BILL ANALYSIS

 

 

Senate Research Center	S.B. 2530
	By: Hughes
	Natural Resources & Economic Development
	4/14/2023
	As Filed

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

Overall S.B. 2530 makes a few clarifications to definitions pertinent to the comptroller's list of financial companies that boycott energy companies (the "list") and establishes some additional reporting and contracting requirements for Employees Retirement System of Texas, Teacher Retirement System of Texas, Texas Municipal Retirement System, Texas County and District Retirement System, Emergency Services Retirement System, and permanent school fund (collectively, the "State Investment Entities").

 

Section 1 of the bill clarifies the definition of "boycott" to ensure the definition captures financial companies that refuse to provide financing to companies because they are in the oil and gas business.

 

The section further clarifies the definition of "financial company" to specifically reference mutual funds, exchange traded funds, and money market funds. The bill restructures the format of the definition into three subdivisions (financial services, banks, and mutual funds, exchange traded funds, etc.) which is helpful to understand the new reporting and contracting requirements applicable to the State Investment Entities. These clarifications are consistent with the comptroller's existing interpretations of the provisions in S.B. 13.

 

Section 2 of the bill requires the State Investment Entities to report to the comptroller and the state leadership offices all contracts with listed financial companies (including existing contracts).  The bill also requires them to report contracts (including existing contracts) with affiliates of listed financial companies that are financial services companies or banks (i.e., on Annex I of the comptroller's list).

 

Section 3 of the bill prohibits the State Investment Entities from contracting with a counterparty (for any purpose) unless the counterparty represents (a) it does not boycott energy companies, (b) will not boycott energy companies for the term of the agreement, and (c) it is neither (i) a listed financial company; or (ii) an affiliate of a listed financial company that is a financial services company or bank listed in Annex I of the comptroller's list.

 

As proposed, S.B. 2530 amends current law relating to state contracts with and investments in certain companies that boycott energy companies.

 

RULEMAKING AUTHORITY

 

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Section 809.001, Government Code, to redefine "boycott energy company" and "financial company."

 

SECTION 2. Amends Section 809.101, Government Code, as follows:

 

Sec. 809.101. REPORT. Requires that each state governmental entity, not later than January 5 of each year, file a publicly available report with the presiding officer of each house of the legislature, the attorney general, and the Comptroller of Public Accounts of the State of Texas that:

 

(1) makes no changes to this subdivision;

 

(2)-(3) makes nonsubstantive changes to these subdivisions;

 

(4) identifies all contracts with listed financial companies as defined by Section 809.001(6) (relating to defining "listed financial company"); and

 

(5) identifies all contracts with affiliates of listed financial companies as defined under Section 809.001(4)(A) (relating to defining "financial company" as a publicly traded financial services company) and (B) (relating to defining "financial company" as a publicly traded banking company). Defines "affiliate."

 

SECTION 3. Amends Chapter 809, Government Code, by adding Subchapter D, as follows:

 

SUBCHAPTER D. PROHIBITION ON CONTRACTS WITH COMPANIES BOYCOTTING CERTAIN ENERGY COMPANIES

 

Sec. 809.201. PROVISION REQUIRED IN CONTRACT. (a) Provides that this section applies only to a contract that:

 

(1)� is between a state 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 state governmental entity.

 

(b) Prohibits a state governmental entity, except as provided by Subsection (c),� from entering into a contract with a company unless the contract contains a written verification from the company that it:

 

(1)� does not boycott energy companies;

 

(2)� will not boycott energy companies during the term of the contract;

 

(3)� is not a listed financial company as defined under Section 809.001(6); and

 

(4)� is not an affiliate of a listed financial company as defined under Section 809.001(4)(A) or (B).

 

(c)� Provides that Subsection (b) does not apply to a state 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.

 

(d) Defines "affiliate."

 

SECTION 4. Makes application of Section 809.201, Government Code, as added by this Act, prospective.

 

SECTION 5. Effective date: September 1, 2023.