, can have a materially adverse result on a public
110	company's operations, financial condition, earnings, and stock
111	prices, all of which can negatively affect the value of an
112	investment," and
113	WHEREAS, in response to the financial risk posed by
114	investments in companies doing business with a state that
115	sponsors terrorists, the Securities and Exchange Commission
116	established its Office of Global Security Risk to provide for
117	enhanced disclosure of material information regarding such
118	companies, and
119	WHEREAS, the current Sudan divestment movement encompasses
120	nearly 100 universities, municipalities, states, and private
121	pension plans, and
122	WHEREAS, companies facing such widespread divestment
123	present further material risk to remaining investors, and
124	WHEREAS, it is a fundamental responsibility of the State of
125	Florida to decide where, how, and by whom financial resources in
126	its control should be invested, taking into account numerous
127	pertinent factors, and
128	WHEREAS, it is the prerogative and desire of the State of
129	Florida, with respect to investment resources in its control and
130	to the extent reasonable, with due consideration for return on
131	investment on behalf of the state and its investment
132	beneficiaries, not to participate in an ownership or capital-
133	providing capacity with entities that provide significant
134	practical support for genocide, including certain non-United
135	States companies presently doing business in Sudan, and
136	WHEREAS, a resolution of the United Nations Security
137	Council imposes sanctions on Iran for its failure to suspend its
138	uranium-enrichment activities, and
139	WHEREAS, the United Nations Security Council voted
140	unanimously for an additional embargo on Iranian arms exports,
141	which is a freeze on assets abroad of an expanded list of
142	individuals and companies involved in Iran's nuclear and
143	ballistic missile programs, and calls for nations and
144	institutions to bar new grants or loans to Iran except for
145	humanitarian and developmental purposes, and
146	WHEREAS, Iran's financial ability to pay its debts to
147	foreign entities involved in the petroleum-energy sector
148	amounting to more than $20 million is put at risk by the Iran
149	and Libya Sanctions Act embargo and sanctions, and
150	WHEREAS, foreign entities have invested in Iran's
151	petroleum-energy sector despite United States and United Nations
152	sanctions against Iran, and
153	WHEREAS, all United States and foreign entities that have
154	invested more than $20 million in Iran's energy sector since
155	August 5, 1996, are subject to sanctions under United States law
156	pursuant to the Iran and Libya Sanctions Act of 1996, and
157	WHEREAS, United States renewed the Iran and Libya Sanctions
158	Act of 1996 in 2001 and 2006, and
159	WHEREAS, while divestiture should be considered with the
160	intent to improve investment performance and, by the rules of
161	prudence, fiduciaries must take into account all relevant
162	substantive factors in arriving at an investment decision, and
163	WHEREAS, the State of Florida is deeply concerned about
164	investments in publicly traded companies that have business
165	activities in and ties to Iran's petroleum-energy sector as a
166	financial risk to the shareholders, and
167	WHEREAS, by investing in publicly traded companies having
168	ties to Iran's petroleum-energy sector, the Florida State Board
169	of Administration is putting the funds it oversees at
170	substantial financial risk, and
171	WHEREAS, divestiture from markets that are vulnerable to
172	embargo, loan restrictions, and sanctions from the United States
173	and the international community, including the United Nations
174	Security Council, is in accordance with the rules of prudence,
175	and
176	WHEREAS, The Legislature finds that this act should remain
177	in effect only insofar as it continues to be consistent with and
178	does not unduly interfere with the foreign policy of the United
179	States as determined by the Federal Government, and
180	WHEREAS, to protect Florida's assets, it is in the best
181	interest of the state to enact a statutory prohibition regarding
182	the investments managed by the State Board of Administration
183	doing business in Sudan or in Iran's petroleum-energy sector,
184	NOW, THEREFORE,
185
186	Be It Enacted by the Legislature of the State of Florida:
187
188	Section 1.  Section 215.442, Florida Statutes, is created
189	to read:
190	215.442  Executive director; reporting requirements; public
191	meeting.--
192	(1)  Beginning October 2007 and quarterly thereafter, the
193	executive director shall present to the Board of Trustees of the
194	State Board of Administration a quarterly report to include the
195	following:
196	(a)  The name of each equity in which the State Board of
197	Administration has invested for the quarter.
198	(b)  The industry category of each equity.
