TX
Texas House Bill HB2189

Texas 2021 - 87th Regular

Texas House Bill HB2189 Compare Versions

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1-87R17676 RDS-F
2- By: King of Parker, Craddick, Price, H.B. No. 2189
3- King of Hemphill, Bell of Montgomery
4- Substitute the following for H.B. No. 2189:
5- By: Paddie C.S.H.B. No. 2189
1+87R6479 RDS-F
2+ By: King of Parker H.B. No. 2189
63
74
85 A BILL TO BE ENTITLED
96 AN ACT
10- relating to state contracts with and investments in certain
11- companies that boycott energy companies.
7+ relating to state contracts with and investments in companies that
8+ boycott certain energy companies.
129 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1310 SECTION 1. Subtitle A, Title 8, Government Code, is amended
1411 by adding Chapter 809 to read as follows:
15- CHAPTER 809. PROHIBITION ON INVESTMENT IN FINANCIAL COMPANIES THAT
16- BOYCOTT CERTAIN ENERGY COMPANIES
12+ CHAPTER 809. PROHIBITION ON INVESTMENT IN COMPANIES THAT BOYCOTT
13+ CERTAIN ENERGY COMPANIES
1714 SUBCHAPTER A. GENERAL PROVISIONS
1815 Sec. 809.001. DEFINITIONS. In this chapter:
19- (1) "Boycott energy company" means refusing to deal
20- with, terminating business activities with, or otherwise taking any
21- action that is, solely or primarily, intended to penalize, inflict
22- economic harm on, or limit commercial relations with a company
23- because the company:
24- (A) engages in the exploration, production,
25- utilization, transportation, sale, or manufacturing of fossil
26- fuel-based energy and does not commit or pledge to meet
27- environmental standards beyond applicable federal and state law; or
16+ (1) "Boycott energy company" means, without an
17+ ordinary business purpose, refusing to deal with, terminating
18+ business activities with, or otherwise taking any action that is
19+ intended to penalize, inflict economic harm on, or limit commercial
20+ relations with a company because the company:
21+ (A) invests in or assists in the exploration,
22+ production, utilization, transportation, sale, or manufacturing of
23+ fossil fuel-based energy; or
2824 (B) does business with a company described by
2925 Paragraph (A).
3026 (2) "Company" means a for-profit sole proprietorship,
3127 organization, association, corporation, partnership, joint
3228 venture, limited partnership, limited liability partnership, or
3329 limited liability company, including a wholly owned subsidiary,
3430 majority-owned subsidiary, parent company, or affiliate of those
3531 entities or business associations, that exists to make a profit.
3632 (3) "Direct holdings" means, with respect to a
37- financial company, all securities of that financial company held
38- directly by a state governmental entity in an account or fund in
39- which a state governmental entity owns all shares or interests.
40- (4) "Financial company" means a publicly traded
41- financial services, banking, or investment company.
42- (5) "Indirect holdings" means, with respect to a
43- financial company, all securities of that financial company held in
44- an account or fund, such as a mutual fund, managed by one or more
45- persons not employed by a state governmental entity, in which the
46- state governmental entity owns shares or interests together with
47- other investors not subject to the provisions of this chapter. The
48- term does not include money invested under a plan described by
49- Section 401(k) or 457 of the Internal Revenue Code of 1986.
50- (6) "Listed financial company" means a financial
51- company listed by the comptroller under Section 809.051.
52- (7) "State governmental entity" means:
33+ company, all securities of that company held directly by a state
34+ governmental entity in an account or fund in which a state
35+ governmental entity owns all shares or interests.
36+ (4) "Indirect holdings" means, with respect to a
37+ company, all securities of that company held in an account or fund,
38+ such as a mutual fund, managed by one or more persons not employed
39+ by a state governmental entity, in which the state governmental
40+ entity owns shares or interests together with other investors not
41+ subject to the provisions of this chapter. The term does not
42+ include money invested under a plan described by Section 401(k) or
43+ 457 of the Internal Revenue Code of 1986.
