Texas 2017 - 85th Regular

Texas House Bill HB1902 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	85R84 TSR-D
2	2	By: Sanford H.B. No. 1902
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to prohibiting the investment of certain retirement system
8	8	funds in publicly traded business entities that donate to Planned
9	9	Parenthood.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle A, Title 8, Government Code, is amended
12	12	by adding Chapter 808 to read as follows:
13	13	CHAPTER 808. PROHIBITION ON INVESTMENT IN COMPANIES THAT DONATE TO
14	14	PLANNED PARENTHOOD
15	15	SUBCHAPTER A. GENERAL PROVISIONS
16	16	Sec. 808.001. DEFINITIONS. In this chapter:
17	17	(1) "Board" means the State Pension Review Board.
18	18	(2) "Company" means a sole proprietorship,
19	19	organization, association, corporation, partnership, joint
20	20	venture, limited partnership, limited liability partnership,
21	21	limited liability company, or other entity or business association
22	22	whose securities are publicly traded, including a wholly owned
23	23	subsidiary, majority-owned subsidiary, parent company, or
24	24	affiliate of those entities or business associations, that exists
25	25	to make a profit.
26	26	(3) "Direct holdings" means, with respect to a
27	27	company, all securities of that company held directly by a
28	28	retirement system in an account or fund in which a retirement system
29	29	owns all shares or interests.
30	30	(4) "Indirect holdings" means, with respect to a
31	31	company, all securities of that company held in an account or fund,
32	32	such as a mutual fund, managed by one or more persons not employed
33	33	by a retirement system, in which the retirement system owns shares
34	34	or interests together with other investors not subject to the
35	35	provisions of this chapter. The term does not include money
36	36	invested under a plan described by Section 401(k) or 457 of the
37	37	Internal Revenue Code of 1986.
38	38	(5) "Listed company" means a company listed by the
39	39	board under Section 808.051.
40	40	(6) "Planned Parenthood" means the Planned Parenthood
41	41	Federation of America.
42	42	(7) "Retirement system" means the Employees
43	43	Retirement System of Texas or the Teacher Retirement System of
44	44	Texas.
45	45	(8) "Scrutinized company" means a company that donates
46	46	money or property directly to Planned Parenthood. The term does not
47	47	include a company whose only donations to Planned Parenthood
48	48	consist of making contributions to Planned Parenthood to match
49	49	contributions made by employees or retirees of the company.
50	50	Sec. 808.002. OTHER LEGAL OBLIGATIONS. With respect to
51	51	actions taken in compliance with this chapter, including all good
52	52	faith determinations regarding companies as required by this
53	53	chapter, a retirement system is exempt from any conflicting
54	54	statutory or common law obligations, including any obligation with
55	55	respect to making investments, divesting from any investment,
56	56	preparing or maintaining any list of companies, or choosing asset
57	57	managers, investment funds, or investments for the retirement
58	58	system's securities portfolios.
59	59	Sec. 808.003. INDEMNIFICATION OF RETIREMENT SYSTEMS,
60	60	EMPLOYEES, AND OTHERS. In a cause of action based on an action,
61	61	inaction, decision, divestment, investment, company communication,
62	62	report, or other determination made or taken in connection with
63	63	this chapter, the state shall, without regard to whether the person
64	64	performed services for compensation, indemnify and hold harmless
65	65	for actual damages, court costs, and attorney's fees adjudged
66	66	against, and defend:
67	67	(1) an employee, a member of the governing body, or any
68	68	other officer of a retirement system;
69	69	(2) a contractor of a retirement system;
70	70	(3) a former employee, a former member of the
71	71	governing body, or any other former officer of a retirement system
72	72	who was an employee or officer when the act or omission on which the
73	73	damages are based occurred;
74	74	(4) a former contractor of a retirement system who was
75	75	a contractor when the act or omission on which the damages are based
76	76	occurred; and
77	77	(5) a retirement system.
