HB 1431

1	A bill to be entitled
2	An act relating to economic sanctions related to Sudan;
3	providing legislative findings; providing definitions;
4	requiring the State Board of Administration to identify
5	all companies doing certain types of business in or with
6	Sudan in which public moneys are invested; requiring the
7	board to create and maintain a Scrutinized Company List
8	which names all such companies; requiring the board to
9	periodically contact all scrutinized companies and
10	encourage them to refrain from engaging in certain types
11	of business in or with Sudan; requiring the board to
12	inform scrutinized companies of their status as a
13	scrutinized company and to ask for clarification as to the
14	nature of each company's business activities; providing
15	that a company may be removed from the list under certain
16	conditions; providing for reintroduction of a company onto
17	the list; requiring the board to divest of all publicly
18	traded securities of a scrutinized company under certain
19	conditions; providing exceptions to the divestment
20	requirement; prohibiting the board from acquiring
21	securities of scrutinized companies that have active
22	business operations; providing exceptions to the
23	investment prohibition; providing an additional exception
24	from the divestment requirement and the investment
25	prohibition to certain indirect holdings in actively
26	managed investment funds; requiring the board to request
27	that the managers of such investment funds consider
28	removing scrutinized companies from the fund or create a
29	similar fund that excludes such companies; requiring the
30	board to file a report with the Governor, the Legislature,
31	and Attorney General within a specified period after
32	creation of the Scrutinized Company List; requiring the
33	annual filing of an updated report; requiring that all
34	such reports be made available to the public; requiring
35	that the report include certain information; providing for
36	the expiration of the act; exempting the board from
37	certain statutory or common law obligations; authorizing
38	the board to cease divesting or to reinvest in certain
39	scrutinized companies if the value for all assets under
40	management by the board becomes equal to or less than a
41	specified amount; requiring the board to provide a written
42	report to the Governor, the Legislature, and Attorney
43	General before such reinvestment; requiring that the
44	report contain certain information; requiring semiannual
45	updates to such reports when applicable; requiring the
46	Attorney General to enforce the divestment requirements
47	and investment prohibitions; authorizing the Attorney
48	General to bring enforcement actions in court through any
49	lawful designee; providing for severability; providing an
50	effective date.
51
52	Be It Enacted by the Legislature of the State of Florida:
53
54	Section 1.  (1)  LEGISLATIVE FINDINGS.--
55	(a)  On July 23, 2004, the United States Congress declared
56	that "the atrocities unfolding in Darfur, Sudan, are genocide."
57	(b)  On September 9, 2004, Secretary of State Colin L.
58	Powell told the United States Senate Foreign Relations Committee
59	that "genocide has occurred and may still be occurring in
60	Darfur" and "the Government of Sudan and the Janjaweed bear
61	responsibility."
62	(c)  On September 21, 2004, addressing the United Nations
63	General Assembly, President George W. Bush affirmed the
64	Secretary of State's finding and stated, "At this hour, the
65	world is witnessing terrible suffering and horrible crimes in
66	the Darfur region of Sudan, crimes my government has concluded
67	are genocide."
68	(d)  On December 7, 2004, the United States Congress noted
69	that the genocidal policy in Darfur has led to reports of
70	"systematic rape of thousands of women and girls, the abduction
71	of women and children, and the destruction of hundreds of
72	ethnically African villages, including the poisoning of their
73	wells and the plunder of their crops and cattle upon which the
74	people of such villages sustain themselves."
75	(e)  Also on December 7, 2004, Congress found that "the
76	Government of Sudan has restricted access by humanitarian and
77	human rights workers to the Darfur area through intimidation by
78	military and security forces, and through bureaucratic and
79	administrative obstruction, in an attempt to inflict the most
80	devastating harm on those individuals displaced from their
81	villages and homes without any means of sustenance or shelter."
