As Reported by the House Financial Institutions, Real Estate and Securities Committee

127th General Assembly Regular Session 2007-2008

Sub. H. B. No. 151

Representatives Mandel, Jones 

Cosponsors: Representatives Adams, Aslanides, Barrett, Brinkman, Bubp, Budish, Carmichael, Collier, Combs, DeGeeter, Dodd, Dolan, Flowers, Gibbs, Goyal, Hite, Latta, Mallory, McGregor, J., Patton, Peterson, Schindel, Setzer, Uecker, Wagner, Wagoner, Webster, Wolpert, Zehringer 

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A BILL

To amend sections 135.143, 148.04, 3305.01, 3305.02,

1

and 3334.02 and to enact sections 137.01 to 137.09

2

of the Revised Code to specify procedures for

3

divesting investments a public investor holds in

4

directly held publicly traded companies conducting

5

specified types of business in the Islamic

6

Republic of Iran and the Republic of the Sudan and

7

to prohibit public investors from investing in

8

such a company and to authorize the Ohio public

9

deferred compensation board, the alternative

10

retirement program, and the Ohio college savings

11

program to offer a terror-free investment option.

12

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 135.143, 148.04, 3305.01, 3305.02,	13
and 3334.02 be amended and sections 137.01, 137.02, 137.03,	14
137.04, 137.05, 137.06, 137.07, 137.08, and 137.09 of the Revised	15
Code be enacted to read as follows:	16

Sec. 135.143.  (A) The treasurer of state may invest or	17
execute transactions for any part or all of the interim funds of	18
the state in the following classifications of obligations:	19

(1) United States treasury bills, notes, bonds, or any other	20
obligations or securities issued by the United States treasury or	21
any other obligation guaranteed as to principal and interest by	22
the United States;	23

(2) Bonds, notes, debentures, or any other obligations or	24
securities issued by any federal government agency or	25
instrumentality;	26

(3) Bonds and other direct obligations of the state of Ohio	27
issued by the treasurer of state and of the Ohio public facilities	28
commission, the Ohio building authority, and the Ohio housing	29
finance agency;	30

(4)(a) Written repurchase agreements with any eligible Ohio	31
financial institution that is a member of the federal reserve	32
system or federal home loan bank or any recognized United States	33
government securities dealer, under the terms of which agreement	34
the treasurer of state purchases and the eligible financial	35
institution or dealer agrees unconditionally to repurchase any of	36
the securities that are listed in division (A)(1), (2), or (6) of	37
this section and that will mature or are redeemable within ten	38
years from the date of purchase. The market value of securities	39
subject to these transactions must exceed the principal value of	40
the repurchase agreement by an amount specified by the treasurer	41
of state, and the securities must be delivered into the custody of	42
the treasurer of state or the qualified trustee or agent	43
designated by the treasurer of state. The agreement shall contain	44
the requirement that for each transaction pursuant to the	45
agreement, the participating institution or dealer shall provide	46
all of the following information:	47

(i) The par value of the securities;

48

(ii) The type, rate, and maturity date of the securities;

49

(iii) A numerical identifier generally accepted in the	50
securities industry that designates the securities.	51

(b) The treasurer of state also may sell any securities,	52
listed in division (A)(1), (2), or (6) of this section, regardless	53
of maturity or time of redemption of the securities, under the	54
same terms and conditions for repurchase, provided that the	55
securities have been fully paid for and are owned by the treasurer	56
of state at the time of the sale.	57

(5) Securities lending agreements with any eligible financial	58
institution that is a member of the federal reserve system or	59
federal home loan bank or any recognized United States government	60
securities dealer, under the terms of which agreements the	61
treasurer of state lends securities and the eligible financial	62
institution or dealer agrees to simultaneously exchange similar	63
securities or cash, equal value for equal value.	64

Securities and cash received as collateral for a securities	65
lending agreement are not interim funds of the state. The	66
investment of cash collateral received pursuant to a securities	67
lending agreement may be invested only in such instruments	68
specified by the treasurer of state in accordance with a written	69
investment policy.	70

(6) Various forms of commercial paper issued by any	71
corporation that is incorporated under the laws of the United	72
States or a state, which notes are rated at the time of purchase	73
in the two highest categories by two nationally recognized rating	74
agencies, provided that the total amount invested under this	75
section in any commercial paper at any time shall not exceed	76
twenty-five per cent of the state's total average portfolio, as	77
determined and calculated by the treasurer of state;	78

(7) Bankers acceptances, maturing in two hundred seventy days	79
or less, which are eligible for purchase by the federal reserve	80
system, provided that the total amount invested in bankers	81
acceptances at any time shall not exceed ten per cent of the	82
state's total average portfolio, as determined and calculated by	83
the treasurer of state;	84

(8) Certificates of deposit in eligible institutions applying	85
for interim moneys as provided in section 135.08 of the Revised	86
Code, including linked deposits as provided in sections 135.61 to	87
135.67 of the Revised Code, agricultural linked deposits as	88
provided in sections 135.71 to 135.76 of the Revised Code, and	89
housing linked deposits as provided in sections 135.81 to 135.87	90
of the Revised Code;	91

(9) The state treasurer's investment pool authorized under	92
section 135.45 of the Revised Code;	93