78	78	Sec. 808.004. NO PRIVATE CAUSE OF ACTION. (a) A person,
79	79	including a member, retiree, or beneficiary of a retirement system,
80	80	an association, a research firm, a company, or any other person may
81	81	not sue or pursue a private cause of action against the state, a
82	82	retirement system, an employee, a member of the governing body, or
83	83	any other officer of a retirement system, or a contractor of a
84	84	retirement system, for any claim or cause of action, including
85	85	breach of fiduciary duty, or for violation of any constitutional,
86	86	statutory, or regulatory requirement in connection with any action,
87	87	inaction, decision, divestment, investment, company communication,
88	88	report, or other determination made or taken in connection with
89	89	this chapter.
90	90	(b) A person who files suit against the state, a retirement
91	91	system, an employee, a member of the governing body, or any other
92	92	officer of a retirement system, or a contractor of a retirement
93	93	system, is liable for paying the costs and attorney's fees of a
94	94	person sued in violation of this section.
95	95	Sec. 808.005. INAPPLICABILITY OF REQUIREMENTS INCONSISTENT
96	96	WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES. A retirement
97	97	system is not subject to a requirement of this chapter if the
98	98	retirement system determines that the requirement would be
99	99	inconsistent with its fiduciary responsibility with respect to the
100	100	investment of the system's assets or other duties imposed by law
101	101	relating to the investment of the system's assets, including the
102	102	duty of care established under Section 67, Article XVI, Texas
103	103	Constitution.
104	104	Sec. 808.006. RELIANCE ON COMPANY RESPONSE. The board and a
105	105	retirement system may rely on a company's response to a notice or
106	106	communication made under this chapter without conducting any
107	107	further investigation, research, or inquiry.
108	108	SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
109	109	Sec. 808.051. LISTED COMPANIES. (a) The board shall
110	110	prepare and maintain, and provide to each retirement system, a list
111	111	of all scrutinized companies. In maintaining the list, the board
112	112	may review and rely on, as appropriate in the board's judgment,
113	113	publicly available information regarding companies that donate
114	114	directly to Planned Parenthood, including information provided by
115	115	the state, nonprofit organizations, research firms, international
116	116	organizations, and governmental entities.
117	117	(b) The board shall update the list annually or more often
118	118	as the board considers necessary, but not more often than
119	119	quarterly.
120	120	(c) Not later than the 30th day after the date the list of
121	121	scrutinized companies is first provided or updated, the board shall
122	122	file the list with the presiding officer of each house of the
123	123	legislature and the attorney general.
124	124	Sec. 808.052. IDENTIFICATION OF INVESTMENT IN LISTED
125	125	COMPANIES. Not later than the 30th day after the date a retirement
126	126	system receives the list provided under Section 808.051, the
127	127	retirement system shall notify the board of the listed companies in
128	128	which the retirement system owns direct holdings or indirect
129	129	holdings.
130	130	Sec. 808.053. ACTIONS RELATING TO DONATIONS BY LISTED
131	131	COMPANY. (a) The board shall send a written notice to each listed
132	132	company identified under Section 808.052 informing the company of
133	133	its listed company status and warning the company that it may become
134	134	subject to divestment by the retirement system.
135	135	(b) The notice must encourage the company to cease making
136	136	further direct donations to Planned Parenthood, for a period of
137	137	time provided by board rule, in order to avoid qualifying for
138	138	divestment by the retirement system.
139	139	(c) If the company timely responds to the notice that the
140	140	company has ceased donating directly to Planned Parenthood, the
141	141	board shall remove the company from the list maintained under
142	142	Section 808.051 and investment in the company will no longer be
143	143	prohibited under this chapter unless the company resumes donating
144	144	directly to Planned Parenthood.
145	145	(d) If the company continues to donate directly to Planned
146	146	Parenthood, the board shall notify each affected retirement system
147	147	that the system is required to sell, redeem, or otherwise divest
148	148	itself of all publicly traded securities of the company, except
149	149	securities described by Section 808.055, according to the schedule
150	150	adopted by the board under Section 808.054.
151	151	Sec. 808.054. DIVESTMENT OF ASSETS. (a) The board by rule
152	152	shall adopt a schedule for divestment from listed companies.
153	153	(b) A retirement system required to sell, redeem, or
154	154	otherwise divest itself of all publicly traded securities of a
155	155	listed company shall comply with the schedule adopted by the board
156	156	under Subsection (a) unless the retirement system determines, based
157	157	on a good faith exercise of its fiduciary discretion, that a
158	158	different schedule is more prudent or that divestment from the
159	159	listed company will likely result in a loss in value or a benchmark
160	160	deviation described by Section 808.056(a).