44+ (5) "Listed company" means a company listed by the
45+ comptroller under Section 809.051.
46+ (6) "State governmental entity" means:
5347 (A) the Employees Retirement System of Texas,
5448 including a retirement system administered by that system;
5549 (B) the Teacher Retirement System of Texas;
5650 (C) the Texas Municipal Retirement System;
5751 (D) the Texas County and District Retirement
5852 System;
5953 (E) the Texas Emergency Services Retirement
6054 System; and
6155 (F) the permanent school fund.
6256 Sec. 809.002. OTHER LEGAL OBLIGATIONS. With respect to
6357 actions taken in compliance with this chapter, including all good
64- faith determinations regarding financial companies as required by
65- this chapter, a state governmental entity and the comptroller are
66- exempt from any conflicting statutory or common law obligations,
67- including any obligations with respect to making investments,
68- divesting from any investment, preparing or maintaining any list of
69- financial companies, or choosing asset managers, investment funds,
70- or investments for the state governmental entity's securities
71- portfolios.
58+ faith determinations regarding companies as required by this
59+ chapter, a state governmental entity and the comptroller are exempt
60+ from any conflicting statutory or common law obligations, including
61+ any obligations with respect to making investments, divesting from
62+ any investment, preparing or maintaining any list of companies, or
63+ choosing asset managers, investment funds, or investments for the
64+ state governmental entity's securities portfolios.
7265 Sec. 809.003. INDEMNIFICATION OF STATE GOVERNMENTAL
7366 ENTITIES, EMPLOYEES, AND OTHERS. In a cause of action based on an
74- action, inaction, decision, divestment, investment, financial
75- company communication, report, or other determination made or taken
76- in connection with this chapter, the state shall, without regard to
67+ action, inaction, decision, divestment, investment, company
68+ communication, report, or other determination made or taken in
69+ connection with this chapter, the state shall, without regard to
7770 whether the person performed services for compensation, indemnify
7871 and hold harmless for actual damages, court costs, and attorney's
7972 fees adjudged against, and defend:
8073 (1) an employee, a member of the governing body, or any
8174 other officer of a state governmental entity;
8275 (2) a contractor of a state governmental entity;
8376 (3) a former employee, a former member of the
8477 governing body, or any other former officer of a state governmental
8578 entity who was an employee, member of the governing body, or other
8679 officer when the act or omission on which the damages are based
8780 occurred;
8881 (4) a former contractor of a state governmental entity
8982 who was a contractor when the act or omission on which the damages
9083 are based occurred; and
9184 (5) a state governmental entity.
9285 Sec. 809.004. NO PRIVATE CAUSE OF ACTION. (a) A person,
9386 including a member, retiree, or beneficiary of a retirement system
9487 to which this chapter applies, an association, a research firm, a
95- financial company, or any other person may not sue or pursue a
96- private cause of action against the state, a state governmental
97- entity, a current or former employee, a member of the governing
98- body, or any other officer of a state governmental entity, or a
99- contractor of a state governmental entity, for any claim or cause of
100- action, including breach of fiduciary duty, or for violation of any
101- constitutional, statutory, or regulatory requirement in connection
102- with any action, inaction, decision, divestment, investment,
103- financial company communication, report, or other determination
104- made or taken in connection with this chapter.
88+ company, or any other person may not sue or pursue a private cause
89+ of action against the state, a state governmental entity, a current
90+ or former employee, a member of the governing body, or any other
91+ officer of a state governmental entity, or a contractor of a state
92+ governmental entity, for any claim or cause of action, including
93+ breach of fiduciary duty, or for violation of any constitutional,
94+ statutory, or regulatory requirement in connection with any action,
95+ inaction, decision, divestment, investment, company communication,
96+ report, or other determination made or taken in connection with
97+ this chapter.