82	(f)  On September 25, 2006, Congress reaffirmed that "the
83	genocide unfolding in the Darfur region of Sudan is
84	characterized by acts of terrorism and atrocities directed
85	against civilians, including mass murder, rape, and sexual
86	violence committed by the Janjaweed and associated militias with
87	the complicity and support of the National Congress Party-led
88	faction of the Government of Sudan."
89	(g)  On September 26, 2006, the United States House of
90	Representatives stated that "an estimated 300,000 to 400,000
91	people have been killed by the Government of Sudan and its
92	Janjaweed allies since the crisis began in 2003, more than
93	2,000,000 people have been displaced from their homes, and more
94	than 250,000 people from Darfur remain in refugee camps in
95	Chad."
96	(h)  The Darfur crisis represents the first time the United
97	States Government has labeled ongoing atrocities as genocide.
98	(i)  The Federal Government has imposed sanctions against
99	the Government of Sudan since 1997. These sanctions are
100	monitored through the United States Treasury Department's Office
101	of Foreign Assets Control (OFAC).
102	(j)  According to a former chair of the United States
103	Securities and Exchange Commission, "the fact that a foreign
104	company is doing material business with a country, government,
105	or entity on OFAC's sanctions list is, in the SEC staff's view,
106	substantially likely to be significant to a reasonable
107	investor's decision about whether to invest in that company."
108	(k)  Since 1993, the United States Secretary of State has
109	determined that Sudan is a country whose government has
110	repeatedly provided support for acts of international terrorism,
111	and, as a result, the United States has restricted assistance,
112	defense exports, defense sales, financial transactions, and
113	various other transactions with the Government of Sudan.
114	(l)  A 2006 report by United States House of
115	Representatives states that "a company's association with
116	sponsors of terrorism and human rights abuses, no matter how
117	large or small, can have a materially adverse result on a public
118	company's operations, financial condition, earnings, and stock
119	prices, all of which can negatively affect the value of an
120	investment."
121	(m)  In response to the financial risk posed by investments
122	in companies doing business with a state that sponsors
123	terrorists, the Securities and Exchange Commission established
124	its Office of Global Security Risk to provide for enhanced
125	disclosure of material information regarding such companies.
126	(n)  The current Sudan divestment movement encompasses
127	nearly 100 universities, municipalities, states, and private
128	pension plans.
129	(o)  Companies facing such widespread divestment present
130	further material risk to remaining investors.
131	(p)  It is a fundamental responsibility of the State of
132	Florida to decide where, how, and by whom financial resources in
133	its control should be invested, taking into account numerous
134	pertinent factors.
135	(q)  It is the prerogative and desire of the State of
136	Florida with respect to investment resources in its control and
137	to the extent reasonable, with due consideration for return on
138	investment on behalf of the state and its investment
139	beneficiaries, not to participate in an ownership or capital-
140	providing capacity with entities that provide significant
141	practical support for genocide, including certain non-United
142	States companies presently doing business in Sudan.
143	(r)  The Legislature finds that this act should remain in
144	effect only insofar as it continues to be consistent with and
145	does not unduly interfere with the foreign policy of the United
146	States as determined by the Federal Government.
147	(s)  The Legislature finds that mandatory divestment of
148	public funds from certain companies is a measure that should be
149	employed sparingly and judiciously. A Congressional and
150	Presidential declaration of genocide satisfies this high
151	threshold.
152	(2)  DEFINITIONS.--As used in this act, the term:
153	(a)  "Active business operations" means all business
154	operations that are not inactive business operations.
155	(b)  "Business operations" means engaging in commerce in
156	any form in Sudan, including, but not limited to, acquiring,
157	developing, maintaining, owning, selling, possessing, leasing,
158	or operating equipment, facilities, personnel, products,
159	services, personal property, real property, or any other
160	apparatus of business or commerce.
161	(c)  "Company" means any sole proprietorship, organization,
162	association, corporation, partnership, joint venture, limited
163	partnership, limited liability partnership, limited liability
164	company, or other entity or business association, including all
165	wholly owned subsidiaries, majority-owned subsidiaries, parent
166	companies, or affiliates of such entities or business
167	associations, which exists for the purpose of making profit.
