Texas 2021 - 87th 2nd C.S.

Texas House Bill HB57 Compare Versions

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

Old	New	Differences
1	1	87S20161 BRG-F
2	2	By: White H.B. No. 57
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to state investments in social media companies that censor
8	8	political speech.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle A, Title 8, Government Code, is amended
11	11	by adding Chapter 809A to read as follows:
12	12	CHAPTER 809A. PROHIBITION ON INVESTMENT IN SOCIAL MEDIA COMPANIES
13	13	THAT CENSOR POLITICAL SPEECH
14	14	SUBCHAPTER A. GENERAL PROVISIONS
15	15	Sec. 809A.001. DEFINITIONS. In this chapter:
16	16	(1) "Company" means a for-profit sole proprietorship,
17	17	organization, association, corporation, partnership, joint
18	18	venture, limited partnership, limited liability partnership, or
19	19	limited liability company, including a wholly owned subsidiary,
20	20	majority-owned subsidiary, parent company, or affiliate of those
21	21	entities or business associations, that exists to make a profit.
22	22	(2) "Direct holdings" means, with respect to a
23	23	company, all securities of that company held directly by a state
24	24	governmental entity in an account or fund in which a state
25	25	governmental entity owns all shares or interests.
26	26	(3) "Indirect holdings" means, with respect to a
27	27	company, all securities of that company held in an account or fund,
28	28	such as a mutual fund, managed by one or more persons not employed
29	29	by a state governmental entity, in which the state governmental
30	30	entity owns shares or interests together with other investors not
31	31	subject to the provisions of this chapter. The term does not
32	32	include money invested under a plan described by Section 401(k) or
33	33	457 of the Internal Revenue Code of 1986.
34	34	(4) "Listed company" means a company listed by the
35	35	attorney general under Section 809A.051.
36	36	(5) "Political speech" means speech relating to the
37	37	state, government, public administration, government policymaking,
38	38	including speech by a governmental entity or candidates for public
39	39	office, and social issues.
40	40	(6) "Social media website" means an Internet website
41	41	or application that is open to the public and enables users to
42	42	communicate with each other by posting information, comments,
43	43	messages, or images. The term does not include a website or
44	44	application:
45	45	(A) with 75 million or fewer users;
46	46	(B) that has been affiliated with a religion or
47	47	political party;
48	48	(C) that is primarily used as an e-mail service;
49	49	or
50	50	(D) that consists primarily of content, such as
51	51	news, sports, or entertainment content, that:
52	52	(i) is curated by the owner or operator of
53	53	the website or application and is not user-generated; and
54	54	(ii) provides the basis for any chat,
55	55	comment, or interactive functionality on the website or
56	56	application.
57	57	(7) "State governmental entity" means:
58	58	(A) the Employees Retirement System of Texas,
59	59	including a retirement system administered by that system;
60	60	(B) the Teacher Retirement System of Texas;
61	61	(C) the Texas Municipal Retirement System;
62	62	(D) the Texas County and District Retirement
63	63	System;
64	64	(E) the Texas Emergency Services Retirement
65	65	System; and
66	66	(F) the permanent school fund.
67	67	(8) "User" means a person that posts, uploads,
68	68	transmits, or otherwise publishes content through a social media
69	69	website.
70	70	Sec. 809A.002. OTHER LEGAL OBLIGATIONS. With respect to
71	71	actions taken in compliance with this chapter, including all good
72	72	faith determinations regarding companies as required by this
73	73	chapter, a state governmental entity and the comptroller are exempt
74	74	from any conflicting statutory or common law obligations, including
75	75	any obligations with respect to making investments, divesting from
76	76	any investment, preparing or maintaining any list of companies, or
77	77	choosing asset managers, investment funds, or investments for the
78	78	state governmental entity's securities portfolios.
79	79	Sec. 809A.003. INDEMNIFICATION OF STATE GOVERNMENTAL
80	80	ENTITIES, EMPLOYEES, AND OTHERS. In a cause of action based on an
81	81	action, inaction, decision, divestment, investment, company
82	82	communication, report, or other determination made or taken in
83	83	connection with this chapter, the state shall, without regard to
84	84	whether the person performed services for compensation, indemnify
85	85	and hold harmless for actual damages, court costs, and attorney's
86	86	fees adjudged against, and defend:
87	87	(1) an employee, a member of the governing body, or any
88	88	other officer of a state governmental entity;
89	89	(2) a contractor of a state governmental entity;
90	90	(3) a former employee, a former member of the
91	91	governing body, or any other former officer of a state governmental
92	92	entity who was an employee, member of the governing body, or other
93	93	officer when the act or omission on which the damages are based
94	94	occurred;
95	95	(4) a former contractor of a state governmental entity
96	96	who was a contractor when the act or omission on which the damages
97	97	are based occurred; and
98	98	(5) a state governmental entity.