10598 (b) A person who files suit against the state, a state
10699 governmental entity, an employee, a member of the governing body,
107100 or any other officer of a state governmental entity, or a contractor
108101 of a state governmental entity, is liable for paying the costs and
109102 attorney's fees of a person sued in violation of this section.
110103 Sec. 809.005. INAPPLICABILITY OF REQUIREMENTS INCONSISTENT
111104 WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES. A state
112105 governmental entity is not subject to a requirement of this chapter
113106 if the state governmental entity determines that the requirement
114107 would be inconsistent with its fiduciary responsibility with
115108 respect to the investment of entity assets or other duties imposed
116109 by law relating to the investment of entity assets, including the
117110 duty of care established under Section 67, Article XVI, Texas
118111 Constitution.
119- Sec. 809.006. RELIANCE ON FINANCIAL COMPANY RESPONSE. The
120- comptroller and a state governmental entity may rely on a financial
121- company's response to a notice or communication made under this
122- chapter without conducting any further investigation, research, or
112+ Sec. 809.006. RELIANCE ON COMPANY RESPONSE. The
113+ comptroller and a state governmental entity may rely on a company's
114+ response to a notice or communication made under this chapter
115+ without conducting any further investigation, research, or
123116 inquiry.
124117 SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
125- Sec. 809.051. LISTED FINANCIAL COMPANIES. (a) The
126- comptroller shall prepare and maintain, and provide to each state
127- governmental entity, a list of all financial companies that boycott
128- energy companies. In maintaining the list, the comptroller may:
129- (1) review and rely, as appropriate in the
130- comptroller's judgment, on publicly available information
131- regarding financial companies, including information provided by
118+ Sec. 809.051. LISTED COMPANIES. (a) The comptroller shall
119+ prepare and maintain, and provide to each state governmental
120+ entity, a list of all companies that boycott energy companies. In
121+ maintaining the list, the comptroller may review and rely, as
122+ appropriate in the comptroller's judgment, on publicly available
123+ information regarding companies, including information provided by
132124 the state, nonprofit organizations, research firms, international
133- organizations, and governmental entities; and
134- (2) request written verification from a financial
135- company that it does not boycott energy companies and rely, as
136- appropriate in the comptroller's judgment and without conducting
137- further investigation, research, or inquiry, on a financial
138- company's written response to the request.
139- (b) A financial company that fails to provide to the
140- comptroller a written verification under Subsection (a)(2) before
141- the 61st day after receiving the request from the comptroller is
142- presumed to be boycotting energy companies.
143- (c) The comptroller shall update the list annually or more
125+ organizations, and governmental entities.
126+ (b) The comptroller shall update the list annually or more
144127 often as the comptroller considers necessary, but not more often
145128 than quarterly, based on information from, among other sources,
146129 those listed in Subsection (a).
147- (d) Not later than the 30th day after the date the list of
148- financial companies that boycott energy companies is first provided
149- or updated, the comptroller shall file the list with the presiding
130+ (c) Not later than the 30th day after the date the list of
131+ companies that boycott energy companies is first provided or
132+ updated, the comptroller shall file the list with the presiding
150133 officer of each house of the legislature and the attorney general
151- and post the list on a publicly available Internet website.
134+ and post the list on a publicly available website.
152135 Sec. 809.052. IDENTIFICATION OF INVESTMENT IN LISTED
153- FINANCIAL COMPANIES. Not later than the 30th day after the date a
154- state governmental entity receives the list provided under Section
136+ COMPANIES. Not later than the 30th day after the date a state
137+ governmental entity receives the list provided under Section
155138 809.051, the state governmental entity shall notify the comptroller
156- of the listed financial companies in which the state governmental
157- entity owns direct holdings or indirect holdings.
158- Sec. 809.053. ACTIONS RELATING TO LISTED FINANCIAL COMPANY.
