Texas 2017 - 85th Regular

Texas Senate Bill SB134 Compare Versions

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

Old	New	Differences
1	1	85R2664 DDT-F
2	2	By: Creighton S.B. No. 134
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to state contracts with and investments in companies that
8	8	boycott Israel.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle F, Title 10, Government Code, is
11	11	amended by adding Chapter 2270 to read as follows:
12	12	CHAPTER 2270. PROHIBITION ON CONTRACTS WITH COMPANIES BOYCOTTING
13	13	ISRAEL
14	14	Sec. 2270.001. DEFINITIONS. In this chapter:
15	15	(1) "Boycott Israel" has the meaning assigned by
16	16	Section 808.001.
17	17	(2) "Company" has the meaning assigned by Section
18	18	808.001.
19	19	(3) "Governmental entity" has the meaning assigned by
20	20	Section 2251.001.
21	21	Sec. 2270.002. PROVISION REQUIRED IN CONTRACT. A
22	22	governmental entity may not enter into a contract with a company for
23	23	goods or services unless the contract contains a written
24	24	verification from the company that it:
25	25	(1) does not boycott Israel; and
26	26	(2) will not boycott Israel during the term of the
27	27	contract.
28	28	SECTION 2. Subtitle A, Title 8, Government Code, is amended
29	29	by adding Chapter 808 to read as follows:
30	30	CHAPTER 808. PROHIBITION ON INVESTMENT IN COMPANIES THAT BOYCOTT
31	31	ISRAEL
32	32	SUBCHAPTER A. GENERAL PROVISIONS
33	33	Sec. 808.001. DEFINITIONS. In this chapter:
34	34	(1) "Boycott Israel" means refusing to deal with,
35	35	terminating business activities with, or otherwise taking any
36	36	action that is intended to penalize, inflict economic harm on, or
37	37	limit commercial relations specifically with Israel, or with a
38	38	person or entity doing business in Israel or in an
39	39	Israeli-controlled territory, but does not include an action made
40	40	for ordinary business purposes.
41	41	(2) "Company" means a for-profit sole proprietorship,
42	42	organization, association, corporation, partnership, joint
43	43	venture, limited partnership, limited liability partnership, or
44	44	limited liability company, including a wholly owned subsidiary,
45	45	majority-owned subsidiary, parent company, or affiliate of those
46	46	entities or business associations that exists to make a profit.
47	47	(3) "Direct holdings" means, with respect to a
48	48	company, all securities of that company held directly by a state
49	49	governmental entity in an account or fund in which a state
50	50	governmental entity owns all shares or interests.
51	51	(4) "Indirect holdings" means, with respect to a
52	52	company, all securities of that company held in an account or fund,
53	53	such as a mutual fund, managed by one or more persons not employed
54	54	by a state governmental entity, in which the state governmental
55	55	entity owns shares or interests together with other investors not
56	56	subject to the provisions of this chapter. The term does not
57	57	include money invested under a plan described by Section 401(k) or
58	58	457 of the Internal Revenue Code of 1986.
59	59	(5) "Listed company" means a company listed by the
60	60	comptroller under Section 808.051.
61	61	(6) "State governmental entity" means:
62	62	(A) the Employees Retirement System of Texas,
63	63	including a retirement system administered by that system;
64	64	(B) the Teacher Retirement System of Texas;
65	65	(C) the Texas Municipal Retirement System;
66	66	(D) the Texas County and District Retirement
67	67	System;
68	68	(E) the Texas Emergency Services Retirement
69	69	System;
70	70	(F) The University of Texas Investment
71	71	Management Company; and
72	72	(G) the permanent school fund.
73	73	Sec. 808.002. OTHER LEGAL OBLIGATIONS. With respect to
74	74	actions taken in compliance with this chapter, including all good
75	75	faith determinations regarding companies as required by this
76	76	chapter, a state governmental entity and the comptroller are exempt
77	77	from any conflicting statutory or common law obligations, including
78	78	any obligations with respect to making investments, divesting from
79	79	any investment, preparing or maintaining any list of companies, or
80	80	choosing asset managers, investment funds, or investments for the
81	81	state governmental entity's securities portfolios.
82	82	Sec. 808.003. INDEMNIFICATION OF STATE GOVERNMENTAL
83	83	ENTITIES, EMPLOYEES, AND OTHERS. In a cause of action based on an
84	84	action, inaction, decision, divestment, investment, company
85	85	communication, report, or other determination made or taken in
86	86	connection with this chapter, the state shall, without regard to
87	87	whether the person performed services for compensation, indemnify
88	88	and hold harmless for actual damages, court costs, and attorney's
89	89	fees adjudged against, and defend:
90	90	(1) an employee, a member of the governing body, or any
91	91	other officer of a state governmental entity;
92	92	(2) a contractor of a state governmental entity;
93	93	(3) a former employee, a former member of the
94	94	governing body, or any other former officer of a state governmental
95	95	entity who was an employee, member of the governing body, or other
96	96	officer when the act or omission on which the damages are based
97	97	occurred;
98	98	(4) a former contractor of a state governmental entity
99	99	who was a contractor when the act or omission on which the damages
100	100	are based occurred; and
101	101	(5) a state governmental entity.