199	(2)  The executive director shall present each quarterly
200	report at a meeting of the board of trustees, which shall be
201	open and noticed to the public pursuant to the requirements of
202	s. 286.011 and s. 24(b), Art. I of the State Constitution.
203	(3)  The State Board of Administration shall publish a copy
204	of each quarterly report on its website prior to presenting the
205	report at each quarterly meeting of the board of trustees.
206	Section 2.  Section 215.473, Florida Statutes, is created
207	to read:
208	215.473  Divestiture by the State Board of Administration;
209	Sudan; Iran.--
210	(1)  DEFINITIONS.--As used in this section, the term:
211	(a)  "Active business operations" means all business
212	operations that are not inactive business operations.
213	(b)  "Business operations" means engaging in commerce in
214	any form in Sudan or Iran, including, but not limited to,
215	acquiring, developing, maintaining, owning, selling, possessing,
216	leasing, or operating equipment, facilities, personnel,
217	products, services, personal property, real property, or any
218	other apparatus of business or commerce.
219	(c)  "Company" means any sole proprietorship, organization,
220	association, corporation, partnership, joint venture, limited
221	partnership, limited liability partnership, limited liability
222	company, or other entity or business association, including all
223	wholly owned subsidiaries, majority-owned subsidiaries, parent
224	companies, or affiliates of such entities or business
225	associations, that exists for the purpose of making a profit.
226	(d)  "Complicit" means taking actions during any preceding
227	20-month period which have directly supported or promoted the
228	genocidal campaign in Darfur, including, but not limited to,
229	preventing Darfur's victimized population from communicating
230	with each other, encouraging Sudanese citizens to speak out
231	against an internationally approved security force for Darfur,
232	actively working to deny, cover up, or alter the record on human
233	rights abuses in Darfur, or other similar actions.
234	(e)  "Direct holdings" in a company means all securities of
235	that company that are held directly by the public fund or in an
236	account or fund in which the public fund owns all shares or
237	interests.
238	(f)  "Government of Iran" means the government of Iran, its
239	instrumentalities, and companies owned or controlled by the
240	government of Iran.
241	(g)  "Government of Sudan" means the government in
242	Khartoum, Sudan, that is led by the National Congress Party,
243	formerly known as the National Islamic Front, or any successor
244	government formed on or after October 13, 2006, including the
245	coalition National Unity Government agreed upon in the
246	Comprehensive Peace Agreement for Sudan, and does not include
247	the regional government of southern Sudan.
248	(h)  "Inactive business operations" means the mere
249	continued holding or renewal of rights to property previously
250	operated for the purpose of generating revenues but not
251	presently deployed for such purpose.
252	(i)  "Indirect holdings" in a company means all securities
253	of that company that are held in an account or fund, such as a
254	mutual fund, managed by one or more persons not employed by the
255	public fund, in which the public fund owns shares or interests
256	together with other investors not subject to the provisions of
257	this section.
258	(j)  "Iran" means the Islamic Republic of Iran.
259	(k)  "Marginalized populations of Sudan" include, but are
260	not limited to, the portion of the population in the Darfur
261	region that has been genocidally victimized; the portion of the
262	population of southern Sudan victimized by Sudan's north-south
263	civil war; the Beja, Rashidiya, and other similarly underserved
264	groups of eastern Sudan; the Nubian and other similarly
265	underserved groups in Sudan's Abyei, Southern Blue Nile, and
266	Nuba Mountain regions; and the Amri, Hamadab, Manasir, and other
267	similarly underserved groups of northern Sudan.