159- (a) For each listed financial company identified under Section
160- 809.052, the state governmental entity shall send a written notice:
161- (1) informing the financial company of its status as a
162- listed financial company;
163- (2) warning the financial company that it may become
164- subject to divestment by state governmental entities after the
165- expiration of the period described by Subsection (b); and
166- (3) offering the financial company the opportunity to
167- clarify its activities related to companies described by Sections
139+ of the listed companies in which the state governmental entity owns
140+ direct holdings or indirect holdings.
141+ Sec. 809.053. ACTIONS RELATING TO LISTED COMPANY. (a) For
142+ each listed company identified under Section 809.052, the state
143+ governmental entity shall send a written notice:
144+ (1) informing the company of its status as a listed
145+ company;
146+ (2) warning the company that it may become subject to
147+ divestment by state governmental entities after the expiration of
148+ the period described by Subsection (b); and
149+ (3) offering the company the opportunity to clarify
150+ its activities related to companies described by Sections
168151 809.001(1)(A) and (B).
169- (b) Not later than the 90th day after the date the financial
170- company receives notice under Subsection (a), the financial company
171- must cease boycotting energy companies in order to avoid qualifying
172- for divestment by state governmental entities.
152+ (b) Not later than the 90th day after the date the company
153+ receives notice under Subsection (a), the company must cease
154+ boycotting energy companies in order to avoid qualifying for
155+ divestment by state governmental entities.
173156 (c) If, during the time provided by Subsection (b), the
174- financial company ceases boycotting energy companies, the
175- comptroller shall remove the financial company from the list
176- maintained under Section 809.051 and this chapter will no longer
177- apply to the financial company unless it resumes boycotting energy
178- companies.
157+ company ceases boycotting energy companies, the comptroller shall
158+ remove the company from the list maintained under Section 809.051
159+ and this chapter will no longer apply to the company unless it
160+ resumes boycotting energy companies.
179161 (d) If, after the time provided by Subsection (b) expires,
180- the financial company continues to boycott energy companies, the
181- state governmental entity shall sell, redeem, divest, or withdraw
182- all publicly traded securities of the financial company, except
183- securities described by Section 809.055, according to the schedule
184- provided by Section 809.054.
162+ the company continues to boycott energy companies, the state
163+ governmental entity shall sell, redeem, divest, or withdraw all
164+ publicly traded securities of the company, except securities
165+ described by Section 809.055, according to the schedule provided by
166+ Section 809.054.
185167 Sec. 809.054. DIVESTMENT OF ASSETS. (a) A state
186168 governmental entity required to sell, redeem, divest, or withdraw
187- all publicly traded securities of a listed financial company shall
188- comply with the following schedule:
169+ all publicly traded securities of a listed company shall comply
170+ with the following schedule:
189171 (1) at least 50 percent of those assets must be removed
190172 from the state governmental entity's assets under management not
191- later than the 180th day after the date the financial company
192- receives notice under Section 809.053 or Subsection (b) unless the
193- state governmental entity determines, based on a good faith
194- exercise of its fiduciary discretion and subject to Subdivision
195- (2), that a later date is more prudent; and
173+ later than the 180th day after the date the company receives notice
174+ under Section 809.053 or Subsection (b) unless the state
175+ governmental entity determines, based on a good faith exercise of
176+ its fiduciary discretion and subject to Subdivision (2), that a
177+ later date is more prudent; and
196178 (2) 100 percent of those assets must be removed from
197179 the state governmental entity's assets under management not later
198- than the 360th day after the date the financial company receives
199- notice under Section 809.053 or Subsection (b).
200- (b) If a financial company that ceased boycotting energy
201- companies after receiving notice under Section 809.053 resumes its
202- boycott, the state governmental entity shall send a written notice
203- to the financial company informing it that the state governmental
204- entity will sell, redeem, divest, or withdraw all publicly traded
205- securities of the financial company according to the schedule in
206- Subsection (a).
180+ than the 360th day after the date the company receives notice under
181+ Section 809.053 or Subsection (b).
