TSP Fiduciary Security Act of 2023

Subjects: Government Operations and Politics, Administrative law and regulatory procedures, Advanced technology and technological innovations, Africa, Asia, Caribbean area, China, Civil actions and liability, Congressional oversight, Corporate finance and management, Cuba, Department of Labor, Employee benefits and pensions, Europe, Financial services and investments, Foreign and international corporations, Government employee pay, benefits, personnel management, Iran, Latin America, Middle East, Military assistance, sales, and agreements, Military procurement, research, weapons development, North Korea, Public contracts and procurement, Research and development, Russia, Securities, Sudan, Syria, Terrorism, Venezuela

Summary:  <p><b>TSP Fiduciary Security Act</b> <b>of 2023</b></p> <p>This bill incorporates national security interests into management of the Thrift Savings Fund. </p> <p>Specifically, the bill requires fiduciaries that are responsible for managing the fund (i.e., the Federal Retirement Thrift Investment Board) to prevent fund investments and associated votes that harm the national security of the United States, including investments in entities on certain lists maintained by the Department of Defense and the Department of Commerce (e.g., Chinese military companies). The Department of Labor must issue implementing regulations that include these and other standards for compliance.</p> <p>Beginning January 1, 2025, fiduciaries may be held personally liable for monetary damages and may be assessed civil penalties for failing to meet these requirements.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 149 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                 S. 149

 To amend title 5, United States Code, to address the responsibilities 
 of fiduciaries with respect to the Thrift Savings Fund, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 30, 2023

   Mr. Rubio introduced the following bill; which was read twice and 
referred to the Committee on Homeland Security and Governmental Affairs

_______________________________________________________________________

                                 A BILL


 
 To amend title 5, United States Code, to address the responsibilities 
 of fiduciaries with respect to the Thrift Savings Fund, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``TSP Fiduciary Security Act of 
2023''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The Federal Retirement Thrift Investment Board has a 
        fiduciary duty to manage the Thrift Savings Fund in the best 
        interest of the beneficiaries of the Fund.
            (2) The principal beneficiaries of the Thrift Savings Fund 
        are the civil servants of the United States, and members of the 
        uniformed services, who are tasked with defending the national 
        security of the United States.
            (3) The duty of the Federal Retirement Thrift Investment 
        Board to manage the Thrift Savings Fund in the best interests 
        of the beneficiaries of the Fund includes a duty not to harm 
        the national security of the United States.

SEC. 3. FIDUCIARY RESPONSIBILITIES WITH RESPECT TO THRIFT SAVINGS FUND.

    Section 8477 of title 5, United States Code, is amended--
            (1) in subsection (b)(1)--
                    (A) in subparagraph (B), by striking ``; and'' and 
                inserting a semicolon;
                    (B) in subparagraph (C), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(D) to the maximum extent practicable, by preventing the 
        investments of the Thrift Savings Fund (or portions thereof), 
        and the exercise of voting rights associated with any such 
        investments, from harming the national security of the United 
        States.''; and
            (2) in subsection (e), by adding at the end the following:
    ``(9)(A) Notwithstanding any other provision of this subsection, no 
fiduciary shall be personally liable for any monetary damages, or be 
assessed any civil penalty, under this subsection with respect to a 
breach of the requirement under subsection (b)(1)(D).
    ``(B) Subparagraph (A) shall cease to have effect beginning on 
January 1, 2025.''.

SEC. 4. REVIEW OF THRIFT SAVINGS FUND FOR COMPLIANCE WITH FIDUCIARY 
              DUTIES.