168	(d)  "Complicit" means taking actions during any preceding
169	20-month period which have directly supported or promoted the
170	genocidal campaign in Darfur, including, but not limited to,
171	preventing Darfur's victimized population from communicating
172	with each other, encouraging Sudanese citizens to speak out
173	against an internationally approved security force for Darfur,
174	actively working to deny, cover up, or alter the record on human
175	rights abuses in Darfur, or other similar actions.
176	(e)  "Direct holdings" in a company means all securities of
177	that company which are held directly by the Public Fund or in an
178	account or fund in which the Public Fund owns all shares or
179	interests.
180	(f)  "Government of Sudan" means the government in
181	Khartoum, Sudan, which is led by the National Congress Party,
182	formerly known as the National Islamic Front, or any successor
183	government formed on or after October 13, 2006, including the
184	coalition National Unity Government agreed upon in the
185	Comprehensive Peace Agreement for Sudan, and does not include
186	the regional government of southern Sudan.
187	(g)  "Inactive business operations" means the mere
188	continued holding or renewal of rights to property previously
189	operated for the purpose of generating revenues but not
190	presently deployed for such purpose.
191	(h)  "Indirect holdings" in a company means all securities
192	of that company which are held in an account or fund, such as a
193	mutual fund, managed by one or more persons not employed by the
194	Public Fund, in which the Public Fund owns shares or interests
195	together with other investors not subject to the provisions of
196	this act.
197	(i)  "Marginalized populations of Sudan" include, but are
198	not limited to, the portion of the population in the Darfur
199	region who have been genocidally victimized; the portion of the
200	population of southern Sudan victimized by Sudan's north-south
201	civil war; the Beja, Rashidiya, and other similarly underserved
202	groups of eastern Sudan; the Nubian and other similarly
203	underserved groups in Sudan's Abyei, Southern Blue Nile, and
204	Nuba Mountain regions; and the Amri, Hamadab, Manasir, and other
205	similarly underserved groups of northern Sudan.
206	(j)  "Military equipment" means weapons, arms, military
207	supplies, and equipment that readily may be used for military
208	purposes, including, but not limited to, radar systems,
209	military-grade transport vehicles, or supplies or services sold
210	or provided directly or indirectly to any force actively
211	participating in armed conflict in Sudan.
212	(k)  "Mineral-extraction activities" include exploring,
213	extracting, processing, transporting, or wholesale selling or
214	trading of elemental minerals or associated metal alloys or
215	oxides (ore), including gold, copper, chromium, chromite,
216	diamonds, iron, iron ore, silver, tungsten, uranium, and zinc,
217	as well as facilitating such activities, including, providing
218	supplies or services in support of such activities.
219	(l)  "Oil-related activities" include, but are not limited
220	to, owning rights to oil blocks; exporting, extracting,
221	producing, refining, processing, exploring for, transporting,
222	selling, or trading of oil; constructing, maintaining, or
223	operating a pipeline, refinery, or other oil-field
224	infrastructure; and facilitating such activities, including
225	providing supplies or services in support of such activities,
226	except that the mere retail sale of gasoline and related
227	consumer products is not considered oil-related activities.
228	(m)  "Power-production activities" means any business
229	operation that involves a project commissioned by the National
230	Electricity Corporation (NEC) of Sudan or other similar entity
231	of the Government of Sudan whose purpose is to facilitate power
232	generation and delivery, including, but not limited to,
233	establishing power-generating plants or hydroelectric dams,
234	selling or installing components for the project, providing
235	service contracts related to the installation or maintenance of
236	the project, as well as facilitating such activities, including
237	providing supplies or services in support of such activities.
238	(n)  "Public Fund" means all funds, assets, trustees, and
239	other designates under the State Board of Administration.