99	99	Sec. 809A.004. NO PRIVATE CAUSE OF ACTION. (a) A person,
100	100	including a member, retiree, or beneficiary of a retirement system
101	101	to which this chapter applies, an association, a research firm, a
102	102	company, or any other person may not sue or pursue a private cause
103	103	of action against the state, a state governmental entity, a current
104	104	or former employee, a member of the governing body, or any other
105	105	officer of a state governmental entity, or a contractor of a state
106	106	governmental entity for any claim or cause of action, including
107	107	breach of fiduciary duty, or for violation of any constitutional,
108	108	statutory, or regulatory requirement in connection with any action,
109	109	inaction, decision, divestment, investment, company communication,
110	110	report, or other determination made or taken in connection with
111	111	this chapter.
112	112	(b) A person who files suit against the state, a state
113	113	governmental entity, an employee, a member of the governing body,
114	114	or any other officer of a state governmental entity, or a contractor
115	115	of a state governmental entity is liable for paying the costs and
116	116	attorney's fees of a person sued in violation of this section.
117	117	Sec. 809A.005. INAPPLICABILITY OF REQUIREMENTS
118	118	INCONSISTENT WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES. A
119	119	state governmental entity is not subject to a requirement of this
120	120	chapter if the state governmental entity determines that the
121	121	requirement would be inconsistent with its fiduciary
122	122	responsibility with respect to the investment of entity assets or
123	123	other duties imposed by law relating to the investment of entity
124	124	assets, including the duty of care established under Section 67,
125	125	Article XVI, Texas Constitution.
126	126	SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
127	127	Sec. 809A.051. LISTED COMPANIES. (a) The attorney general
128	128	shall prepare and maintain, and provide to each state governmental
129	129	entity, a list of companies that own a social media website that
130	130	censors political speech by:
131	131	(1) removing, banning, or demonetizing a user on the
132	132	basis that the user posted, uploaded, transmitted, or published
133	133	political speech; or
134	134	(2) otherwise restricting a user's ability to post,
135	135	upload, transmit, or publish political speech.
136	136	(b) In maintaining the list, the attorney general may review
137	137	and rely, as appropriate in the attorney general's judgment, on
138	138	publicly available information regarding companies that own a
139	139	social media website, including information provided by the state,
140	140	nonprofit organizations, research firms, international
141	141	organizations, and governmental entities.
142	142	(c) The attorney general may not include an Internet service
143	143	provider on a list prepared under this section.
144	144	(d) The attorney general shall update the list annually or
145	145	more often as the attorney general considers necessary, but not
146	146	more often than quarterly, based on information from, among other
147	147	sources, those listed in Subsection (b).
148	148	(e) Not later than the 30th day after the date the list of
149	149	companies is first provided or updated, the attorney general shall
150	150	file the list with the presiding officer of each house of the
151	151	legislature and post the list on a publicly available website.
152	152	Sec. 809A.052. IDENTIFICATION OF INVESTMENT IN LISTED
153	153	COMPANIES. Not later than the 30th day after the date a state
154	154	governmental entity receives the list provided under Section
155	155	809A.051, the state governmental entity shall notify the attorney
156	156	general of the listed companies in which the state governmental
157	157	entity owns direct holdings or indirect holdings.
158	158	Sec. 809A.053. ACTIONS RELATING TO LISTED COMPANY. (a) For
159	159	each listed company identified under Section 809A.052, the state
160	160	governmental entity shall send a written notice:
161	161	(1) informing the company of its status as a listed
162	162	company;
163	163	(2) warning the company that it may become subject to
164	164	divestment by state governmental entities after the expiration of
165	165	the period described by Subsection (b); and
166	166	(3) offering the company the opportunity to clarify
167	167	its activities related to censorship of political speech.
168	168	(b) Not later than the 90th day after the date the company
169	169	receives notice under Subsection (a), the company must cease
170	170	censoring political speech in order to avoid qualifying for
171	171	divestment by state governmental entities.
172	172	(c) If, during the time provided by Subsection (b), the
173	173	company ceases censoring political speech, the attorney general
174	174	shall remove the company from the list maintained under Section
175	175	809A.051 and this chapter will no longer apply to the company unless
176	176	it resumes censoring political speech.
177	177	(d) If, after the time provided by Subsection (b) expires,
178	178	the company continues to censor political speech, the state
179	179	governmental entity shall sell, redeem, divest, or withdraw all
180	180	publicly traded securities of the company, except securities
181	181	described by Section 809A.055, according to the schedule provided
182	182	by Section 809A.054.
183	183	Sec. 809A.054. DIVESTMENT OF ASSETS. (a) A state
184	184	governmental entity required to sell, redeem, divest, or withdraw
185	185	all publicly traded securities of a listed company shall comply
186	186	with the following schedule:
187	187	(1) at least 50 percent of those assets must be removed
188	188	from the state governmental entity's assets under management not
189	189	later than the 180th day after the date the company receives notice
190	190	under Section 809A.053 or Subsection (b) unless the state
191	191	governmental entity determines, based on a good faith exercise of
192	192	its fiduciary discretion and subject to Subdivision (2), that a
193	193	later date is more prudent; and
194	194	(2) 100 percent of those assets must be removed from
195	195	the state governmental entity's assets under management not later
196	196	than the 360th day after the date the company receives notice under
197	197	Section 809A.053 or Subsection (b).