(10) DebtExcept as provided in Chapter 137. of the Revised	94
Code, debt interests, other than commercial paper described in	95
division (A)(6) of this section, rated at the time of purchase in	96
the three highest categories by two nationally recognized rating	97
agencies and issued by corporations that are incorporated under	98
the laws of the United States or a state, or issued by foreign	99
nations diplomatically recognized by the United States government,	100
or any instrument based on, derived from, or related to such	101
interests. All interest and principal shall be denominated and	102
payable in United States funds. The investments made under	103
division (A)(10) of this section shall not exceed in the aggregate	104
twenty-five per cent of the state's total average portfolio, as	105
determined and calculated by the treasurer of state. The	106
investments made under division (A)(10) of this section in debt	107
interests issued by foreign nations shall not exceed in the	108
aggregate one per cent of the state's total average portfolio, as	109
determined and calculated by the treasurer of state. The	110
investments made under division (A)(10) of this section in the	111
debt interests of a single issuer shall not exceed in the	112
aggregate one-half of one per cent of the state's total average	113
portfolio, as determined and calculated by the treasurer of state.	114

The treasurer of state shall invest under division (A)(10) of	115
this section in a debt interest issued by a foreign nation only if	116
the debt interest is backed by the full faith and credit of that	117
foreign nation. For purposes of division (A)(10) of this section,	118
a debt interest is rated in the three highest categories by two	119
nationally recognized rating agencies if either the debt interest	120
itself or the issuer of the debt interest is rated, or is	121
implicitly rated, at the time of purchase in the three highest	122
categories by two nationally recognized rating agencies.	123

(11) No-load money market mutual funds consisting exclusively	124
of obligations described in division (A)(1), (2), or (6) of this	125
section and repurchase agreements secured by such obligations.	126

(12) Obligations of a board of education issued under	127
authority of section 133.10 or 133.301 of the Revised Code.	128

(B) Whenever, during a period of designation, the treasurer	129
of state classifies public moneys as interim moneys, the treasurer	130
of state shall notify the state board of deposit of such action.	131
The notification shall be given within thirty days after such	132
classification and, in the event the state board of deposit does	133
not concur in such classification or in the investments or	134
deposits made under this section, the board may order the	135
treasurer of state to sell or liquidate any of the investments or	136
deposits, and any such order shall specifically describe the	137
investments or deposits and fix the date upon which they are to be	138
sold or liquidated. Investments or deposits so ordered to be sold	139
or liquidated shall be sold or liquidated for cash by the	140
treasurer of state on the date fixed in such order at the then	141
current market price. Neither the treasurer of state nor the	142
members of the state board of deposit shall be held accountable	143
for any loss occasioned by sales or liquidations of investments or	144
deposits at prices lower than their cost. Any loss or expense	145
incurred in making these sales or liquidations is payable as other	146
expenses of the treasurer's office.	147

(C) If any securities or obligations invested in by the	148
treasurer of state pursuant to this section are registrable either	149
as to principal or interest, or both, such securities or	150
obligations shall be registered in the name of the treasurer of	151
state.	152

(D) The treasurer of state is responsible for the safekeeping	153
of all securities or obligations under this section. Any such	154
securities or obligations may be deposited for safekeeping as	155
provided in section 113.05 of the Revised Code.	156

(E) Interest earned on any investments or deposits authorized	157
by this section shall be collected by the treasurer of state and	158
credited by the treasurer of state to the proper fund of the	159
state.	160

(F) Whenever investments or deposits acquired under this	161
section mature and become due and payable, the treasurer of state	162
shall present them for payment according to their tenor, and shall	163
collect the moneys payable thereon. The moneys so collected shall	164
be treated as public moneys subject to sections 135.01 to 135.21	165
of the Revised Code.	166

(G) The treasurer of state and any board of education issuing	167
obligations referred to in division (A)(12) of this section may	168
enter into an agreement providing for:	169

(1) The purchase of those obligations by the treasurer of	170
state on terms and subject to conditions set forth in the	171
agreement;	172

(2) The payment by the board of education to the treasurer of	173
state of a reasonable fee as consideration for the agreement of	174
the treasurer of state to purchase those obligations; provided,	175
however, that the treasurer of state shall not be authorized to	176
enter into any such agreement with the board of education of a	177
school district that has an outstanding obligation with respect to	178
a loan received under authority of section 3313.483 of the Revised	179
Code.	180

(H) For purposes of division (G) of this section, a fee shall	181
not be considered reasonable unless it is set to recover only the	182
direct costs and a reasonable estimate of the indirect costs	183
associated with the purchasing of obligations of a school board	184
under division (G) of this section and any reselling of the	185
obligations or any interest in the obligations, including	186
interests in a fund comprised of the obligations. No money from	187
the general revenue fund shall be used to subsidize the purchase	188
or resale of these obligations.	189

(I) All money collected by the treasurer of state from the	190
fee imposed by division (G) of this section shall be deposited to	191
the credit of the state school board obligations fund, which is	192
hereby created in the state treasury. Money credited to the fund	193
shall be used solely to pay the treasurer of state's direct and	194
indirect costs associated with purchasing and reselling	195
obligations of a board of education under division (G) of this	196
section.	197

Sec. 137.01.  As used in this chapter:

198

(A) "Active business operations" means all business	199
operations that are not inactive business operations.	200

