PROTECTING PENNSYLVANIA'S INVESTMENTS ACT - ENACTMENT
                  Act of Jul. 2, 2010, P.L. 266, No. 44               Cl. 71
                                  AN ACT

     Providing for divestiture by the State Treasurer, the State
        Employees' Retirement System and the Public School Employees'
        Retirement System of investments in companies doing business
        in Iran and Sudan.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

     Section 1.  Short title.
        This act shall be known and may be cited as the Protecting
     Pennsylvania's Investments Act.
     Section 2.  Definitions.
        The following words and phrases when used in this act shall
     have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Alternative investments."  An investment in a private equity
     fund, private debt fund, venture fund, real estate fund, hedge
     fund or absolute return fund.
        "Board."  As defined in section 102 of the act of February 1,
     1974 (P.L.34, No.15), known as the Pennsylvania Municipal
     Retirement Law, 24 Pa.C.S. § 8102 (relating to definitions) or
     71 Pa.C.S. § 5102 (relating to definitions).
        "Business activities."  Owning or controlling property or
     assets located in, having employees or facilities located in,
     providing goods or services to, having distribution agreements
     with, issuing credit or loans to, purchasing bonds or commercial
     paper issued by, investing in or having equity ties to or with
     Iran, Sudan or any company domiciled in Iran or Sudan.
        "Company."  Any sole proprietorship, organization,
     association, corporation, partnership, joint venture, limited
     partnership, limited liability partnership, limited liability
     company or other entity or business association that exists for
     the purpose of making a profit.
        "Direct holdings."  All securities of a company that are held
     directly by the public fund.
        "Foreign company."  Any entity which is not organized under
     the laws of the United States.
        "Government of Iran."  The government of Iran and its
     instrumentalities and companies owned or controlled by the
     government of Iran.
        "Government of Sudan."  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 the
     National Unity Government agreed upon in the Comprehensive Peace
     Agreement for Sudan. The term does not include the regional
     government of southern Sudan.
        "Inactive business activities."  The continued holding or
     renewal of rights to property previously operated for the
     purpose of generating revenues but not presently deployed for
     that purpose.
        "Indemnitee."  Each current or former board member, duly
     appointed designee of a board member, officer, employee,
     including, without limitation, the attorneys in the Office of
     Chief Counsel that serve a public fund, agent, research firm or
     investment manager of a public fund who was or is a party to, or
     is threatened to be made a party to or is otherwise involved in
     any proceeding by reason of the fact that the person is or was a
     board member, designee of a board member, officer, employee,
     agent, research firm or investment manager of a public fund.
        "Indirect holdings."  All securities held in an account or
     fund such as a mutual fund managed by one or more persons not
     employed by a public fund, in which the public fund owns shares
     or interests together with other investors.
        "Iran."  The Islamic Republic of Iran.
        "List of State Sponsors of Terrorism."  The list of countries
     designated by the United States Secretary of State as having
     repeatedly provided support for acts of international terrorism
     as reported annually in Country Reports on Terrorism under
     section 140 of the Foreign Relations Authorization Act, Fiscal
     Years 1988 and 1989 (Public Law 100-24, 26 U.S.C. § 2656(f)).
        "Marginalized 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.
        "Military equipment."  Weapons, arms, military supplies and
     equipment that may be used readily for military purposes,
     including, but not limited to, radar systems or military-grade
     transport vehicles. This term shall also include supplies or
     services sold or provided directly or indirectly to any force
     actively participating in armed conflict in Sudan.
        "Mineral 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.
        "Oil-related activities."  The term includes all of the
     following:
            (1)  Development of petroleum or natural gas resources of
        Iran or Sudan. This paragraph does not include the mere sale
        of gasoline and related consumer products.
            (2)  Owning rights to oil or natural gas blocks.
            (3)  Exporting, extracting, producing, refining,
        processing, exploring for, transporting, selling or trading
        oil or natural gas.
            (4)  Constructing, maintaining or operating any pipeline,
        refinery, liquefaction facility or other oil or natural gas
        infrastructure.
            (5)  Facilitating activities referred to in paragraph
        (1), (2), (3) or (4), including by supplying services in
        support of the activities.
        "Power production activities."  Business activities that
     involve 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.
        "Proceeding."  Any threatened, pending or completed action,
     suit or proceeding, including, without limitation, an action,
     suit or proceeding by or in the right of a public fund, relating
     to compliance with any investment limitations imposed by
     statute, whether civil, criminal, administrative, investigative
     or through arbitration.
        "Public fund."  Any of the following:
            (1)  The State Employees' Retirement Fund established
        pursuant to 71 Pa.C.S. Pt. XXV (relating to retirement for
        State employees and officers).
