BILL ANALYSIS

Senate Research Center	S.B. 2146
88R12313 LRM-D	By: Parker
	State Affairs
	4/14/2023
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The need for transparency from financial institutions that plan to divest from Texas oil and natural gas is paramount, as it affects not only the financial well-being of Texas investors but also the wider Texas economy. Divestment from these industries has the potential to significantly impact the state's economy and the livelihood of many Texas residents, making it important for financial institutions to be transparent about their plans and the reasons behind them. Investors have the right to know why their financial institution is divesting from these industries and how it will impact their investments, so they can make informed decisions about where to invest their money.

S.B. 2146 would require all financial institutions in the state that operate mutual funds to submit a signed statement to the Comptroller of Public Accounts of the State of Texas signifying that the custodian will not divest in Texas oil and natural gas.

S.B. 2146 provides enforcement for a financial institution that does not  comply with the conditions above. The comptroller will administer rules to  have on their prospectus documents a mark resembling a stamp stating that the financial institution plans to divest from Texas oil and natural gas.   

As proposed, S.B. 2146 amends current law relating to oversight by the comptroller of financial institution divestments from certain industries.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Comptroller of Public Accounts of the State of Texas in SECTION 1 (Section 403.0302, Government Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter B, Chapter 403, Government Code, by adding Section 403.0302, as follows:

Sec. 403.0302.� OVERSIGHT OF DIVESTMENTS IN CERTAIN INDUSTRIES. (a) Requires the Comptroller of Public Accounts of the State of Texas (comptroller) to require a financial institution that operates a mutual fund to periodically submit a statement to the comptroller stating whether the financial institution has divested or intends to divest from the mutual fund investments in a company that engages in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy.

(b) Requires the comptroller to adopt rules to:

(1) prescribe the requirements for a financial institution to comply with the requirements of Subsection (a);

(2) require a financial institution that chooses to divest from investments described by Subsection (a) to place a mark prescribed by the comptroller on prospectus documents that signifies the institution's choice to divest; and

(3) provide a penalty for financial institutions that fail to submit a statement required under Subsection (a).

SECTION 2. Requires the comptroller to adopt rules as required by Section 403.0302, Government Code, as added by this Act, not later than January 1, 2024.

SECTION 3. Effective date: September 1, 2023.