(B) "Business operations" means engaging in commerce in any	201
form in Sudan or Iran, including by maintaining, selling,	202
acquiring, developing, owning, possessing, operating, or leasing	203
equipment, facilities, personnel, products, services, personal or	204
real property, or any other apparatus of business or commerce.	205

(C) "Company" means a sole proprietorship, organization,	206
association, corporation, partnership, joint venture, limited	207
partnership, limited liability partnership, limited liability	208
company, business association, or other entity, including any	209
wholly-owned subsidiary, majority-owned subsidiary, parent	210
company, or affiliate of any of those types of entities, that	211
exists for the purpose of making a profit.	212

(D) "Complicit" means taking actions during any preceding	213
twenty-month period that directly support or promote the genocidal	214
campaign in the Darfur region of Sudan, including, but not limited	215
to, preventing members of the population of the Darfur region of	216
Sudan negatively affected by genocide from communicating with each	217
other; encouraging Sudanese citizens to speak against the	218
internationally approved security force that provides aide to the	219
Darfur region; actively working to deny, cover up, or alter the	220
record on human rights abuses in Darfur; or other similar actions.	221

(E) "Direct holdings" means all stocks or bonds of a company	222
held directly by a public investor or held in an account or fund	223
of which the public investor owns all of the shares or interests.	224

(F) "Government of Iran" means the Islamic republic of Iran,	225
its instrumentalities, and companies owned or controlled by the	226
government of Iran.	227

(G) "Government of Sudan" means the government in Khartoum,	228
Sudan, that is led by the national congress party, formerly known	229
as the national Islamic front, or any successor government formed	230
on or after October 13, 2006, including the coalition national	231
unity government agreed upon in the "2005 Comprehensive Peace	232
Agreement," and does not include the regional government of	233
southern Sudan.	234

(H) "Inactive business operations" means those business	235
operations conducted by a company that involve only the continued	236
holding or renewal of rights to property that, at one time, was	237
used for the purpose of generating revenue for the company but is	238
not presently used for such purpose.	239

(I) "Indirect holdings" means all stocks and bonds of a	240
company that are not direct holdings and are held in an account or	241
fund in which the public investor owns shares or interests	242
together with other investors not subject to the provisions of	243
this chapter, as well as any private equity fund, private equity	244
fund-of-funds, venture capital fund, hedge fund, hedge	245
fund-of-funds, real estate fund or other investment vehicle that	246
is not publicly traded, mutual funds, and pooled or securitized	247
investment vehicles.	248

(J) "Iran" means the Islamic republic of Iran.

249

(K) "Marginalized populations of Sudan" includes, but is not	250
limited to, all of the following:	251

(1) The portion of the population in the Darfur region that	252
has been negatively affected by genocide;	253

(2) The portion of the population of southern Sudan	254
negatively affected by the civil war that occurred between the	255
north and south regions of Sudan;	256

(3) The Beja, Rashidiya, and other similarly underserved	257
groups of eastern Sudan;	258

(4) The Nubian and other similarly underserved groups in the	259
Abyei, southern blue Nile, and Nuba mountain regions of Sudan;	260

(5) The Amri, Hamadab, Manasir, and other similarly	261
underserved groups of northern Sudan.	262

(L) "Military equipment" means weapons, arms, military	263
supplies, and equipment including, but not limited to, radar	264
systems, or military-grade transport vehicles, that readily may be	265
used for military purposes; or supplies or services sold or	266
directly or indirectly provided to any force actively	267
participating in armed conflict in Sudan.	268

(M) "Mineral extraction activities" include exploring,	269
extracting, processing, transporting, or wholesale selling or	270
trading of elemental minerals or associated metal alloys or	271
oxides, also known as ore, including gold, copper, chromium,	272
chromite, diamonds, iron, iron ore, silver, tungsten, uranium, and	273
zinc; and includes facilitating such activities, including by	274
providing supplies or services in support of such activities.	275

(N) "Oil-related activities" includes, but is not limited to,	276
owning rights to oil blocks; exporting, extracting, producing,	277
refining, processing, exploring for, transporting, selling, or	278
trading of oil; constructing, maintaining, or operating a	279
pipeline, refinery, or other oil-field infrastructure; or	280
facilitating such activities, including by providing supplies or	281
services in support of such activities. "Oil-related activities"	282
does not mean engaging in only the retail sale of gasoline and	283
related consumer products.	284

(O) "Petroleum resource" means petroleum, petroleum	285
byproducts, or natural gas.	286

(P) "Power production activities" means any business	287
operation that involves a project commissioned by the national	288
electricity corporation of Sudan or other similar entity of the	289
government of Sudan whose purpose is to facilitate power	290
generation and delivery, including, but not limited to,	291
establishing power-generating plants or hydroelectric dams,	292
selling or installing components for a project, providing service	293
contracts related to the installation or maintenance of a project,	294
or facilitating any of these activities, including by providing	295
supplies or services in support of such activities.	296

(Q) "Public investor" means the treasurer of state, the state	297
board of deposit, the workers' compensation oversight commission,	298
the administrator of workers' compensation, and the board of each	299
of the state retirement systems.	300

(R) "Public fund" means the assets included in any fund	301
portfolio that is under the control of, or controlled on behalf	302
of, a public investor.	303

(S) "Scrutinized active business operation" means active	304
business operations that have resulted in a company becoming a	305
scrutinized company.	306