            (2)  The Public School Employees' Retirement Fund
        established pursuant to 24 Pa.C.S. Pt. IV (relating to
        retirement for school employees).
            (3)  The Pennsylvania Municipal Retirement Fund.
            (4)  Any Commonwealth fund of which the State Treasurer
        is the custodian.
        "Scrutinized business activities."  Business activities that
     have resulted in a company becoming a scrutinized company.
        "Scrutinized company."  Any of the following:
            (1)  Any foreign company that has:
                (i)  invested at least $20,000,000 in oil-related
            activities in Iran in any 12-month period since August 5,
            1996;
                (ii)  supplied military equipment to the government
            of Iran within the 12-month period prior to the effective
            date of this section; or
                (iii)  knowingly and intentionally violated the
            United States export controls with respect to Iran during
            the 12-month period prior to the effective date of this
            section.
            (2)  Any foreign company that meets the criteria set
        forth either in subparagraph (i) or (ii):
                (i)  The company has business activities that involve
            contracts with or provision of supplies or services to
            the government of Sudan, companies in which the
            government of Sudan has any direct equity share,
            government of Sudan-commissioned consortiums or projects,
            or companies involved in government of Sudan-commissioned
            consortiums or projects; and
                    (A)  more than 10% of the company's revenue or
                assets linked to Sudan involve oil-related activities
                or mineral extraction activities; less than 75% of
                the company's revenues or assets linked to Sudan
                involve contracts with or provision of oil-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 has failed to take
                substantial action specific to Sudan; or
                    (B)  more than 10% of the company's revenues or
                assets linked to Sudan involve power production
                activities; less than 75% of the company's power
                production activities include projects whose intent
                is to provide power or electricity to the
                marginalized populations of Sudan; and the company
                has failed to take substantial action specific to
                Sudan.
                (ii)  The company supplies military equipment within
            Sudan, unless it clearly shows that the military
            equipment cannot be used to facilitate offensive military
            actions in Sudan or the 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, 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.
     The term does not include a foreign company that is a social
     development company.
        "Social development company."  A company whose primary
     purpose in Iran or 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.
        "Substantial action specific to Iran."  Adopting, publicizing
     and implementing a formal plan to cease scrutinized business
     activities within one year and to refrain from any such new
     business activities in Iran.
        "Substantial action specific to Sudan."  Adopting,
     publicizing and implementing a formal plan to cease scrutinized
     business activities within one year and to refrain from any such
     new business activities; undertaking significant humanitarian
     efforts in conjunction with an international organization, the
     government of Sudan, the regional government of southern Sudan
     or a nonprofit entity and evaluated and certified by an
     independent third party to be substantial in relationship to the
     company's Sudan business activities and of benefit to one or
     more marginalized populations of Sudan; or through engagement
     with the government of Sudan, materially improving conditions
     for the genocidally victimized population in Darfur.
        "Sudan."  The Democratic Republic of Sudan.
     Section 3.  Identification of companies.
        (a)  Best effort.--Within 90 days after the effective date of
     this section, a public fund shall make its best effort to
     identify all scrutinized companies in which the public fund has
     direct holdings. A public fund shall review, as appropriate in
     the public fund's judgment, publicly available information
     regarding foreign companies that have scrutinized business
     activities, including information provided by nonprofit
     organizations, research firms, international organizations and
     government entities.
        (b)  Assembly.--By the first meeting of a public fund
     following the time period under subsection (a), the public fund
     shall assemble all scrutinized companies that fit the criteria
     specified in paragraph (1) of the definition of "scrutinized
     company" into a Scrutinized Companies with Activities in Iran
     List and shall assemble all scrutinized companies that fit
     criteria specified in paragraph (2) of the definition of
     "scrutinized company" into a Scrutinized Companies with
     Activities in Sudan List.
     Section 4.  Required actions.
        (a)  Procedure.--A public fund shall adhere to the procedures
     under this section for determining companies on its Scrutinized
     Companies with Activities in Iran List and Scrutinized Companies
     with Activities in Sudan List that qualify for divestment.
        (b)  Engagement.--
            (1)  For each company on a public fund's Scrutinized
        Companies with Activities in Iran List or Scrutinized
        Companies with Activities in Sudan List in which the public
        fund has direct holdings, the public fund shall send a
        written notice informing the company of its scrutinized
        company status and specify the business activities which have
        resulted in this determination and that it may become subject
        to divestment by the public fund. The notice must inform the
        company of the opportunity to clarify its scrutinized
        business activities and encourage the company, within 180
        days of the date of receipt of the notice, to cease its
        scrutinized business activities in Iran, Sudan or both or
        convert the activities to inactive business activities in
        order to avoid qualifying for divestment by the public fund.
