GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2017
SESSION LAW 2017-193
HOUSE BILL 161
AN ACT to require state divestment from, and prohibit State Agencies from Contracting With, Companies That Boycott Israel and to amend the existing sudan and iran divestment statutes.
Whereas, boycotts and related tactics have become a tool of economic warfare that threaten the sovereignty and security of key allies and trade partners of the United States; and
Whereas, the State of Israel is the most prominent target of such boycott activity, which began with, but has not been limited to, the Arab League Boycott adopted in 1945, even before Israel's declaration of independence as the reestablished national state of the Jewish people; and
Whereas, companies that refuse to deal with United States trade partners such as Israel, or entities that do business with or in such countries, make discriminatory decisions on the basis of national origin that impair those companies' commercial soundness; and
Whereas, it is the public policy of the United States, as enshrined in several federal acts, to oppose boycotts against Israel, and Congress has concluded as a matter of national trade policy that cooperation with Israel materially benefits United States companies and improves American competitiveness; and
Whereas, Israel in particular is known for its dynamic and innovative approach in many business sectors, and, therefore, a company's decision to discriminate against Israel, Israeli entities, or entities that do business with or in Israel is an unsound business practice making such a company an unduly risky contracting partner or vehicle for investment; Now, therefore,
The General Assembly of North Carolina enacts:
PART I. DIVESTMENT FROM COMPANIES BOYCOTTING ISRAEL
SECTION 1.1. Chapter 147 of the General Statutes is amended by adding a new Article to read:
"Article 6G.
"Divestment From Companies Boycotting Israel.
"§ 147‑86.80. Definitions.
The following definitions apply in this Article:
(1) Boycott Israel or boycott of Israel. – Engaging in refusals to deal, terminating business activities, or taking actions that are intended to penalize, inflict economic harm, or otherwise limit commercial relations specifically with Israel, or persons or entities doing business in Israel or in Israeli‑controlled territories. This term does not apply to decisions made for ordinary business purposes or for actions with an economic impact of less than twenty million dollars ($20,000,000) in a 12‑month period.
(2) Company. – 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.
(3) Investment. – This term has the same meaning as G.S. 147‑86.57(3).
(4) Restricted company. – A company that appears on the list of companies that are engaged in a boycott of Israel developed by the State Treasurer under G.S. 147‑86.81(a)(1).
(5) State agency. – Any board, commission, department, executive department, officer, institution, and any political subdivision of the State.
"§ 147‑86.81. Prohibitions on State investment.
(a) No more than 30 days after October 1, 2017, the State Treasurer shall adopt a policy prohibiting the North Carolina Retirement Systems or the Department of State Treasurer from investing in any company engaged in a boycott of Israel. At a minimum, the policy shall provide for the following:
(1) List of restricted companies. – Within 120 days of adoption of the policy, the State Treasurer shall develop and make publicly available a list of companies it determines to be engaged in a boycott of Israel. In the development of this list, the State Treasurer shall use any other state lists of restricted companies pursuant to similar laws and any federal information or guidance on companies that boycott Israel and any other credible information provided by nonprofit organizations, research firms, and governmental entities, and generally publicly available information. The State Treasurer shall make every effort to avoid erroneously including a company on the list. Before finalizing an initial or updated list, the State Treasurer must do all of the following before a company is included on the list:
a. Provide 90 days' written notice of the State Treasurer's intent to include the company on the list. The notice shall inform the company that inclusion on the list would make the company ineligible for State investment, may result in the company becoming subject to divestment by the North Carolina Retirement Systems, and may affect the company's ability to conduct business with the State and its subdivisions. The notice shall specify that the company may be removed from the list if the company ceases its engagement in a boycott of Israel.
b. The State Treasurer shall provide a company with an opportunity to comment in writing that the company is not engaged in a boycott of Israel or has ceased its boycott of Israel. If the company demonstrates to the State Treasurer that the company has not been engaged in a boycott of Israel, the company shall not be placed on the list. If a company had been engaged in a boycott of Israel but has ceased the boycott, it must submit a written certification to the State Treasurer that the company will not reengage in a boycott of Israel for the duration of any business with the State. The State Treasurer shall keep all written certifications from restricted and previously restricted companies.
