S.B.ANo.A13

AN ACT12

relating

to

state

contracts

with

and

3

companies that boycott energy companies.

investmentsincertain4

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

5SECTIONA1.AASubtitle A, Title 8, Government Code, is amended

6by adding Chapter 809 to read as follows:

7

CHAPTER 809.

PROHIBITION ON INVESTMENT IN FINANCIAL COMPANIES THAT

8BOYCOTT CERTAIN ENERGY COMPANIES9SUBCHAPTER A.

10

GENERAL PROVISIONS

Sec.A809.001.AADEFINITIONS.
(1)AA"Boycott11business

energypurpose,In this chapter:company"

refusing

13

business activities with, or otherwise taking any action that is

14

intended to penalize, inflict economic harm on, or limit commercial

15

relations with a company because the company:

16(A)AAengages
transportation,

exploration,

production,utilization,18

fuel-based19

environmental standards beyond applicable federal and state law; or

22

does

(B)AAdoes

20
21

and

not

businessorterminating

17

energy

sale,

with,

an

ordinary

the

deal

without

12

in

to

means,

manufacturingcommit

with

a

or

pledgeoftofossilmeet

company describedbyParagraph (A).
(2)AA"Company" means a for-profit sole proprietorship,

23

organization,

24

venture, limited partnership, limited liability partnership, or

association,

corporation,

1

partnership,joint

S.B.ANo.A13
1limited liability company, including a wholly owned subsidiary,2majority-owned subsidiary, parent company, or affiliate of those3

entities or business associations, that exists to make a profit.
holdings"(3)AA"Direct

4means,

withrespecttoa5

financial company, all securities of that financial company held

6

directly by a state governmental entity in an account or fund in7

which a state governmental entity owns all shares or interests.
(4)AA"Financial

89company"meansapublicly

tradedfinancial services, banking, or investment company.
(5)AA"Indirect10

holdings"

means,

withrespect

toa11

financial company, all securities of that financial company held in

12

an account or fund, such as a mutual fund, managed by one or more

13

persons not employed by a state governmental entity, in which the14state governmental entity owns shares or interests together with15

other investors not subject to the provisions of this chapter.

16

term does not include money invested under a plan described by

17

Section 401(k) or 457 of the Internal Revenue Code of 1986.
(6)AA"Listed

18
19

company"meansafinancialcompany listed by the comptroller under Section 809.051.
(7)AA"State governmental entity" means:

20(A)AAthe21
22

financial

The

Employees

Retirement

SystemofTexas,

including a retirement system administered by that system;

23(B)AAthe Teacher Retirement System of Texas;

24(C)AAthe Texas Municipal Retirement System;

25(D)AAtheTexas

CountyandDistrict

Retirement(E)AAtheTexas

Emergency

Services

Retirement

26
27

System;2

S.B.ANo.A13
1

System; and(F)AAthe permanent school fund.

2

Sec.A809.002.AAOTHER

3

LEGAL

OBLIGATIONS.

With

respectto4

actions taken in compliance with this chapter, including all good5

faith determinations regarding financial companies as required by

6

this chapter, a state governmental entity and the comptroller are

7

exempt from any conflicting statutory or common law obligations,8

including9

divesting from any investment, preparing or maintaining any list of

10

financial companies, or choosing asset managers, investment funds,

11

or

12

portfolios.

13

any

investments

obligations

for

the

with

state

respect

togovernmental

Sec.A809.003.AAINDEMNIFICATION

OF

makinginvestments,

entity ’s

STATEsecurities

GOVERNMENTAL

14

ENTITIES, EMPLOYEES, AND OTHERS.

15

action,16

company communication, report, or other determination made or taken

17

in connection with this chapter, the state shall, without regard to18

whether the person performed services for compensation, indemnify

19

and hold harmless for actual damages, court costs, and attorney ’s

20

fees adjudged against, and defend:

21
22

inaction,

decision,

In a cause of action based on andivestment,

investment,

financial(1)AAan employee, a member of the governing body, or any
other officer of a state governmental entity;

23(2)AAa contractor of a state governmental entity;

24(3)AAaformeremployee,aformermember

of

the

25

governing body, or any other former officer of a state governmental

26

entity who was an employee, member of the governing body, or other27

officer when the act or omission on which the damages are based

3

S.B.ANo.A13
1

occurred;2(4)AAa former contractor of a state governmental entity

3

who was a contractor when the act or omission on which the damages

4

are based occurred; and5(5)AAa state governmental entity.

6

Sec.A809.004.AANO PRIVATE CAUSE OF ACTION.