240	(o)  "Scrutinized company" means any company that meets any
241	of the following criteria:
242	1.  The company has business operations that involve
243	contracts with or provision of supplies or services to the
244	Government of Sudan, companies in which the Government of Sudan
245	has any direct or indirect equity share, consortiums or projects
246	commissioned by the Government of Sudan, or companies involved
247	in consortiums or projects commissioned by the Government of
248	Sudan and:
249	a.  More than 10 percent of the company's revenues or
250	assets linked to Sudan involve oil-related activities or
251	mineral-extraction activities; less than 75 percent of the
252	company's revenues or assets linked to Sudan involve contracts
253	with or provision of oil-related or mineral-extracting products
254	or services to the regional government of southern Sudan or a
255	project or consortium created exclusively by that regional
256	government; and the company has failed to take substantial
257	action; or
258	b.  More than 10 percent of the company's revenues or
259	assets linked to Sudan involve power-production activities; less
260	than 75 percent of the company's power-production activities
261	include projects whose intent is to provide power or electricity
262	to the marginalized populations of Sudan; and the company has
263	failed to take substantial action.
264	2.  The company is complicit in the Darfur genocide.
265	3.  The company supplies military equipment within Sudan,
266	unless it clearly shows that the military equipment cannot be
267	used to facilitate offensive military actions in Sudan or the
268	company implements rigorous and verifiable safeguards to prevent
269	use of that equipment by forces actively participating in armed
270	conflict. Examples of safeguards include post-sale tracking of
271	such equipment by the company, certification from a reputable
272	and objective third party that such equipment is not being used
273	by a party participating in armed conflict in Sudan, or sale of
274	such equipment solely to the regional government of southern
275	Sudan or any internationally recognized peacekeeping force or
276	humanitarian organization.
277
278	Notwithstanding the provisions of this act, a social-development
279	company that is not complicit in the Darfur genocide is not
280	considered a scrutinized company.
281	(p)  "Social-development company" means a company whose
282	primary purpose in Sudan is to provide humanitarian goods or
283	services, including medicine or medical equipment; agricultural
284	supplies or infrastructure, educational opportunities;
285	journalism-related activities; information or information
286	materials; spiritual-related activities; services of a purely
287	clerical or reporting nature; food, clothing, or general
288	consumer goods that are unrelated to oil-related activities;
289	mineral-extraction activities; or power-production activities.
290	(q)  "Substantial action" means adopting, publicizing, and
291	implementing a formal plan to cease scrutinized business
292	operations within 1 year and to refrain from any such new
293	business operations; undertaking significant humanitarian
294	efforts on behalf of one or more marginalized populations of
295	Sudan; or, through engagement with the Government of Sudan,
296	materially improving conditions for the genocidally victimized
297	population in Darfur.
298	(3)  IDENTIFICATION OF COMPANIES.--
299	(a)  Within 90 days after the effective date of this act,
300	the Public Fund shall make its best efforts to identify all
301	scrutinized companies in which the Public Fund has direct or
302	indirect holdings or could possibly have such holdings in the
303	future. Such efforts include:
304	1.  Reviewing and relying, as appropriate in the Public
305	Fund's judgment, on publicly available information regarding
306	companies having business operations in Sudan, including
307	information provided by nonprofit organizations, research firms,
308	international organizations, and government entities;
309	2.  Contacting asset managers contracted by the Public Fund
310	which invest in companies having business operations in Sudan;
311	or
312	3.  Contacting other institutional investors that have
313	divested from or engaged with companies that have business
314	operations in Sudan.
315	(b)  By the first meeting of the Public Fund following the
316	90-day period described in paragraph (a), the Public Fund shall
317	assemble all scrutinized companies identified into a
318	"Scrutinized Companies List."
319	(c)  The Public Fund shall update the Scrutinized Companies
320	List quarterly based on evolving information from, among other
321	sources, those listed in paragraph (a).
