Combating BDS Act of 2017

Summary: Combating BDS Act of 2017 This bill allows&nbsp;a state or local government to adopt and enforce measures to divest its assets from, prohibit investment of its assets in, or restrict contracting with: (1) an entity that engages in a commerce- or investment-related boycott, divestment, or sanctions activity targeting Israel; or (2) an entity that owns or controls, is owned or controlled by, or is under common ownership or control with such an entity. Such measures are not preempted by federal law. A state or local government that seeks to adopt or enforce such measures shall comply with specified requirements related to notice, timing, and opportunity for comment. In addition, the bill amends the Investment Company Act of 1940 to prohibit a person from bringing any civil, criminal, or administrative action against a registered investment company based solely upon that company's divestment from securities issued by a person that engages in a commerce- or investment-related boycott, divestment, or sanctions activity targeting Israel.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Combating BDS Act of 2017''.

SEC. 2. NONPREEMPTION OF MEASURES BY STATE AND LOCAL GOVERNMENTS TO 
              DIVEST FROM ENTITIES THAT ENGAGE IN CERTAIN BOYCOTT, 
              DIVESTMENT, OR SANCTIONS ACTIVITIES TARGETING ISRAEL.

    (a) State and Local Measures.--Notwithstanding any other provision 
of law, a State or local government may adopt and enforce measures that 
meet the requirements of subsection (b) to divest the assets of the 
State or local government from, prohibit investment of the assets of 
the State or local government in, or restrict contracting by the State 
or local government for goods and services with--
            (1) an entity that the State or local government 
        determines, using credible information available to the public, 
        knowingly engages in a commerce-related or investment-related 
        boycott, divestment, or sanctions activity targeting Israel;
            (2) a successor entity or subunit of an entity described in 
        paragraph (1); or
            (3) an entity that owns or controls, is owned or controlled 
        by, or is under common ownership or control with, an entity 
        described in paragraph (1).
    (b) Requirements.--A State or local government that seeks to adopt 
or enforce a measure under subsection (a) shall meet the following 
requirements:
            (1) Notice.--The State or local government shall provide 
        written notice to each entity to which a measure under 
        subsection (a) is to be applied.
            (2) Timing.--The measure shall apply to an entity not 
        earlier than the date that is 90 days after the date on which 
        written notice is provided to the entity under paragraph (1).
            (3) Opportunity for comment.--The State or local government 
        shall provide an opportunity to comment in writing to each 
        entity to which a measure is to be applied. If the entity 
        demonstrates to the State or local government that the entity 
        has not engaged in a commerce-related or investment-related 
        boycott, divestment, or sanctions activity targeting Israel, 
        the measure shall not apply to the entity.
            (4) Sense of congress on avoiding erroneous targeting.--It 
        is the sense of Congress that a State or local government 
        should not adopt a measure under subsection (a) with respect to 
        an entity unless the State or local government has made every 
        effort to avoid erroneously targeting the entity and has 
        verified that the entity engages in a commerce-related or 
        investment-related boycott, divestment, or sanctions activity 
        targeting Israel.
    (c) Notice to Department of Justice.--
            (1) In general.--Except as provided in paragraph (2), not 
        later than 30 days after adopting a measure described in 
        subsection (a), the State or local government that adopted the 
        measure shall submit written notice to the Attorney General 
        describing the measure.
            (2) Existing measures.--With respect to measures described 
        in subsection (a) adopted before the date of the enactment of 
        this Act, the State or local government that adopted the 
        measure shall submit written notice to the Attorney General 
        describing the measure not later than 30 days after the date of 
        the enactment of this Act.
    (d) Nonpreemption.--A measure of a State or local government that 
is consistent with subsection (a) is not preempted by any Federal law.
    (e) Effective Date.--This section applies to any measure adopted by 
a State or local government before, on, or after the date of the 
enactment of this Act.
    (f) Prior Enacted Measures.--
            (1) In general.--Notwithstanding any other provision of 
        this section or any other provision of law, and except as 
        provided in paragraph (2), a State or local government may 
        enforce a measure described in subsection (a) adopted by the 
        State or local government before the date of the enactment of 
        this Act without regard to the requirements of subsection (b).
            (2) Application of notice and opportunity for comment.--A 
        measure described in paragraph (1) shall be subject to the 
        requirements of subsection (b) on and after the date that is 2 
        years after the date of the enactment of this Act.
    (g) Rules of Construction.--
            (1) Authority of states.--Nothing in this section shall be 
        construed to abridge the authority of a State to issue and 
        enforce rules governing the safety, soundness, and solvency of 
        a financial institution subject to its jurisdiction or the 
        business of insurance pursuant to the Act of March 9, 1945 (59 
        Stat. 33, chapter 20; 15 U.S.C. 1011 et seq.) (commonly known 
        as the ``McCarran-Ferguson Act'').
            (2) Policy of the united states.--Nothing in this section 
        shall be construed to alter the established policy of the 
        United States concerning final status issues associated with 
        the Arab-Israeli conflict, including border delineation, that 
        can only be resolved through direct negotiations between the 
        parties.
            (3) Scope of nonpreemption.--Nothing in this section shall 
        be construed as establishing a basis for preempting or implying 
        preemption of State measures relating to boycott, divestment, 
        or sanctions activity targeting Israel that are outside the 
        scope of subsection (a).
    (h) Definitions.--In this section:
            (1) Assets.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``assets'' means any pension, retirement, 
                annuity, or endowment fund, or similar instrument, that 
                is controlled by a State or local government.
                    (B) Exception.--The term ``assets'' does not 
                include employee benefit plans covered by title I of 
                the Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1001 et seq.).
            (2) Boycott, divestment, or sanctions activity targeting 
        israel.--The term ``boycott, divestment, or sanctions activity 
        targeting Israel'' means any activity that is intended to 
        penalize, inflict economic harm on, or otherwise limit 
        commercial relations with Israel or persons doing business in 
        Israel or in Israeli-controlled territories for purposes of 
        coercing political action by, or imposing policy positions on, 
        the Government of Israel.
            (3) Entity.--The term ``entity'' includes--
                    (A) any corporation, company, business association, 
                partnership, or trust; and
                    (B) any governmental entity or instrumentality of a 
                government, including a multilateral development 
                institution (as defined in section 1701(c)(3) of the 
                International Financial Institutions Act (22 U.S.C. 
                262r(c)(3))).
            (4) Investment.--The term ``investment'' includes--
                    (A) a commitment or contribution of funds or 
                property;
                    (B) a loan or other extension of credit; and
                    (C) the entry into or renewal of a contract for 
                goods or services.
            (5) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Commonwealth of the Northern Mariana Islands, 
        American Samoa, Guam, the United States Virgin Islands, and any 
        other territory or possession of the United States.
            (6) State or local government.--The term ``State or local 
        government'' includes--
                    (A) any State and any agency or instrumentality 
                thereof;
                    (B) any local government within a State and any 
                agency or instrumentality thereof; and
                    (C) any other governmental instrumentality of a 
                State or locality.

SEC. 3. SAFE HARBOR FOR CHANGES OF INVESTMENT POLICIES BY ASSET 
              MANAGERS.

    Section 13(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 
80a-13(c)(1)) is amended--
            (1) in subparagraph (A), by striking ``; or'' and inserting 
        a semicolon;
            (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following:
                    ``(C) engage in any boycott, divestment, or 
                sanctions activity targeting Israel described in 
                section 2 of the Combating BDS Act of 2017.''.