Texas 2021 - 87th Regular

Texas Senate Bill SB1158 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Kolkhorst, et al. S.B. No. 1158
	1	+	By: Kolkhorst S.B. No. 1158
	2	+	(In the Senate - Filed March 8, 2021; March 18, 2021, read
	3	+	first time and referred to Committee on State Affairs;
	4	+	April 15, 2021, reported adversely, with favorable Committee
	5	+	Substitute by the following vote: Yeas 6, Nays 3; April 15, 2021,
	6	+	sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR S.B. No. 1158 By: Birdwell
2	9
3	10
4	11		A BILL TO BE ENTITLED
5	12		AN ACT
6	13		relating to state contracts with and investments in social media
7	14		companies that censor political speech.
8	15		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	16		SECTION 1. Subtitle A, Title 8, Government Code, is amended
10	17		by adding Chapter 809 to read as follows:
11	18		CHAPTER 809. PROHIBITION ON INVESTMENT IN SOCIAL MEDIA COMPANIES
12	19		THAT CENSOR POLITICAL SPEECH
13	20		SUBCHAPTER A. GENERAL PROVISIONS
14	21		Sec. 809.001. DEFINITIONS. In this chapter:
15	22		(1) "Company" means a for-profit sole proprietorship,
16	23		organization, association, corporation, partnership, joint
17	24		venture, limited partnership, limited liability partnership, or
18	25		limited liability company, including a wholly owned subsidiary,
19	26		majority-owned subsidiary, parent company, or affiliate of those
20	27		entities or business associations, that exists to make a profit.
21	28		(2) "Direct holdings" means, with respect to a
22	29		company, all securities of that company held directly by a state
23	30		governmental entity in an account or fund in which a state
24	31		governmental entity owns all shares or interests.
25	32		(3) "Indirect holdings" means, with respect to a
26	33		company, all securities of that company held in an account or fund,
27	34		such as a mutual fund, managed by one or more persons not employed
28	35		by a state governmental entity, in which the state governmental
29	36		entity owns shares or interests together with other investors not
30	37		subject to the provisions of this chapter. The term does not
31	38		include money invested under a plan described by Section 401(k) or
32	39		457 of the Internal Revenue Code of 1986.
33	40		(4) "Listed company" means a company listed by the
34	41		attorney general under Section 809.051.
35	42		(5) "Political speech" means speech relating to the
36	43		state, government, public administration, government policymaking,
37	44		including speech by a governmental entity or candidates for public
38	45		office, and social issues.
39	46		(6) "Social media website" means an Internet website
40	47		or application that is open to the public and enables users to
41	48		communicate with each other by posting information, comments,
42	49		messages, or images. The term does not include a website or
43	50		application:
44	51		(A) with 75 million or fewer users;
45	52		(B) that has been affiliated with a religion or
46	53		political party;
47	54		(C) that is primarily used as an e-mail service;
48	55		or
49	56		(D) that consists primarily of content, such as
50	57		news, sports, or entertainment content, that:
51	58		(i) is curated by the owner or operator of
52	59		the website or application and is not user-generated; and
53	60		(ii) provides the basis for any chat,
54	61		comment, or interactive functionality on the website or
55	62		application.
56	63		(7) "State governmental entity" means:
57	64		(A) the Employees Retirement System of Texas,
58	65		including a retirement system administered by that system;
59	66		(B) the Teacher Retirement System of Texas;
60	67		(C) the Texas Municipal Retirement System;
61	68		(D) the Texas County and District Retirement
62	69		System;
63	70		(E) the Texas Emergency Services Retirement
64	71		System; and
65	72		(F) the permanent school fund.
66	73		(8) "User" means a person that posts, uploads,
67	74		transmits, or otherwise publishes content through a social media
68	75		website.
69	76		Sec. 809.002. OTHER LEGAL OBLIGATIONS. With respect to
70	77		actions taken in compliance with this chapter, including all good
71	78		faith determinations regarding companies as required by this
72	79		chapter, a state governmental entity and the comptroller are exempt
73	80		from any conflicting statutory or common law obligations, including
74	81		any obligations with respect to making investments, divesting from
75	82		any investment, preparing or maintaining any list of companies, or
76	83		choosing asset managers, investment funds, or investments for the
77	84		state governmental entity's securities portfolios.
78	85		Sec. 809.003. INDEMNIFICATION OF STATE GOVERNMENTAL
79	86		ENTITIES, EMPLOYEES, AND OTHERS. In a cause of action based on an
80	87		action, inaction, decision, divestment, investment, company
81	88		communication, report, or other determination made or taken in
82	89		connection with this chapter, the state shall, without regard to
83	90		whether the person performed services for compensation, indemnify
84	91		and hold harmless for actual damages, court costs, and attorney's
85	92		fees adjudged against, and defend:
86	93		(1) an employee, a member of the governing body, or any
87	94		other officer of a state governmental entity;
88	95		(2) a contractor of a state governmental entity;
89	96		(3) a former employee, a former member of the
90	97		governing body, or any other former officer of a state governmental
91	98		entity who was an employee, member of the governing body, or other
92	99		officer when the act or omission on which the damages are based
93	100		occurred;
94	101		(4) a former contractor of a state governmental entity
95	102		who was a contractor when the act or omission on which the damages
96	103		are based occurred; and
97	104		(5) a state governmental entity.
