Bill Text: CA SB185 | 2015-2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Public retirement systems: public divestiture of thermal coal companies.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2015-10-08 - Chaptered by Secretary of State. Chapter 605, Statutes of 2015. [SB185 Detail]

Download: California-2015-SB185-Introduced.html

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BILL NUMBER: SB 185	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator De León

                        FEBRUARY 9, 2015

   An act to add Article 5 (commencing with Section 7524) to Chapter
21 of Division 7 of Title 1 of the Government Code, relating to
public retirement systems.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 185, as introduced, De León. Public retirement systems: Public
Divestiture of Thermal Coal Companies Act.
   The California Constitution provides that the Legislature may by
statute prohibit retirement board investments if it is in the public
interest to do so, and providing that the prohibition satisfies
specified fiduciary standards.
   Existing law prohibits the Public Employees' Retirement System and
the State Teachers' Retirement System from investing public employee
retirement funds in a company with active business operations in
Sudan, as specified, and requires these retirement systems to
liquidate any investments in a company with business operations in
Sudan. Existing law also prohibits these retirement systems from
investing in a company that has specified investments in the energy
sector of Iran, as defined, including in a company that provides oil
or liquefied natural gas tankers, or products used to construct or
maintain pipelines used to transport oil or liquefied natural gas.
   This bill would create the Public Divestiture of Thermal Coal
Companies Act and require the boards of the Public Employees'
Retirement System and the State Teachers' Retirement System to divest
the public employee retirement funds of any investments in a thermal
coal company, as defined, and prohibit additional or new investments
or the renewal of existing investments in a thermal coal company.
This bill would also require the boards to liquidate the investments
of the board in a thermal coal company, as specified. This bill would
require these actions to be undertaken consistently with the board's
fiduciary responsibilities specified in the California Constitution.
The bill would make related legislative findings and declarations.
   This bill would require, on or before January 1, 2017, these
boards to file a report to the Legislature and the Governor,
containing specified information, including a list of investments and
companies of which it has divested.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 5 (commencing with Section 7524) is added to
Chapter 21 of Division 7 of Title 1 of the Government Code, to read:

      Article 5.  Public Divestiture of Thermal Coal Companies Act


   7524.  This article may be known and cited as the Public
Divestiture of Thermal Coal Companies Act.
   7524.1.  The Legislature finds and declares all of the following:
   (a) The combustion of coal resources is the single largest
contributor to global climate change in the United States.
   (b) Climate change affects all parts of the California economy and
environment, and the Legislature has adopted numerous laws to
mitigate greenhouse gas emissions and to adapt to a changing climate.

   (c) The purpose of this article is to require the Public Employees'
Retirement System and the State Teachers' Retirement System,
consistent with, and not in violation of, their fiduciary
responsibilities, to divest their holding of thermal coal power as
one part of the state's broader efforts to decarbonize the California
economy and to transition to clean, pollution free energy resources.

   7524.2.  For purposes of this article, the following definitions
shall apply:
   (a) "Board" means the Board of Administration of the Public
Employees' Retirement System or the Teachers' Retirement Board of the
State Teachers' Retirement System, as applicable.
   (b) "Company" means a sole proprietorship, organization,
association, corporation, partnership, venture, or other entity, or
its subsidiary or affiliate that exists for profit making purposes or
to otherwise secure economic advantage.
   (c) "Investment" means the purchase, ownership, or control of
stock of a company, association, or corporation, corporate bonds or
other debt instruments issued by a company, or the commitment of
funds or other assets to a company, including a loan or extension of
credit to that company.
   (d) "Public employee retirement funds" means the Public Employees'
Retirement Fund described in Section 20062 of this code, and the
Teachers' Retirement Fund described in Section 22167 of the Education
Code.
   (e) "Thermal coal company" means a company engaged in the
combustion of coal as determined by the board using Bloomberg Global
Coal Index, Carbon Tracker, and Energy Transition Advisors Indices.
   7524.3.  Consistent with the board's fiduciary responsibilities as
described in Section 17 of Article XVI of the California
Constitution, and by the earliest feasible date after the enactment
of this article, the board shall undertake all of the following:
   (a) The board, shall divest the public employee retirement funds
of any investments in a thermal coal company.
   (b) The board shall not make additional or new investments or
renew existing investments in a thermal coal company.
   (c) The board shall liquidate the investments of the board in a
thermal coal company no later than eighteen months after this article
applies to that company.
   7524.4.  On or before January 1, 2017, the board shall file a
report with the Legislature, in compliance with Section 9795, and the
Governor on the following:
   (a) Actions it has taken to implement this article, including a
list of investments and companies of which it has divested.
   (b) Recommendations to ensure the board is able to act consistent
with its fiduciary responsibilities as described in Section 17 of
Article XVI of the California Constitution.
   (c) In consultation with the Secretary of the California
Environmental Protection Agency, a comprehensive assessment of the
feasibility of divesting the public employee retirement funds of
additional fossil fuel investments such as natural gas and petroleum
and its implications for the fund.
   7524.5.  Nothing in this article 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 as described in
Section 17 of Article XVI of the California Constitution.