(a)

A person,

7

including a member, retiree, or beneficiary of a retirement system8

to which this chapter applies, an association, a research firm, a9financial company, or any other person may not sue or pursue a

10

private cause of action against the state, a state governmental

11

entity, a current or former employee, a member of the governing

12

body, or any other officer of a state governmental entity, or a13

contractor of a state governmental entity, for any claim or cause of

14

action, including breach of fiduciary duty, or for violation of any

15

constitutional, statutory, or regulatory requirement in connection

16

with

17

financial company communication, report, or other determination

18

made or taken in connection with this chapter.

anyaction,(b)AAA19

inaction,

personwho

decision,

files

suit

divestment,

againsttheinvestment,

state,

a

state

20

governmental entity, an employee, a member of the governing body,21

or any other officer of a state governmental entity, or a contractor

22

of a state governmental entity, is liable for paying the costs and23

attorney ’s fees of a person sued in violation of this section.

24

Sec.A809.005.AAINAPPLICABILITY OF REQUIREMENTS INCONSISTENT

25

WITH

26

governmental entity is not subject to a requirement of this chapter

27

if the state governmental entity determines that the requirement

FIDUCIARYRESPONSIBILITIES

4ANDRELATED

DUTIES.

A

state

S.B.ANo.A13
1

would

be

2

respect to the investment of entity assets or other duties imposed3

by law relating to the investment of entity assets, including the

4

duty

5

Constitution.

ofinconsistent

care

with

established

its

under

fiduciary

Sectionresponsibility

67,

Article

XVI,

with

Texas

6

Sec.A809.006.AARELIANCE ON FINANCIAL COMPANY RESPONSE.

7

comptroller and a state governmental entity may rely on a financial

8

company ’s response to a notice or communication made under this9

chapter without conducting any further investigation, research, or

10inquiry.
SUBCHAPTER B.

11
12

The

DUTIES REGARDING INVESTMENTS

Sec.A809.051.AALISTEDFINANCIALCOMPANIES.

(a)

The

13

comptroller shall prepare and maintain, and provide to each state

14

governmental entity, a list of all financial companies that boycott

15

energy companies.

In maintaining the list, the comptroller may:

(1)AAreview

16

and

rely,

as

appropriate

in

the

17

comptroller ’s

18regarding financial companies, including information provided by

19

the state, nonprofit organizations, research firms, international

20

organizations, and governmental entities; andjudgment,(2)AArequest

21

onpublicly

writtenavailable

verification

frominformationafinancial

22company that it does not boycott energy companies and rely, as

23

appropriate in the comptroller ’s judgment and without conducting

24

further

25

company ’s written response to the request.

26
27

investigation,(b)AAAfinancialresearch,companyorthatinquiry,

fails

to

on

a

financialprovidetothecomptroller a written verification under Subsection (a)(2) before

5S.B.ANo.A13
1

the 61st day after receiving the request from the comptroller is2presumed to be boycotting energy companies.

3(c)AAThe comptroller shall update the list annually or more

4

often as the comptroller considers necessary, but not more often

5than quarterly, based on information from, among other sources,

6

those listed in Subsection (a).

7(d)AANot later than the 30th day after the date the list of

8

financial companies that boycott energy companies is first provided

9

or updated, the comptroller shall file the list with the presiding

10

officer of each house of the legislature and the attorney general11and post the list on a publicly available Internet website.
Sec.A809.052.AAIDENTIFICATION

12OFINVESTMENTIN

LISTED13

FINANCIAL COMPANIES.

Not later than the 30th day after the date a14state governmental entity receives the list provided under Section

15809.051, the state governmental entity shall notify the comptroller

16of the listed financial companies in which the state governmental

17

entity owns direct holdings or indirect holdings.
Sec.A809.053.AAACTIONS RELATING TO LISTED FINANCIAL COMPANY.

18
19

(a)

20

809.052, the state governmental entity shall send a written notice:21(1)AAinforming the financial company of its status as a

22

For each listed financial company identified under Section

listed financial company;

23(2)AAwarning the financial company that it may become

24

subject to divestment by state governmental entities after the25

expiration of the period described by Subsection (b); and26(3)AAoffering the financial company the opportunity to27clarify its activities related to companies described by Sections

6

S.B.ANo.A13
1

809.001(1)(A) and (B).

