MD
Maryland Senate Bill SB1005

Maryland 2022 Regular Session

Maryland Senate Bill SB1005 Compare Versions

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1- LAWRENCE J. HOGAN, JR., Governor Ch. 343
21
3-– 1 –
4-Chapter 343
5-(Senate Bill 1005)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *sb1005*
89
9-State Retirement and Pension System – Divestment From Russia
10+SENATE BILL 1005
11+P6 EMERGENCY BILL 2lr3303
12+ CF HB 1482
13+By: Senator Elfreth (Chair, Joint Committee on Pensions) and Senators
14+Augustine, Bailey, Beidle, Benson, Carozza, Carter, Cassilly, Corderman,
15+Eckardt, Edwards, Ellis, Ferguson, Gallion, Griffith, Guzzone, Hettleman,
16+Hough, Jackson, Jennings, Kagan, Kelley, Ki ng, Klausmeier, Lam, Lee,
17+McCray, Pinsky, Ready, Reilly, Rosapepe, Salling, Simonaire, Smith,
18+Sydnor, Waldstreicher, Washington, West, Young, and Zucker Zucker,
19+Feldman, Hayes, Hershey, Hester, Kramer, Patterson, and Watson
20+Introduced and read first time: February 25, 2022
21+Assigned to: Rules
22+Re–referred to: Budget and Taxation, February 28, 2022
23+Committee Report: Favorable
24+Senate action: Adopted with floor amendments
25+Read second time: March 3, 2022
1026
11-FOR the purpose of requiring the Board of Trustees for the State Retirement and Pension
12-System to review certain investment holdings; requiring the Board of Trustees to
13-take certain divestment actions with regard to certain Russian investments;
14-prohibiting the Board of Trustees from making certain new investments; providing
15-certain immunities from liability for certain persons; requiring the Board of Trustees
16-to act in good faith in taking certain actions in a certain manner; requiring the Board
17-of Trustees to make certain recommendations to the Joint Committee on Pensions;
18-and generally relating to the investment of assets of the State Retirement and
19-Pension System.
27+CHAPTER ______
2028
21-BY adding to
22- Article – State Personnel and Pensions
23-Section 21–123.3
24- Annotated Code of Maryland
25- (2015 Replacement Volume and 2021 Supplement)
29+AN ACT concerning 1
2630
27- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
28-That the Laws of Maryland read as follows:
31+State Retirement and Pension System – Divestment From Russia 2
2932
30-Article – State Personnel and Pensions
33+FOR the purpose of requiring the Board of Trustees for the State Retirement and Pension 3
34+System to review certain investment holdings; requiring the Board of Trustees to 4
35+take certain divestment actions with regard to certain Russian investments; 5
36+prohibiting the Board of Trustees from making certain new investments; providing 6
37+certain immunities from liability for certain persons; requiring the Board of Trustees 7
38+to act in good faith in taking certain actions in a certain manner; requiring the Board 8
39+of Trustees to make certain recommendations to the Joint Committee on Pensions; 9
40+and generally relating to the investment of assets of the State Retirement and 10
41+Pension System. 11
3142
32-21–123.3.
43+BY adding to 12
44+ Article – State Personnel and Pensions 13
45+Section 21–123.3 14
46+ Annotated Code of Maryland 15
47+ (2015 Replacement Volume and 2021 Supplement) 16
48+ 2 SENATE BILL 1005
3349
34- (A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS
35-INDICATED.
3650
37- (2) (I) “ACTIVELY MANAGED SEP ARATE ACCOUNTS ” MEANS THE
38-ACCOUNTS OF THE SEVE RAL SYSTEMS THAT ARE ACTIVELY MANAGED AT THE
39-DIRECTION OF THE BOARD OF TRUSTEES AND HELD IN SEPARATE ACCOUNTS .
51+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
52+That the Laws of Maryland read as follows: 2
4053
41- (II) “ACTIVELY MANAGED SEPA RATE ACCOUNTS ” DOES NOT
42-MEAN INDEXED FUNDS , PRIVATE EQUITY FUNDS , REAL ESTATE FUNDS , OR OTHER
43-COMMINGLED OR PASSIV ELY MANAGED FUNDS .
54+Article – State Personnel and Pensions 3
4455
45- (3) “COMPANY” MEANS ANY CORPORATIO N, UTILITY, PARTNERSHIP ,
46-JOINT VENTURE , FRANCHISOR , FRANCHISEE, TRUST, ENTITY INVESTMENT
47-VEHICLE, FINANCIAL INSTITUTIO N, OR A WHOLLY OWNED SU BSIDIARY OF A NY OF Ch. 343 2022 LAWS OF MARYLAND
56+21–123.3. 4
4857
49-– 2 –
50-THESE ENTITIES.