(2) Identification of investments. – Upon completion of the initial list of restricted companies created pursuant to subdivision (1) of this subsection, the State Treasurer shall identify any restricted companies in which the North Carolina Retirement Systems has investments.
(3) Review of restricted companies list. – The State Treasurer shall review the list of restricted companies created pursuant to subdivision (1) of this subsection on an annual basis. This updated list shall be made publicly available and any updates shall be distributed to the North Carolina Retirement Systems.
(4) Investments prohibited. – Neither the North Carolina Retirement Systems nor the State Treasurer may invest funds with a company that is identified on a list created pursuant to subdivision (1) of this section as a company engaging in restricted investment activities.
(5) Existing investments. – Any existing investment with a company that is identified on a list created pursuant to subdivision (1) of this section as a company engaging in restricted activities must be divested within 180 days of the adoption of the list.
(b) Nothing in the policy or in this Article shall require the North Carolina Retirement Systems or the State Treasurer to take action unless it is determined by the State Treasurer, in good faith, that the action is consistent with the fiduciary responsibilities of the Retirement Systems and the State Treasurer.
"§ 147‑86.82. Restrictions on contracts with the State or subdivisions of the State.
(a) A company that is identified as a restricted company is ineligible to contract with the State or any political subdivision of the State.
(b) Any contract entered into with a company that is identified as a restricted company at the time of contract is void ab initio.
(c) Upon receiving information that a company that was not identified as a restricted company at the time of contract has later been identified as a restricted company, the State agency shall review the information and offer the company an opportunity to respond. If the company fails to demonstrate that the company should not have been identified as a restricted company within 90 days after notification by the State agency, then the State agency shall take action as may be appropriate and provided for by law, rule, or contract.
(d) Contracts in existence on October 1, 2017, with restricted companies shall be allowed to expire in accordance with the terms of the contract.
"§ 147‑86.83. Exceptions.
G.S. 147‑86.82 shall not apply to contracts valued at one thousand dollars ($1,000) or less.
"§ 147‑86.84. Reporting.
The State Treasurer shall report to the Joint Legislative Commission on Governmental Operations annually by October 1 on information regarding investments sold, redeemed, divested, or withdrawn in compliance with this Article."
SECTION 1.2.(a) Pursuant to G.S. 147‑69.3(g), the State Treasurer is authorized to retain the services of consultants, professional individuals, analysts, data collection firms, or other persons possessing specialized skills or knowledge necessary for the proper implementation and administration of the requirements of this act.
SECTION 1.2.(b) This section is effective when this act becomes law.
PART II. AMEND SUDAN (DARFUR) DIVESTMENT ACT
SECTION 2.1. G.S. 147‑86.42 reads as rewritten:
"§ 147‑86.42. Definitions.
As used in this article, the following definitions apply:
(1) "Active Business Operations" means all
Business Operations that are not Inactive Business Operations.
(2) "Business Operations"
operations" means engaging in commerce in any form in Sudan,
including by 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 such entities or business associations, that exists for profit‑making purposes.
(4) "Complicit" means taking actions during any preceding 20‑month period which have directly supported or promoted the genocidal campaign in Darfur, including, but not limited to, preventing Darfur's victimized population from communicating with each other, encouraging Sudanese citizens to speak out against an internationally approved security force for Darfur, actively working to deny, cover up, or alter the record on human rights abuses in Darfur, or other similar actions.
(5) "Direct Holdings" in a Company means
all securities of that Company held directly by the Public Fund or in an
account or fund in which the Public Fund owns all shares or interests.