        The notice shall be sent no later than 120 days after the
        effective date of this section.
            (2)  If, within 180 days of the date of receipt of a
        notice under paragraph (1), a company announces by public
        disclosure substantial action specific to Iran or substantial
        action specific to Sudan, the public fund may maintain its
        holdings, but the company shall remain on the Scrutinized
        Companies with Activities in Iran List or Scrutinized
        Companies with Activities in Sudan List pending completion of
        the companies' cessation of scrutinized business activities.
        Following completion of a company's cessation of scrutinized
        business activities, the public fund shall remove the company
        from its Scrutinized Companies with Activities in Iran List
        or Scrutinized Companies with Activities in Sudan List.
        (c)  Divestment.--
            (1)  If, after 180 days following the effective date of
        receipt of the notice under subsection (b)(1), a company has
        not announced by public disclosure substantial action
        specific to Iran, substantial action specific to Sudan or
        both as specified in the notice, or the public fund
        determines or becomes aware that the company continues to
        have scrutinized business activities, the public fund, within
        26 months after the 180-day period, shall sell, redeem,
        divest or withdraw from its direct holdings all securities of
        the company.
            (2)  If a public fund determines or becomes aware that a
        company that ceased scrutinized business activities following
        engagement under subsection (b) has resumed the activities,
        the public fund shall send a written notice to the company
        under subsection (b), and the company shall be immediately
        placed onto the public fund's Scrutinized Companies with
        Activities in Iran List or Scrutinized Companies with
        Activities in Sudan List.
            (3)  A public fund shall monitor a scrutinized company
        that has announced by public disclosure substantial action
        specific to Iran, substantial action specific to Sudan or
        both. If, after one year the public fund determines or
        becomes aware that the company has not implemented the plan,
        within 26 months after the expiration of the one-year period,
        the public fund shall sell, redeem, divest or withdraw from
        its direct holdings all securities of the company.
        (d)  Prohibition.--A public fund may not acquire securities
     of a company on its Scrutinized Companies with Activities in
     Iran List or Scrutinized Companies with Activities in Sudan
     List.
        (e)  Excluded securities.--Nothing in this act shall apply to
     the public fund's holdings in alternative investments or
     indirect holdings.
     Section 5.  Reporting.
        (a)  Report to United States Attorney General.--Within 30
     days of the passage of this act, administrators of the public
     fund shall file a written report to the United States Attorney
     General detailing the requirements contained in this act.
        (b)  Duty of public fund.--A public fund shall, within one
     year of assembly of its Scrutinized Companies with Activities in
     Iran List and Scrutinized Companies with Activities in Sudan
     List, provide a report to the Governor, the President pro
     tempore of the Senate, the Speaker of the House of
     Representatives and each member of the boards of the
     Pennsylvania Municipal Retirement System, the State Employees'
     Retirement System and Public School Employees' Retirement
     System. The report shall include the items required under
     subsection (c). The report shall be made available to the
     public.
        (c)  Contents.--The report under subsection (b) shall include
     the most recent Scrutinized Companies with Activities in Iran
     List and Scrutinized Companies with Activities in Sudan List and
     all of the following:
            (1)  A summary of correspondence with scrutinized
        companies engaged by the public fund under section 4.
            (2)  All investments sold, redeemed, divested or
        withdrawn in compliance with section 4(c), the costs and
        expenses of such transfers and a determination of net gain or
        loss on account of such transactions incurred in compliance
        with the provisions of this act.
            (3)  All prohibited investments under section 4(d).
            (4)  A list of all publicly traded securities held by the
        public fund.
        (d)  Update.--A public fund shall do all of the following:
            (1)  Annually update, based on evolving information under
        subsection (c), and make publicly available its Scrutinized
        Companies with Activities in Iran List and Scrutinized
        Companies with Activities in Sudan List.
            (2)  Provide a copy of the lists under paragraph (1),
        including updates, to all other public funds.
     Section 6.  Expiration.
        (a)  Recurrence of investment in Iran.--A public fund shall
     have no obligations under this act with respect to a company
     engaged in business activities in Iran upon the occurrence of
     any of the following:
            (1)  Iran does not appear on the List of State Sponsors
        of Terrorism.
            (2)  The President or Congress of the United States,
        through legislation or executive order, declares that
        mandatory divestment of the type provided for in this act
        interferes with the conduct of United States foreign policy.
        (b)  Recurrence of investment in Sudan.--A public fund shall
     have no obligations under this act with respect to a company
     engaged in business activities in Sudan upon the occurrence of
     any of the following:
            (1)  The President or Congress of the United States
        declares Darfur genocide has been halted for at least 12
        months.
