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S.B. 112





Chief Sponsor: Curtis S. Bramble

House Sponsor: Julie Fisher

             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Utah State Retirement and Insurance Benefit Act by requiring the
             10      Utah State Retirement Office to prevent the investment of retirement funds in Iran's
             11      petroleum sector.
             12      Highlighted Provisions:
             13          This bill:
             14          .    requires the Utah State Retirement Office to include data designed to explain the
             15      extent to which public fund investments in scrutinized companies are being
             16      prevented;
             17          .    requires the Utah State Retirement Office to prevent the investment of public funds
             18      in a scrutinized company by adjusting future investment practices within the office
             19      and by stipulating in future investment management contracts that no new
             20      investments may be made in a scrutinized company; and
             21          .    making technical changes.
             22      Money Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          This bill takes effect on July 1, 2011.
             26      Utah Code Sections Affected:
             27      AMENDS:

             28          49-11-306, as enacted by Laws of Utah 2009, Chapter 54
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 49-11-306 is amended to read:
             32           49-11-306. Definitions -- Scrutinized companies investment report -- Content --
             33      Reporting -- Exceptions.
             34          (1) As used in this section:
             35          (a) "Active business operations" means all business operations that are not inactive
             36      business operations.
             37          (b) (i) "Business operations" means investing, with actual knowledge on or after
             38      August 5, 1996, in Iran's petroleum sector which investment directly and significantly
             39      contributes to the enhancement of Iran's ability to develop the petroleum resources of Iran.
             40          (ii) "Business operations" does not include the retail sale of gasoline and related
             41      consumer products.
             42          (c) "Company" means any foreign sole proprietorship, organization, association,
             43      corporation, partnership, joint venture, limited partnership, limited liability partnership, limited
             44      liability company, or any other foreign entity or business association, including all
             45      wholly-owned subsidiaries, majority-owned subsidiaries or parent companies or affiliates of
             46      these entities or business associations, that exists for the purpose of making a profit.
             47          (d) "Direct holdings" means all publicly traded equity securities of a company that are
             48      held directly by the public fund or in an account or fund in which the public fund owns all
             49      shares or interests.
             50          (e) "Inactive business operations" means the continued holding or renewal of rights to
             51      property previously operated for the purpose of generating revenues but not presently deployed
             52      for that purpose.
             53          (f) "Iran" means the Islamic Republic of Iran.
             54          (g) "Petroleum resources" means petroleum or natural gas.
             55          (h) "Public fund" means the Utah State Retirement Investment Fund created under
             56      Section 49-11-301 .
             57          (i) "Scrutinized business operations" means any active business operations that:
             58          (i) are subject to or liable for sanctions under Public Law 104-172, the Iran Sanctions

             59      Act of 1996, as amended; and
             60          (ii) involve the maintenance of:
             61          (A) the company's existing assets or investments in Iran; or
             62          (B) the deployment of new investments to Iran that meet or exceed the threshold
             63      referred to in Public Law 104-172, the Iran Sanctions Act of 1996, as amended.
             64          (j) "Scrutinized company" means any company engaging in scrutinized business
             65      operations.
             66          (2) (a) The Utah State Retirement Office shall identify those scrutinized companies in
             67      which the public fund has direct holdings. In making the determination, the board shall review
             68      and rely on publicly available information regarding companies with business operations in
             69      Iran, including information provided by nonprofit organizations, research firms, international
             70      organizations, and government entities.
             71          (b) The office shall assemble a list of all identified scrutinized companies.
             72          (c) The office shall update the list, on an annual basis, with information provided and
             73      received from those entities listed in Subsection (2)(a).
             74          (3) The office shall prepare an annual report of public fund investments in scrutinized
             75      companies.
             76          (4) The report shall include amounts and other data and statistics designed to explain
             77      the past and current extent to which public fund investments in scrutinized companies:
             78          (a) are present[.]; and
             79          (b) are being prevented under Subsection (6).
             80          (5) The report shall be provided to the governor, the board, the president of the Senate,
             81      the speaker of the House of Representatives, and to each member and staff of the Retirement
             82      and Independent Entities Committee created under Section 63E-1-201 .
             83          (6) Beginning July 1, 2011, using the most current list assembled under Subsection (2),
             84      the office shall prevent the investment of public funds in a scrutinized company:
             85          (a) for public funds managed within the office, by not investing in a scrutinized
             86      company; and
             87          (b) for public funds managed by contract by a professional investment manager:
             88          (i) for existing contracts, by requesting that no more investments be made in a
             89      scrutinized company; and

             90          (ii) for future contracts, by stipulating in the contract that no new investments may be
             91      made in a scrutinized company.
             92          [(6)] (7) The provisions of this section do not apply to:
             93          (a) money invested in a defined contribution plan as defined under Section 49-11-102 ;
             94      or
             95          (b) investments in a company that is primarily engaged in:
             96          (i) supplying goods or services intended to relieve human suffering in Iran; or
             97          (ii) promoting health, education, religious, welfare, or journalistic activities in Iran.
             98          Section 2. Effective date.
             99          This bill takes effect on July 1, 2011.

Legislative Review Note
    as of 11-29-10 9:56 AM

Office of Legislative Research and General Counsel

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