161	161	(c) If a retirement system delays divestment under the
162	162	schedule adopted by the board under Subsection (a), the retirement
163	163	system shall submit a report to the presiding officer of each house
164	164	of the legislature and the attorney general stating the reasons and
165	165	justification for the retirement system's delay in divestment from
166	166	a listed company. The report must include documentation supporting
167	167	its determination that the divestment would result in a loss in
168	168	value or benchmark deviation described by Section 808.056(a),
169	169	including objective numerical estimates. The retirement system
170	170	shall update the report every six months.
171	171	Sec. 808.055. INVESTMENTS EXEMPTED FROM DIVESTMENT. A
172	172	retirement system is not required to divest from any indirect
173	173	holdings in actively or passively managed investment funds or
174	174	private equity funds. The retirement system shall submit letters
175	175	to the managers of investment funds containing listed companies
176	176	requesting that they consider removing those companies from the
177	177	fund or create a similar fund with holdings devoid of listed
178	178	companies. If the manager creates such a similar fund with
179	179	substantially the same management fees and same level of investment
180	180	risk and anticipated return, the retirement system may replace all
181	181	applicable investments with investments in the similar fund in a
182	182	time frame consistent with prudent fiduciary standards.
183	183	Sec. 808.056. AUTHORIZED INVESTMENT IN LISTED COMPANIES.
184	184	(a) A retirement system may cease divesting from or may reinvest in
185	185	one or more listed companies if clear and convincing evidence shows
186	186	that:
187	187	(1) the retirement system has suffered or will suffer
188	188	a loss in the hypothetical value of all assets under management by
189	189	the retirement system as a result of having to divest from listed
190	190	companies under this chapter; or
191	191	(2) an individual portfolio that uses a
192	192	benchmark-aware strategy would be subject to an aggregate expected
193	193	deviation from its benchmark as a result of having to divest from
194	194	listed companies under this chapter.
195	195	(b) A retirement system may cease divesting from or may
196	196	reinvest in a listed company as provided by this section only to the
197	197	extent necessary to ensure that the retirement system does not
198	198	suffer a loss in value or deviate from its benchmark as described by
199	199	Subsection (a).
200	200	(c) Before a retirement system may cease divesting from or
201	201	may reinvest in a listed company under this section, the retirement
202	202	system must provide a written report to the presiding officer of
203	203	each house of the legislature and the attorney general setting
204	204	forth the reason and justification, supported by clear and
205	205	convincing evidence, for its decision to cease divestment, to
206	206	reinvest, or to remain invested in a listed company.
207	207	(d) The retirement system shall update the report required
208	208	by Subsection (c) semiannually, as applicable.
209	209	(e) This section does not apply to reinvestment in a company
210	210	that is no longer a listed company.
211	211	Sec. 808.057. PROHIBITED INVESTMENTS. Except as provided
212	212	by Section 808.056, a retirement system may not acquire securities
213	213	of a listed company.
214	214	SUBCHAPTER C. REPORT; ENFORCEMENT
215	215	Sec. 808.101. REPORT. Not later than December 31 of each
216	216	year, each retirement system shall file a publicly available report
217	217	with the presiding officer of each house of the legislature and the
218	218	attorney general that:
219	219	(1) identifies all securities sold, redeemed,
220	220	divested, or withdrawn in compliance with Section 808.054;
221	221	(2) identifies all prohibited investments under
222	222	Section 808.057; and
223	223	(3) summarizes any changes made under Section 808.055.
224	224	Sec. 808.102. ENFORCEMENT. The attorney general may bring
225	225	any action necessary to enforce this chapter.
226	226	SECTION 2. (a) Not later than November 1, 2017, the State
227	227	Pension Review Board shall adopt rules necessary to implement
228	228	Chapter 808, Government Code, as added by this Act.
229	229	(b) Not later than January 1, 2018, the State Pension Review
230	230	Board shall prepare and provide to each retirement system, as
231	231	defined by Section 808.001, Government Code, as added by this Act,
232	232	the initial list of scrutinized companies required by Section
233	233	808.051, Government Code, as added by this Act.
234	234	SECTION 3. This Act takes effect September 1, 2017.