(5a) "Investment" means a commitment or contribution of funds or property, whatever the source, or a loan or other extension of credit. It does not include indirect beneficial ownership through index funds, commingled funds, limited partnerships, derivative instruments, or the like.
(6) "Government of Sudan" means the government in Khartoum, Sudan, which is led by the National Congress Party (formerly known as the National Islamic Front) or any successor government formed on or after October 13, 2006 (including the coalition National Unity Government agreed upon in the Comprehensive Peace Agreement for Sudan), and does not include the regional government of southern Sudan.
(7) "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 such
purpose.
(8) "Indirect Holdings" in a Company means
all securities of that Company held in an account or fund, such as a mutual
fund, managed by one or more persons not employed by the Public Fund, in which
the Public Fund owns shares or interests together with other investors not
subject to the provisions of this Article and securities held through index
funds, commingled funds, limited partnerships, derivative instruments, or any
other similar investment instrument.
(9) "Marginalized Populations
populations of Sudan" include, but are not limited to, the
portion of the population in the Darfur region that has been genocidally
victimized; the portion of the population of southern Sudan victimized by
Sudan's North‑South civil war; the Beja, Rashidiya, and other similarly
underserved groups of eastern Sudan; the Nubian and other similarly underserved
groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain regions; and the
Amri, Hamadab, Manasir, and other similarly underserved groups of northern
Sudan.
(10) "Military Equipment"equipment"
means weapons, arms, military supplies, and equipment that readily may be used
for military purposes, including, but not limited to, radar systems or military‑grade
transport vehicles; or supplies or services sold or provided directly or
indirectly to any force actively participating in armed conflict in Sudan.
(11) "Mineral Extraction
Activities"extraction activities" include exploring,
extracting, processing, transporting, or wholesale selling or trading of
elemental minerals or associated metal alloys or oxides (ore), including gold,
copper, chromium, chromite, diamonds, iron, iron ore, silver, tungsten,
uranium, and zinc, as well as facilitating such activities, including by
providing supplies or services in support of such activities.
(12) "Oil‑Related
Activities""Oil‑related activities" include,
but are not limited to, owning rights to oil blocks; exporting, extracting,
producing, refining, processing, exploring for, transporting, selling, or
trading of oil; constructing, maintaining, or operating a pipeline, refinery,
or other oil‑field infrastructure; and facilitating such activities,
including by providing supplies or services in support of such activities,
provided that the mere retail sale of gasoline and related consumer products
shall not be considered Oil‑Related Activities.
(13) "Power Production
Activities"production activities" means any Business
Operationbusiness operation that involves a project commissioned by
the National Electricity Corporation (NEC) of Sudan or other similar Government
of Sudan entity whose purpose is to facilitate power generation and delivery,
including, but not limited to, establishing power‑generating plants or
hydroelectric dams, selling or installing components for the project, providing
service contracts related to the installation or maintenance of the project, as
well as facilitating such activities, including by providing supplies or
services in support of such activities.
(14) "Public Fund"fund"
means any funds held by the State Treasurer to the credit of:
a. The Teachers' and State Employees' Retirement System.
b. The Consolidated Judicial Retirement System.
c. The Firemen's and Rescue Workers' Pension Fund.
d. The Local Governmental Employees' Retirement System.
e. The Legislative Retirement System.
f. The Legislative Retirement Fund.
g. The North Carolina National Guard Pension Fund.
(14a) "Scrutinized
Business Operations""Restricted business operations"
means Business Operationsbusiness operations that have resulted
in a Company company becoming a Scrutinized Company.restricted
company.
