Texas 2023 - 88th Regular

Texas Senate Bill SB2405 Compare Versions

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1	1	88R10369 RDS-D
2	2	By: Creighton S.B. No. 2405
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to state contracts with Chinese companies and investments
8	8	in Chinese companies and certain companies doing business with
9	9	China; authorizing a civil penalty.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 2270.0001, Government Code, is amended
12	12	by adding Subdivision (1-a) and amending Subdivision (9) to read as
13	13	follows:
14	14	(1-a) "Chinese company" means a company that is
15	15	headquartered in China, regardless of whether:
16	16	(A) the company's or its parent company's
17	17	securities are publicly traded; or
18	18	(B) the company or its parent company is listed
19	19	as a Chinese company on a public stock exchange.
20	20	(9) "Scrutinized company" means:
21	21	(A) a company that:
22	22	(i) engages in scrutinized business
23	23	operations described by Section 2270.0052; or
24	24	(ii) has been complicit in the Darfur
25	25	genocide during any preceding 20-month period;
26	26	(B) a company that engages in scrutinized
27	27	business operations described by Section 2270.0102; [and]
28	28	(C) a company that engages in scrutinized
29	29	business operations described by Section 2270.0152; and
30	30	(D) a company that engages in scrutinized
31	31	business operations described by Section 2270.0162 or that is a
32	32	Chinese company.
33	33	SECTION 2. Subchapter A, Chapter 2270, Government Code, is
34	34	amended by adding Section 2270.00015 to read as follows:
35	35	Sec. 2270.00015. APPLICABILITY. (a) In this section:
36	36	(1) "Institution of higher education" has the meaning
37	37	assigned by Section 61.003, Education Code.
38	38	(2) "Trust company" means the Texas Treasury
39	39	Safekeeping Trust Company.
40	40	(b) This subchapter applies to an institution of higher
41	41	education and the trust company in the same manner as this
42	42	subchapter applies to an investing entity.
43	43	(c) Subchapter E, except Section 2270.0205, applies to an
44	44	institution of higher education and the trust company in the same
45	45	manner that the subchapter applies to an investing entity, but only
46	46	to the extent the institution of higher education or trust company
47	47	owns direct or indirect holdings of a company described by Section
48	48	2270.0001(9)(D).
49	49	SECTION 3. Section 2270.0002, Government Code, is amended
50	50	to read as follows:
51	51	Sec. 2270.0002. EXCEPTION. Notwithstanding any other law,
52	52	a company that the United States government affirmatively declares
53	53	to be excluded from its federal sanctions regime relating to Sudan,
54	54	its federal sanctions regime relating to Iran, [or] any federal
55	55	sanctions regime relating to a designated foreign terrorist
56	56	organization, or its federal sanctions regime relating to China is
57	57	not subject to divestment or investment prohibition under this
58	58	chapter.
59	59	SECTION 4. Chapter 2270, Government Code, is amended by
60	60	adding Subchapter D-1 to read as follows:
61	61	SUBCHAPTER D-1. GENERAL PROVISIONS RELATING TO INVESTMENTS IN CHINA
62	62	Sec. 2270.0161. DEFINITIONS. In this subchapter:
63	63	(1) "Business operations" means engaging in commerce
64	64	in any form in China, including by acquiring, developing,
65	65	maintaining, owning, selling, possessing, leasing, or operating
66	66	equipment, facilities, personnel, products, services, personal
67	67	property, real property, or any other apparatus of business or
68	68	commerce.
69	69	(2) "Military equipment" means weapons, arms,
70	70	military supplies, and equipment that readily may be used for
71	71	military purposes, including radar systems and military-grade
72	72	transport vehicles.
73	73	Sec. 2270.0162. SCRUTINIZED BUSINESS OPERATIONS IN CHINA.
74	74	A company engages in scrutinized business operations in China if:
75	75	(1) the company has business operations that involve
76	76	contracts with or providing supplies or services to the government
77	77	of China, a company in which the government of China has any direct
78	78	or indirect equity share, a consortium or project commissioned by
79	79	the government of China, or a company involved in a consortium or
80	80	project commissioned by the government of China; or
81	81	(2) the company supplies military equipment to China.
82	82	SECTION 5. Sections 2270.0201(a) and (b), Government Code,
83	83	are amended to read as follows:
84	84	(a) The comptroller shall prepare and maintain a list of all
85	85	scrutinized companies. The list must be categorized according to:
86	86	(1) companies that are scrutinized companies under
87	87	Section 2270.0001(9)(A);
88	88	(2) companies that are scrutinized companies under
89	89	Section 2270.0001(9)(B); [and]
90	90	(3) companies that are scrutinized companies under
91	91	Section 2270.0001(9)(C); and
92	92	(4) companies that are scrutinized companies under
93	93	Section 2270.0001(9)(D).
94	94	(b) In maintaining the list of scrutinized companies under
95	95	Subsection (a), the comptroller may review and rely, as appropriate
96	96	in the comptroller's judgment, on publicly available information
97	97	regarding companies with business operations in Sudan, in Iran,
98	98	[or] with designated foreign terrorist organizations, or in China,
99	99	as applicable, including information provided by the state,
100	100	nonprofit organizations, research firms, international
101	101	organizations, and governmental entities.