            (2)  Sudan does not appear on the list of State Sponsors
        of Terrorism.
            (3)  The President or Congress of the United States
        declares that the government of Sudan has honored its
        commitments to cease attacks on civilians, demobilize and
        demilitarize the Janjaweed and associated militias, grant
        free and unfettered access for deliveries of humanitarian
        assistance and allow for the safe and voluntary return of
        refugees and internally displaced persons under the Sudan
        Accountability and Divestment Act of 2007 (P.L. 110-174, 121
        Stat. 2516).
            (4)  The President or Congress of the United States,
        through legislation or executive order, declares that
        mandatory divestment of the type provided for in this act
        interferes with the conduct of United States foreign policy.
     Section 7.  Conflict with other laws.
        A public fund may perform any action necessary to comply with
     this act, notwithstanding the provisions of any other law,
     including, but not limited to, any fiduciary or prudent
     investing responsibilities as prescribed in 24 Pa.C.S. § 8521
     (relating to management of fund and accounts) and 71 Pa.C.S. §
     5931 (relating to management of fund and accounts) and any
     obligations of a public fund with respect to choice of asset
     managers, investment funds or investments for the public fund's
     securities portfolios.
     Section 8.  Indemnification.
        (a)  General rule.--Each indemnitee shall be indemnified and
     held harmless by the Commonwealth for all good faith actions
     taken by the indemnitee and for all good faith failures to take
     action, regardless of the date of any such action or failure to
     take action, in connection with attempts to comply with any
     investment limitations imposed by statute against all expense,
     liability and loss, including, without limitation, attorney
     fees, judgments, fines, taxes, penalties and amounts paid or to
     be paid in settlements reasonably incurred or suffered by the
     indemnitee in connection with any proceeding.
        (b)  Advance payment.--The right to indemnification provided
     in this section shall include the right to have the expenses
     reasonably incurred by the indemnitee in defending any
     proceeding paid by the Commonwealth in advance of the final
     disposition of the proceeding upon the receipt by the
     Commonwealth of a written undertaking by the indemnitee to
     refund the amounts so advanced if it is ultimately determined
     that the indemnitee is not entitled to indemnification under
     this section.
        (c)  Persons entitled.--Indemnification pursuant to this
     section shall continue as to an indemnitee who has ceased to be
     a board member, designee of a board member, officer or employee
     of a public fund and shall inure to the benefit of such person's
     legal representatives, heirs, executors and administrators.
        (d)  Reimbursement to public funds.--To the extent that the
     Commonwealth does not make any indemnification payments,
     including any advancement of legal fees and expenses, within 30
     days of demand therefor, a public fund shall make such payment
     and the Commonwealth shall reimburse the public fund.
        (e)  Construction.--The repeal, expiration or amendment of
     any provision of this section shall not limit the rights of any
     indemnitee to indemnification, including advancement of
     expenses, with respect to any action or failure to act occurring
     prior to the effective date of such repeal or amendment.
     Section 9.  Fund reimbursement.
        The Commonwealth shall reimburse each public fund for their
     net losses, costs and expenses incurred as a result of
     compliance with the provisions of this act. The reimbursements
     shall occur in the following manner:
            (1)  The public fund shall submit to the Secretary of the
        Budget an itemization of the amount necessary to be
        appropriated by the General Assembly to reimburse the public
        fund for their net losses, costs and expenses incurred as a
        result of compliance with the provisions of this act in the
        previous fiscal year. To the extent the public fund
        experiences net gains as a result of compliance with the
        provisions of this act in a fiscal year, the net gains shall
        be used to offset any reported costs or expenses incurred by
        the public fund.
            (2)  In consultation with each public fund, the Secretary
        of the Budget shall annually establish a uniform method for
        the determination of gains and losses. The method shall be
        used by each public fund in making a claim for reimbursement
        under this section. The budget submission shall be on a form
        and in a manner determined by the secretary of the budget,
        including net losses, along with an itemized accounting of
        all costs and expenses claimed by the public fund. Budget
        submission shall occur no later than November 1 following the
        fiscal year in which the net losses, costs and expenses were
        incurred.
            (3)  Upon appropriation by the General Assembly to
        provide for the obligations of the Commonwealth, the amount
        shall be paid by the State Treasurer through the Department
        of Revenue into the public fund within 90 days of receipt of
        the requisition presented by the public fund.
     Section 10.  Severability.
        If any provision of this act or its application to any person
     or circumstances is held invalid, the invalidity shall not
     affect other provisions or applications of this act that can be
     given effect without the invalid provision or application.
     Section 30.  Effective date.
        This act shall take effect immediately.