(15) "Scrutinized
Company""Restricted company" means any Company company
that meets the criteria in sub‑subdivisions a., b., or c. below:
a. The Company company
has Business Operationsbusiness operations that involve
contracts with and/or provision of supplies or services to the Government of
Sudan, to companies in which the Government of Sudan has any direct or indirect
equity share, Government of Sudan‑commissioned consortiums or projects,
or to Companies companies involved in Government of Sudan‑commissioned
consortiums or projects and at least one of the following conditions is
satisfied:
1. More than ten percent
(10%) of the Company's company's revenues or assets linked to
Sudan involve Oil‑Related Activities or Mineral Extraction Activities;oil‑related
activities or mineral extraction activities less than seventy‑five
percent (75%) of the Company's company's revenues or assets
linked to Sudan involve contracts with and/or provision of Oil‑Related
or Mineral Extractingoil‑related or mineral extracting
products or services to the regional government of southern Sudan or a project
or consortium created exclusively by that regional government; and the Company
company has failed to take Substantial Action.substantial
action.
2. More than ten percent
(10%) of the Company's company's revenues or assets linked to
Sudan involve Power Production Activities; power production
activities; less than seventy‑five percent (75%) of the Company's
Power Production Activitiescompany's power production activities
include projects whose intent is to provide power or electricity to the Marginalized
Populationsmarginalized populations of Sudan; and the Company company
has failed to take Substantial Action.substantial action.
b. The Company company
is Complicit complicit in the Darfur genocide.
c. The Company company
supplies Military Equipmentmilitary equipment within Sudan,
unless it clearly shows that the Military Equipmentmilitary equipment
cannot be used to facilitate offensive military actions in Sudan or the Company
company implements rigorous and verifiable safeguards to prevent use
of that equipment by forces actively participating in armed conflict, for
example, through post‑sale tracking of such equipment by the Company,company,
certification from a reputable and objective third party that such equipment is
not being used by a party participating in armed conflict in Sudan, or sale of
such equipment solely to the regional government of southern Sudan or any
internationally recognized peacekeeping force or humanitarian organization.
Notwithstanding
anything herein to the contrary, a Social Development Company social
development company which is not Complicit complicit in the
Darfur genocide shall not be considered a Scrutinized Company.restricted
company.
(16) "Social Development
Company"development company" means a Company company
whose primary purpose in Sudan is to provide humanitarian goods or
services, including medicine or medical equipment, agricultural supplies or
infrastructure, educational opportunities, journalism‑related activities,
information or information materials, spiritual‑related activities, services
of a purely clerical or reporting nature, food, clothing, or general consumer
goods that are unrelated to Oil‑Related Activities, Mineral Extraction
Activities, or Power Production Activities.oil‑related activities,
mineral extraction activities, or power production activities.
(17) "Substantial Action"action"
means adopting, publicizing, and implementing a formal detailed plan
to cease Scrutinized Business Operationsrestricted business
operations within one year and to refrain from any such new Business
Operations;business operations; undertaking significant humanitarian
efforts on behalf of one or more Marginalized Populationsmarginalized
populations of Sudan; or through engagement with the Government of Sudan,
materially improving conditions for the genocidally victimized population in
Darfur."
SECTION 2.2. G.S. 147‑86.43 reads as rewritten:
"§ 147‑86.43. Identification of companies.
(a) Within 90 days of August
30, 2007, the Public Fund shall make its best efforts to identify all
Scrutinized Companies in which the Public Fund has Direct or Indirect Holdings
or could possibly have such holdings in the future. Such efforts shall include,
as appropriate:public fund shall develop and make publicly available a
list of companies it determines to be engaged in restricted business activities.
In the development of this list, the public fund shall use any other state
lists of restricted companies pursuant to similar laws and any federal
information or guidance on companies engaged in restricted business activities,
and any other credible information provided by nonprofit organizations,
research firms, and governmental entities. The public fund shall make every
effort to avoid erroneously, including a company on the list. Before finalizing
an initial or update list, the public fund must do all of the following before
a company is included on the list:
(1) Reviewing and relying, as appropriate in the
Public Fund's judgment, on publicly available information regarding Companies
with Business Operations in Sudan, including information provided by nonprofit
organizations, research firms, international organizations, and government
entities;Provide 90 days written notice of the
public fund's intent to include the company on the list. The notices shall inform
the company that inclusion on the list would make the company ineligible for
State investment, may result in the company becoming subject to divestment by
the North Carolina Retirement Systems, and may affect the company's ability to
conduct business with the State and its subdivisions. The notice shall specify
that the company may be removed from the list if the company ceases engagement
in the restricted business activities.
