Bill Text: OR HB3666 | 2011 | Regular Session | Introduced
Bill Title: Relating to divestment from Iran; declaring an emergency.
Sponsorship: Slight Partisan Bill (Republican 19-9-1)
Status: (Failed) 2011-06-30 - In committee upon adjournment. [HB3666 Detail]
Download: Oregon-2011-HB3666-Introduced.html
76th OREGON LEGISLATIVE ASSEMBLY--2011 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 4194
House Bill 3666
Sponsored by Representatives WEIDNER, HOYLE, Senator BOQUIST,
Representative GREENLICK; Representatives BOONE, CAMERON,
CONGER, DOHERTY, ESQUIVEL, FREEMAN, GILLIAM, HICKS, HUFFMAN,
HUNT, JOHNSON, KENNEMER, KOTEK, KRIEGER, LINDSAY, MATTHEWS,
NOLAN, OLSON, PARRISH, SHEEHAN, THOMPSON, WAND, WHISNANT,
WINGARD, WITT
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Encourages Oregon Investment Council and State Treasurer to
divest investment funds invested in certain companies engaged in
mineral-extraction or oil-related activities related to Iran.
Directs council or treasurer to maintain list of companies.
Specifies procedures for notice and possible divestment.
Prohibits certain investments. Provides exceptions.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to divestment from Iran; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 and 3 of this 2011 Act are added to
and made a part of ORS 293.701 to 293.820. + }
SECTION 2. { + As used in this section and section 3 of this
2011 Act:
(1) 'Active business operations' means all business operations
that are not inactive business operations.
(2) 'Business operations' means engaging in commerce in any
form in Iran, including, but not limited to, acquiring,
developing, maintaining, owning, selling, possessing, leasing or
operating equipment, facilities, personnel, products, services,
personal property, real property or any other apparatus of
business or commerce.
(3) 'Company' means any sole proprietorship, organization,
association, corporation, partnership, joint venture, limited
partnership, limited liability partnership, limited liability
company or other entity or business association, including all
wholly owned subsidiaries, majority-owned subsidiaries, parent
companies or affiliates of those entities or business
associations, that exists for the purpose of making profit.
(4) 'Direct holdings' means securities of a company that are
held directly by this state, or an account or fund in which this
state owns all shares or interests.
(5) 'Inactive business operations' means the mere continued
holding or renewal of rights to property previously operated for
the purpose of generating revenues, but not presently deployed
for that purpose.
(6) 'Indirect holdings' means securities of a company that are
held in an account or fund, such as a mutual fund, managed by one
or more persons not employed by this state, in which this state
owns shares or interests together with other investors that are
not subject to the provisions of section 3 of this 2011 Act.
(7) 'Iran' means the Islamic Republic of Iran.
(8) 'Mineral-extraction activities' means:
(a) Exploring, extracting, processing, transporting or
wholesale selling or trading of elemental minerals or associated
metal alloys or oxides, including, but not limited to, gold,
copper, chromium, chromite, diamonds, iron, iron ore, silver,
tungsten, uranium and zinc; and
(b) Facilitating or otherwise providing supplies or services in
support of the activities described in paragraph (a) of this
subsection.
(9)(a) 'Oil-related activities' means:
(A) Owning rights to oil blocks;
(B) Exporting, extracting, producing, refining, processing,
exploring for, transporting, selling or trading of oil;
(C) Constructing, maintaining or operating a pipeline, refinery
or other oil field infrastructure; and
(D) Facilitating or otherwise providing supplies or services in
support of the activities described in this paragraph.
(b) 'Oil-related activities' does not include the mere retail
sale of gasoline and related consumer products.
(10) 'Petroleum resources' means petroleum, petroleum
by-products or natural gas.
(11) 'Private market fund' means any private equity fund,
private equity fund of funds, venture capital fund, hedge fund,
hedge fund of funds, real estate fund or other investment vehicle
that is not publicly traded.
(12) 'Scrutinized company' means a company:
(a)(A) That has business operations involving contracts with or
provision of supplies or services to the Government of Iran, a
consortium or project commissioned by the Government of Iran, or
a company involved in a consortium or project commissioned by the
Government of Iran; and
(B) In which more than 10 percent of the company's revenues or
assets linked to Iran involve oil-related activities or
mineral-extraction activities, less than 75 percent of the
company's revenues or assets linked to Iran involve contracts
with or provision of oil-related or mineral-extraction products
or services to the Government of Iran or a project or consortium
created exclusively by that government; and
(b)(A) That has failed to take substantial action; or
(B) That has, with actual knowledge, on or after August 5,
1996, made an investment of $20 million or more, or any
combination of investments of at least $10 million each that in
the aggregate equals or exceeds $20 million in any 12-month
period, that directly or significantly contributes to the
enhancement of Iran's ability to develop the petroleum resources
of Iran.
(13) 'Substantial action' means adopting, publicizing and
implementing a formal plan to cease engaging in business
operations as a scrutinized company within one year and to
refrain from any such new business operations. + }
SECTION 3. { + (1) The Oregon Investment Council and the State
Treasurer, in the State Treasurer's role as investment officer
for the council, during the course of ordinary business, stock
analysis or routine performance reviews, shall make efforts to
identify all scrutinized companies in which the council or
treasurer has direct or indirect holdings of investment funds.