2(b)AANot later than the 90th day after the date the financial

3company receives notice under Subsection (a), the financial company

4must cease boycotting energy companies in order to avoid qualifying

5

for divestment by state governmental entities.
(c)AAIf, during the time provided by Subsection (b), the67financialcompany

8

comptroller

9maintained under Section 809.051 and this chapter will no longer

10

apply to the financial company unless it resumes boycotting energy

11

companies.

shallceasesremoveboycotting
theenergyfinancialcompanies,

company

from

the

the
list

12

(d)AAIf, after the time provided by Subsection (b) expires,13

the financial company continues to boycott energy companies, the14state governmental entity shall sell, redeem, divest, or withdraw

15

all publicly traded securities of the financial company, except

16

securities described by Section 809.055, according to the schedule17

provided by Section 809.054.
Sec.A809.054.AADIVESTMENT

18

OF

ASSETS.

(a)

A

state

19

governmental entity required to sell, redeem, divest, or withdraw

20

all publicly traded securities of a listed financial company shall21

comply with the following schedule:

22(1)AAat least 50 percent of those assets must be removed

23

from the state governmental entity ’s assets under management not

24

later

25

receives notice under Section 809.053 or Subsection (b) unless the

26

state

27

exercise of its fiduciary discretion and subject to Subdivision

than

the

180th

governmentalday

entity

after

the

date

determines,

7

the

based

financialonacompany

good

faith

S.B.ANo.A13
1(2), that a later date is more prudent; and2(2)AA100 percent of those assets must be removed from3

the state governmental entity ’s assets under management not later

4

than the 360th day after the date the financial company receives

5

notice under Section 809.053 or Subsection (b).

6(b)AAIf a financial company that ceased boycotting energy

7companies after receiving notice under Section 809.053 resumes its

8boycott, the state governmental entity shall send a written notice9

to the financial company informing it that the state governmental

10

entity will sell, redeem, divest, or withdraw all publicly traded11

securities of the financial company according to the schedule in

12

Subsection (a).
(c)AAExcept

13

asprovidedby

Subsection

(a),

a

state

14

governmental entity may delay the schedule for divestment under

15

that subsection only to the extent that the state governmental

16

entity determines, in the state governmental entity ’s good faith17

judgment, and consistent with the entity ’s fiduciary duty, that18

divestment from listed financial companies will likely result in a

19

loss

20

809.056(a).

21divestment, the state governmental entity shall submit a report to22

the presiding officer of each house of the legislature and the23

attorney general stating the reasons and justification for the

24

state

25

financial

26

supporting its determination that the divestment would result in a

27

loss

in

value

or

a

deviation

described

bySectionIf a state governmental entity delays the schedule for

entity ’s

governmentalinbenchmarkcompanies.

value

or

a

The

delay

in

reportmustbenchmarkdivestment

deviation

8

includefromlisteddocumentation

described

bySectionS.B.ANo.A13
1

809.056(a), including objective numerical estimates.

2

governmental entity shall update the report every six months.
EXEMPTED

Sec.A809.055.AAINVESTMENTS

3

governmental

5

indirect holdings in actively or passively managed investment funds

6

or

7

submit letters to the managers of each investment fund containing

8

listed9

financial companies from the fund or create a similar actively or

10passively managed fund with indirect holdings devoid of listed

11

financial companies.

12

substantially the same management fees and same level of investment

13

risk and anticipated return, the state governmental entity may

14

replace all applicable investments with investments in the similar

15

fund in a time frame consistent with prudent fiduciary standards

16

but not later than the 450th day after the date the fund is created.

financialfunds.

notThe

companies

state

COMPANIES.

19

from

20

convincing evidence shows that:ordivest

that

they

from

entityremove

any

shall

those

If a manager creates a similar fund with

18

one

(a)

to

governmental

requesting

Sec.A809.056.AAAUTHORIZED

17

requiredA

stateequityis

DIVESTMENT.

4

privateentityFROMThe state

INVESTMENTIN

LISTEDFINANCIAL

A state governmental entity may cease divesting

more

listedfinancialcompanies

only

if

clear

and

(1)AAthe state governmental entity has suffered or will

21
22

suffer23

management by the state governmental entity as a result of having to24divest from listed financial companies under this chapter; or

25

a

loss

in

(2)AAanthehypotheticalindividual

value

of

portfolio

allassets

that

under

uses

a

26

benchmark-aware strategy would be subject to an aggregate expected27

deviation from its benchmark as a result of having to divest from

9

S.B.ANo.A13
1listed financial companies under this chapter.

