Bill Text: CA AB2780 | 2019-2020 | Regular Session | Amended

California Assembly Bill 2780 (Prior Session Legislation)

Bill Title: Public employee retirement systems: prohibited investments: Turkey and Azerbaijan.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2020-05-05 - Re-referred to Com. on P.E. & R. [AB2780 Detail]

Download: California-2019-AB2780-Amended.html

Amended IN Assembly May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 2780

Introduced by Assembly Member Holden

February 20, 2020

An act ~~relating to civil actions.~~ to add and repeal Section 7513.76 of the Government Code, relating to public employee retirement systems.

LEGISLATIVE COUNSEL'S DIGEST

AB 2780, as amended, Holden. ~~Civil actions: human rights violations.~~ Public employee retirement systems: prohibited investments: Turkey and Azerbaijan.

The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the retirement fund and system. The California Constitution qualifies this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board. Existing law prohibits the boards of administration of the Public Employees’ Retirement System and the State Teachers’ Retirement System from making investments in certain countries and in thermal coal companies, as specified, subject to the boards’ plenary authority and fiduciary responsibility for investment of moneys and administration of the systems.
Existing law, upon the passage of a federal law imposing sanctions on the government of Turkey for failure to officially acknowledge its responsibility for the Armenian Genocide, also prohibits the boards of administration of the Public Employees’ Retirement System and the State Teachers’ Retirement System, from making additional or new investments, or renewing existing investments, of public employee retirement funds in an investment vehicle in the government of Turkey that is issued by the government of Turkey or that is owned by the government of Turkey. Existing law requires the boards to liquidate existing investments in the government of Turkey within 18 months of the passage of the above-described federal law.
This bill, upon the passage of a federal law imposing sanctions on the government of Turkey for imposing an economic blockade of Armenia, would prohibit the boards of specified public pension or retirement systems from making additional or new investments or renew existing investments of public employee retirement funds in any investment vehicle that is issued or owned by the government of Azerbaijan or Turkey. The bill would require the boards to liquidate investments in the government of Azerbaijan or Turkey within 18 months of the passage of the above-described law.
The bill would not apply the above provisions to an investment vehicle if the governing body of the financial institution issuing the investment vehicle, by resolution, adopts a policy not to renew existing, expand existing, or engage in new, discriminatory practices in furtherance of or in compliance with the economic blockade of Armenia by the governments of Turkey and Azerbaijan. The bill would require a copy of the resolution to be submitted to the Treasurer and the chief administrative officer of each public employee retirement fund, accompanied by a certification, under penalty of perjury, that the adopted policy is being complied with by the financial institution. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.
The bill would also require these boards to make specified reports to the Legislature and the Governor regarding these actions within one year of the passage of a federal law imposing those sanctions on the government of Azerbaijan or Turkey. The bill would specify that its provisions do not require a board to take any action that the board determines in good faith is inconsistent with its constitutional fiduciary responsibilities to the retirement system.
The bill would indemnify from the General Fund and hold harmless the present, former, and future board members, officers, and employees of, and investment managers under contract with, the boards, in connection with actions relating to these investments. The bill would repeal the above-described prohibited investment and reporting provisions on January 1, 2026, or if a determination is made by the Legislature, the Department of State, the Congress of the United States, or another appropriate federal agency that the government of either Turkey or both Turkey and Azerbaijan has adopted a policy to cease their economic blockade of Armenia.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law proscribes various crimes involving human rights violations, including human trafficking. Existing law authorizes a victim of human trafficking to bring a civil action for actual damages, compensatory damages, punitive damages, injunctive relief, and other appropriate relief, as specified.
This bill would express the intent of the Legislature to enact legislation that would, if enacted, ensure that victims of human rights violations have adequate remedies to ensure that they obtain relief from perilous circumstances.

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NOYES

The people of the State of California do enact as follows:

SECTION 1.