102	102	Sec. 808.004. NO PRIVATE CAUSE OF ACTION. (a) A person,
103	103	including a member, retiree, or beneficiary of a retirement system
104	104	to which this chapter applies, an association, a research firm, a
105	105	company, or any other person may not sue or pursue a private cause
106	106	of action against the state, a state governmental entity, a current
107	107	or former employee, a member of the governing body, or any other
108	108	officer of a state governmental entity, or a contractor of a state
109	109	governmental entity, for any claim or cause of action, including
110	110	breach of fiduciary duty, or for violation of any constitutional,
111	111	statutory, or regulatory requirement in connection with any action,
112	112	inaction, decision, divestment, investment, company communication,
113	113	report, or other determination made or taken in connection with
114	114	this chapter.
115	115	(b) A person who files suit against the state, a state
116	116	governmental entity, an employee, a member of the governing body,
117	117	or any other officer of a state governmental entity, or a contractor
118	118	of a state governmental entity, is liable for paying the costs and
119	119	attorney's fees of a person sued in violation of this section.
120	120	Sec. 808.005. RELIANCE ON COMPANY RESPONSE. The
121	121	comptroller and a state governmental entity may rely on a company's
122	122	response to a notice or communication made under this chapter
123	123	without conducting any further investigation, research, or
124	124	inquiry.
125	125	SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
126	126	Sec. 808.051. LISTED COMPANIES. (a) The comptroller shall
127	127	prepare and maintain, and provide to each state governmental
128	128	entity, a list of all companies that boycott Israel. In maintaining
129	129	the list, the comptroller may review and rely, as appropriate in the
130	130	comptroller's judgment, on publicly available information
131	131	regarding companies, including information provided by the state,
132	132	nonprofit organizations, research firms, international
133	133	organizations, and governmental entities.
134	134	(b) The comptroller shall update the list annually or more
135	135	often as the comptroller considers necessary, but not more often
136	136	than quarterly, based on information from, among other sources,
137	137	those listed in Subsection (a).
138	138	(c) Not later than the 30th day after the date the list of
139	139	companies that boycott Israel is first provided or updated, the
140	140	comptroller shall file the list with the presiding officer of each
141	141	house of the legislature and the attorney general and post the list
142	142	on a publicly available website.
143	143	Sec. 808.052. IDENTIFICATION OF INVESTMENT IN LISTED
144	144	COMPANIES. Not later than the 30th day after the date a state
145	145	governmental entity receives the list provided under Section
146	146	808.051, the state governmental entity shall notify the comptroller
147	147	of the listed companies in which the state governmental entity owns
148	148	direct holdings or indirect holdings.
149	149	Sec. 808.053. ACTIONS RELATING TO LISTED COMPANY. (a) For
150	150	each listed company identified under Section 808.052, the state
151	151	governmental entity shall send a written notice informing the
152	152	company of its status as a listed company and warning the company
153	153	that it may become subject to divestment by state governmental
154	154	entities.
155	155	(b) The notice must offer the company the opportunity to
156	156	clarify its Israel-related activities and must encourage the
157	157	company, not later than the 90th day after the date the company
158	158	receives notice under this section, to cease boycotting Israel in
159	159	order to avoid qualifying for divestment by state governmental
160	160	entities.
161	161	(c) If, during the time provided by Subsection (b), the
162	162	company ceases boycotting Israel, the comptroller shall remove the
163	163	company from the list maintained under Section 808.051 and this
164	164	chapter will no longer apply to the company unless it resumes
165	165	boycotting Israel.
166	166	(d) If, after the time provided by Subsection (b) expires,
167	167	the company continues to boycott Israel, the state governmental
168	168	entity shall sell, redeem, divest, or withdraw all publicly traded
169	169	securities of the company, except securities described by Section
170	170	808.055, according to the schedule provided by Section 808.054.
171	171	Sec. 808.054. DIVESTMENT OF ASSETS. (a) A state
172	172	governmental entity required to sell, redeem, divest, or withdraw
173	173	all publicly traded securities of a listed company shall comply
174	174	with the following schedule:
175	175	(1) at least 50 percent of those assets must be removed
176	176	from the state governmental entity's assets under management not
177	177	later than the 180th day after the date the company receives notice
178	178	under Section 808.053 or Subsection (b) unless the state
179	179	governmental entity determines, based on a good faith exercise of
180	180	its fiduciary discretion and subject to Subdivision (2), that a
181	181	later date is more prudent; and
182	182	(2) 100 percent of those assets must be removed from
183	183	the state governmental entity's assets under management not later
184	184	than the 360th day after the date the company receives notice under
185	185	Section 808.053 or Subsection (b).
