Texas 2021 - 87th 1st C.S.

Texas Senate Bill SB24 Compare Versions

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

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