Bill Text: NJ A4248 | 2010-2011 | Regular Session | Introduced
Bill Title: Prohibits State investment in petroleum product commodities, derivatives, and exchange-traded funds.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-11-10 - Introduced, Referred to Assembly Appropriations Committee [A4248 Detail]
Download: New_Jersey-2010-A4248-Introduced.html
Sponsored by:
Assemblyman JOHN J. BURZICHELLI
District 3 (Salem, Cumberland and Gloucester)
SYNOPSIS
Prohibits State investment in petroleum product commodities, derivatives, and exchange-traded funds.
CURRENT VERSION OF TEXT
As introduced.
An Act prohibiting State investment in certain petroleum product commodities, derivatives, and exchange-traded funds, supplementing P.L.1950, c.270.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. As used in this section:
"Petroleum product" means crude oil, residual fuel oil, or any refined petroleum product.
"Petroleum product commodity" means a contract for the present or future delivery of a petroleum product, but does not include a contract entered into by the State for the acquisition of a petroleum product for consumption by the State or a related government entity.
"Petroleum product derivative" means a financial instrument the value of which depends on or is derived from the performance of a secondary source or underlying financial instrument the value of which depends on the pricing of a petroleum product commodity, including but not limited to a futures contract, option contract, and swap agreement involving a petroleum product commodity.
"Petroleum product exchange-traded fund" means a fund or class of shares, the shares of which represent an interest in a security or portfolio comprised primarily of petroleum product commodities, petroleum product derivatives or both.
"Refined petroleum product" means gasoline, diesel fuel, fuel oil, lubricating oil, liquified petroleum gas, petroleum distillate that is produced through the refining or processing of crude oil, or oil derived from tar sands, shale, or coal.
"Related government entity" means an agency, authority, or political subdivision of the State, including but not limited to a county, municipality, or school district.
b. Notwithstanding any provision of law to the contrary, no assets of any pension or annuity fund under the jurisdiction of the Division of Investment in the Department of the Treasury, the State of New Jersey Cash Management Fund, and any other State funds in the custody of the State Treasurer shall be invested in any petroleum product commodity, petroleum product derivative, or petroleum product exchange-traded fund.
c. The State Treasurer, State Investment Council and the Director of the Division of Investment, after reviewing the recommendations of and consulting with an independent research firm that specializes in commodities, derivatives or exchange-traded funds for portfolio determinations, selected by the State Treasurer, shall take appropriate action to sell, redeem, divest or withdraw any investment held in violation of subsection b. of this section. This section shall not be construed to require the premature or otherwise imprudent sale, redemption, divestment or withdrawal of an investment, but such sale, redemption, divestment or withdrawal shall be completed not later than three years following the effective date of P.L. , c. (C. )(pending before the Legislature as this bill).
d. Within 60 days after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Director of the Division of Investment shall file with the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), a report of all investments held as of the effective date of P.L. , c. (C. )(pending before the Legislature as this bill) that are in violation of subsection b. of this section. Each year after the initial report the director shall report on all investments sold, redeemed, divested or withdrawn in compliance with subsection c. of this section, except that no report shall be due after the annual report in which the director reports that there are no longer any investments held in violation of subsection b. of this section. Each report after the initial report shall provide a description of the progress that the division has made since the previous report and since the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) in implementing subsection c. of this section.
e. Jointly and individually, the State Treasurer, the Director of the Division of Investment, State Investment Council members, and State officers and employees involved therewith, shall be indemnified and held harmless by the State of New Jersey from all claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including court costs and attorney's fees, and against all liability, losses and damages of any nature whatsoever that the State Treasurer, the Director of the Division of Investment, State Investment Council members, and State officers and employees, shall or may at any time sustain by reason of any decision to restrict, reduce or eliminate investments pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
2. This act shall take effect immediately.
STATEMENT
This bill prohibits the investment of New Jersey public employee retirement system funds, New Jersey Cash Management Fund funds, and any other State funds in the custody of the State Treasurer in petroleum product commodities, derivatives, and petroleum product exchange-traded funds. The purpose of this bill is twofold. The bill removes the State as a potential participant in petroleum product price speculation and potential contributor to rising fuel prices. The bill also prevents State investment in potentially risky financial instruments.
In addition to the investment prohibition, the bill requires the State to divest any investments held in violation of the prohibition after consulting with an independent research firm that specializes in commodities, derivatives or exchange-traded funds for portfolio determinations. The firm is to be selected by the State Treasurer. The State has the three years following the date of enactment within which to divest all investments held in violation of the prohibition. Periodic progress reports on the divestment are to be made by the Division of Investment. The bill also provides that the State Treasurer, the Director of the Division of Investment, State Investment Council members, and State officers and employees involved therewith, are indemnified and held harmless by the State of New Jersey from all liabilities and losses that may be sustained by reason of any decision to restrict or eliminate investments pursuant to the bill.