    (a) In General.--Section 8477(f) of title 5, United States Code, is 
amended--
            (1) by inserting ``(1)'' after ``(f)''; and
            (2) by adding at the end the following:
    ``(2)(A) Not later than 1 year after the date of enactment of this 
paragraph, the Secretary of Labor, in consultation with the Secretary 
of Defense, the Attorney General, the Secretary of Homeland Security, 
and the Secretary of the Treasury, shall prescribe regulations to carry 
out subsection (b)(1)(D) with respect to each of the following:
            ``(i) The investments of the Thrift Savings Fund, which 
        shall include the establishment of standards by which 
        compliance with subsection (b)(1)(D) with respect to the 
        investments of the Thrift Savings Fund (or portions thereof) 
        shall be determined.
            ``(ii) The exercise of voting rights associated with the 
        investments of the Thrift Savings Fund (or portions thereof).
    ``(B) The regulations prescribed under subparagraph (A)(ii) shall 
include--
            ``(i) the establishment of a process by which the exercise 
        of voting rights described in subparagraph (A)(ii) shall be 
        reviewed by the Secretary of Labor, in consultation with the 
        Secretary of Defense, the Attorney General, the Secretary of 
        Homeland Security, and the Secretary of the Treasury, for 
        compliance with subsection (b)(1)(D) with respect to the 
        exercise of those rights; and
            ``(ii) the establishment of standards by which compliance 
        with subsection (b)(1)(D) with respect to the exercise of 
        voting rights described in subparagraph (A)(ii) shall be 
        determined, including the factors contributing to a 
        determination that a covered vote would not comply with 
        subsection (b)(1)(D).
    ``(C) For the purposes of any regulation prescribed under 
subparagraph (A), the Secretary of Labor shall presume that--
            ``(i) an investment of the Thrift Savings Fund (or portions 
        thereof) does not comply with subsection (b)(1)(D) if the 
        investment invests in--
                    ``(I) an entity included on--
                            ``(aa) the list of Communist Chinese 
                        military companies maintained under section 
                        1237(b) of the Strom Thurmond National Defense 
                        Authorization Act for Fiscal Year 1999 (50 
                        U.S.C. 1701 note); or
                            ``(bb) the entity list maintained by the 
                        Bureau of Industry and Security of the 
                        Department of Commerce and set forth in 
                        Supplement No. 4 to part 744 of title 15, Code 
                        of Federal Regulations; or
                    ``(II) a parent, subsidiary, or affiliate of, or an 
                entity controlled by, an entity described in subclause 
                (I); and
            ``(ii) an exercise of voting rights associated with any 
        investments of the Thrift Savings Fund (or portions thereof) 
        does not comply with subsection (b)(1)(D) if that exercise of 
        voting rights is a covered vote with respect to a proposal that 
        would--
                    ``(I) approve or ratify a transaction, including a 
                transaction described in subparagraph (D)(ii)(I), that 
                would cause, or would reasonably be expected to cause, 
                an entity to which the covered vote applies to--
                            ``(aa) breach any contract with the Federal 
                        Government to which the entity is a party, and 
                        under which the consideration provided to the 
                        entity over the course of the entire contract 
                        is more than $10,000,000, if the entity has 
                        otherwise complied with all applicable laws and 
                        regulations in fulfilling the responsibilities 
                        of the entity with respect to the contract;
                            ``(bb) significantly reduce the production 
                        of, or the capital expenditure or research and 
                        development expenditure with respect to, any--
                                    ``(AA) industrial resources, 
                                critical technology items, or materials 
                                that are essential to the national 
                                defense (as those terms are defined in 
                                section 702 of the Defense Production 
                                Act of 1950 (50 U.S.C. 4552)); or
                                    ``(BB) emerging and foundational 
                                technology identified by the President 
                                under section 1758 of the Export 
                                Controls Act of 2018 (50 U.S.C. 4817); 
                                or
                            ``(cc) outsource or substantially sell, 
                        whether to any affiliated entity or joint 
                        venture, or by contract, to any entity located 
                        in a covered country, any--
                                    ``(AA) industrial resources, 
                                critical technology items, or materials 
                                that are essential to the national 
                                defense (as those terms are defined in 
                                section 702 of the Defense Production 
                                Act of 1950 (50 U.S.C. 4552)); or
                                    ``(BB) emerging and foundational 
                                technology identified by the President 
                                under section 1758 of the Export 
                                Controls Act of 2018 (50 U.S.C. 4817); 
                                or
                    ``(II) elect to the board of directors of any 
                entity an individual who--
                            ``(aa) is a director, officer, employee, or 
                        affiliate of any entity described in clause 
                        (i)(I);
                            ``(bb) at any time during the 5-year period 
                        preceding the date on which that election 
                        occurs, was as described in item (aa); or
                            ``(cc) a reasonable investor would believe 
                        supports any proposal described in subclause 
                        (I).
    ``(D) In this paragraph--
            ``(i) the term `covered country' means--
                    ``(I) the People's Republic of China, the Russian 
                Federation, North Korea, Iran, Syria, Sudan, Venezuela, 
                or Cuba;
                    ``(II) any country, the government of which the 
                Secretary of State determines has provided support for 
                international terrorism pursuant to--
                            ``(aa) section 1754(c)(1)(A) of the Export 
                        Control Reform Act of 2018 (50 U.S.C. 
                        4813(c)(1)(A));
                            ``(bb) section 620A of the Foreign 
                        Assistance Act of 1961 (22 U.S.C. 2371);
                            ``(cc) section 40 of the Arms Export 
                        Control Act (22 U.S.C. 2780); or
                            ``(dd) any other provision of law; or
                    ``(III) any other country that the Secretary of 
                Labor, in consultation with the Secretary of Defense, 
                the Attorney General, the Secretary of Homeland 
                Security, and the Secretary of the Treasury, designates 
                as posing an undue or unnecessary risk to the national 
                security of the United States; and
            ``(ii) the term `covered vote' means a vote in favor of (or 
        an abstention with respect to) a proposal to--
                    ``(I) approve or ratify a transaction involving an 
                entity, including--
                            ``(aa) any sale of, or other disposition of 
                        (whether in a single or a series of 
                        transactions) assets or capital stock; and
                            ``(bb) any merger, consolidation, joint 
                        venture, partnership, spin-off, reverse spin-
                        off, dissolution, restructuring, 
                        recapitalization, liquidation, or any other 
                        business combination or strategic transaction; 
                        or
                    ``(II) elect an individual to the board of 
                directors of the entity that is the subject of the 
                proposal.''.
    (b) Review of Exercise of Voting Rights; Report to Congress.--
Section 8438 of title 5, United States Code, is amended--
            (1) in subsection (f)--
                    (A) by inserting ``(1)'' after ``(f)''; and
                    (B) by adding at the end the following:
    ``(2) For the purposes of paragraph (1), a review of the exercise 
of voting rights for compliance with section 8477(b)(1)(D), including 
under the regulations prescribed under section 8477(f)(2), shall not be 
considered to be the exercise of voting rights associated with the 
ownership of securities by the Thrift Savings Fund.''; and
            (2) by adding at the end the following:
    ``(i) Not later than 2 years after the date of enactment of this 
subsection, and annually thereafter, the Secretary of Labor shall 
submit to the Committee on Homeland Security and Governmental Affairs 
of the Senate and the Committee on Oversight and Accountability of the 
House of Representatives a report regarding--
            ``(1) for the year covered by the report, the investments 
        of the Thrift Savings Fund (or portions thereof), and the 
        exercise of voting rights associated with any such investments, 
        that have been reviewed for compliance with section 
        8477(b)(1)(D); and
            ``(2) the outcome with respect to enforcement of each 
        review conducted under paragraph (1) and a justification for 
        that outcome.''.
                                 &lt;all&gt;
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