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  S.B. No. 13
 
 
 
 
AN ACT
  relating to state contracts with and investments in certain
  companies that boycott energy companies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle A, Title 8, Government Code, is amended
  by adding Chapter 809 to read as follows:
  CHAPTER 809. PROHIBITION ON INVESTMENT IN FINANCIAL COMPANIES THAT
  BOYCOTT CERTAIN ENERGY COMPANIES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 809.001.  DEFINITIONS. In this chapter:
               (1)  "Boycott energy company" means, without an
  ordinary business purpose, refusing to deal with, terminating
  business activities with, or otherwise taking any action that is
  intended to penalize, inflict economic harm on, or limit commercial
  relations with a company because the company:
                     (A)  engages in the exploration, production,
  utilization, transportation, sale, or manufacturing of fossil
  fuel-based energy and does not commit or pledge to meet
  environmental standards beyond applicable federal and state law; or
                     (B)  does business with a company described by
  Paragraph (A).
               (2)  "Company" means a for-profit sole proprietorship,
  organization, association, corporation, partnership, joint
  venture, limited partnership, limited liability partnership, or
  limited liability company, including a wholly owned subsidiary,
  majority-owned subsidiary, parent company, or affiliate of those
  entities or business associations, that exists to make a profit.
               (3)  "Direct holdings" means, with respect to a
  financial company, all securities of that financial company held
  directly by a state governmental entity in an account or fund in
  which a state governmental entity owns all shares or interests.
               (4)  "Financial company" means a publicly traded
  financial services, banking, or investment company.
               (5)  "Indirect holdings" means, with respect to a
  financial company, all securities of that financial company held in
  an account or fund, such as a mutual fund, managed by one or more
  persons not employed by a state governmental entity, in which the
  state governmental entity owns shares or interests together with
  other investors not subject to the provisions of this chapter. The
  term does not include money invested under a plan described by
  Section 401(k) or 457 of the Internal Revenue Code of 1986.
               (6)  "Listed financial company" means a financial
  company listed by the comptroller under Section 809.051.
               (7)  "State governmental entity" means:
                     (A)  the Employees Retirement System of Texas,
  including a retirement system administered by that system;
                     (B)  the Teacher Retirement System of Texas;
                     (C)  the Texas Municipal Retirement System;
                     (D)  the Texas County and District Retirement
  System;
                     (E)  the Texas Emergency Services Retirement
  System; and
                     (F)  the permanent school fund.
         Sec. 809.002.  OTHER LEGAL OBLIGATIONS. With respect to
  actions taken in compliance with this chapter, including all good
  faith determinations regarding financial companies as required by
  this chapter, a state governmental entity and the comptroller are
  exempt from any conflicting statutory or common law obligations,
  including any obligations with respect to making investments,
  divesting from any investment, preparing or maintaining any list of
  financial companies, or choosing asset managers, investment funds,
  or investments for the state governmental entity's securities
  portfolios.
         Sec. 809.003.  INDEMNIFICATION OF STATE GOVERNMENTAL
  ENTITIES, EMPLOYEES, AND OTHERS. In a cause of action based on an
  action, inaction, decision, divestment, investment, financial
  company communication, report, or other determination made or taken
  in connection with this chapter, the state shall, without regard to
  whether the person performed services for compensation, indemnify
  and hold harmless for actual damages, court costs, and attorney's
  fees adjudged against, and defend:
               (1)  an employee, a member of the governing body, or any
  other officer of a state governmental entity;
               (2)  a contractor of a state governmental entity;
               (3)  a former employee, a former member of the
  governing body, or any other former officer of a state governmental
  entity who was an employee, member of the governing body, or other
  officer when the act or omission on which the damages are based
  occurred;
               (4)  a former contractor of a state governmental entity
  who was a contractor when the act or omission on which the damages
  are based occurred; and
               (5)  a state governmental entity.