58+ (A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 5
59+INDICATED. 6
5160
52- (4) “DIVESTMENT ACTION ” MEANS SELLING , REDEEMING ,
53-TRANSFERRING , EXCHANGING , OTHERWISE DISPOSING OF, AND REFRAINING FROM
54-FURTHER INVESTMENT I N CERTAIN INVESTMENT S.
61+ (2) (I) “ACTIVELY MANAGED SEPA RATE ACCOUNTS ” MEANS THE 7
62+ACCOUNTS OF THE SEVE RAL SYSTEMS THAT ARE ACTIVELY MANAGED AT THE 8
63+DIRECTION OF THE BOARD OF TRUSTEES AND HELD IN SEPARATE ACCOUNTS. 9
5564
56- (5) “ELIGIBLE ACCOUNTS ” MEANS ACTIVELY MANAG ED SEPARATE
57-ACCOUNTS CONTAINING FUNDS OF THE SEVERAL SYSTEMS .
65+ (II) “ACTIVELY MANAGED SEPA RATE ACCOUNTS ” DOES NOT 10
66+MEAN INDEXED FUNDS , PRIVATE EQUITY FUNDS , REAL ESTATE FUNDS , OR OTHER 11
67+COMMINGLED OR PASSIV ELY MANAGED FUNDS . 12
5868
59- (6) “INVESTMENT ” MEANS THE COMMITMENT OF FUNDS OR OTHER
60-ASSETS TO A COMPANY INCLUDING:
69+ (3) “COMPANY” MEANS ANY CORPORATIO N, UTILITY, PARTNERSHIP , 13
70+JOINT VENTURE , FRANCHISOR , FRANCHISEE, TRUST, ENTITY INVESTMENT 14
71+VEHICLE, FINANCIAL INSTITUTIO N, OR A WHOLLY OWNED SU BSIDIARY OF ANY OF 15
72+THESE ENTITIES. 16
6173
62- (I) THE OWNERSHIP OR CON TROL OF A SHARE OR I NTEREST IN
63-THE COMPANY ; OR
74+ (4) “DIVESTMENT ACTION ” MEANS SELLING , REDEEMING , 17
75+TRANSFERRING , EXCHANGING , OTHERWISE DISPOSING OF, AND REFRAINING FROM 18
76+FURTHER INVESTMENT I N CERTAIN INVESTMENT S. 19
6477
65- (II) THE OWNERSHIP OR CON TROL OF A BOND OR OTHER DEBT
66-INSTRUMENT OF A COMP ANY.
78+ (5) “ELIGIBLE ACCOUNTS ” MEANS ACTIVELY MANAG ED SEPARATE 20
79+ACCOUNTS CONTAINING FUNDS OF THE SEVERAL SYSTEMS. 21
6780
68- (7) (I) “RUSSIA” MEANS THE GOVERNMENT OF RUSSIA OR THE
69-GOVERNMENT OF THE RUSSIAN FEDERATION.
81+ (6) “INVESTMENT ” MEANS THE COMMITMENT OF FUNDS OR OTHER 22
82+ASSETS TO A COMPANY INCLUDING: 23
7083
71- (II) “RUSSIA” INCLUDES ALL AGENCIE S, INSTITUTIONS,
72-INSTRUMENTALITIES , AND POLITICAL SUBDIV ISIONS OF RUSSIA.
84+ (I) THE OWNERSHIP OR CON TROL OF A SHARE OR I NTEREST IN 24
85+THE COMPANY ; OR 25
7386
74- (8) “RUSSIA–RESTRICTED INVESTMEN T” MEANS AN INVESTMENT IN
75-A COMPANY:
87+ (II) THE OWNERSHIP OR CON TROL OF A BOND OR OT HER DEBT 26
88+INSTRUMENT OF A COMP ANY. 27
7689
77- (I) IDENTIFIED BY THE FEDERAL OFFICE OF FOREIGN ASSETS
78-CONTROL AS A RUSSIAN ENTITY WITH W HICH TRANSACTIONS AR E PROHIBITED BY
79-FEDERAL LAW ;
90+ (7) (I) “RUSSIA” MEANS THE GOVERNMENT OF RUSSIA OR THE 28
91+GOVERNMENT OF THE RUSSIAN FEDERATION. 29
8092
81- (II) OWNED, IN WHOLE OR IN PART , BY RUSSIA;
93+ (II) “RUSSIA” INCLUDES ALL AGENCIE S, INSTITUTIONS, 30
94+INSTRUMENTALITIES , AND POLITICAL SUBDIV ISIONS OF RUSSIA. 31 SENATE BILL 1005 3
8295
83- (III) CONTROLLED BY A COMP ANY THAT IS OWNED , IN WHOLE OR
84-IN PART, BY RUSSIA;
8596
86- (IV) INCORPORATED IN RUSSIA; OR
8797
88- (V) WHOSE PRINCIPAL PLAC E OF BUSINESS IS LOC ATED WITHIN
89-RUSSIA, TO THE EXTENT THIS D ETERMINATION CAN BE MADE.