(2) Contacting asset managers contracted by the
Public Fund that invest in Companies with Business Operations in Sudan; orThe public fund shall provide a company with an opportunity
to comment in writing that it is not engaged in restricted activities in Sudan.
If the company demonstrates to the public fund that the company is not engaged
in restricted activities, the company shall not be included on the list.
(3) Contacting other institutional investors that
have divested from and/or engaged with Companies that have Business Operations
in Sudan.
(b) By the first meeting of the Public Fund
following the 90‑day period described in subsection (a), the Public Fund
shall assemble all Scrutinized Companies identified into a "Scrutinized
Companies List."
(c) The Public Fundpublic
fund shall update the Scrutinized Companies Listlist on a
quarterlyan annual basis based on evolving information from, among
other sources, those listed in subsection (a) of this section."
SECTION 2.3. G.S. 147‑86.44 reads as rewritten:
"§ 147‑86.44. Required actions.
(a) General. – The Public Fund shall adhere to the
procedure for Companies on the Scrutinized Companies List as provided in this
section:
(b) Engagement. –
(1) The Public Fund shall immediately determine the
Companies on the Scrutinized Companies List in which the Public Fund owns
Direct or Indirect Holdings.
(2) For each Company identified in subdivision (1)
of this section with only Inactive Business Operations, the Public Fund shall
send a written notice informing the Company of this article and encouraging it
to continue to refrain from initiating Active Business Operations in Sudan
until it is able to avoid Scrutinized Business Operations. The Public Fund
shall continue such correspondence on a semiannual basis.
(3) For each Company newly identified in subdivision
(1) of this section with Active Business Operations, the Public Fund shall send
a written notice informing the Company of its Scrutinized Company status and
that it may become subject to divestment by the Public Fund. The notice shall
offer the Company the opportunity to clarify its Sudan‑related activities
and shall encourage the Company, within 90 days, to either cease its
Scrutinized Business Operations or convert such operations to Inactive Business
Operations in order to avoid qualifying for divestment by the Public Fund.
(4) If, within 90 days following the Public Fund's
first engagement with a Company pursuant to subdivision (3) of this section
that Company ceases Scrutinized Business Operations, the Company shall be
removed from the Scrutinized Companies List and the provisions of this Section
shall cease to apply to it unless it resumes Scrutinized Business Operations.
If, within 90 days following the Public Fund's first engagement, the Company
converts its Scrutinized Active Business Operations to Inactive Business
Operations, the Company shall be subject to all provisions relating thereto.
(c) Divestment. –
(1) If, after 90 days following the Public Fund's
first engagement with a Company pursuant to subdivision (b)(3) of this section,
the Company continues to have Scrutinized Active Business Operations, and only
while such Company continues to have Scrutinized Active Business Operations,
the Public Fund shall sell, redeem, divest, or withdraw all publicly traded
securities of the Company within 15 months after the Company's most recent
appearance on the Scrutinized Companies List.
(2) If a Company that ceased Scrutinized Active
Business Operations following engagement pursuant to subdivision (b)(3) of this
section resumes such operations, subdivision (1) of this subsection shall immediately
apply, and the Public Fund shall send a written notice to the Company. The
Company shall also be immediately reintroduced onto the Scrutinized Companies
List.
(d) Prohibition.Investments
Prohibited. – At no time shall the Public Fund acquire securities of
Companies on the Scrutinized Companies List that have Active Business
Operations, except as provided below.public fund invest with companies
on the list created pursuant to G.S. 147‑86.43.