322	(4)  REQUIRED ACTIONS.--The Public Fund shall adhere to the
323	following procedure for companies on the Scrutinized Companies
324	List:
325	(a)  Engagement.--
326	1.  The Public Fund shall immediately determine the
327	companies on the Scrutinized Companies List in which the Public
328	Fund owns direct or indirect holdings.
329	2.  For each company identified in this paragraph which has
330	only inactive business operations, the Public Fund shall send a
331	written notice informing the company of this act and encouraging
332	it to continue to refrain from initiating active business
333	operations in Sudan until it is able to avoid scrutinized
334	business operations. The Public Fund shall continue such
335	correspondence semiannually.
336	3.  For each company newly identified under this paragraph
337	which has active business operations, the Public Fund shall send
338	a written notice informing the company of its scrutinized
339	company status and that it may become subject to divestment by
340	the Public Fund. The notice must inform the company of the
341	opportunity to clarify its Sudan-related activities and
342	encourage the company, within 90 days, to cease its scrutinized
343	business operations or convert such operations to inactive
344	business operations in order to avoid qualifying for divestment
345	by the Public Fund.
346	4.  If, within 90 days after the Public Fund's first
347	engagement with a company pursuant to this paragraph, that
348	company ceases scrutinized business operations, the company
349	shall be removed from the Scrutinized Companies List and the
350	provisions of this act shall cease to apply to it unless it
351	resumes scrutinized business operations. If, within 90 days
352	after the Public Fund's first engagement, the company converts
353	its scrutinized active business operations to inactive business
354	operations, the company is subject to all provisions relating
355	thereto.
356	(b)  Divestment.--
357	1.  If, after 90 days following the Public Fund's first
358	engagement with a company pursuant to paragraph (a), the company
359	continues to have scrutinized active business operations, and
360	only while such company continues to have scrutinized active
361	business operations, the Public Fund shall sell, redeem, divest,
362	or withdraw all publicly traded securities of the company,
363	except as provided in paragraph (d), according to the following
364	schedule:
365	a.  At least 50 percent of such assets shall be removed
366	from the Public Fund's assets under management by 9 months after
367	the company's most recent appearance on the Scrutinized
368	Companies List.
369	b.  One hundred percent of such assets shall be removed
370	from the Public Fund's assets under management within 15 months
371	after the company's most recent appearance on the Scrutinized
372	Companies List.
373	2.  If a company that ceased scrutinized active business
374	operations following engagement pursuant to paragraph (a)
375	resumes such operations, this paragraph immediately applies, and
376	the Public Fund shall send a written notice to the company. The
377	company shall also be immediately reintroduced onto the
378	Scrutinized Companies List.
379	(c)  Prohibition.--The Public Fund may not acquire
380	securities of companies on the Scrutinized Companies List which
381	have active business operations, except as provided in paragraph
382	(d).
383	(d)  Exemption.--A company that the United States
384	Government affirmatively declares to be excluded from its
385	present or any future federal sanctions regime relating to Sudan
386	is not subject to divestment or the investment prohibition
387	pursuant to paragraphs (b) and (c).
388	(e)  Excluded securities.--Notwithstanding the provisions
389	of this act, paragraphs (b) and (c) do not apply to indirect
390	holdings in actively managed investment funds. However, the
391	Public Fund shall submit letters to the managers of such
392	investment funds containing companies that have scrutinized
393	active business operations requesting that they consider
394	removing such companies from the fund or create a similar
395	actively managed fund having indirect holdings devoid of such
396	companies. If the manager creates a similar fund, the Public
397	Fund shall replace all applicable investments with investments
398	in the similar fund in an expedited timeframe consistent with
399	prudent investing standards. For the purposes of this section, a
400	private equity fund is deemed to be an actively managed
401	investment fund.
402	(5)  REPORTING.--
403	(a)  The Public Fund shall file a report with the Governor,
404	the President of the Senate, the Speaker of the House of
405	Representatives, and the Attorney General that includes the
406	Scrutinized Companies List within 30 days after the list is
407	created. This report shall be made available to the public.