(T) "Scrutinized business operations" means business	307
operations that have resulted in a company that meets any of the	308
following criteria:	309

(1) The company has business operations that involve	310
contracts with or provision of supplies or services to the	311
government of Sudan, companies in which the government of Sudan	312
has any direct or indirect equity share, consortiums or projects	313
commissioned by the government of Sudan, or companies involved in	314
consortiums or projects commissioned by the government of Sudan,	315
and more than ten per cent of the company's revenues or assets	316
linked to Sudan involve oil-related activities or	317
mineral-extraction activities; less than seventy-five per cent of	318
the company's revenues or assets linked to Sudan involve contracts	319
with or provision of oil-related or mineral-extracting products or	320
services to the regional government of southern Sudan or a project	321
or consortium created exclusively by that regional government; and	322
the company has failed to take substantial action specific to	323
Sudan; or more than ten per cent of the company's revenues or	324
assets linked to Sudan involve power-production activities; less	325
than seventy-five per cent of the company's power-production	326
activities include projects whose intent is to provide power or	327
electricity to the marginalized populations of Sudan; and the	328
company has failed to take substantial action specific to Sudan.	329

(2) The company is complicit in the Darfur genocide.

330

(3) The company supplies military equipment within Sudan,	331
unless it clearly shows that the military equipment cannot be used	332
to facilitate offensive military actions in Sudan or the company	333
implements rigorous and verifiable safeguards to prevent use of	334
that equipment by forces actively participating in armed conflict.	335
Examples of safeguards include post-sale tracking of such	336
equipment by the company, certification from a reputable and	337
objective third party that such equipment is not being used by a	338
party participating in armed conflict in Sudan, or sale of such	339
equipment solely to the regional government of southern Sudan or	340
any internationally recognized peacekeeping force or humanitarian	341
organization.	342

(4)(a) The company has business operations that involve	343
contracts with or provision of supplies or services to the	344
government of Iran, companies in which the government of Iran has	345
any direct or indirect equity share, consortiums, or projects	346
commissioned by the government of Iran, or companies involved in	347
consortiums or projects commissioned by the government of Iran,	348
and one of the following apply:	349

(i) More than ten per cent of the company's total revenues or	350
assets are linked to Iran and involve oil-related activities,	351
mineral-extraction activities, or petroleum resources;	352

(ii) The company has, with actual knowledge, on or after	353
August 5, 1996, made an investment of twenty million dollars or	354
more, or any combination of investments of at least ten million	355
dollars each, which in the aggregate equals or exceeds twenty	356
million dollars in any twelve-month period, and which directly or	357
significantly contributes to the enhancement of Iran's ability to	358
develop the petroleum resources of Iran;	359

(iii) The company is engaged in business with an Iranian	360
organization labeled as a terrorist organization by the United	361
States government.	362

(b) Any company that takes substantial action specific to	363
Iran with respect to divisions (T)(4)(a)(i) and (T)(4)(a)(ii) of	364
this section shall not meet the criteria to be deemed a company	365
involved in scrutinized business operations.	366

(U) "Social development company" means a company whose	367
primary purpose in Sudan is to provide only the following	368
humanitarian goods or services to the people of Sudan:	369

(1) Medicine or medical equipment;

370

(2) Agricultural supplies or infrastructure;

371

(3) Educational opportunities;

372

(4) Journalistic activities;

373

(5) Information or information materials;

374

(6) Spiritual-related activities;

375

(7) Services of a purely clerical or reporting nature;

376

(8) Food, clothing, or general consumer goods that are	377
unrelated to oil-related activities, mineral extraction	378
activities, or power production activities.	379

(V) "Substantial action specific to Iran" means adopting,	380
publicizing, and implementing a formal plan to cease scrutinized	381
business operations within one year and to refrain from any such	382
new business operations.	383

(W) "Substantial action specific to Sudan" means adopting,	384
publicizing, and implementing a formal plan to cease scrutinized	385
business operations within one year and to refrain from any such	386
new business operations; undertaking humanitarian efforts in	387
conjunction with an international organization, the government of	388
Sudan, the regional government of southern Sudan, or a nonprofit	389
entity evaluated and certified by an independent third party to be	390
substantially in a relationship to the company's Sudan business	391
operations and of benefit to one or more marginalized populations	392
of Sudan; or, through engagement with the government of Sudan,	393
materially improving conditions for the genocidally victimized	394
population in Darfur.	395

(X) "Sudan" means the republic of the Sudan.

396

Sec. 137.02. (A) Within ninety days after the effective date	397
of this section, each public investor shall make its best efforts	398
to identify all publicly traded companies involved in scrutinized	399
business operations in which the public investor has direct or	400
indirect holdings or could possibly have such holdings in the	401
future. The efforts shall include:	402

(1) Reviewing and relying, as appropriate in the public	403
investor's judgment, on publicly available information regarding	404
companies having business operations in Iran or Sudan, including	405
information provided by nonprofit organizations, research firms,	406
international organizations, and government entities;	407

(2) Contacting asset managers contracted by the public	408
investor that invest in companies having business operations in	409
Iran or Sudan;	410

(3) Contacting other institutional investors that have	411
divested from or engaged with companies that have business	412
operations in Iran or Sudan;	413