(d1) Existing Investments. – Any existing investment with a company that is identified on a list created pursuant to G.S. 147‑86.43 as a company engaging in restricted business activities must be divested within 180 days of the adoption of the list.
(e) Exemption. – No Company
company which the United States Government affirmatively declares to
be excluded from its present or any future federal sanctions regime relating to
Sudan shall be subject to divestment or investment prohibition pursuant to
subsections (c) and (d) of this section.
(e1) Nothing in this Article shall require the North Carolina Retirement Systems or the State Treasurer to take action unless it is determined by the State Treasurer, in good faith, that the action is consistent with the fiduciary responsibilities of the Retirement Systems and the State Treasurer.
(f) Excluded Securities. – Notwithstanding anything
herein to the contrary, subsections (c) and (d) of this section shall not apply
to Indirect Holdings. The Public Fund shall, however, submit letters to the
managers of such investment funds containing Companies with Scrutinized Active
Business Operations requesting that they consider removing such Companies from
the fund or create a similar actively managed fund with Indirect Holdings
devoid of such Companies. If the manager creates a similar fund, the Public Fund
shall replace all applicable investments with investments in the similar fund
in an expedited time frame consistent with prudent investing standards. For the
purposes of this section, "private equity" funds shall be deemed to
be actively managed investment funds."
SECTION 2.4. G.S. 147‑86.45 reads as rewritten:
"§ 147‑86.45. Reporting.
(a) The Public Fund shall file a publicly available report
to the General Assembly that includes the Scrutinized Companies List annually.public
fund shall report to the Joint Legislative Commission on Governmental
Operations annually on October 1 on information regarding investments sold,
redeemed, divested, or withdrawn in compliance with this Article.
(b) Annually thereafter, the Public Fund shall file
a publicly available report to the General Assembly and send a copy of that
report to the United States Presidential Special Envoy to Sudan (or an
appropriate designee or successor) that includes:
(1) A summary of correspondence with Companies
engaged by the Public Fund under G.S. 147‑86.44(b)(2) and (b)(3).
(2) All investments sold, redeemed, divested, or
withdrawn in compliance with G.S. 147‑86.44(c).
(3) All prohibited investments under G.S. 147‑86.44(d);
and
(4) Any progress made under G.S. 147‑86.44(f)."
SECTION 2.5. G.S. 147‑86.47 and G.S. 147‑86.48 are repealed.
PART III. AMEND IRAN DIVESTMENT ACT
SECTION 3.1. G.S. 147‑86.56 reads as rewritten:
"§ 147‑86.56. Findings.
The General Assembly finds that:
…
(7) In order to effectively
address the need for this State to respond to the policies of Iran in a uniform
fashion, prohibiting contracts with persons companies engaged in
investment activities in the energy sector of Iran must be accomplished on a
statewide basis.
…."
SECTION 3.2. G.S. 147‑86.57 reads as rewritten:
"§ 147‑86.57. Definitions.
As used in this Article:
(1) "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.
(1a) "Energy sector of Iran" means activities to develop petroleum or natural gas resources or nuclear power in Iran.
(2) "Financial institution" means the term as used in Section 14 of the Iran Sanctions Act of 1996, as amended (Public Law 104‑172; 50 U.S.C. 1701 § note).
(3) "Investment" means a commitment or contribution of funds or property, whatever the source, a loan or other extension of credit, and the entry into or renewal of a contract for goods or services. It does not include indirect beneficial ownership through index funds, commingled funds, limited partnerships, derivative instruments, or the like.
(4) "Investment
activities in Iran" means a person company engages in
investment activities in Iran if:
a. The person company
provides goods or services of twenty million dollars ($20,000,000) or more
within any 12‑month period in the energy sector of Iran, including a person
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, for the energy sector of Iran; or
b. The person company
is a financial institution that extends twenty million dollars
($20,000,000) or more in credit to another person,company, for 45
days or more, if (i) the financial institution knows, or reasonably should
know, that person company will use the credit to provide goods or
services in the energy sector in Iran, and (ii) the person company receiving
credit is identified on a list created pursuant to G.S. 147‑86.60 as
a person company engaging in investment activities in Iran as
described in this section.