182+ (b) If a company that ceased boycotting energy companies
183+ after receiving notice under Section 809.053 resumes its boycott,
184+ the state governmental entity shall send a written notice to the
185+ company informing it that the state governmental entity will sell,
186+ redeem, divest, or withdraw all publicly traded securities of the
187+ company according to the schedule in Subsection (a).
207188 (c) Except as provided by Subsection (a), a state
208189 governmental entity may delay the schedule for divestment under
209190 that subsection only to the extent that the state governmental
210191 entity determines, in the state governmental entity's good faith
211192 judgment, and consistent with the entity's fiduciary duty, that
212- divestment from listed financial companies will likely result in a
213- loss in value or a benchmark deviation described by Section
214- 809.056(a). If a state governmental entity delays the schedule for
215- divestment, the state governmental entity shall submit a report to
216- the presiding officer of each house of the legislature and the
217- attorney general stating the reasons and justification for the
218- state governmental entity's delay in divestment from listed
219- financial companies. The report must include documentation
220- supporting its determination that the divestment would result in a
221- loss in value or a benchmark deviation described by Section
222- 809.056(a), including objective numerical estimates. The state
223- governmental entity shall update the report every six months.
193+ divestment from listed companies will likely result in a loss in
194+ value or a benchmark deviation described by Section 809.056(a). If
195+ a state governmental entity delays the schedule for divestment, the
196+ state governmental entity shall submit a report to the presiding
197+ officer of each house of the legislature and the attorney general
198+ stating the reasons and justification for the state governmental
199+ entity's delay in divestment from listed companies. The report
200+ must include documentation supporting its determination that the
201+ divestment would result in a loss in value or a benchmark deviation
202+ described by Section 809.056(a), including objective numerical
203+ estimates. The state governmental entity shall update the report
204+ every six months.
224205 Sec. 809.055. INVESTMENTS EXEMPTED FROM DIVESTMENT. A
225206 state governmental entity is not required to divest from any
226207 indirect holdings in actively or passively managed investment funds
227208 or private equity funds. The state governmental entity shall
228209 submit letters to the managers of each investment fund containing
229- listed financial companies requesting that they remove those
230- financial companies from the fund or create a similar actively or
231- passively managed fund with indirect holdings devoid of listed
232- financial companies. If a manager creates a similar fund with
233- substantially the same management fees and same level of investment
234- risk and anticipated return, the state governmental entity may
235- replace all applicable investments with investments in the similar
236- fund in a time frame consistent with prudent fiduciary standards
237- but not later than the 450th day after the date the fund is created.
238- Sec. 809.056. AUTHORIZED INVESTMENT IN LISTED FINANCIAL
239- COMPANIES. (a) A state governmental entity may cease divesting
240- from one or more listed financial companies only if clear and
241- convincing evidence shows that:
210+ listed companies requesting that they remove those companies from
211+ the fund or create a similar actively or passively managed fund with
212+ indirect holdings devoid of listed companies. If a manager creates
213+ a similar fund with substantially the same management fees and same
214+ level of investment risk and anticipated return, the state
215+ governmental entity may replace all applicable investments with
216+ investments in the similar fund in a time frame consistent with
217+ prudent fiduciary standards but not later than the 450th day after
218+ the date the fund is created.
219+ Sec. 809.056. AUTHORIZED INVESTMENT IN LISTED COMPANIES.
220+ (a) A state governmental entity may cease divesting from one or
221+ more listed companies only if clear and convincing evidence shows
222+ that:
242223 (1) the state governmental entity has suffered or will
243224 suffer a loss in the hypothetical value of all assets under
244225 management by the state governmental entity as a result of having to
245- divest from listed financial companies under this chapter; or
226+ divest from listed companies under this chapter; or
246227 (2) an individual portfolio that uses a
247228 benchmark-aware strategy would be subject to an aggregate expected
248229 deviation from its benchmark as a result of having to divest from
249- listed financial companies under this chapter.
230+ listed companies under this chapter.