186	186	(b) If a company that ceased boycotting Israel after
187	187	receiving notice under Section 808.053 resumes its boycott, the
188	188	state governmental entity shall send a written notice to the
189	189	company informing it that the state governmental entity will sell,
190	190	redeem, divest, or withdraw all publicly traded securities of the
191	191	company according to the schedule in Subsection (a).
192	192	(c) Except as provided by Subsection (a), a state
193	193	governmental entity may delay the schedule for divestment under
194	194	that subsection only to the extent that the state governmental
195	195	entity determines, in the state governmental entity's good faith
196	196	judgment, and consistent with the entity's fiduciary duty, that
197	197	divestment from listed companies will likely result in a loss in
198	198	value or a benchmark deviation described by Section 808.056(a). If
199	199	a state governmental entity delays the schedule for divestment, the
200	200	state governmental entity shall submit a report to the presiding
201	201	officer of each house of the legislature and the attorney general
202	202	stating the reasons and justification for the state governmental
203	203	entity's delay in divestment from listed companies. The report
204	204	must include documentation supporting its determination that the
205	205	divestment would result in a loss in value or a benchmark deviation
206	206	described by Section 808.056(a), including objective numerical
207	207	estimates. The state governmental entity shall update the report
208	208	every six months.
209	209	Sec. 808.055. INVESTMENTS EXEMPTED FROM DIVESTMENT. A
210	210	state governmental entity is not required to divest from any
211	211	indirect holdings in actively or passively managed investment funds
212	212	or private equity funds. The state governmental entity shall
213	213	submit letters to the managers of each investment fund containing
214	214	listed companies requesting that they remove those companies from
215	215	the fund or create a similar actively or passively managed fund with
216	216	indirect holdings devoid of listed companies. If a manager creates
217	217	a similar fund with substantially the same management fees and same
218	218	level of investment risk and anticipated return, the state
219	219	governmental entity may replace all applicable investments with
220	220	investments in the similar fund in a time frame consistent with
221	221	prudent fiduciary standards but not later than the 450th day after
222	222	the date the fund is created.
223	223	Sec. 808.056. AUTHORIZED INVESTMENT IN LISTED COMPANIES.
224	224	(a) A state governmental entity may cease divesting from one or
225	225	more listed companies only if clear and convincing evidence shows
226	226	that:
227	227	(1) the state governmental entity has suffered or will
228	228	suffer a loss in the hypothetical value of all assets under
229	229	management by the state governmental entity as a result of having to
230	230	divest from listed companies under this chapter; or
231	231	(2) an individual portfolio that uses a
232	232	benchmark-aware strategy would be subject to an aggregate expected
233	233	deviation from its benchmark as a result of having to divest from
234	234	listed companies under this chapter.
235	235	(b) A state governmental entity may cease divesting from a
236	236	listed company as provided by this section only to the extent
237	237	necessary to ensure that the state governmental entity does not
238	238	suffer a loss in value or deviate from its benchmark as described by
239	239	Subsection (a).
240	240	(c) Before a state governmental entity may cease divesting
241	241	from a listed company under this section, the state governmental
242	242	entity must provide a written report to the comptroller, the
243	243	presiding officer of each house of the legislature, and the
244	244	attorney general setting forth the reason and justification,
245	245	supported by clear and convincing evidence, for deciding to cease
246	246	divestment or to remain invested in a listed company.
247	247	(d) The state governmental entity shall update the report
248	248	required by Subsection (c) semiannually, as applicable.
249	249	(e) This section does not apply to reinvestment in a company
250	250	that is no longer a listed company.
251	251	Sec. 808.057. PROHIBITED INVESTMENTS. Except as provided
252	252	by Section 808.056, a state governmental entity may not acquire
253	253	securities of a listed company.
254	254	SUBCHAPTER C. REPORT; ENFORCEMENT
255	255	Sec. 808.101. REPORT. Not later than January 5 of each
256	256	year, each state governmental entity shall file a publicly
257	257	available report with the presiding officer of each house of the
258	258	legislature and the attorney general that:
259	259	(1) identifies all securities sold, redeemed,
260	260	divested, or withdrawn in compliance with Section 808.054;
261	261	(2) identifies all prohibited investments under
262	262	Section 808.057; and
263	263	(3) summarizes any changes made under Section 808.055.
264	264	Sec. 808.102. ENFORCEMENT. The attorney general may bring
265	265	any action necessary to enforce this chapter.
266	266	SECTION 3. This Act takes effect September 1, 2017.