268	(l)  "Military equipment" means weapons, arms, military
269	supplies, and equipment that may readily be used for military
270	purposes, including, but not limited to, radar systems,
271	military-grade transport vehicles, or supplies or services sold
272	or provided directly or indirectly to any force actively
273	participating in armed conflict in Sudan.
274	(m)  "Mineral-extraction activities" include the exploring,
275	extracting, processing, transporting, or wholesale selling or
276	trading of elemental minerals or associated metal alloys or
277	oxides (ore), including gold, copper, chromium, chromite,
278	diamonds, iron, iron ore, silver, tungsten, uranium, and zinc,
279	as well as facilitating such activities, including providing
280	supplies or services in support of such activities.
281	(n)  "Oil-related activities" include, but are not limited
282	to, owning rights to oil blocks; exporting, extracting,
283	producing, refining, processing, exploring for, transporting,
284	selling, or trading of oil; constructing, maintaining, or
285	operating a pipeline, refinery, or other oil-field
286	infrastructure; and facilitating such activities, including
287	providing supplies or services in support of such activities,
288	except that the mere retail sale of gasoline and related
289	consumer products is not considered an oil-related activity.
290	(o)  "Petroleum resources" means petroleum, petroleum
291	byproducts, or natural gas.
292	(p)  "Power-production activities" means any business
293	operation that involves a project commissioned by the National
294	Electricity Corporation (NEC) of Sudan or other similar entity
295	of the Government of Sudan whose purpose is to facilitate power
296	generation and delivery, including, but not limited to,
297	establishing power-generating plants or hydroelectric dams,
298	selling or installing components for the project, providing
299	service contracts related to the installation or maintenance of
300	the project, as well as facilitating such activities, including
301	providing supplies or services in support of such activities.
302	(q)  "Public fund" means all funds, assets, trustees, and
303	other designates under the State Board of Administration
304	pursuant to chapter 121.
305	(r)  "Scrutinized active business operations" means active
306	business operations that have resulted in a company becoming a
307	scrutinized company.
308	(s)  "Scrutinized business operations" means business
309	operations that have resulted in a company becoming a
310	scrutinized company.
311	(t)  "Scrutinized company" means any company that meets any
312	of the following criteria:
313	1.  The company has business operations that involve
314	contracts with or provision of supplies or services to the
315	Government of Sudan, companies in which the Government of Sudan
316	has any direct or indirect equity share, consortiums or projects
317	commissioned by the Government of Sudan, or companies involved
318	in consortiums or projects commissioned by the Government of
319	Sudan, and:
320	a.  More than 10 percent of the company's revenues or
321	assets linked to Sudan involve oil-related activities or
322	mineral-extraction activities, less than 75 percent of the
323	company's revenues or assets linked to Sudan involve contracts
324	with or provision of oil-related or mineral-extracting products
325	or services to the regional government of southern Sudan or a
326	project or consortium created exclusively by that regional
327	government, and the company has failed to take substantial
328	action; or
329	b.  More than 10 percent of the company's revenues or
330	assets linked to Sudan involve power-production activities, less
331	than 75 percent of the company's power-production activities
332	include projects whose intent is to provide power or electricity
333	to the marginalized populations of Sudan, and the company has
334	failed to take substantial action.
335	2.  The company is complicit in the Darfur genocide.
336	3.  The company supplies military equipment within Sudan,
337	unless it clearly shows that the military equipment cannot be
338	used to facilitate offensive military actions in Sudan or the
339	company implements rigorous and verifiable safeguards to prevent
340	use of that equipment by forces actively participating in armed
341	conflict. Examples of safeguards include post-sale tracking of
342	such equipment by the company, certification from a reputable
343	and objective third party that such equipment is not being used
344	by a party participating in armed conflict in Sudan, or sale of
345	such equipment solely to the regional government of southern
346	Sudan or any internationally recognized peacekeeping force or
347	humanitarian organization.
