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