(5) "Iran" includes the Government of Iran and any agency or instrumentality of Iran.
(6) "Person" means any of the following:
a. A natural person, corporation, company, limited liability company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group.
b. Any governmental entity or instrumentality of a government, including a multilateral development institution, as defined in section 1701(c)(3) of the International Financial Institutions Act (22 U.S.C. § 262r(c)(3)).
c. Any successor, parent entity owning more than 20%, or majority‑owned subunit or subsidiary of any entity described in sub‑subdivisions (a) and (b) of this subdivision.
(7) "State agency" means any board, commission, department, executive department, officer, institution, and any political subdivision of the State."
SECTION 3.3. G.S. 147‑86.58 reads as rewritten:
"§ 147‑86.58. Prohibitions on State investment.
No more than 30 days after October
1, 2015, the State Treasurer shall adopt a policy prohibiting the North
Carolina Retirement Systems or the Department of the State Treasurer from
investing funds with a person company engaging in investment
activities in Iran. At a minimum, the policy shall provide:
(1) List of persons
engaged in investment.restricted companies. – Within 120 days of
adoption of the policy, the State Treasurer shall develop and make publically
available, using federal sanctions lists and any other credible information
available to the public, a list of persons companies it
determines engage in investment activities in Iran. The State Treasurer
shall use any other state lists of restricted companies pursuant to similar
laws and any federal information or guidance on companies engaged in investment
activities in Iran and any other credible information provided by nonprofit
organizations, research firms, governmental entities, and generally public
information. The State Treasurer shall make every effort to avoid
erroneously including a person company on the list. The State
Treasurer shall update the list every 180 days.annually. Before
finalizing an initial list or an updated list, the State Treasurer must do all
of the following before a person company is included on the list:
a. Provide 90 days' written
notice of the State Treasurer's intent to include the person company on
the list. The notice shall inform the person company that
inclusion on the list would make the person company ineligible
for State investment and may affect the person's company's ability
to conduct other business with the State and its subdivisions. The notice shall
specify that the person, if it ceases its engagement in investment
activities in Iran, company may be removed from the list.list
if it ceases its investment activities in Iran.
b. The State Treasurer shall
provide a person company with an opportunity to comment in
writing that it is not engaged in investment activities in Iran. If the person
company demonstrates to the State Treasurer that the person company
is not engaged in investment activities in Iran, the person company
shall not be included on the list.
(2) Investments prohibited. –
Neither the North Carolina Retirement Systems nor the State Treasurer may
invest funds with a person company that is identified on a list
created pursuant to subdivision (1) of this section as a person company
engaging in investment activities in Iran.
(3) Existing investments. –
Any existing investment with a person company that is identified
on a list created pursuant to subdivision (1) of this section as a person company
engaging in investment activities in Iran must be divested within 180 days
of the adoption of the policy.being placed on the list created
pursuant to subdivision (1) of this section.
(4) Fiduciary duties. – Nothing in the policy or in this Article shall require the North Carolina Retirement Systems or the State Treasurer to take action unless it is determined by the State Treasurer, in good faith, that the action is consistent with the fiduciary responsibilities of the Retirement Systems and the State Treasurer.
(5) Exceptions. –
Notwithstanding the policy, an investment may be made in a person company
engaged in investment activities in Iran if:
a. The person company
is eligible to contract with the State under the exception in G.S. 147‑86.61.
b. The State Treasurer makes a good‑faith determination, on a case‑by‑case basis, that the investments are necessary to perform its functions."
SECTION 3.4. G.S. 147‑86.59 is repealed.
SECTION 3.5. G.S. 147‑86.60 reads as rewritten:
"§ 147‑86.60. Restrictions on contracts with the State or subdivisions of the State.