98	105		Sec. 809.004. NO PRIVATE CAUSE OF ACTION. (a) A person,
99	106		including a member, retiree, or beneficiary of a retirement system
100	107		to which this chapter applies, an association, a research firm, a
101	108		company, or any other person may not sue or pursue a private cause
102	109		of action against the state, a state governmental entity, a current
103	110		or former employee, a member of the governing body, or any other
104	111		officer of a state governmental entity, or a contractor of a state
105	112		governmental entity for any claim or cause of action, including
106	113		breach of fiduciary duty, or for violation of any constitutional,
107	114		statutory, or regulatory requirement in connection with any action,
108	115		inaction, decision, divestment, investment, company communication,
109	116		report, or other determination made or taken in connection with
110	117		this chapter.
111	118		(b) A person who files suit against the state, a state
112	119		governmental entity, an employee, a member of the governing body,
113	120		or any other officer of a state governmental entity, or a contractor
114	121		of a state governmental entity is liable for paying the costs and
115	122		attorney's fees of a person sued in violation of this section.
116	123		Sec. 809.005. INAPPLICABILITY OF REQUIREMENTS INCONSISTENT
117	124		WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES. A state
118	125		governmental entity is not subject to a requirement of this chapter
119	126		if the state governmental entity determines that the requirement
120	127		would be inconsistent with its fiduciary responsibility with
121	128		respect to the investment of entity assets or other duties imposed
122	129		by law relating to the investment of entity assets, including the
123	130		duty of care established under Section 67, Article XVI, Texas
124	131		Constitution.
125	132		SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
126	133		Sec. 809.051. LISTED COMPANIES. (a) The attorney general
127	134		shall prepare and maintain, and provide to each state governmental
128	135		entity, a list of companies that own a social media website that
129	136		censors political speech by:
130	137		(1) removing, banning, or demonetizing a user on the
131	138		basis that the user posted, uploaded, transmitted, or published
132	139		political speech; or
133	140		(2) otherwise restricts a user's ability to post,
134	141		upload, transmit, or publish political speech.
135	142		(b) In maintaining the list, the attorney general may review
136	143		and rely, as appropriate in the attorney general's judgment, on
137	144		publicly available information regarding companies that own a
138	145		social media website, including information provided by the state,
139	146		nonprofit organizations, research firms, international
140	147		organizations, and governmental entities.
141	148		(c) The attorney general may not include an Internet service
142	149		provider on a list prepared under this section.
143	150		(d) The attorney general shall update the list annually or
144	151		more often as the attorney general considers necessary, but not
145	152		more often than quarterly, based on information from, among other
146	153		sources, those listed in Subsection (b).
147	154		(e) Not later than the 30th day after the date the list of
148	155		companies is first provided or updated, the attorney general shall
149	156		file the list with the presiding officer of each house of the
150	157		legislature and post the list on a publicly available website.
151	158		Sec. 809.052. IDENTIFICATION OF INVESTMENT IN LISTED
152	159		COMPANIES. Not later than the 30th day after the date a state
153	160		governmental entity receives the list provided under Section
154	161		809.051, the state governmental entity shall notify the attorney
155	162		general of the listed companies in which the state governmental
156	163		entity owns direct holdings or indirect holdings.
157	164		Sec. 809.053. ACTIONS RELATING TO LISTED COMPANY. (a) For
158	165		each listed company identified under Section 809.052, the state
159	166		governmental entity shall send a written notice:
160	167		(1) informing the company of its status as a listed
161	168		company;
162	169		(2) warning the company that it may become subject to
163	170		divestment by state governmental entities after the expiration of
164	171		the period described by Subsection (b); and
165	172		(3) offering the company the opportunity to clarify
166	173		its activities related to censorship of political speech.
167	174		(b) Not later than the 90th day after the date the company
168	175		receives notice under Subsection (a), the company must cease
169	176		censoring political speech in order to avoid qualifying for
170	177		divestment by state governmental entities.
171	178		(c) If, during the time provided by Subsection (b), the
172	179		company ceases censoring political speech, the attorney general
173	180		shall remove the company from the list maintained under Section
174	181		809.051 and this chapter will no longer apply to the company unless
175	182		it resumes censoring political speech.
176	183		(d) If, after the time provided by Subsection (b) expires,
177	184		the company continues to censor political speech, the state
178	185		governmental entity shall sell, redeem, divest, or withdraw all
179	186		publicly traded securities of the company, except securities
180	187		described by Section 809.055, according to the schedule provided by
181	188		Section 809.054.