198	198	(b) If a company that ceased censoring political speech
199	199	after receiving notice under Section 809A.053 resumes censoring
200	200	political speech, the state governmental entity shall send a
201	201	written notice to the company informing it that the state
202	202	governmental entity will sell, redeem, divest, or withdraw all
203	203	publicly traded securities of the company according to the schedule
204	204	in Subsection (a).
205	205	(c) Except as provided by Subsection (a), a state
206	206	governmental entity may delay the schedule for divestment under
207	207	that subsection only to the extent that the state governmental
208	208	entity determines, in the state governmental entity's good faith
209	209	judgment, and consistent with the entity's fiduciary duty, that
210	210	divestment from listed companies will likely result in a loss in
211	211	value or a benchmark deviation described by Section 809A.056(a).
212	212	If a state governmental entity delays the schedule for divestment,
213	213	the state governmental entity shall submit a report to the
214	214	presiding officer of each house of the legislature and the attorney
215	215	general stating the reasons and justification for the state
216	216	governmental entity's delay in divestment from listed companies.
217	217	The report must include documentation supporting its determination
218	218	that the divestment would result in a loss in value or a benchmark
219	219	deviation described by Section 809A.056(a), including objective
220	220	numerical estimates. The state governmental entity shall update
221	221	the report every six months.
222	222	Sec. 809A.055. INVESTMENTS EXEMPTED FROM DIVESTMENT. A
223	223	state governmental entity is not required to divest from any
224	224	indirect holdings in actively or passively managed investment funds
225	225	or private equity funds. The state governmental entity shall
226	226	submit letters to the managers of each investment fund containing
227	227	listed companies requesting that they remove those companies from
228	228	the fund or create a similar actively or passively managed fund with
229	229	indirect holdings devoid of listed companies. If a manager creates
230	230	a similar fund with substantially the same management fees and same
231	231	level of investment risk and anticipated return, the state
232	232	governmental entity may replace all applicable investments with
233	233	investments in the similar fund in a time frame consistent with
234	234	prudent fiduciary standards but not later than the 450th day after
235	235	the date the fund is created.
236	236	Sec. 809A.056. AUTHORIZED INVESTMENT IN LISTED COMPANIES.
237	237	(a) A state governmental entity may cease divesting from one or
238	238	more listed companies only if clear and convincing evidence shows
239	239	that:
240	240	(1) the state governmental entity has suffered or will
241	241	suffer a loss in the hypothetical value of all assets under
242	242	management by the state governmental entity as a result of having to
243	243	divest from listed companies under this chapter; or
244	244	(2) an individual portfolio that uses a
245	245	benchmark-aware strategy would be subject to an aggregate expected
246	246	deviation from its benchmark as a result of having to divest from
247	247	listed companies under this chapter.
248	248	(b) A state governmental entity may cease divesting from a
249	249	listed company as provided by this section only to the extent
250	250	necessary to ensure that the state governmental entity does not
251	251	suffer a loss in value or deviate from its benchmark as described by
252	252	Subsection (a).
253	253	(c) Before a state governmental entity may cease divesting
254	254	from a listed company under this section, the state governmental
255	255	entity must provide a written report to the comptroller, the
256	256	presiding officer of each house of the legislature, and the
257	257	attorney general setting forth the reason and justification,
258	258	supported by clear and convincing evidence, for deciding to cease
259	259	divestment or to remain invested in a listed company.
260	260	(d) The state governmental entity shall update the report
261	261	required by Subsection (c) semiannually, as applicable.
262	262	(e) This section does not apply to reinvestment in a company
263	263	that is no longer a listed company.
264	264	Sec. 809A.057. PROHIBITED INVESTMENTS. Except as provided
265	265	by Section 809A.056, a state governmental entity may not acquire
266	266	securities of a listed company.
267	267	SUBCHAPTER C. REPORT; ENFORCEMENT
268	268	Sec. 809A.101. REPORT. Not later than January 15 of each
269	269	year, each state governmental entity shall file a publicly
270	270	available report with the presiding officer of each house of the
271	271	legislature and the attorney general that:
272	272	(1) identifies all securities sold, redeemed,
273	273	divested, or withdrawn in compliance with Section 809A.054;
274	274	(2) identifies all prohibited investments under
275	275	Section 809A.057; and
276	276	(3) summarizes any changes made under Section
277	277	809A.055.
278	278	Sec. 809A.102. ENFORCEMENT. The attorney general may bring
279	279	any action necessary to enforce this chapter.
280	280	SECTION 2. This Act takes effect on the 91st day after the
281	281	last day of the legislative session.