HB1391 (2008) Detail

Prohibiting the investment of state funds in the energy sectors of countries that have been identified by the United States Department of State as state sponsors of terrorism.


HB 1391-FN – AS INTRODUCED

2008 SESSION

08-2066

05/10

HOUSE BILL 1391-FN

AN ACT prohibiting the investment of state funds in the energy sectors of countries that have been identified by the United States Department of State as state sponsors of terrorism.

SPONSORS: Rep. Mooney, Hills 19; Rep. Bedrick, Rock 4; Rep. Rowe, Hills 6; Rep. Lasky, Hills 26; Rep. Bettencourt, Rock 4; Sen. Letourneau, Dist 19; Sen. Roberge, Dist 9; Sen. Barnes, Dist 17; Sen. Clegg, Dist 14

COMMITTEE: State-Federal Relations and Veterans Affairs

ANALYSIS

This bill prohibits the state treasurer, the state retirement system, and the judicial retirement plan from investing in the energy sectors of countries that have been identified by the United States Department of State as state sponsors of terrorism.

The bill also repeals certain governing principles relative to investment of state funds in Northern Ireland.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

08-2066

05/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eight

AN ACT prohibiting the investment of state funds in the energy sectors of countries that have been identified by the United States Department of State as state sponsors of terrorism.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Subdivision; State Investment Policy. Amend RSA 6 by inserting after section 43 the following new subdivision:

State Investment Policy

6:44 Investment of Funds with Firms Linked to State Sponsors of Terrorism Prohibited.

I. No assets under the jurisdiction of the state treasurer shall be invested in the energy sector of any country identified by the United States Department of State as a state sponsor of terrorism; nor shall such assets be invested in any entity that invests $20,000,000 or more in the energy sector of a state sponsor of terrorism. In this section, the term “energy sector” means activities to develop petroleum or natural gas resources.

II. The state treasurer, after reviewing the recommendations of and consulting with an independent research firm that specializes in global security risk for portfolio determinations selected by the state treasurer, shall take appropriate action to sell, redeem, divest, or withdraw any investment held in violation of paragraph I. This paragraph shall not be construed to require the premature or otherwise imprudent sale, redemption, divestment, or withdrawal of an investment, but such sale, redemption, divestment, or withdrawal shall be completed not later than 2 years following the effective date of this section.

III. Within 60 days after the effective date of this section, the state treasurer shall file with the general court, a report of all investments held as of the effective date that are in violation of paragraph I. Every year thereafter, the treasurer shall report on all investments sold, redeemed, divested, or withdrawn in compliance with paragraph II.

IV. Each report after the initial report shall provide a description of the progress that the state treasurer has made since the previous report and since the effective date of this section.

2 New Paragraph; State Retirement System; State Investment Policy. Amend RSA 100-A:15 by inserting after paragraph I the following new paragraph:

I-a. Notwithstanding paragraph I, pursuant to the state investment policy in RSA 6:44, no assets under the jurisdiction of the system’s board of trustees shall be invested in the energy sector of any country identified by the United States Department of State as a state sponsor of terrorism; nor shall such assets be invested in any entity that invests $20,000,000 or more in the energy sector of a state sponsor of terrorism. The board of trustees, after reviewing the recommendations of and consulting with an independent research firm that specializes in global security risk for portfolio determinations selected by the board, shall take appropriate action to sell, redeem, divest, or withdraw any investment held in violation of the state investment policy. This paragraph shall not be construed to require the premature or otherwise imprudent sale, redemption, divestment, or withdrawal of an investment, but such sale, redemption, divestment, or withdrawal shall be completed not later than 2 years following the effective date of this paragraph. The board shall summarize compliance with the state investment policy in the comprehensive annual investment report submitted pursuant to paragraph VII.

3 New Paragraph; Judicial Retirement Plan; State Investment Policy. Amend RSA 100-C:12 by inserting after paragraph II the following new paragraph:

II-a. Notwithstanding paragraphs I and II, pursuant to the state investment policy in RSA 6:44, the board of trustees shall not invest any assets of the judicial retirement plan in the energy sector of any country identified by the United States Department of State as a state sponsor of terrorism; nor shall such assets be invested in any entity that invests $20,000,000 or more in the energy sector of a state sponsor of terrorism. The board of trustees, after reviewing the recommendations of and consulting with an independent research firm that specializes in global security risk for portfolio determinations selected by the board, shall take appropriate action to sell, redeem, divest, or withdraw any investment held in violation of the state investment policy. This paragraph shall not be construed to require the premature or otherwise imprudent sale, redemption, divestment, or withdrawal of an investment, but such sale, redemption, divestment, or withdrawal shall be completed not later than 2 years following the effective date of this paragraph. The board shall summarize compliance with the state investment policy in the annual report completed pursuant to RSA 100-C:11.

4 Repeal. RSA 6:32-6:34, relative to the investment of state funds in Northern Ireland, are repealed.

5 Effective Date. This act shall take effect 60 days after its passage.

LBAO

08-2066

11/28/07

HB 1391-FN - FISCAL NOTE

AN ACT prohibiting the investment of state funds in the energy sectors of countries that have been identified by the United States Department of State as state sponsors of terrorism.

FISCAL IMPACT:

      The Treasury Department, the New Hampshire Retirement System, and the Judicial Retirement Plan state this bill may increase state, county, and local expenditures by an indeterminable amount in FY 2008 and each year thereafter. There will be no fiscal impact on state, county, and local revenue.

METHODOLOGY:

    The Treasury Department, the New Hampshire Retirement System, and the Judicial Retirement Plan state this bill prohibits the investing in the energy sectors of countries that have been identified as a state sponsor of terrorism. The Treasury Department states it will need to hire an independent research firm that specializes in global security risks for portfolio determinations. The independent research firm’s initial study will cost approximately $100,000 in FY 2008 and subsequent quarterly updates will cost $160,000 ($40,000 per quarter) in FY 2009 and each year thereafter. The Treasury Department is not able to determine the impact, if any, of possible forced investment divestiture.

    The New Hampshire Retirement System states the System will have costs associated with retaining a consultant to identify impacted securities, staff time associated with coordinating efforts of the consultant and investment managers and staff time to ensure and report compliance with the law. Additionally, the System will have divestment trading commission costs and execution costs. The System estimates the increased expenditures for the administration of the divestment statute will exceed $100,000 in FY 2008 and each year thereafter. The System assumes state, county, and local employer contribution rates may need to increase to support the increased administrative costs. Additionally, if forced divesture results in a lower funding ratio for the System, state, county, and local contribution rates may need to be increased.

    The Judicial Retirement Plan states this bill will increase administrative costs to the Plan. The Plan will need to hire staff and an independent research firm to determine if assets are being invested in the energy sectors of countries identified as state sponsors of terrorism. The Plan states it uses index funds which increases the difficulty of identifying if assets are invested in a prohibited area. The increased cost may require an increase in state contributions to the Plan.