(a) A person company
that is identified on a list created by the State Treasurer pursuant to
G.S. 147‑86.58 as a person company engaging in
investment activities in Iran is ineligible to contract with the State or any
political subdivision of the State.
(b) Any contract entered
into with a person company that is ineligible to contract with
the State or any political subdivision of the State is void ab initio.
(c) Existing contracts with persons
companies made ineligible to contract with the State or any
political subdivision of the State under this Article shall be allowed to
expire in accordance with the terms of the contract."
SECTION 3.6. G.S. 147‑86.61 reads as rewritten:
"§ 147‑86.61. Exceptions.
(a) G.S. 147‑86.60 does not apply to contracts valued at one thousand dollars ($1,000) or less.
(b) Persons Companies
engaged in substantial positive action. – Notwithstanding any other
provision of this Article, a person company engaged in investment
activities in Iran may contract with the State or a political subdivision of
the Statenot be placed on the list developed pursuant to G.S. 147‑86.58(1)
if the State Treasurer determines, using U.S. government statements and any
other credible information available to the public, that the person's company's
investment activities in Iran were made before October 1, 2015, the
investment activities in Iran have not been expanded or renewed after October
1, 2015, and the person company has adopted, publicized, and is
implementing a detailed plan to cease the investment activities in Iran and to
refrain from engaging in any new investments in Iran. The State Treasurer shall
develop and make publically available a "Substantial Positive Action
Exception List" of these persons.companies. The State
Treasurer shall update the list every 180 days.annually. Once a
person has not engaged in investment activities in Iran within the previous
five years, the State Treasurer shall remove that person from the list created
pursuant to G.S. 147‑86.58.
(c) Necessary commodities or
services. – Notwithstanding any other provision of this Article, a person company
engaged in investment activities in Iran may contract with the State or a
political subdivision of the State, on a case‑by‑case basis, if the
State agency or political subdivision makes a good‑faith determination
that the commodities or services are necessary to perform its functions and
that, absent such an exemption, the State agency would be unable to obtain the
commodities or services for which the contract is offered. The determination
shall be entered into the procurement record."
SECTION 3.7. G.S. 147‑86.62 reads as rewritten:
"§ 147‑86.62. Report; application.
(a) The State Treasurer shall report to the Joint
Legislative Commission on Governmental Operations and the Governor annually
by October 1 on the status of the federal "Comprehensive Iran
Sanctions, Accountability, and Divestment Act of 2010" (Public Law 111‑195),
the "Iran Divestment Act of 2015," and any rules or regulations
adopted thereunder.information regarding investments sold, redeemed,
divested, or withdrawn in compliance with this Article.
(b) The restrictions provided for in this Article
apply only until:
(1) The President or Congress of the United States,
by means including, but not limited to, legislation, executive order, or
written certification, declares that divestment of the type provided for in
this Article interferes with the conduct of United States foreign policy; or
with respect to restrictions on any particular investment activities in Iran,
those activities have been specifically exempted from U.S. government sanctions
by an affirmative declaration authorized by the Congress of the United States;
or
(2) Congress revokes authority to divest in the
manner provided for in this Article."
SECTION 3.8. G.S. 147‑86.63 reads as rewritten:
"§ 147‑86.63. No private right of action.
(a) This Article does not create or authorize a private right of action to enforce the provisions of the Article.
(b) A person company
may challenge being included on the lists established in this Article using
the procedures in Article 3 of Chapter 150B of the General Statutes, except
that no person company may file a contested case more than once
every 365 days, and no attorneys' fees may be awarded under G.S. 150B‑33(b)(11)."
SECTION 4. Except as otherwise provided, this act becomes effective October 1, 2017.
In the General Assembly read three times and ratified this the 29th day of June, 2017.
s/ Daniel J. Forest
President of the Senate
s/ Tim Moore
Speaker of the House of Representatives
s/ Roy Cooper
Governor
Approved 2:34 p.m. this 27th day of July, 2017