(4) Reviewing the laws of the United States regarding the	414
levels of business activity that would cause application of	415
sanctions for companies conducting business or investing in	416
countries that are designated state sponsors of terror.	417

(B) Within ninety days after the effective date of this	418
section, each public investor shall create a "scrutinized	419
companies with activities in Sudan list" and a "scrutinized	420
companies with activities in Iran list," consisting of all	421
publicly traded companies identified in division (A) of this	422
section, shall make the lists publicly available, and shall update	423
the lists annually.	424

(C) Notwithstanding the provisions of this chapter, a	425
social-development company that is not complicit in the Darfur	426
genocide is not considered a scrutinized company.	427

(D) The public investor shall engage the companies on the	428
scrutinized companies with activities in Sudan list and the	429
scrutinized companies with activities in Iran list, in which the	430
public investor owns direct or indirect holdings, according to the	431
following:	432

(1) For each company identified in this paragraph that has	433
only inactive business operations, the public investor shall send	434
a written notice informing the company of the requirements of this	435
chapter and encouraging it to continue to refrain from initiating	436
active business operations in Iran or Sudan until it is able to	437
avoid scrutinized business operations. The public investor shall	438
continue such correspondence semiannually.	439

(2) For each company newly identified under this section that	440
has active business operations, the public investor shall send a	441
written notice informing the company of its scrutinized company	442
status and that it may become subject to divestment by the public	443
investor. The notice shall inform the company of the opportunity	444
to clarify its Iran-related or Sudan-related activities and	445
encourage the company, within ninety days, to cease its	446
scrutinized business operations or convert such operations to	447
inactive business operations in order to avoid qualifying for	448
divestment by the public investor.	449

(3) If, within ninety days after the public investors create	450
the lists pursuant to division (B) of this section, a company on	451
either list ceases scrutinized business operations, the public	452
investor shall remove the company from the scrutinized companies	453
with activities in Sudan list and the scrutinized companies with	454
activities in Iran list, and the provisions of this chapter shall	455
cease to apply to that company unless that company resumes	456
scrutinized business operations. If, within ninety days after the	457
public investors create the lists, the company converts its	458
scrutinized active business operations to inactive business	459
operations, the company is subject to all provisions of this	460
chapter relating to inactive business operations. A company may be	461
on both the scrutinized companies with activities in Sudan list	462
and the scrutinized companies with activities in Iran list. A	463
company may be removed from one list but remain on the other list,	464
in which case the company is subject to the provisions of this	465
chapter applicable to the list on which the company remains.	466

(4) The public investor shall submit letters to the managers	467
of actively managed investment funds containing indirect holdings	468
in companies identified in division (A) of this section that have	469
scrutinized active business operations requesting that they	470
consider removing such companies from the fund or create a similar	471
actively managed fund having indirect holdings devoid of such	472
companies.	473

Sec. 137.03. (A) Each public investor shall dispose of any	474
direct holdings in publicly traded companies with scrutinized	475
business operations as follows:	476

(1) If, after the ninety-day period described in division	477
(D)(3) of section 137.02 of the Revised Code the company continues	478
to have scrutinized active business operations, and only while	479
such company continues to have scrutinized active business	480
operations, the public investor shall sell, redeem, divest, or	481
withdraw all direct holdings in publicly traded securities of the	482
company, except as provided in section 137.04 of the Revised Code,	483
from the public investor's assets under management within twelve	484
months after the ninety-day period described in division (D)(3) of	485
section 137.02 of the Revised Code.	486

(2) If a company that ceased scrutinized active business	487
operations following engagement pursuant to division (D)(3) of	488
section 137.02 of the Revised Code resumes such operations, this	489
division immediately applies, and the public investor shall send a	490
written notice to the company. The public investor also shall	491
immediately reinstate the company on the scrutinized companies	492
with activities in Sudan list or on the scrutinized companies with	493
activities in Iran list, as applicable.	494

(B) The public investor shall not acquire direct holdings in	495
publicly traded companies on the scrutinized companies with	496
activities in Sudan list or the scrutinized companies with	497
activities in Iran list that have active business operations,	498
except as provided in section 137.04 of the Revised Code.	499

(C) If a manager of an actively managed investment fund, in	500
which a public investor has indirect holdings of publicly traded	501
companies that have scrutinized active business operations, has	502
created, pursuant to division (D)(4) of section 137.02 of the	503
Revised Code, a similar actively managed fund devoid of such	504
companies, the public investor shall replace all applicable	505
investments with investments in the similar fund in an expedited	506
time frame consistent with prudent investing standards.	507

(D) Notwithstanding any other provisions of sections 137.01	508
to 137.09 of the Revised Code, a public investor may cease any	509
divestment required by this section and may reinvest in companies	510
on the scrutinized companies with activities in Sudan list or the	511
scrutinized companies with activities in Iran list from which it	512
divested if clear and convincing evidence shows that the value of	513
all assets under management by the public investor becomes equal	514
to or less than ninety-nine and one-half per cent, or at least	515
less than fifty basis points, of the hypothetical value of all	516
assets under management by the public investor assuming no	517
divestment for any company had occurred under this section.	518
Cessation of divestment, reinvestment, or any subsequent ongoing	519
investment authorized by this division is limited to the minimum	520
steps necessary to avoid the contingency set forth in this	521
division or that no divestment of any company is required for less	522
than fair value. For any cessation of divestment, reinvestment, or	523
subsequent ongoing investment authorized by this section, the	524
public investor shall provide a written report, in advance of	525
initial reinvestment, to the president of the senate and the	526
speaker of the house of representatives, and updated semiannually	527
thereafter for as long as the public investor continues to act	528
pursuant to this division, setting forth the reasons and	529
justification, supported by clear and convincing evidence, for the	530
public investor's decisions to cease divestment, reinvest, or	531
remain invested in companies having scrutinized active business	532
operations. This division does not apply to reinvestment in	533
companies on the grounds that they have ceased to have scrutinized	534
active business operations.	535