         Sec. 809.004.  NO PRIVATE CAUSE OF ACTION. (a) A person,
  including a member, retiree, or beneficiary of a retirement system
  to which this chapter applies, an association, a research firm, a
  financial company, or any other person may not sue or pursue a
  private cause of action against the state, a state governmental
  entity, a current or former employee, a member of the governing
  body, or any other officer of a state governmental entity, or a
  contractor of a state governmental entity, for any claim or cause of
  action, including breach of fiduciary duty, or for violation of any
  constitutional, statutory, or regulatory requirement in connection
  with any action, inaction, decision, divestment, investment,
  financial company communication, report, or other determination
  made or taken in connection with this chapter.
         (b)  A person who files suit against the state, a state
  governmental entity, an employee, a member of the governing body,
  or any other officer of a state governmental entity, or a contractor
  of a state governmental entity, is liable for paying the costs and
  attorney's fees of a person sued in violation of this section.
         Sec. 809.005.  INAPPLICABILITY OF REQUIREMENTS INCONSISTENT
  WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES. A state
  governmental entity is not subject to a requirement of this chapter
  if the state governmental entity determines that the requirement
  would be inconsistent with its fiduciary responsibility with
  respect to the investment of entity assets or other duties imposed
  by law relating to the investment of entity assets, including the
  duty of care established under Section 67, Article XVI, Texas
  Constitution.
         Sec. 809.006.  RELIANCE ON FINANCIAL COMPANY RESPONSE. The
  comptroller and a state governmental entity may rely on a financial
  company's response to a notice or communication made under this
  chapter without conducting any further investigation, research, or
  inquiry.
  SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
         Sec. 809.051.  LISTED FINANCIAL COMPANIES. (a) The
  comptroller shall prepare and maintain, and provide to each state
  governmental entity, a list of all financial companies that boycott
  energy companies. In maintaining the list, the comptroller may:
               (1)  review and rely, as appropriate in the
  comptroller's judgment, on publicly available information
  regarding financial companies, including information provided by
  the state, nonprofit organizations, research firms, international
  organizations, and governmental entities; and
               (2)  request written verification from a financial
  company that it does not boycott energy companies and rely, as
  appropriate in the comptroller's judgment and without conducting
  further investigation, research, or inquiry, on a financial
  company's written response to the request.
         (b)  A financial company that fails to provide to the
  comptroller a written verification under Subsection (a)(2) before
  the 61st day after receiving the request from the comptroller is
  presumed to be boycotting energy companies.
         (c)  The comptroller shall update the list annually or more
  often as the comptroller considers necessary, but not more often
  than quarterly, based on information from, among other sources,
  those listed in Subsection (a).
         (d)  Not later than the 30th day after the date the list of
  financial companies that boycott energy companies is first provided
  or updated, the comptroller shall file the list with the presiding
  officer of each house of the legislature and the attorney general
  and post the list on a publicly available Internet website.
         Sec. 809.052.  IDENTIFICATION OF INVESTMENT IN LISTED
  FINANCIAL COMPANIES. Not later than the 30th day after the date a
  state governmental entity receives the list provided under Section
  809.051, the state governmental entity shall notify the comptroller
  of the listed financial companies in which the state governmental
  entity owns direct holdings or indirect holdings.
         Sec. 809.053.  ACTIONS RELATING TO LISTED FINANCIAL COMPANY.
  (a) For each listed financial company identified under Section
  809.052, the state governmental entity shall send a written notice:
               (1)  informing the financial company of its status as a
  listed financial company;
               (2)  warning the financial company that it may become
  subject to divestment by state governmental entities after the
  expiration of the period described by Subsection (b); and
               (3)  offering the financial company the opportunity to
  clarify its activities related to companies described by Sections
  809.001(1)(A) and (B).
         (b)  Not later than the 90th day after the date the financial
  company receives notice under Subsection (a), the financial company
  must cease boycotting energy companies in order to avoid qualifying
  for divestment by state governmental entities.