2(b)AAA state governmental entity may cease divesting from a3

listed financial company as provided by this section only to the4extent necessary to ensure that the state governmental entity does

5

not

6

described by Subsection (a).

suffer

a

loss

in

value

or

deviatefromitsbenchmarkas(c)AABefore a state governmental entity may cease divesting

7
8

from

9

governmental

entity10comptroller,

the

11

legislature, and the attorney general setting forth the reason and12justification,

13

deciding to cease divestment or to remain invested in a listed

14

financial company.

financialcompany

must

providepresiding

supported

under

by

a

officer

clear

and

this

section,

the

state

writtenreport

to

the

of

house

of

the

each

convincing

evidence,for

required by Subsection (c) semiannually, as applicable.
(e)AAThis

17
18

listed(d)AAThe state governmental entity shall update the report

15
16

a

section

does

not

apply

to

reinvestment

inafinancial company that is no longer a listed financial company.
Sec.A809.057.AAPROHIBITED INVESTMENTS.

19

Except as provided

20

by Section 809.056, a state governmental entity may not acquire

21

securities of a listed financial company.

22

SUBCHAPTER C.

23

Sec.A809.101.AAREPORT.
state

Not later than January 5 of each

24

year,

25

available report with the presiding officer of each house of the26

legislature and the attorney general that:

27

each

REPORT; ENFORCEMENT

governmental(1)AAidentifies

entity

all

10

shall

securities

file

sold,

a

publicly

redeemed,

S.B.ANo.A13
1divested, or withdrawn in compliance with Section 809.054;

3

6
7
8
9

Sec.A809.102.AAENFORCEMENT.

SECTIONA2.AASubtitle

CHAPTER 2274.

22
23
24

Government

Code,

is

PROHIBITION ON CONTRACTS WITH COMPANIES BOYCOTTING

In this chapter:by Section 809.001.
(2)AA"Company"

proprietorship.

21

10,

(1)AA"Boycott energy company" has the meaning assigned

16

20

Title

Sec.A2274.001.AADEFINITIONS.

809.001,

19

F,

CERTAIN ENERGY COMPANIES

15

18

The attorney general may bringamended by adding Chapter 2274 to read as follows:

14

17

under

any action necessary to enforce this chapter.

12
13

investments(3)AAsummarizes any changes made under Section 809.055.

10
11

prohibited

Section 809.057; and

4
5

all

(2)AAidentifies

2

except

that

has

the

the
term

meaning
does

assignednotbyincludeSectionasole(3)AA"Governmental entity" has the meaning assigned by
Section 2251.001.
Sec.A2274.002.AAPROVISION REQUIRED IN CONTRACT.

(a)

This

section applies only to a contract that:(1)AAis between a governmental entity and a company
with 10 or more full-time employees; and(2)AAhas a value of $100,000 or more that is to be paid
wholly or partly from public funds of the governmental entity.

25(b)AAExcept as provided by Subsection (c), a governmental

26

entity may not enter into a contract with a company for goods or27

services unless the contract contains a written verification from11

S.B.ANo.A13
1

the company that it:

2(1)AAdoes not boycott energy companies; and3(2)AAwill not boycott energy companies during the term

4of the contract.

5(c)AASubsection (b) does not apply to a governmental entity

6

that determines the requirements of Subsection (b) are inconsistent7

with the governmental entity ’s constitutional or statutory duties

8

related9

obligations

10

to

the
or

issuance,thedeposit,incurrence,custody,ormanagement

management,

of

debt

borrowing,or

investment of funds.
SECTIONA3.AAChapter 2274, Government Code, as added by this

11
12

Act,

13

effective date of this Act.

14

date is governed by the law in effect on the date the contract was

15

entered into, and the former law is continued in effect for that

16

purpose.

17

applies

only

to

a

contract

entered

into

on

or

after

the

A contract entered into before that

SECTIONA4.AAThis Act takes effect September 1, 2021.

12

S.B.ANo.A13______________________________AAAA______________________________
President of the SenateAAAAAAAAAAAAASpeaker of the HouseI

herebyAprilA15,A2021,

certify
by

that

the

S.B.ANo.A13

following

passedtheSenatevote:AAYeasA26,

on

NaysA4;

MayA12,A2021, Senate refused to concur in House amendments andrequested appointment of Conference Committee; MayA14,A2021, House
grantedrequestConference

of

the

Committee

MayA28,A2021,

Senatethevote:AAYeasA28,

Senate;Reportbyfollowing

adoptedNaysA3.

______________________________AAAASecretary of the Senate
I hereby certify that S.B.ANo.A13 passed the House, with
amendments,
NaysA40,

on

two

MayA4,A2021,

present

not

by

the

voting;following

vote:AAYeasA105,

MayA14,A2021,

House

grantedrequest of the Senate for appointment of Conference Committee;
MayA28,A2021,

House

adoptedConference

Committee

Reportbythefollowing vote:AAYeasA121, NaysA26, one present not voting.

______________________________AAAAChief Clerk of the House

Approved:______________________________AAAAAAAAAAAADate______________________________AAAAAAAAAAAGovernor

13