98+ (8) “RUSSIA–RESTRICTED INVESTMEN T” MEANS AN INVESTMENT IN 1
99+A COMPANY: 2
90100
91- (B) THE BOARD OF TRUSTEES SHALL REVIEW THE INVESTMENT HOLDI NGS
92-IN ELIGIBLE ACCOUNTS FOR THE PURPOSE OF D ETERMINING THE EXTEN T TO WHICH LAWRENCE J. HOGAN, JR., Governor Ch. 343
101+ (I) IDENTIFIED BY THE FEDERAL OFFICE OF FOREIGN ASSETS 3
102+CONTROL AS A RUSSIAN ENTITY WITH W HICH TRANSACTIONS AR E PROHIBITED BY 4
103+FEDERAL LAW ; 5
93104
94-– 3 –
95-FUNDS IN ELIGIBLE AC COUNTS ARE INVESTED IN RUSSIA–RESTRICTED
96-INVESTMENTS .
105+ (II) OWNED, IN WHOLE OR IN PART , BY RUSSIA; 6
97106
98- (C) EXCEPT AS PROVIDED IN SUBSECTION (D) OF THIS SECTION, THE
99-BOARD OF TRUSTEES:
107+ (III) CONTROLLED BY A COMP ANY THAT IS OWNED , IN WHOLE OR 7
108+IN PART, BY RUSSIA; 8
100109
101- (1) SHALL TAKE DIVESTMEN T ACTION IN ELIGIBLE ACCOUNTS WITH
102-REGARD TO CURRENT IN VESTMENTS:
110+ (IV) INCORPORATED IN RUSSIA; OR 9
103111
104- (I) IN ANY RUSSIA–RESTRICTED INVESTMEN T; OR
112+ (V) WHOSE PRINCIPAL PLACE OF B USINESS IS LOCATED W ITHIN 10
113+RUSSIA, TO THE EXTENT THIS D ETERMINATION CAN BE MADE. 11
105114
106- (II) IN ANY SECURITY OR I NSTRUMENT ISSUED BY RUSSIA; AND
115+ (B) THE BOARD OF TRUSTEES SHALL REVIEW THE INVESTMENT HOLDI NGS 12
116+IN ELIGIBLE ACCOUNTS FOR THE PURPOSE OF D ETERMINING THE EXTEN T TO WHICH 13
117+FUNDS IN ELIGIBLE A CCOUNTS ARE INVESTED IN RUSSIA–RESTRICTED 14
118+INVESTMENTS . 15
107119
108- (2) MAY NOT MAKE ANY NEW INVESTMENTS FROM NET NEW FUNDS IN
109-AN ELIGIBLE ACCOUNT IN ANY RUSSIA–RESTRICTED INVESTMEN T.
120+ (C) EXCEPT AS PROVIDED IN SUBSECTION (D) OF THIS SECTION , THE 16
121+BOARD OF TRUSTEES: 17
110122
111- (D) NOTWITHSTANDING THE P ROVISIONS OF THIS SE CTION, THE BOARD OF
112-TRUSTEES MAY EXCLUDE FROM THE PROVISIONS OF SUBSECTION (C) OF THIS
113-SECTION A COMPANY:
123+ (1) SHALL TAKE DIVESTMEN T ACTION IN ELIGIBLE ACCOUNTS WITH 18
124+REGARD TO CURRENT IN VESTMENTS: 19
114125
115- (1) THAT THE UNITED STATES GOVERNMENT AFF IRMATIVELY
116-DECLARES TO BE EXCLU DED FROM ITS FEDERAL SANCTIONS REGIME REL ATING TO
117-RUSSIA; AND
126+ (I) IN ANY RUSSIA–RESTRICTED INVESTMENT ; OR 20
118127
119- (2) WHOSE DIVESTMENT CAN NOT BE EXECUTED FOR FAIR MARKET
120-VALUE OR GREATER .