         (c)  If, during the time provided by Subsection (b), the
  financial company ceases boycotting energy companies, the
  comptroller shall remove the financial company from the list
  maintained under Section 809.051 and this chapter will no longer
  apply to the financial company unless it resumes boycotting energy
  companies.
         (d)  If, after the time provided by Subsection (b) expires,
  the financial company continues to boycott energy companies, the
  state governmental entity shall sell, redeem, divest, or withdraw
  all publicly traded securities of the financial company, except
  securities described by Section 809.055, according to the schedule
  provided by Section 809.054.
         Sec. 809.054.  DIVESTMENT OF ASSETS. (a) A state
  governmental entity required to sell, redeem, divest, or withdraw
  all publicly traded securities of a listed financial company shall
  comply with the following schedule:
               (1)  at least 50 percent of those assets must be removed
  from the state governmental entity's assets under management not
  later than the 180th day after the date the financial company
  receives notice under Section 809.053 or Subsection (b) unless the
  state governmental entity determines, based on a good faith
  exercise of its fiduciary discretion and subject to Subdivision
  (2), that a later date is more prudent; and
               (2)  100 percent of those assets must be removed from
  the state governmental entity's assets under management not later
  than the 360th day after the date the financial company receives
  notice under Section 809.053 or Subsection (b).
         (b)  If a financial company that ceased boycotting energy
  companies after receiving notice under Section 809.053 resumes its
  boycott, the state governmental entity shall send a written notice
  to the financial company informing it that the state governmental
  entity will sell, redeem, divest, or withdraw all publicly traded
  securities of the financial company according to the schedule in
  Subsection (a).
         (c)  Except as provided by Subsection (a), a state
  governmental entity may delay the schedule for divestment under
  that subsection only to the extent that the state governmental
  entity determines, in the state governmental entity's good faith
  judgment, and consistent with the entity's fiduciary duty, that
  divestment from listed financial companies will likely result in a
  loss in value or a benchmark deviation described by Section
  809.056(a). If a state governmental entity delays the schedule for
  divestment, the state governmental entity shall submit a report to
  the presiding officer of each house of the legislature and the
  attorney general stating the reasons and justification for the
  state governmental entity's delay in divestment from listed
  financial companies. The report must include documentation
  supporting its determination that the divestment would result in a
  loss in value or a benchmark deviation described by Section
  809.056(a), including objective numerical estimates. The state
  governmental entity shall update the report every six months.
         Sec. 809.055.  INVESTMENTS EXEMPTED FROM DIVESTMENT. A
  state governmental entity is not required to divest from any
  indirect holdings in actively or passively managed investment funds
  or private equity funds. The state governmental entity shall
  submit letters to the managers of each investment fund containing
  listed financial companies requesting that they remove those
  financial companies from the fund or create a similar actively or
  passively managed fund with indirect holdings devoid of listed
  financial companies. If a manager creates a similar fund with
  substantially the same management fees and same level of investment
  risk and anticipated return, the state governmental entity may
  replace all applicable investments with investments in the similar
  fund in a time frame consistent with prudent fiduciary standards
  but not later than the 450th day after the date the fund is created.
         Sec. 809.056.  AUTHORIZED INVESTMENT IN LISTED FINANCIAL
  COMPANIES. (a) A state governmental entity may cease divesting
  from one or more listed financial companies only if clear and
  convincing evidence shows that:
               (1)  the state governmental entity has suffered or will
  suffer a loss in the hypothetical value of all assets under
  management by the state governmental entity as a result of having to
  divest from listed financial companies under this chapter; or
               (2)  an individual portfolio that uses a
  benchmark-aware strategy would be subject to an aggregate expected
  deviation from its benchmark as a result of having to divest from
  listed financial companies under this chapter.
         (b)  A state governmental entity may cease divesting from a
  listed financial company as provided by this section only to the
  extent necessary to ensure that the state governmental entity does
  not suffer a loss in value or deviate from its benchmark as
  described by Subsection (a).