348	4.  The company has business operations that involve
349	contracts with or provision of supplies or services to the
350	Government of Iran, companies in which the Government of Iran
351	has any direct or indirect equity share, consortiums or projects
352	commissioned by the Government of Iran, or companies involved in
353	consortiums or projects commissioned by the Government of Iran
354	and:
355	a.  More than 10 percent of the company's total revenues or
356	assets are linked to Iran and involve oil-related activities or
357	mineral-extraction activities, and the company has failed to
358	take substantial action; or
359	b.  The company has, with actual knowledge, on or after
360	August 5, 1996, made an investment of $20 million or more, or
361	any combination of investments of at least $10 million each
362	which in the aggregate equals or exceeds $20 million in any 12-
363	month period, that directly or significantly contributes to the
364	enhancement of Iran's ability to develop the petroleum resources
365	of Iran.
366	(u)  "Social-development company" means a company whose
367	primary purpose in Sudan is to provide humanitarian goods or
368	services, including medicine or medical equipment; agricultural
369	supplies or infrastructure; educational opportunities;
370	journalism-related activities; information or information
371	materials; spiritual-related activities; services of a purely
372	clerical or reporting nature; food, clothing, or general
373	consumer goods that are unrelated to oil-related activities;
374	mineral-extraction activities; or power-production activities.
375	(v)  "Substantial action specific to Iran" means adopting,
376	publicizing, and implementing a formal plan to cease scrutinized
377	business operations within 1 year and to refrain from any such
378	new business operations.
379	(w)  "Substantial action specific to Sudan" means adopting,
380	publicizing, and implementing a formal plan to cease scrutinized
381	business operations within 1 year and to refrain from any such
382	new business operations; undertaking humanitarian efforts in
383	conjunction with an international organization, the Government
384	of Sudan, the regional government of Southern Sudan, or a
385	nonprofit entity evaluated and certified by an independent third
386	party to be substantially in a relationship to the company's
387	Sudan business operations and of benefit to one or more
388	marginalized populations of Sudan; or, through engagement with
389	the Government of Sudan, materially improving conditions for the
390	genocidally victimized population in Darfur.
391	(2)  IDENTIFICATION OF COMPANIES.--
392	(a)  Within 90 days after the effective date of this act,
393	the public fund shall make its best efforts to identify all
394	scrutinized companies in which the public fund has direct or
395	indirect holdings or could possibly have such holdings in the
396	future. Such efforts include:
397	1.  Reviewing and relying, as appropriate in the public
398	fund's judgment, on publicly available information regarding
399	companies having business operations in Sudan, including
400	information provided by nonprofit organizations, research firms,
401	international organizations, and government entities.
402	2.  Contacting asset managers contracted by the public fund
403	that invest in companies having business operations in Sudan.
404	3.  Contacting other institutional investors that have
405	divested from or engaged with companies that have business
406	operations in Sudan.
407	4.  Reviewing laws of the United States regarding the
408	levels of business activity that would cause application of
409	sanctions for companies conducting business or investing in
410	countries that are designated state sponsors of terror.
411	(b)  By the first meeting of the public fund following the
412	90-day period described in paragraph (a), the public fund shall
413	assemble all scrutinized companies that fit criteria specified
414	in subparagraphs (1)(t)1., 2., and 3. into a "Scrutinized
415	Companies with Activities in Sudan List" and shall assemble all
416	scrutinized companies that fit criteria specified in
417	subparagraph (1)(t)4. into a "Scrutinized Companies with
418	Activities in the Iran Petroleum Energy Sector List."
419	(c)  The public fund shall update and make publicly
420	available each quarter the Scrutinized Companies with Activities
421	in Sudan List and the Scrutinized Companies with Activities in
422	the Iran Petroleum Energy Sector List based on evolving
423	information from, among other sources, those listed in paragraph
424	(a).