182	189		Sec. 809.054. DIVESTMENT OF ASSETS. (a) A state
183	190		governmental entity required to sell, redeem, divest, or withdraw
184	191		all publicly traded securities of a listed company shall comply
185	192		with the following schedule:
186	193		(1) at least 50 percent of those assets must be removed
187	194		from the state governmental entity's assets under management not
188	195		later than the 180th day after the date the company receives notice
189	196		under Section 809.053 or Subsection (b) unless the state
190	197		governmental entity determines, based on a good faith exercise of
191	198		its fiduciary discretion and subject to Subdivision (2), that a
192	199		later date is more prudent; and
193	200		(2) 100 percent of those assets must be removed from
194	201		the state governmental entity's assets under management not later
195	202		than the 360th day after the date the company receives notice under
196	203		Section 809.053 or Subsection (b).
197	204		(b) If a company that ceased censoring political speech
198	205		after receiving notice under Section 809.053 resumes censoring
199	206		political speech, the state governmental entity shall send a
200	207		written notice to the company informing it that the state
201	208		governmental entity will sell, redeem, divest, or withdraw all
202	209		publicly traded securities of the company according to the schedule
203	210		in Subsection (a).
204	211		(c) Except as provided by Subsection (a), a state
205	212		governmental entity may delay the schedule for divestment under
206	213		that subsection only to the extent that the state governmental
207	214		entity determines, in the state governmental entity's good faith
208	215		judgment, and consistent with the entity's fiduciary duty, that
209	216		divestment from listed companies will likely result in a loss in
210	217		value or a benchmark deviation described by Section 809.056(a). If
211	218		a state governmental entity delays the schedule for divestment, the
212	219		state governmental entity shall submit a report to the presiding
213	220		officer of each house of the legislature and the attorney general
214	221		stating the reasons and justification for the state governmental
215	222		entity's delay in divestment from listed companies. The report
216	223		must include documentation supporting its determination that the
217	224		divestment would result in a loss in value or a benchmark deviation
218	225		described by Section 809.056(a), including objective numerical
219	226		estimates. The state governmental entity shall update the report
220	227		every six months.
221	228		Sec. 809.055. INVESTMENTS EXEMPTED FROM DIVESTMENT. A
222	229		state governmental entity is not required to divest from any
223	230		indirect holdings in actively or passively managed investment funds
224	231		or private equity funds. The state governmental entity shall
225	232		submit letters to the managers of each investment fund containing
226	233		listed companies requesting that they remove those companies from
227	234		the fund or create a similar actively or passively managed fund with
228	235		indirect holdings devoid of listed companies. If a manager creates
229	236		a similar fund with substantially the same management fees and same
230	237		level of investment risk and anticipated return, the state
231	238		governmental entity may replace all applicable investments with
232	239		investments in the similar fund in a time frame consistent with
233	240		prudent fiduciary standards but not later than the 450th day after
234	241		the date the fund is created.
235	242		Sec. 809.056. AUTHORIZED INVESTMENT IN LISTED COMPANIES.
236	243		(a) A state governmental entity may cease divesting from one or
237	244		more listed companies only if clear and convincing evidence shows
238	245		that:
239	246		(1) the state governmental entity has suffered or will
240	247		suffer a loss in the hypothetical value of all assets under
241	248		management by the state governmental entity as a result of having to
242	249		divest from listed companies under this chapter; or
243	250		(2) an individual portfolio that uses a
244	251		benchmark-aware strategy would be subject to an aggregate expected
245	252		deviation from its benchmark as a result of having to divest from
246	253		listed companies under this chapter.
247	254		(b) A state governmental entity may cease divesting from a
248	255		listed company as provided by this section only to the extent
249	256		necessary to ensure that the state governmental entity does not
250	257		suffer a loss in value or deviate from its benchmark as described by
251	258		Subsection (a).
252	259		(c) Before a state governmental entity may cease divesting
253	260		from a listed company under this section, the state governmental
254	261		entity must provide a written report to the comptroller, the
255	262		presiding officer of each house of the legislature, and the
256	263		attorney general setting forth the reason and justification,
257	264		supported by clear and convincing evidence, for deciding to cease
258	265		divestment or to remain invested in a listed company.
259	266		(d) The state governmental entity shall update the report
260	267		required by Subsection (c) semiannually, as applicable.
261	268		(e) This section does not apply to reinvestment in a company
262	269		that is no longer a listed company.
263	270		Sec. 809.057. PROHIBITED INVESTMENTS. Except as provided
264	271		by Section 809.056, a state governmental entity may not acquire
265	272		securities of a listed company.
266	273		SUBCHAPTER C. REPORT; ENFORCEMENT
267	274		Sec. 809.101. REPORT. Not later than January 15 of each
268	275		year, each state governmental entity shall file a publicly
269	276		available report with the presiding officer of each house of the
270	277		legislature and the attorney general that:
271	278		(1) identifies all securities sold, redeemed,
272	279		divested, or withdrawn in compliance with Section 809.054;
273	280		(2) identifies all prohibited investments under
274	281		Section 809.057; and
275	282		(3) summarizes any changes made under Section 809.055.
276	283		Sec. 809.102. ENFORCEMENT. The attorney general may bring
277	284		any action necessary to enforce this chapter.
278	285		SECTION 2. This Act takes effect September 1, 2021.
	286	+	* * * * *