Sec. 137.04. (A) A company that is headquartered in the	536
United States and that complies with all relevant United States	537
foreign trade controls relating to Iran or Sudan is not subject to	538
divestment or the investment prohibition pursuant to section	539
137.03 of the Revised Code.	540

(B) The provisions and requirements of this chapter do not	541
apply to any private holdings of a public investor.	542

Sec. 137.05. (A) Each public investor shall file a report	543
with the president of the senate, the speaker of the house of	544
representatives, the minority leader of the senate, the minority	545
leader of the house of representatives, the Ohio retirement study	546
council, and the workers compensation council that includes the	547
scrutinized companies with activities in Sudan list and the	548
scrutinized companies with activities in Iran list within thirty	549
days after the list is created and within thirty days after the	550
list is updated pursuant to section 137.02 of the Revised Code.	551
The public investor shall make the report available to the public.	552

(B) Each public investor shall file a report annually, which	553
shall be made available to the public, to the president of the	554
senate, the speaker of the house of representatives, the minority	555
leader of the senate, the minority leader of the house of	556
representatives, the Ohio retirement study council, and the	557
workers compensation council, and send a copy of that report to	558
the United States presidential special envoy to Sudan and the	559
United States presidential special envoy to Iran, or an	560
appropriate designee or successor, which includes:	561

(1) A summary of correspondence with companies engaged by the	562
public investor under division (D) of section 137.02 of the	563
Revised Code;	564

(2) All investments sold, redeemed, divested, or withdrawn in	565
compliance with section 137.03 of the Revised Code;	566

(3) All prohibited investments under division (B) of section	567
137.03 of the Revised Code;	568

(4) Any progress made under division (D)(4) of section 137.02	569
of the Revised Code and division (C) of section 137.03 of the	570
Revised Code;	571

(5) A list of all publicly traded securities held directly by	572
the public investor.	573

Sec. 137.06. (A) If any of the following occur, a public	574
investor shall no longer assemble the scrutinized companies with	575
activities in Sudan list, shall cease engagement and divestment of	576
such companies, and may reinvest in such companies as long as such	577
companies do not satisfy the criteria for inclusion in the	578
scrutinized companies with activities in Iran list:	579

(1) Congress or the president of the United States determines	580
that the government of Sudan has sufficiently halted the genocide	581
in the Darfur region for at least twelve months.	582

(2) The federal government revokes all sanctions imposed	583
against the government of Sudan.	584

(3) Congress or the president of the United States, through	585
legislation or executive order, declares that mandatory divestment	586
of the type provided for in this chapter interferes with the	587
conduct of United States foreign policy.	588

(4) Congress or the president of the United States declares	589
that the government of Sudan has honored its commitments to cease	590
attacks on civilians, demobilize and demilitarize the Janjaweed	591
and associated militias, grant free and unfettered access for	592
deliveries of humanitarian assistance, and allow for the safe and	593
voluntary return of refugees and internally displaced persons.	594

(B) If any of the following occur, a public investor shall no	595
longer assemble the scrutinized companies with activities in Iran	596
list and shall cease engagement, investment prohibitions, and	597
divestment. The public investor may reinvest in such companies as	598
long as such companies do not satisfy the criteria for inclusion	599
in the scrutinized companies with activities in Sudan list:	600

(1) Congress or the president of the United States determines	601
that the government of Iran has ceased to acquire weapons of mass	602
destruction and support international terrorism;	603

(2) The federal government revokes all sanctions imposed	604
against the government of Iran.	605

(3) Congress or the president of the United States declares	606
that mandatory divestment of the type provided for in this act	607
interferes with the conduct of United States foreign policy.	608

Sec. 137.07.  The attorney general shall enforce the	609
provisions of this chapter and the attorney general or the	610
attorney general's designee may bring an action in court to	611
enforce this chapter.	612

Sec. 137.08. A public investor is not liable for breach of	613
the public investor's fiduciary duty to the public fund for which	614
that public investor has the authority to invest assets if the	615
public investor complies in good faith with the requirements of	616
this chapter. If the public investor made determinations in good	617
faith regarding the status of a company as required under this	618
chapter, the members are not liable in an action for libel or	619
slander. All former, present, or future public investors and	620
members of any boards of all public investors and all officers,	621
employees, and agents of such boards shall be indemnified, whether	622
jointly or severally, for all claims, demands, suits, actions,	623
damages, judgments, costs, charges, and expenses, including court	624
costs and attorney's fees, and against all liability, losses, and	625
damages of any nature that such board members, officers,	626
employees, or agents may incur by reason of any decision to	627
restrict, reduce, or eliminate investments in companies doing	628
business in Iran or Sudan. A board member, officer, employee, or	629
agent of a public investor shall be indemnified through the public	630
fund in which the public authority has the authority to invest. In	631
any action pursuant to this chapter, any state retirement board	632
has any rights granted in section 109.98 of the Revised Code and	633
the workers' compensation oversight commission has any rights	634
granted in section 109.981 of the Revised Code.	635