425	(d)  Notwithstanding the provisions of this section, a
426	social-development company that is not complicit in the Darfur
427	genocide is not considered a scrutinized company under
428	subparagraph (1)(t)1., subparagraph (1)(t)2., or subparagraph
429	(1)(t)3.
430	(3)  REQUIRED ACTIONS.--The public fund shall adhere to the
431	following procedure for assembling companies on the Scrutinized
432	Companies with Activities in Sudan List and the Scrutinized
433	Companies with Activities in the Iran Petroleum Energy Sector
434	List:
435	(a)  Engagement.--
436	1.  The public fund shall immediately determine the
437	companies on the Scrutinized Companies with Activities in Sudan
438	List and the Scrutinized Companies with Activities in the Iran
439	Petroleum Energy Sector List in which the public fund owns
440	direct or indirect holdings.
441	2.  For each company identified in this paragraph that has
442	only inactive business operations, the public fund shall send a
443	written notice informing the company of this section and
444	encouraging it to continue to refrain from initiating active
445	business operations in Sudan or Iran until it is able to avoid
446	scrutinized business operations. The public fund shall continue
447	such correspondence semiannually.
448	3.  For each company newly identified under this paragraph
449	that has active business operations, the public fund shall send
450	a written notice informing the company of its scrutinized
451	company status and that it may become subject to divestment by
452	the public fund. The notice must inform the company of the
453	opportunity to clarify its Sudan-related or Iran-related
454	activities and encourage the company, within 90 days, to cease
455	its scrutinized business operations or convert such operations
456	to inactive business operations in order to avoid qualifying for
457	divestment by the public fund.
458	4.  If, within 90 days after the public fund's first
459	engagement with a company pursuant to this paragraph, that
460	company ceases scrutinized business operations, the company
461	shall be removed from the Scrutinized Companies with Activities
462	in Sudan List and the Scrutinized Companies with Activities in
463	the Iran Petroleum Energy Sector List, and the provisions of
464	this section shall cease to apply to that company unless that
465	company resumes scrutinized business operations. If, within 90
466	days after the public fund's first engagement, the company
467	converts its scrutinized active business operations to inactive
468	business operations, the company is subject to all provisions
469	relating to inactive business operations. A company may be
470	removed from one list but remain on the other list, in which
471	case the company shall be subject to the provisions applicable
472	to the list on which the company remains.
473	(b)  Divestment.--
474	1.  If, after 90 days following the public fund's first
475	engagement with a company pursuant to paragraph (a), the company
476	continues to have scrutinized active business operations, and
477	only while such company continues to have scrutinized active
478	business operations, the public fund shall sell, redeem, divest,
479	or withdraw all publicly traded securities of the company,
480	except as provided in paragraph (d), from the public fund's
481	assets under management within 12 months after the company's
482	most recent appearance on the Scrutinized Companies with
483	Activities in Sudan List or on the Scrutinized Companies with
484	Activities in the Iran Petroleum Energy Sector List.
485	2.  If a company that ceased scrutinized active business
486	operations following engagement pursuant to paragraph (a)
487	resumes such operations, this paragraph immediately applies, and
488	the public fund shall send a written notice to the company. The
489	company shall also be immediately reintroduced onto the
490	Scrutinized Companies with Activities in Sudan List or on the
491	Scrutinized Companies with Activities in the Iran Petroleum
492	Energy Sector List, as applicable.
493	(c)  Prohibition.--The public fund may not acquire
494	securities of companies on the Scrutinized Companies with
495	Activities in Sudan List or the Scrutinized Companies with
496	Activities in the Iran Petroleum Energy Sector List that have
497	active business operations, except as provided in paragraph (d).
498	(d)  Exemption.--A company that the United States
499	Government affirmatively declares to be excluded from its
500	present or any future federal sanctions regime relating to Sudan
501	or Iran is not subject to divestment or the investment
502	prohibition pursuant to paragraphs (b) and (c).