These efforts may include the following:
(a) Reviewing and relying, as appropriate in the judgment of
the council and treasurer, on publicly available information
regarding companies having business operations in Iran, including
information provided by nonprofit organizations, research firms,
international organizations and government entities;
(b) Contacting asset managers contracted by the council or
treasurer; and
(c) Contacting other institutional investors that have divested
from or engaged with companies that have business operations in
Iran.
(2) The council or treasurer may retain an independent research
firm to identify scrutinized companies in which the council or
treasurer has direct or indirect holdings. The council or
treasurer shall maintain a list of all scrutinized companies.
(3) The council or treasurer shall develop an engagement policy
under which the council or treasurer notifies and requests
information from scrutinized companies in which the council or
treasurer has direct or indirect holdings. In adopting and
implementing the policy, the council or treasurer shall adhere to
the following procedures for companies on the scrutinized
companies list:
(a) The council or treasurer shall determine the companies on
the scrutinized companies list in which the council or treasurer
has direct or indirect holdings.
(b) For each company identified in paragraph (a) of this
subsection that has active or inactive business operations in
Iran, the council or treasurer shall send a written notice
informing the company of its scrutinized company status and of
the provisions of this section.
(c) The written notice shall also advise the company that the
company may become subject to divestment by the council or
treasurer, inform the company of the opportunity to clarify the
company's Iran-related activities or describe the company's plan
to cease business operations as a scrutinized company, describe
possible sanctions applicable under federal law to scrutinized
companies and encourage the company to cease its business
operations as a scrutinized company or convert the operations to
inactive business operations.
(d) If a company ceases business operations as a scrutinized
company, the council or treasurer shall remove the company from
the scrutinized companies list and the provisions of this section
do not apply to the company unless the company resumes business
operations as a scrutinized company.
(4) If a company continues to have active business operations
as a scrutinized company, the council or treasurer, subject to
the standard set forth in ORS 293.726, is encouraged to sell,
redeem, divest or withdraw all publicly traded securities of the
company, except as provided in subsection (6) of this section,
from the council's or treasurer's assets under management of the
council or treasurer.
(5) Subject to the standard set forth in ORS 293.726 and except
as provided in subsection (6) of this section, the council or
treasurer may not acquire securities of companies on the
scrutinized companies list that have active business operations
in Iran.
(6) A company that the United States Government affirmatively
declares to be excluded from present or any future federal
sanctions relating to Iran is not subject to divestment or the
investment prohibition pursuant to subsections (4) and (5) of
this section.
(7) Notwithstanding the provisions of this section, subsections
(4) and (5) of this section do not apply to indirect holdings in
a private market fund. The council or treasurer may submit
letters to the managers of those investment funds that are
subject to Oregon Investment Council policies and that contain
companies that engage in active business operations as
scrutinized companies requesting that they consider removing the
companies from the fund or create a similar actively managed fund
having indirect holdings devoid of the companies. If the manager
creates a similar fund, the council or treasurer is encouraged to
replace all applicable investments with investments in the
similar fund in an expedited time frame consistent with prudent
investing standards.
(8) The council or treasurer shall publish on the treasurer's
website the list of scrutinized companies that are identified
during the ordinary course of business, stock analysis or routine
performance reviews under subsection (1) of this section.
(9) The treasurer shall publish on the treasurer's website an
annual report that includes:
(a) A summary of correspondence with companies engaged by the
council or treasurer under this section;
(b) A list of all investments sold, redeemed, divested or
withdrawn in compliance with this section;
(c) A list of investments prohibited under subsection (5) of
this section; and
(d) A summary of correspondence with private market funds under
subsection (7) of this section.
(10) With respect to actions taken in compliance with this
section, including all good faith determinations regarding
companies as required by this section, the council and treasurer
are exempt from any conflicting statutory or common law
obligations, including any such obligations with respect to
choice of asset managers, investment funds or investments for the
council's or treasurer's securities portfolios.
(11)(a) Notwithstanding the provisions of this section, the
council or treasurer may cease divesting from certain scrutinized
companies pursuant to subsection (4) of this section or reinvest
in certain scrutinized companies from which it divested pursuant
to subsection (4) of this section if clear and convincing
evidence shows that the value of all assets under management by
the council or treasurer becomes equal to or less than 99.50
percent, or 50 basis points, of the hypothetical value of all
assets under management by the council or treasurer assuming no
divestment for any company had occurred under subsection (4) of
this section.
(b) Cessation of divestment, reinvestment or any subsequent
ongoing investment authorized by this section is limited to the
minimum steps necessary to avoid the contingency set forth in
paragraph (a) of this subsection.
(c) This subsection does not apply to reinvestment in companies
on the grounds that they have ceased to engage in active business
operations as scrutinized companies. + }
SECTION 4. { + The Oregon Investment Council or State
Treasurer shall produce the first list of scrutinized companies
required by section 3 of this 2011 Act as soon as practicable
after first identifying a scrutinized company during the ordinary
course of business, stock analysis or routine performance reviews
under section 3 (1) of this 2011 Act. + }
SECTION 5. { + (1) Sections 1 to 4 of this 2011 Act become
operative January 1, 2012.
(2) The State Treasurer and the Oregon Investment Council may
take any action before the operative date specified in subsection
(1) of this section that is necessary for the council or
treasurer to exercise, on and after the operative date specified
in subsection (1) of this section, all the duties, functions and
powers conferred on the council or treasurer by sections 1 to 4
of this 2011 Act. + }
SECTION 6. { + This 2011 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2011 Act takes effect on its
passage. + }
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