Sec. 137.09. Except as otherwise specified in this chapter or	636
as otherwise specified by the general assembly, this chapter	637
prevails over sections 135.143, 145.11, 742.11, 3307.15, 3309.15,	638
4123.44, and 5505.06 of the Revised Code and all other laws that	639
conflict with this chapter.	640

Sec. 148.04.  (A) The Ohio public employees deferred	641
compensation board shall initiate, plan, expedite, and, subject to	642
an appropriate assurance of the approval of the internal revenue	643
service, promulgate and offer to all eligible employees, and	644
thereafter administer on behalf of all participating employees and	645
continuing members, and alter as required, a program for deferral	646
of compensation, including a reasonable number of options to the	647
employee for the investment of deferred funds, including life	648
insurance, annuities, variable annuities, pooled investment funds	649
managed by the board, or other forms of investment approved by the	650
board, always in such form as will assure the desired tax	651
treatment of such funds. There may be at least one terror-free	652
investment option, as defined in section 3305.01 of the Revised	653
Code, among the investment options offered to eligible employees.	654
Annually, the board shall prepare, and deliver to the president of	655
the senate and the speaker of the house of representatives a	656
report regarding the board's efforts to identify and provide a	657
terror-free investment option. The members of the board are the	658
trustees of any deferred funds and shall discharge their duties	659
with respect to the funds solely in the interest of and for the	660
exclusive benefit of participating employees, continuing members,	661
and their beneficiaries. With respect to such deferred funds,	662
section 148.09 of the Revised Code shall apply to claims against	663
participating employees or continuing members and their employers.	664

(B) Every employer of an eligible employee shall contract	665
with the employee upon the employee's application for	666
participation in a deferred compensation program offered by the	667
board. Every retirement system serving an eligible employee shall	668
serve as collection agent for compensation deferred by any of its	669
members and account for and deliver such sums to the board.	670

(C) The board shall, subject to any applicable contract	671
provisions, undertake to obtain as favorable conditions of tax	672
treatment as possible, both in the initial programs and any	673
permitted alterations of them or additions to them, as to such	674
matters as terms of distribution, designation of beneficiaries,	675
withdrawal upon disability, financial hardship, or termination of	676
public employment, and other optional provisions.	677

(D) In no event shall the total of the amount of deferred	678
compensation to be set aside under a deferred compensation program	679
and the employee's nondeferred income for any year exceed the	680
total annual salary or compensation under the existing salary	681
schedule or classification plan applicable to the employee in that	682
year.	683

Such a deferred compensation program shall be in addition to	684
any retirement or any other benefit program provided by law for	685
employees of this state. The board shall adopt rules pursuant to	686
Chapter 119. of the Revised Code to provide any necessary	687
standards or conditions for the administration of its programs,	688
including any limits on the portion of a participating employee's	689
compensation that may be deferred in order to avoid adverse	690
treatment of the program by the internal revenue service or the	691
occurrence of deferral, withholding, or other deductions in excess	692
of the compensation available for any pay period.	693

Any income deferred under such a plan shall continue to be	694
included as regular compensation for the purpose of computing the	695
contributions to and benefits from the retirement system of such	696
employee. Any sum so deferred shall not be included in the	697
computation of any federal and state income taxes withheld on	698
behalf of any such employee.	699

(E) This section does not limit the authority of any	700
municipal corporation, county, township, park district,	701
conservancy district, sanitary district, health district, public	702
library, county law library, public institution of higher	703
education, or school district to provide separate authorized plans	704
or programs for deferring compensation of their officers and	705
employees in addition to the program for the deferral of	706
compensation offered by the board. Any municipal corporation,	707
township, public institution of higher education, or school	708
district that offers such plans or programs shall include a	709
reasonable number of options to its officers or employees for the	710
investment of the deferred funds, including annuities, variable	711
annuities, regulated investment trusts, or other forms of	712
investment approved by the municipal corporation, township, public	713
institution of higher education, or school district, that will	714
assure the desired tax treatment of the funds.	715

Sec. 3305.01.  As used in this chapter:

716

(A) "Public institution of higher education" means a state	717
university as defined in section 3345.011 of the Revised Code, the	718
northeastern Ohio universities college of medicine, or a	719
university branch, technical college, state community college,	720
community college, or municipal university established or	721
operating under Chapter 3345., 3349., 3354., 3355., 3357., or	722
3358. of the Revised Code.	723

(B) "State retirement system" means the public employees	724
retirement system created under Chapter 145. of the Revised Code,	725
the state teachers retirement system created under Chapter 3307.	726
of the Revised Code, or the school employees retirement system	727
created under Chapter 3309. of the Revised Code.	728

(C) "Eligible employee" means any person employed as a	729
full-time employee of a public institution of higher education.	730

In all cases of doubt, the board of trustees of the public	731
institution of higher education shall determine whether any person	732
is an eligible employee for purposes of this chapter, and the	733
board's decision shall be final.	734

