Combating BDS Act of 2021

To provide for nonpreemption of measures by State and local governments to divest from entities that engage in certain boycott, divestment, or sanctions activities targeting Israel or persons doing business in Israel or Israeli-controlled territories, and for other purposes. 1. Short title This Act may be cited as the Combating BDS Act of 2021 2. Nonpreemption of measures by State and local governments to divest from entities that engage in certain boycott, divestment, or sanctions activities targeting Israel or persons doing business in Israel or Israeli-controlled territories (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 (c) 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 an activity described in subsection (b); (2) a successor entity or subunit of an entity described in paragraph (1); or (3) an entity that owns or controls or is owned or controlled by an entity described in paragraph (1). (b) Activities described An activity described in this subsection is a commerce-related or investment-related boycott, divestment, or sanctions activity in the course of interstate or international commerce that is intended to penalize, inflict economic harm on, or otherwise limit commercial relations with Israel or persons doing business in Israel or Israeli-controlled territories for purposes of coercing political action by, or imposing policy positions on, the Government of Israel. (c) 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— (A) in the case of a measure relating to divestment or investment, to each entity to which the measure is to be applied; and (B) in the case of a measure relating to contracting, of the restrictions imposed by the measure to each prospective contractor before entering into a contract. (2) Timing A measure relating to divestment or investment 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 In the case of a measure relating to divestment or investment, the State or local government shall provide an opportunity to comment in writing to each entity to which the measure is to be applied. If the entity demonstrates to the State or local government that neither the entity nor any entity related to the entity as described in paragraph (2) or (3) of subsection (a) has knowingly engaged in an activity described in subsection (b), the measure shall not apply to the entity. (4) Disclosure in contracting measures The State or local government may require, in a measure relating to contracting, that a prospective contractor disclose whether the prospective contractor or any entity related to the prospective contractor as described in paragraph (2) or (3) of subsection (a) knowingly engages in any activity described in subsection (b) before entering into a contract. (5) 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 an activity described in subsection (b). (d) 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. (e) Nonpreemption A measure of a State or local government that is consistent with subsection (a) is not preempted by any Federal law. (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 (c). (2) Application of notice and opportunity for comment Enforcement of a measure described in paragraph (1) shall be subject to the requirements of subsection (c) 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. 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 Palestinian-Israeli conflict, including border delineation, that can only be resolved through direct negotiations between the parties. (h) Definitions In this section: (1) Assets (A) In general Except as provided in subparagraph (B), the term assets (B) Exception The term assets 29 U.S.C. 1001 et seq. (2) Entity The term entity (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) (3) Investment The term investment (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. (4) Knowingly The term knowingly (5) State The term State (6) State or local government The term State or local government (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. 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) (1) in subparagraph (A), by striking ; or (2) in subparagraph (B), by striking the period at the end and inserting ; or (3) by adding at the end the following: (C) knowingly engage in any activity described in section 2(b) of the Combating BDS Act of 2021 . 4. Sense of Congress regarding certain ERISA plan investments It is the sense of Congress that— (1) a fiduciary of an employee benefit plan, as defined in section 3(3) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1002(3) (A) the fiduciary makes that determination using credible information that is available to the public; and (B) the fiduciary prudently determines that the result of that divestment or avoidance of investment would not be expected to provide the employee benefit plan with— (i) a lower rate of return than alternative investments with commensurate degrees of risk; or (ii) a higher degree of risk than alternative investments with commensurate rates of return; and (2) by divesting assets or avoiding the investment of assets as described in paragraph (1), the fiduciary is not breaching the responsibilities, obligations, or duties imposed upon the fiduciary by subparagraph (A) or (B) of section 404(a)(1) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1104(a)(1) 5. Rule of construction Nothing in this Act shall be construed to infringe upon any right protected under the First Amendment to the Constitution of the United States.

Summary: Combating BDS Act of 2021 This bill allows a state or&nbsp;local government to&nbsp;adopt measures to divest its assets from entities using boycotts, divestments, or sanctions to influence Israel's policies. Such measures shall meet various requirements, including those related to written notice and comment. It also bars lawsuits against investment companies based solely on a company's decision to divest from entities that use boycotts, divestments, or sanctions to influence Israel's policies.