128+ (II) IN ANY SECURITY OR I NSTRUMENT ISSUED BY RUSSIA; AND 21
121129
122- (E) ON OR BEFORE APRIL 1 AND OCTOBER 1 EACH YEAR, THE BOARD OF
123-TRUSTEES SHALL SUBMIT A REPORT, IN ACCORDANCE WITH § 2–1257 OF THE STATE
124-GOVERNMENT ARTICLE, TO THE SENATE BUDGET AND TAXATION COMMITTEE, THE
125-HOUSE APPROPRIATIONS COMMITTEE, AND THE JOINT COMMITTEE ON PENSIONS
126-THAT PROVIDE S:
130+ (2) MAY NOT MAKE ANY NEW INVESTMENTS FROM NET NEW FUNDS IN 22
131+AN ELIGIBLE ACCOUNT IN ANY RUSSIA–RESTRICTED INVESTMEN T. 23
127132
128- (1) ALL DIVESTMENT ACTIO NS TAKEN BY THE BOARD OF TRUSTEES
129-IN ACCORDANCE WITH T HIS SECTION;
133+ (D) NOTWITHSTANDING THE P ROVISIONS OF THIS SE CTION, THE BOARD OF 24
134+TRUSTEES MAY EXCLUDE FROM THE PROVISIONS OF SUBSECTION (C) OF THIS 25
135+SECTION A COMPANY: 26
130136
131- (2) A LIST OF INVESTMENTS THAT THE BOARD OF TRUSTEES HAS
132-DETERMINED TO BE INE LIGIBLE FOR INVESTME NTS OF NET NEW FUNDS UNDER
133-SUBSECTION (C)(2) OF THIS SECTIO N; AND
137+ (1) THAT THE UNITED STATES GOVERNMENT AFF IRMATIVELY 27
138+DECLARES TO BE EXCLU DED FROM ITS FEDERAL SANCTIONS REG IME RELATING TO 28
139+RUSSIA; AND 29
140+ 4 SENATE BILL 1005
134141
135- (3) OTHER DEVELOPMENTS R ELEVANT TO RUSSIA–RESTRICTED
136-INVESTMENTS .
137- Ch. 343 2022 LAWS OF MARYLAND
138142
139-– 4 –
140- (F) THE BOARD OF TRUSTEES OR ANY OTHER FIDUCIARY OF THE SEV ERAL
141-SYSTEMS MAY NOT BE H ELD LIABLE FOR ANY A CTIONS TAKEN OR DECI SIONS MADE
142-IN GOOD FAITH FOR TH E PURPOSE OF COMPLYI NG WITH OR EXECUTING THE
143-REQUIREMENTS OF ANY DIVESTMENT PROVISION S UNDER THIS SECTION.
143+ (2) WHOSE DIVESTMENT CAN NOT BE EXECUTED FOR FAIR MARKET 1
144+VALUE OR GREATER . 2
144145
145- (G) THE BOARD OF TRUSTEES SHALL ACT IN GOOD FAITH TO CARRY OUT
146-DIVESTMENT ACTION AS REQUIRED BY THIS SEC TION IN COMPLIANCE W ITH ALL
147-APPLICABLE STATE AND FEDERAL LAW , INCLUDING RELEVANT J UDICIAL
148-DECISIONS.
146+ (E) ON OR BEFORE APRIL 1 AND OCTOBER 1 EACH YEAR, THE BOARD OF 3
147+TRUSTEES SHALL SUBMIT A REPORT, IN ACCORDANCE WITH § 2–1257 OF THE STATE 4
148+GOVERNMENT ARTICLE, TO THE SENATE BUDGET AND TAXATION COMMITTEE, THE 5
149+HOUSE APPROPRIATIONS COMMITTEE, AND THE JOINT COMMITTEE ON PENSIONS 6
150+THAT PROVIDES : 7
149151
150- (H) NOTHING IN THIS SECTI ON SHALL REQUIRE THE BOARD OF TRUSTEES
151-TO TAKE ACTION AS DE SCRIBED IN THIS SECT ION UNLESS THE BOARD OF TRUSTEES
152-DETERMINES IN GOOD F AITH THAT THE ACTION IS CONSISTENT WITH T HE
153-FIDUCIARY RESPONSIBI LITIES OF THE BOARD OF TRUSTEES AS DESCRIBED IN
154-SUBTITLE 2 OF THIS TITLE.
