One of Gov. Peter Shumlin's signature initiatives from his State of the State address has been watered down by the House and further diluted by the Senate.
The governor won't even get a nonbinding Senate resolution out of the deal which was reached last week by the Senate Government Operations Committee and Beth Pearce, the state treasurer.
Instead, the committee is drafting a letter recommending that Pearce study divestment of state investments in fossil fuels. Meanwhile, MMR, a Montpelier lobbying firm, is pressuring the panel to strip the name Exxon Mobil from the letter.
Shumlin's proposal would have forced Pearce and the Vermont Pension Investment Committee to divest 200 top fossil-fuel companies from the state retirement fund.
Pearce, a fellow Democrat, has publicly opposed a legislative mandate. She has said lawmakers' interference in VPIC investments would set a dangerous precedent. "Legislating investments, I believe, is an inappropriate practice," Pearce told committee members last week.
The House backed away from a state mandate last month, and instead passed a resolution urging VPIC to eliminate state investments in coal and Exxon Mobil.
The Senate, however, doesn't have the votes for a resolution.
The Senate letter urges Pearce to form a subcommittee of the Vermont Pension Investment Committee to study the impact of divestiture of fossil fuel companies on the market performance of state pension funds.
If the subcommittee finds that retirees won't lose money, the letter asks Pearce to eliminate fossil fuel assets from the pension fund.
"They may decide it doesn't make any fiduciary sense at all. That may be what they come back with," said Chair Jeanette White, D-Windham. "We shouldn't be asking them to do something if it doesn't meet fiduciary standards, and we're very clear about that."
Pearce has in the past said the $4 billion state pension fund would likely lose money if fossil fuel investments were pared from the portfolios.
Vermont has about $1.2 million in coal-related investments and owns $207,000 in Exxon Mobil stock. The pension fund provides income for about 50,000 people.
Sen. Anthony Pollina, P/D/W-Washington, advocated for the passage of a toxic chemicals regulation bill in March 2014 at a Statehouse news conference. Photo by John Herrick/VTDigger
The letter outlines a five-year period in which to divest the fund of the top 200 carbon polluters' assets. It also asks Pearce to report to the Senate and House Government Operations committees by May 2 with a timeline for divesting from coal companies and Exxon Mobil.
If the VPIC were instructed by law to divest all at once, the transaction costs — the selling of one company's stock and reinvesting the proceeds in another — could be expensive. But over the five-year period envisioned in the tentative agreement, pension funds routinely buy and sell stocks and the state could ease out of fossil fuel stocks without harm.
Sen. Anthony Pollina, P/D-Washington, introduced S.28, which would have required VPIC to divest the state retirement fund of the 200 publicly traded companies that hold fossil fuel reserves with the highest carbon content.
He said evidence shows that divestiture would have no effect on the retirement account and could have made more money than the fund has realized in recent years.
"I certainly do not want to do anything that would make the pension funds lose money, and I wouldn't support (such legislation) if I thought it would lose money," Pollina said.
At least one analysis has shown that Vermont has lost money by having continued to invest in fossil fuel assets, Pollina said.
Beyond that, Pollina said, "We shouldn't invest in companies doing something we oppose."
Pollina said he met with Pearce shortly before the Town Meeting Day break, and said the two "talked about a way to agree on a strategy that would get us where we wanted to go."
Some retirees oppose divestiture, Pollina said, and although a majority of committee members may have approved the bill, it would likely have been tricky to see it through to the Senate floor, he said.
A resolution similar to the one the House passed would have required at least one more committee's consideration, in addition to a vote on the Senate floor, Pollina said. Direct negotiations, memorialized through a letter, seemed the most expedient means, he said.
White said she prefers the non-legislative approach.
"Some things you don't need in legislation, you just need some public pressure to do it, and we don't need any more green books — we need to cut our green books in half," White said, pointing to the volumes of state statutes bound in green that line the committee room's walls.
Pollina said he drafted the letter to Pearce out of the belief that "it's easier to build consensus around a letter than (around) legislation.
"When you're dealing with the legislative process, sometimes you have to compromise to get where you're trying to go," he said.
The letter requests that Pearce include on the subcommittee two legislators — one from each of the Government Operations committees — and experts on fossil fuel-free investing.
The letter specifically asks Pearce and the VPIC to divest the state's accounts of Exxon Mobil stock. Andrew MacLean of the lobbying firm MMR has sought removal of the company's name from the letter. Vermont secretary of state records show that Exxon Mobil hired MMR on Feb. 18.
White said lobbyists approached her with the request and that she discussed with the committee the fact that the letter names only one company. It might be unnecessary to name Exxon Mobil, White said, since it's among the top 200 companies from which the letter asks VPIC to divest.
Pollina said Exxon Mobil ought to be named because the company's leaders have been "well aware" of climate change for some time, and have funded efforts to convince the public that human-caused climate change doesn't exist. Exxon Mobil is under investigation by New York and California attorneys general.
The pension account's investment committee will meet Friday in the treasurer's executive conference room at 11:30 a.m. to hammer out the divestment study subcommittee's composition, scope and process, Pearce said.
A wide variety of interested parties and stakeholders have been invited to the meeting, including the Sierra Club, the Vermont Public Interest Research Group, the National Wildlife Foundation, Vermont Businesses for Social Responsibility, the League of Conservation Voters, the Vermont State Employees Association, the National Education Association, and others, she said.
Recommendations from the meeting will be presented to VPIC on March 22.