503	(e)  Excluded securities.--Notwithstanding the provisions
504	of this section, paragraphs (b) and (c) do not apply to indirect
505	holdings in actively managed investment funds. However, the
506	public fund shall submit letters to the managers of such
507	investment funds containing companies that have scrutinized
508	active business operations requesting that they consider
509	removing such companies from the fund or create a similar
510	actively managed fund having indirect holdings devoid of such
511	companies. If the manager creates a similar fund, the public
512	fund shall replace all applicable investments with investments
513	in the similar fund in an expedited timeframe consistent with
514	prudent investing standards. For the purposes of this section, a
515	private equity fund is deemed to be an actively managed
516	investment fund.
517	(f)  Further exclusions.--Notwithstanding any other
518	provision of this section, the public fund, when discharging its
519	responsibility for operation of a defined contribution plan,
520	shall engage the manager of the investment offerings in such
521	plans requesting that they consider removing scrutinized
522	companies from the investment offerings or create an alternative
523	investment offering devoid of scrutinized companies. If the
524	manager creates an alternative investment offering and the
525	offering is deemed by the public fund to be consistent with
526	prudent investor standards, the public fund shall consider
527	including such investment offering in the plan.
528	(4)  REPORTING.--
529	(a)  The public fund shall file a report with each member
530	of the Board of Trustees of the State Board of Administration,
531	the President of the Senate, and the Speaker of the House of
532	Representatives that includes the Scrutinized Companies with
533	Activities in Sudan List and the Scrutinized Companies with
534	Activities in the Iran Petroleum Energy Sector List within 30
535	days after the list is created. This report shall be made
536	available to the public.
537	(b)  At each quarterly meeting of the board of trustees,
538	the public fund shall file a report, which shall be made
539	available to the public and to each member of the Board of
540	Trustees of the State Board of Administration, the President of
541	the Senate, and the Speaker of the House of Representatives, and
542	send a copy of that report to the United States Presidential
543	Special Envoy to Sudan and the United States Presidential
544	Special Envoy to Iran, or an appropriate designee or successor,
545	which includes:
546	1.  A summary of correspondence with companies engaged by
547	the public fund under subparagraphs (3)(a)2. and 3.
548	2.  All investments sold, redeemed, divested, or withdrawn
549	in compliance with paragraph (3)(b).
550	3.  All prohibited investments under paragraph (3)(c).
551	4.  Any progress made under paragraph (3)(e).
552	5.  A list of all publicly traded securities held directly
553	by this state.
554	(5)  EXPIRATION.--This section expires upon the occurrence
555	of all of the following:
556	(a)  If any of the following occurs, the public fund shall
557	no longer scrutinize companies according to subparagraphs
558	(1)(t)1., 2., and 3. and shall no longer assemble the
559	Scrutinized Companies with Activities in Sudan List, shall cease
560	engagement and divestment of such companies, and may reinvest in
561	such companies as long as such companies do not satisfy the
562	criteria for inclusion in the Scrutinized Companies with
563	Activities in the Iran Petroleum Energy Sector List:
564	1.  The Congress or the President of the United States
565	affirmatively and unambiguously states, by means of, including,
566	but not limited to, legislation, executive order, or written
567	certification from the President to the Congress, that the
568	Darfur genocide has been halted for at least 12 months;
569	2.  The United States revokes all sanctions imposed against
570	the Government of Sudan;
571	3.  The Congress or the President of the United States
572	affirmatively and unambiguously states, by means of, including,
573	but not limited to, legislation, executive order, or written
574	certification from the President to the Congress, that the
575	Government of Sudan has honored its commitments to cease attacks
576	on civilians, demobilize and demilitarize the Janjaweed and
577	associated militias, grant free and unfettered access for
578	deliveries of humanitarian assistance, and allow for the safe
579	and voluntary return of refugees and internally displaced
580	persons; or
581	4.  The Congress or the President of the United States
582	affirmatively and unambiguously states, by means of, including,
583	but not limited to, legislation, executive order, or written
584	certification from the President to the Congress, that mandatory
585	divestment of the type provided for in this section interferes
586	with the conduct of United States foreign policy.