152+ (1) ALL DIVESTMENT ACTIO NS TAKEN BY THE BOARD OF TRUSTEES 8
153+IN ACCORDANCE WITH TH IS SECTION; 9
155154
156- SECTION 2. AND BE IT FURTHER ENACTED, That :
155+ (2) A LIST OF INVESTMENTS THAT THE BOARD OF TRUSTEES HAS 10
156+DETERMINED TO BE INE LIGIBLE FOR INVESTME NTS OF NET NEW FUNDS UNDER 11
157+SUBSECTION (C)(2) OF THIS SECTION; AND 12
157158
158- (a) Notwithstanding any other provision of this Act, Section 1 of this Act may not
159-be applied to investments or divestment actions by the Board of Trustees for the State
160-Retirement and Pension System in connection with a Russia–restricted investment if the
161-United States government declares an end to financial sanctions against the Russian
162-Federation related to its invasion of and violation of the sovereignty of Ukraine.
159+ (3) OTHER DEVELOPMENTS R ELEVANT TO RUSSIA–RESTRICTED 13
160+INVESTMENTS . 14
163161
164- (b) Within 6 months after a declaration or other action described under subsection
165-(a) of this section, the Board of Trustees shall recommend to the Joint Committee on
166-Pensions legislation that would amend Section 1 of this Act.
162+ (F) THE BOARD OF TRUSTEES OR ANY OTHER FIDUCIARY OF THE SEV ERAL 15
163+SYSTEMS MAY NOT BE H ELD LIABLE FOR ANY A CTIONS TAKEN OR DECI SIONS MADE 16
164+IN GOOD FAITH FOR TH E PURPOSE OF COMPLYI NG WITH OR EXECUTING THE 17
165+REQUIREMENTS OF ANY DIVESTMENT PROVISION S UNDER THIS SECTION. 18
167166
168- SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency
169-measure, is necessary for the immediate preservation of the public health or safety, has
170-been passed by a yea and nay vote supported by three–fifths of all the members elected to
171-each of the two Houses of the General Assembly, and shall take effect from the date it is
172-enacted.
167+ (G) THE BOARD OF TRUSTEES SHALL ACT IN GOOD FAITH TO CARRY OUT 19
168+DIVESTMENT ACTION AS REQUIRED BY THIS SEC TION IN COMPLIANCE W ITH ALL 20
169+APPLICABLE STATE AND FEDERAL LAW , INCLUDING RELEVANT J UDICIAL 21
170+DECISIONS. 22
173171
174-Approved by the Governor, May 12, 2022.
172+ (H) NOTHING IN THIS SECTI ON SHALL REQUIRE THE BOARD OF TRUSTEES 23
173+TO TAKE ACTION AS DE SCRIBED IN THIS SECT ION UNLESS THE BOARD OF TRUSTEES 24
174+DETERMINES IN GOOD F AITH THAT THE ACTION IS CONSISTENT WITH T HE 25
175+FIDUCIARY RESPONSIBI LITIES OF THE BOARD OF TRUSTEES AS DESCRIBED IN 26
176+SUBTITLE 2 OF THIS TITLE. 27
177+
178+ SECTION 2. AND BE IT FURTHER ENACTED, That : 28
179+
180+ (a) Notwithstanding any other provision of this Act, Section 1 of this Act may not 29
181+be applied to investments or divestment actions by the Board of Trustees for the State 30
182+Retirement and Pension System in connection with a Russia–restricted investment if the 31
183+United States government declares an end to financial sanctions against the Russian 32
184+Federation related to its invasion of and violation of the sovereignty of Ukraine. 33
185+
186+ (b) Within 6 months after a declaration or other action described under subsection 34
187+(a) of this section, the Board of Trustees shall recommend to the Joint Committee on 35 SENATE BILL 1005 5
188+
189+
190+Pensions legislation that would amend Section 1 of this Act. 1
191+
192+ SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency 2
193+measure, is necessary for the immediate preservation of the public health or safety, has 3
194+been passed by a yea and nay vote supported by three–fifths of all the members elected to 4
195+each of the two Houses of the General Assembly, and shall take effect from the date it is 5
196+enacted. 6
197+
198+
199+
200+Approved:
201+________________________________________________________________________________
202+ Governor.
203+________________________________________________________________________________
204+ President of the Senate.
205+________________________________________________________________________________
206+ Speaker of the House of Delegates.