408	(b)  Annually thereafter, the Public Fund shall file a
409	report, which shall be made available to the public, with the
410	Governor, the President of the Senate, the Speaker of the House
411	of Representatives, and the Attorney General and send a copy of
412	that report to the United States Presidential Special Envoy to
413	Sudan, or an appropriate designee or successor, which includes:
414	1.  A summary of correspondence with companies engaged by
415	the Public Fund under subparagraphs (4)(a)2. and 3.;
416	2.  All investments sold, redeemed, divested, or withdrawn
417	in compliance with paragraph (4)(b);
418	3.  All prohibited investments under paragraph (4)(c); and
419	4.  Any progress made under paragraph (4)(e).
420	(6)  EXPIRATION.--This act expires upon the occurrence of
421	any of the following:
422	(a)  The Congress or President of the United States
423	declares that the Darfur genocide has been halted for at least
424	12 months;
425	(b)  The United States revokes all sanctions imposed
426	against the Government of Sudan;
427	(c)  The Congress or President of the United States
428	declares that the Government of Sudan has honored its
429	commitments to cease attacks on civilians, demobilize and
430	demilitarize the Janjaweed and associated militias, grant free
431	and unfettered access for deliveries of humanitarian assistance,
432	and allow for the safe and voluntary return of refugees and
433	internally displaced persons; or
434	(d)  The Congress or President of the United States,
435	through legislation or executive order, declares that mandatory
436	divestment of the type provided for in this act interferes with
437	the conduct of United States foreign policy.
438	(7)  OTHER LEGAL OBLIGATIONS.--With respect to actions
439	taken in compliance with this act, including all good faith
440	determinations regarding companies as required by this act, the
441	Public Fund is exempt from any conflicting statutory or common
442	law obligations, including any such obligations with respect to
443	choice of asset managers, investment funds, or investments for
444	the Public Fund's securities portfolios.
445	(8)  REINVESTMENT IN CERTAIN COMPANIES HAVING SCRUTINIZED
446	ACTIVE BUSINESS OPERATIONS.--Notwithstanding any other provision
447	of this act to the contrary, the Public Fund may cease divesting
448	from certain scrutinized companies pursuant to paragraph (4)(b)
449	or reinvest in certain scrutinized companies from which it
450	divested pursuant to paragraph (4)(b) if clear and convincing
451	evidence shows that the value of all assets under management by
452	the Public Fund becomes equal to or less than 99.50 percent, or
453	50 basis points, of the hypothetical value of all assets under
454	management by the Public Fund assuming no divestment for any
455	company had occurred under paragraph (4)(b). Cessation of
456	divestment, reinvestment, or any subsequent ongoing investment
457	authorized by this act is limited to the minimum steps necessary
458	to avoid the contingency set forth in this subsection. For any
459	cessation of divestment, reinvestment, or subsequent ongoing
460	investment authorized by this act, the Public Fund shall provide
461	a written report to the Governor, the President of the Senate,
462	the Speaker of the House of Representatives, and the Attorney
463	General in advance of initial reinvestment, updated semiannually
464	thereafter as applicable, setting forth the reasons and
465	justification, supported by clear and convincing evidence, for
466	its decisions to cease divestment, reinvest, or remain invested
467	in companies having scrutinized active business operations. This
468	act does not apply to reinvestment in companies on the grounds
469	that they have ceased to have scrutinized active business
470	operations.
471	(9)  ENFORCEMENT.--The Attorney General shall enforce the
472	provisions of this act and may bring any necessary actions in
473	court through any lawful designee.
474	Section 2.  If any provision of this act or its application
475	to any person or circumstance is held invalid, the invalidity
476	does not affect other provisions or applications of the act
477	which can be given effect without the invalid provision or
478	application, and to this end the provisions of this act are
479	severable.
480	Section 3.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.