Lawmakers Hear Proposal for Legacy Fund Transparency Website; No Vote Taken

Representative Bernie Satram, sponsor of House Bill 1319, opened a March hearing of the Industry and Business Committee urging greater public transparency of North Dakota's Legacy Fund investments.

"We have something called ADD, the agriculture diversification, development fund," Representative Bernie Satram said, explaining how the fund had helped expand local meat processing. He told the committee he and constituents want to know whether Legacy Fund money is invested in companies or countries they find objectionable and asked for a website that would show in-state and foreign exposure. "Are profits more important than principles?" he asked.

The bill would direct the Retirement and Investment Office (RIO) and State Investment Board to publish online information about Legacy Fund holdings and how biennial earnings are spent. Jody Smith, interim executive director for the Retirement and Investment Office, told the committee that much Legacy Fund information is already public but often available only in PDF reports that are difficult for general users to navigate.

"All of this information is already out there. All of it primarily is in a PDF format," Jody Smith said. She described a three-phase rollout the office prefers: an initial, manually maintained site; later integration with new investment software; and eventual automation for more frequent updates. Smith said the office has discussed an Oslo-style dashboard as an inspiration but expects updates would be far less frequent than real-time.

Lawmakers and witnesses focused on two central constraints: (1) some investment agreements with external fund managers appear to limit what the state can disclose, and (2) an outstanding attorney general's opinion will guide how much contract-level detail the state can make public. Smith said the office asked the committee to avoid overly prescriptive statutory language because a more prescriptive law might conflict with existing contracts and the forthcoming AG opinion.

Committee members and other senators said they supported more transparency but raised tradeoffs about cost and potential market impacts. Senator Klein and others noted the Legacy Fund is one of many funds RIO manages, and Smith said a separate site for the Legacy Fund could reduce routine open-records requests. Smith provided high-level figures during the hearing: the Legacy Fund balance is about $11.5 billion and biennium earnings available for appropriation were cited in testimony at roughly $601 million; she said approximately one-third of the office's open-records requests relate to the Legacy Fund.

Representative Satram described his research into certain commingled funds and said roughly $3.1 billion of the Legacy Fund is in commingled or hard-to-audit vehicles; he asked that the website show a clear percentage of holdings in North Dakota investments versus foreign exposure. Smith responded that the office can report totals invested in a country but may not be able to break out allocations to individual investors within commingled funds because of contractual "special sauce" protections.

The committee heard that a separate House bill (House Bill 1330) addressing direct investment divestment from China is expected to be considered in the coming weeks; Smith said the State Investment Board is neutral on that bill and would comply with statutorily directed divestment of direct investments if the Legislature so directs.

No motion or committee vote was taken on House Bill 1319 during the hearing. The committee closed the hearing and moved to the next bill on the agenda.

The legacy fund is commonly referred to as the "people's fund." Committee discussion flagged three practical next steps: (1) wait for the attorney general's opinion about contract disclosure limits before adopting prescriptive statutory language; (2) start with a modest, manually maintained site or better-organized PDFs while investment software integration is planned; and (3) consider whether the state should pair any transparency policy with a separate legislative decision about divesting direct holdings in specific countries.

Ending: The committee closed the public hearing on House Bill 1319 without a recommendation. Committee members said they expect to revisit transparency and related divestment bills after receiving the attorney general's opinion and additional fiscal detail from RIO.