Bismarck — The House Industry, Business and Labor Committee held a lengthy hearing on House Bill 1330, which would require the State Investment Board to divest all Legacy Fund holdings in companies ‘‘publicly known to be majority owned by, controlled by, or subject to the jurisdiction or direction of China.’’ Representative Bernie Satrim (District 12) sponsored the bill and framed it as a transparency and national-security issue.

‘‘This bill requires the State Investment Board to divest of all its legacy fund investments in China. It’s long overdue,’’ Satrim told the committee. He cited a list of companies and alleged harms — from intellectual-property theft to ties to state actors — and said North Dakota should not be investing in firms that support activities he described as inimical to U.S. interests.

Supporters repeatedly urged greater transparency in Legacy Fund holdings. Satrim said portions of the fund’s holdings are opaque: ‘‘We have $3,100,000,000 that we really don't know we're at right now,’’ he said, calling for snapshot disclosures and clearer reporting to legislators.

State Treasurer Thomas Beadle testified that he supported the spirit of divestment but urged the committee to craft workable, implementable language. Beadle and staff noted that the Legacy Fund’s international exposure is set in statute by its client board and that the office operates under an existing investment-policy framework and the state’s ‘‘prudent investor’’ standards.

Scott Anderson, chief investment officer for the Retirement and Investment Office, provided a written cost-benefit analysis completed by an outside consultant (RVK). Anderson told the committee that a broad statutory definition, such as including firms ‘‘subject to the jurisdiction or direction of China,’’ would reach many large, developed-market companies with operations in China and could force the board to sell roughly $6 billion of directly affected assets. He said an alternative—screening by domicile—would be narrower, easier to monitor and less costly.

Anderson said RVK estimated the bill as written could raise annual management costs by roughly $5.6 million (for shifting to higher-fee products) and impose other operational frictions. Revising the definition to companies ‘‘domiciled in China’’ would reduce the implementation cost in the consultant’s scenario to about $1.9 million, Anderson testified.

Several legislators and witnesses pressed two related points: (1) whether the Legacy Fund’s fiduciary obligations under the prudent-investor standard allow a legislatively mandated country-based divestment, and (2) whether the state should adopt an explicit statutory exception for the Legacy Fund similar to North Dakota code provisions that already allow certain in-state manager preferences.

Representative Keith Kepnick, a member of the Legacy Fund advisory board, described the fund’s recent shift toward in-state investment and active management and warned that an overly broad divestment mandate could increase costs or reduce diversification. Kepnick said the fund’s China exposure is already modest — roughly 2% compared with a 4.5% index weighting — and that operational complexity would increase if the board had to monitor and exclude indirect exposure across commingled funds.

Several lawmakers asked whether the state could set a clear, narrower standard (for example, a company ‘‘domiciled’’ in China or majority owned in China) and then direct staff and managers to implement the policy. Beadle and Anderson said that narrowly drawn, index-provider–based definitions and explicit statutory direction would be more workable, and they noted the office is already pursuing strategies to reduce direct country risk and shift some investments to separately managed accounts.

No committee votes were recorded in the hearing. Committee members said they would review testimony, the consultant analysis and suggested statutory language changes before deciding whether to advance the bill.