102	102	SECTION 6. Section 2270.0203, Government Code, is amended
103	103	to read as follows:
104	104	Sec. 2270.0203. NOTICE TO LISTED COMPANY ENGAGED IN
105	105	INACTIVE BUSINESS OPERATIONS. For each listed company identified
106	106	under Section 2270.0202 that is engaged in only inactive
107	107	scrutinized business operations, the investing entity shall send a
108	108	written notice informing the company of this chapter and
109	109	encouraging the company to continue to refrain from initiating
110	110	active business operations in Sudan, in Iran, [and] with designated
111	111	foreign terrorist organizations, and in China until it is able to
112	112	avoid being considered a listed company. The investing entity
113	113	shall continue the correspondence as the entity considers
114	114	necessary, but is not required to initiate correspondence more
115	115	often than semiannually.
116	116	SECTION 7. Section 2270.0204(b), Government Code, is
117	117	amended to read as follows:
118	118	(b) The notice shall offer the company the opportunity to
119	119	clarify its Sudan-related, Iran-related, [or] designated foreign
120	120	terrorist organization-related, or China-related activities, as
121	121	applicable, and shall encourage the company, not later than the
122	122	90th day after the date the company receives notice under this
123	123	section, to either cease all scrutinized business operations as
124	124	described by Sections 2270.0052, 2270.0102, [and] 2270.0152, and
125	125	2270.0162, or convert such operations to inactive business
126	126	operations in order to avoid qualifying for divestment by investing
127	127	entities.
128	128	SECTION 8. Subtitle F, Title 10, Government Code, is
129	129	amended by adding Chapter 2279 to read as follows:
130	130	CHAPTER 2279. PROHIBITION ON CONTRACTS WITH CHINESE COMPANIES
131	131	Sec. 2279.001. DEFINITIONS. In this chapter:
132	132	(1) "Chinese company" means a company that is
133	133	headquartered in China, regardless of whether:
134	134	(A) the company's or its parent company's
135	135	securities are publicly traded; or
136	136	(B) the company or its parent company is listed
137	137	as a Chinese company on a public stock exchange.
138	138	(2) "Company" means a sole proprietorship,
139	139	organization, association, corporation, partnership, joint
140	140	venture, limited partnership, limited liability partnership, or
141	141	limited liability company, including a wholly owned subsidiary,
142	142	majority-owned subsidiary, parent company, or affiliate of those
143	143	entities or business associations, that exists to make a profit.
144	144	(3) "State agency" has the meaning assigned by Section
145	145	2151.002.
146	146	Sec. 2279.002. PROVISION REQUIRED IN CERTAIN CONTRACTS. A
147	147	state agency may not enter into a contract with a vendor for goods
148	148	or services unless the contract contains a written verification
149	149	from the vendor that it is not a Chinese company.
150	150	Sec. 2279.003. FALSE VERIFICATION; PENALTIES. (a) If a
151	151	state agency determines that a vendor holding a contract with the
152	152	agency was ineligible to have the contract awarded under Section
153	153	2279.002 because the vendor's written verification was false, the
154	154	state agency shall immediately terminate the contract without
155	155	further obligation to the vendor.
156	156	(b) A vendor described by Subsection (a):
157	157	(1) is barred from responding to a solicitation for or
158	158	being awarded a contract for goods or services by any state agency;
159	159	and
160	160	(2) is liable to this state for a civil penalty of
161	161	$10,000.
162	162	(c) The attorney general may bring an action to recover a
163	163	civil penalty imposed under Subsection (b)(2). The attorney
164	164	general may recover reasonable attorney's fees and court costs in
165	165	bringing an action under this subsection.
166	166	SECTION 9. (a) As soon as practicable after the effective
167	167	date of this Act, the comptroller of public accounts shall review
168	168	all contracts entered into under the comptroller's purchasing
169	169	authority and identify any contracts entered into between this
170	170	state and a Chinese company, as defined by Section 2270.0001,
171	171	Government Code, as amended by this Act. The comptroller of public
172	172	accounts shall prepare a list of all Chinese companies that are a
173	173	party to a contract identified under this section.
174	174	(b) Not later than September 1, 2024, the comptroller of
175	175	public accounts shall provide the list prepared under Subsection
176	176	(a) of this section to the governor, the lieutenant governor, the
177	177	speaker of the house of representatives, and each member of the
178	178	legislature.
179	179	SECTION 10. Not later than the 180th day after the effective
180	180	date of this Act, the comptroller of public accounts shall include
181	181	the companies described by Section 2270.0201(a)(4), Government
182	182	Code, as added by this Act, on the list under Section 2270.0201(a),
183	183	Government Code.
184	184	SECTION 11. Section 2279.002, Government Code, as added by
185	185	this Act, applies only to a contract entered into on or after the
186	186	effective date of this Act. A contract entered into before that
187	187	date is governed by the law in effect on the date the contract was
188	188	entered into, and the former law is continued in effect for that
189	189	purpose.
190	190	SECTION 12. This Act takes effect immediately if it
191	191	receives a vote of two-thirds of all the members elected to each
192	192	house, as provided by Section 39, Article III, Texas Constitution.
193	193	If this Act does not receive the vote necessary for immediate
194	194	effect, this Act takes effect September 1, 2023.