(D) "Electing employee" means any eligible employee who	735
elects, pursuant to section 3305.05 or 3305.051 of the Revised	736
Code, to participate in an alternative retirement plan provided	737
pursuant to this chapter or an eligible employee who is required	738
to participate in an alternative retirement plan pursuant to	739
division (C)(4) of section 3305.05 or division (F) of section	740
3305.051 of the Revised Code.	741

(E) "Compensation," for purposes of an electing employee, has	742
the same meaning as the applicable one of the following:	743

(1) If the electing employee would be subject to Chapter 145.	744
of the Revised Code had the employee not made an election pursuant	745
to section 3305.05 or 3305.051 of the Revised Code, "earnable	746
salary" as defined in division (R) of section 145.01 of the	747
Revised Code;	748

(2) If the electing employee would be subject to Chapter	749
3307. of the Revised Code had the employee not made an election	750
pursuant to section 3305.05 or 3305.051 of the Revised Code,	751
"compensation" as defined in division (L) of section 3307.01 of	752
the Revised Code;	753

(3) If the electing employee would be subject to Chapter	754
3309. of the Revised Code had the employee not made an election	755
pursuant to section 3305.05 or 3305.051 of the Revised Code,	756
"compensation" as defined in division (V) of section 3309.01 of	757
the Revised Code.	758

(F) "Provider" means an entity designated under section	759
3305.03 of the Revised Code as a provider of investment options	760
for an alternative retirement plan.	761

(G) "Terror-free investment option" means an account or fund	762
that excludes from its portfolio any company that is involved in	763
scrutinized business operations as defined in section 137.01 of	764
the Revised Code.	765

Sec. 3305.02.  An alternative retirement program is hereby	766
established in accordance with this chapter for the purpose of	767
providing to eligible employees the opportunity of participating	768
in an alternative retirement plan as an alternative to	769
participating in a state retirement system. The employer is the	770
sponsor of each alternative retirement plan offered under this	771
chapter.	772

Each alternative retirement plan offered under this program	773
shall be a defined contribution plan qualified under section 401	774
(a) of the Internal Revenue Code that provides retirement and	775
death benefits through investment options. The options shall be	776
offered to electing employees pursuant to group or individual	777
contracts, and certificates issued under group contracts,. The	778
options may include a terror-free investment option and may	779
include life insurance, annuities, variable annuities, regulated	780
investment trusts, pooled investment funds, or other forms of	781
investment, at the option of each electing employee.	782

Notwithstanding this chapter, any retirement plan established	783
by a public institution of higher education prior to March 31,	784
1997, as an alternative to participating in any state retirement	785
system may continue in effect and be modified without regard to	786
this chapter for all employees at the public institution eligible	787
to participate in the plan.	788

Sec. 3334.02.  (A) In order to help make higher education	789
affordable and accessible to all citizens of Ohio, to maintain	790
state institutions of higher education by helping to provide a	791
stable financial base to these institutions, to provide the	792
citizens of Ohio with financing assistance for higher education	793
and protection against rising tuition costs, to encourage saving	794
to enhance the ability of citizens of Ohio to obtain financial	795
access to institutions of higher education, to encourage	796
elementary and secondary students in this state to achieve	797
academic excellence, and to promote a well-educated and	798
financially secure population to the ultimate benefit of all	799
citizens of the state of Ohio, there is hereby created the Ohio	800
college savings program. The program shall consist of the issuance	801
of college savings bonds and the sale of tuition units.	802

(B) The provisions of Chapter 1707. of the Revised Code shall	803
not apply to tuition units or any agreement or transaction related	804
thereto.	805

(C) To provide the citizens of Ohio with a choice of	806
tax-advantaged college savings programs and the opportunity to	807
participate in more than one type of college savings program at a	808
time, the Ohio tuition trust authority shall establish and	809
administer a variable college savings program as a qualified state	810
tuition program under section 529 of the Internal Revenue Code.	811
The program shall allow contributors to make cash contributions to	812
variable college savings program accounts created for the purpose	813
of paying future tuition and other higher education expenses and	814
providing variable rates of return on contributions. The program	815
shall offer contributors a reasonable number of options for the	816
investment of contributed funds among which may be at least one	817
terror-free investment option, as defined in section 3305.01 of	818
the Revised Code. The Ohio tuition trust authority annually shall	819
prepare, and deliver to the president of the senate and the	820
speaker of the house of representatives a report regarding the	821
board's efforts to identify and provide a terror-free investment	822
option.	823

(D) A person may participate simultaneously in both the Ohio	824
college savings program and the variable college savings program.	825

Section 2.  That existing sections 135.143, 148.04, 3305.01,	826
3305.02, and 3334.02 of the Revised Code are hereby repealed.	827

Section 3.  The sections and items of law contained in this	828
act, and their applications, are severable. If any section or item	829
of law contained in this act, or if any application of any section	830
or item of law contained in this act, is held invalid, the	831
invalidity does not affect other sections or items of law	832
contained in this act and their applications that can be given	833
effect without the invalid section or item of law or application.	834

Section 4. It is the finding of the General Assembly of the	835
state of Ohio that the Islamic Republic of Iran and the Republic	836
of the Sudan are guilty of advocating genocide, and are unstable	837
and high risk investment locations, and therefore, the General	838
Assembly of the state of Ohio establishes the requirements of this	839
act.	840