Section 7513.76 is added to the Government Code, to read:

7513.76.
(a) As used in this section, the following terms apply:
(1) “Azerbaijan” means the Republic of Azerbaijan.
(2) “Board” means the retirement board of a public pension or retirement system that administers and invests public employee retirement funds, as described in paragraph (5).
(3) “Government of Azerbaijan” means the government of Azerbaijan or its instrumentalities or political subdivisions.
(4) “Government of Turkey” means the government of Turkey or its instrumentalities or political subdivisions.
(5) “Public employee retirement funds” means the funds administered by the Public Employees’ Retirement Fund, the Legislators’ Retirement Fund, the State Teachers’ Retirement Fund, the Judges’ Retirement Fund, the Judges’ Retirement System II Fund, the Volunteer Firefighter Fund, the General Fund portion of the University of California Retirement Fund, and any funds invested pursuant to these retirement funds.
(6) “Turkey” means the Republic of Turkey.
(b) Upon passage of a federal law by both the United States House of Representatives and the United States Senate, and signed by the President of the United States, imposing sanctions on the government of Turkey for their economic blockade of Armenia, the board shall not make additional or new investments or renew existing investments of public employee retirement funds in any investment vehicle that meets either of the following criteria:
(1) The investment vehicle is issued or owned by the government of Azerbaijan.
(2) The investment vehicle is issued or owned by the government of Turkey.
(c) The board shall liquidate investments as described in subdivision (b), within 18 months of the passage of a federal law, pursuant to subdivision (b), that imposes sanctions on the government of Turkey.
(d) (1) Subdivisions (b) and (c) shall not apply to an investment vehicle if the governing body of the financial institution issuing the investment vehicle, by resolution, adopts a policy not to renew existing, expand existing, or engage in new, discriminatory practices in furtherance of or in compliance with the economic blockade of Armenia by the governments of Turkey and Azerbaijan. The resolution required by this subdivision shall include the following statement: “____ (name of financial institution) agrees not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with Turkey and Azerbaijan’s economic blockade of Armenia.”
(2) (A) A copy of a resolution, as described in paragraph (1), shall be submitted to the Treasurer and to the chief administrative officer of each public employee retirement fund. The information submitted shall also provide a description of the discriminatory business practices in furtherance of or in compliance with Turkey or Azerbaijan’s economic blockade of Armenia, in existence as of the date of the resolution.
(B) The copy of a resolution shall be accompanied by a certification, under penalty of perjury, that the adopted policy is being complied with by the financial institution. Annually thereafter, a certification, under penalty of perjury, that the adopted policy is being complied with shall be submitted to the Treasurer.
(C) The resolution and the information submitted to the Treasurer shall be deemed public documents and shall be open to public inspection.
(e) Subdivisions (b) and (c) shall no longer apply if, by resolution of their parliaments or heads of state, the government of Azerbaijan or Turkey, or both, as applicable, adopts a policy to cease their economic blockade of Armenia.
(f) Within one year of the passage of a federal law pursuant to subdivision (b) imposing sanctions on the government of Azerbaijan or Turkey, as applicable, the board shall file a report with the Legislature, in compliance with Section 9795, and with the Governor, that shall include the following:
(1) A list of investment vehicles in the government of Azerbaijan or Turkey of which the board has liquidated its investments pursuant to subdivision (c).
(2) A list of investment vehicles in the government of Azerbaijan or Turkey of which the board has not liquidated its investments as a result of a determination made pursuant to subdivision (g) that a sale or transfer of investments is inconsistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution and the board’s findings adopted in support of that determination.
(g) Nothing in this section shall require a board to take action as described in this section unless the board determines in good faith that the action described in this section is consistent with the fiduciary responsibilities of the board described in Section 17 of Article XVI of the California Constitution.
(h) Present, future, and former members of the governing board of a public retirement system subject to this section, jointly and individually, state officers and employees, and investment managers under contract with the system, shall be indemnified from the General Fund by the State of California from all claims, demands, suits, actions, damages, judgments, costs, charges, and expenses, including court costs and attorney’s fees, and against all liability, losses, and damages of any nature whatsoever that these present, future, or former board members, state officers or employees, or contract investment managers shall or may at any time sustain by reason of any decision to restrict, reduce, or eliminate investments pursuant to this section.
(i) This section shall not apply to any Internal Revenue Code Section 457, 401(k), or 403(b) defined contribution plan administered by the Department of Human Resources.
(j) This section shall be repealed on the earlier of the following dates:
(1) Upon a determination by the State Legislature, the Department of State, the Congress of the United States, or other appropriate federal agency, that either or both Turkey and Azerbaijan, by resolution of their parliaments or heads of state, adopt a policy to cease their economic blockade of Armenia.
(2) January 1, 2026.

SEC. 2.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SECTION 1.
It is the intent of the Legislature to enact legislation that would, if enacted, ensure that victims of human rights violations have adequate remedies to ensure that they obtain relief from perilous circumstances.