250231 (b) A state governmental entity may cease divesting from a
251- listed financial company as provided by this section only to the
252- extent necessary to ensure that the state governmental entity does
253- not suffer a loss in value or deviate from its benchmark as
254- described by Subsection (a).
232+ listed company as provided by this section only to the extent
233+ necessary to ensure that the state governmental entity does not
234+ suffer a loss in value or deviate from its benchmark as described by
235+ Subsection (a).
255236 (c) Before a state governmental entity may cease divesting
256- from a listed financial company under this section, the state
257- governmental entity must provide a written report to the
258- comptroller, the presiding officer of each house of the
259- legislature, and the attorney general setting forth the reason and
260- justification, supported by clear and convincing evidence, for
261- deciding to cease divestment or to remain invested in a listed
262- financial company.
237+ from a listed company under this section, the state governmental
238+ entity must provide a written report to the comptroller, the
239+ presiding officer of each house of the legislature, and the
240+ attorney general setting forth the reason and justification,
241+ supported by clear and convincing evidence, for deciding to cease
242+ divestment or to remain invested in a listed company.
263243 (d) The state governmental entity shall update the report
264244 required by Subsection (c) semiannually, as applicable.
265- (e) This section does not apply to reinvestment in a
266- financial company that is no longer a listed financial company.
245+ (e) This section does not apply to reinvestment in a company
246+ that is no longer a listed company.
267247 Sec. 809.057. PROHIBITED INVESTMENTS. Except as provided
268248 by Section 809.056, a state governmental entity may not acquire
269- securities of a listed financial company.
249+ securities of a listed company.
270250 SUBCHAPTER C. REPORT; ENFORCEMENT
271251 Sec. 809.101. REPORT. Not later than January 5 of each
272252 year, each state governmental entity shall file a publicly
273253 available report with the presiding officer of each house of the
274254 legislature and the attorney general that:
275255 (1) identifies all securities sold, redeemed,
276256 divested, or withdrawn in compliance with Section 809.054;
277257 (2) identifies all prohibited investments under
278258 Section 809.057; and
279259 (3) summarizes any changes made under Section 809.055.
280260 Sec. 809.102. ENFORCEMENT. The attorney general may bring
281261 any action necessary to enforce this chapter.
282262 SECTION 2. Subtitle F, Title 10, Government Code, is
283263 amended by adding Chapter 2274 to read as follows:
284264 CHAPTER 2274. PROHIBITION ON CONTRACTS WITH COMPANIES BOYCOTTING
285265 CERTAIN ENERGY COMPANIES
286266 Sec. 2274.001. DEFINITIONS. In this chapter:
287267 (1) "Boycott energy company" has the meaning assigned
288268 by Section 809.001.
289269 (2) "Company" has the meaning assigned by Section
290270 809.001, except that the term does not include a sole
291271 proprietorship.
292272 (3) "Governmental entity" has the meaning assigned by
293273 Section 2251.001.
294274 Sec. 2274.002. PROVISION REQUIRED IN CONTRACT. (a) This
295275 section applies only to a contract that:
296276 (1) is between a governmental entity and a company
297277 with 10 or more full-time employees; and
298278 (2) has a value of $100,000 or more that is to be paid
299279 wholly or partly from public funds of the governmental entity.
300280 (b) A governmental entity may not enter into a contract with
301281 a company for goods or services unless the contract contains a
302282 written verification from the company that it:
303283 (1) does not boycott energy companies; and
304284 (2) will not boycott energy companies during the term
305285 of the contract.
306- SECTION 3. Chapter 2274, Government Code, as added by this
307- Act, applies only to a contract entered into on or after the
308- effective date of this Act. A contract entered into before that
309- date is governed by the law in effect on the date the contract was
310- entered into, and the former law is continued in effect for that
311- purpose.
312- SECTION 4. This Act takes effect September 1, 2021.
286+ SECTION 3. This Act takes effect September 1, 2021.