         (c)  Before a state governmental entity may cease divesting
  from a listed financial company under this section, the state
  governmental entity must provide a written report to the
  comptroller, the presiding officer of each house of the
  legislature, and the attorney general setting forth the reason and
  justification, supported by clear and convincing evidence, for
  deciding to cease divestment or to remain invested in a listed
  financial company.
         (d)  The state governmental entity shall update the report
  required by Subsection (c) semiannually, as applicable.
         (e)  This section does not apply to reinvestment in a
  financial company that is no longer a listed financial company.
         Sec. 809.057.  PROHIBITED INVESTMENTS. Except as provided
  by Section 809.056, a state governmental entity may not acquire
  securities of a listed financial company.
  SUBCHAPTER C.  REPORT; ENFORCEMENT
         Sec. 809.101.  REPORT. Not later than January 5 of each
  year, each state governmental entity shall file a publicly
  available report with the presiding officer of each house of the
  legislature and the attorney general that:
               (1)  identifies all securities sold, redeemed,
  divested, or withdrawn in compliance with Section 809.054;
               (2)  identifies all prohibited investments under
  Section 809.057; and
               (3)  summarizes any changes made under Section 809.055.
         Sec. 809.102.  ENFORCEMENT. The attorney general may bring
  any action necessary to enforce this chapter.
         SECTION 2.  Subtitle F, Title 10, Government Code, is
  amended by adding Chapter 2274 to read as follows:
  CHAPTER 2274. PROHIBITION ON CONTRACTS WITH COMPANIES BOYCOTTING
  CERTAIN ENERGY COMPANIES
         Sec. 2274.001.  DEFINITIONS. In this chapter:
               (1)  "Boycott energy company" has the meaning assigned
  by Section 809.001.
               (2)  "Company" has the meaning assigned by Section
  809.001, except that the term does not include a sole
  proprietorship.
               (3)  "Governmental entity" has the meaning assigned by
  Section 2251.001.
         Sec. 2274.002.  PROVISION REQUIRED IN CONTRACT. (a) This
  section applies only to a contract that:
               (1)  is between a governmental entity and a company
  with 10 or more full-time employees; and
               (2)  has a value of $100,000 or more that is to be paid
  wholly or partly from public funds of the governmental entity.
         (b)  Except as provided by Subsection (c), a governmental
  entity may not enter into a contract with a company for goods or
  services unless the contract contains a written verification from
  the company that it:
               (1)  does not boycott energy companies; and
               (2)  will not boycott energy companies during the term
  of the contract.
         (c)  Subsection (b) does not apply to a governmental entity
  that determines the requirements of Subsection (b) are inconsistent
  with the governmental entity's constitutional or statutory duties
  related to the issuance, incurrence, or management of debt
  obligations or the deposit, custody, management, borrowing, or
  investment of funds.
         SECTION 3.  Chapter 2274, Government Code, as added by this
  Act, applies only to a contract entered into on or after the
  effective date of this Act. A contract entered into before that
  date is governed by the law in effect on the date the contract was
  entered into, and the former law is continued in effect for that
  purpose.
         SECTION 4.  This Act takes effect September 1, 2021.
 
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 13 passed the Senate on
  April 15, 2021, by the following vote:  Yeas 26, Nays 4;
  May 12, 2021, Senate refused to concur in House amendments and
  requested appointment of Conference Committee; May 14, 2021, House
  granted request of the Senate; May 28, 2021, Senate adopted
  Conference Committee Report by the following vote:  Yeas 28,
  Nays 3.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 13 passed the House, with
  amendments, on May 4, 2021, by the following vote:  Yeas 105,
  Nays 40, two present not voting; May 14, 2021, House granted
  request of the Senate for appointment of Conference Committee;
  May 28, 2021, House adopted Conference Committee Report by the
  following vote:  Yeas 121, Nays 26, one present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
             Date
 
 
  ______________________________ 
            Governor