587	(b)  If any of the following occurs, the public fund shall
588	no longer scrutinize companies according to subparagraph
589	(1)(t)4. and shall no longer assemble the Scrutinized Companies
590	with Activities in the Iran Petroleum Energy Sector List and
591	shall cease engagement, investment prohibitions, and divestment.
592	The public fund may reinvest in such companies as long as such
593	companies do not satisfy the criteria for inclusion in the
594	Scrutinized Companies with Activities in Sudan List:
595	1.  The Congress or the President of the United States
596	affirmatively and unambiguously states, by means of, including,
597	but not limited to, legislation, executive order, or written
598	certification from the President to the Congress, that the
599	Government of Iran has ceased to acquire weapons of mass
600	destruction and support international terrorism;
601	2.  The United States revokes all sanctions imposed against
602	the Government of Iran; or
603	3.  The Congress or the President of the United States
604	affirmatively and unambiguously declares, by means including,
605	but not limited to, legislation, executive order, or written
606	certification from the President to the Congress, that mandatory
607	divestment of the type provided for in this section interferes
608	with the conduct of United States foreign policy.
609	(6)  OTHER LEGAL OBLIGATIONS.--With respect to actions
610	taken in compliance with this section, including all good faith
611	determinations regarding companies as required by this section,
612	the public fund is exempt from any conflicting statutory or
613	common law obligations, including any such obligations with
614	respect to choice of asset managers, investment funds, or
615	investments for the public fund's securities portfolios.
616	(7)  REINVESTMENT IN CERTAIN COMPANIES HAVING SCRUTINIZED
617	ACTIVE BUSINESS OPERATIONS.--Notwithstanding any other provision
618	of this section to the contrary, the public fund may cease
619	divesting from certain scrutinized companies pursuant to
620	paragraph (3)(b) or reinvest in certain scrutinized companies
621	from which it divested pursuant to paragraph (3)(b) if clear and
622	convincing evidence shows that the value of all assets under
623	management by the public fund becomes equal to or less than
624	99.50 percent, or 50 basis points, of the hypothetical value of
625	all assets under management by the public fund assuming no
626	divestment for any company had occurred under paragraph (3)(b).
627	Cessation of divestment, reinvestment, or any subsequent ongoing
628	investment authorized by this section is limited to the minimum
629	steps necessary to avoid the contingency set forth in this
630	subsection or that no divestment of any company is required for
631	less than fair value. For any cessation of divestment,
632	reinvestment, or subsequent ongoing investment authorized by
633	this section, the public fund shall provide a written report to
634	each member of the Board of Trustees of the State Board of
635	Administration, the President of the Senate, and the Speaker of
636	the House of Representatives in advance of initial reinvestment,
637	updated semiannually thereafter as applicable, setting forth the
638	reasons and justification, supported by clear and convincing
639	evidence, for its decisions to cease divestment, reinvest, or
640	remain invested in companies having scrutinized active business
641	operations. This section does not apply to reinvestment in
642	companies on the grounds that they have ceased to have
643	scrutinized active business operations.
644	Section 3.  If any provision of this act or its application
645	to any person or circumstance is held invalid, the invalidity
646	does not affect other provisions or applications of the act that
647	can be given effect without the invalid provision or
648	application, and to this end the provisions of this act are
649	severable. The Legislature hereby declares that it would have
650	passed this act and each provision of this act, irrespective of
651	the fact that any one or more provisions of this act might be
652	declared invalid, illegal, unenforceable, or unconstitutional,
653	including, but not limited to, each of the engagement,
654	divestment, and prohibition provisions of this act.
655	Section 4.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.