Combating BDS Act of 2016

To authorize State and local governments to divest from entities that engage in commerce or investment-related boycott, divestment, or sanctions activities targeting Israel, and for other purposes. 1. Short title This Act may be cited as the Combating BDS Act of 2016 2. Authority of State and local governments to divest from entities that engage in commerce or investment-related boycotts, divestments, or sanctions activities targeting Israel (a) Authority To divest Notwithstanding any other provision of law, a State or local government may adopt and enforce measures that meet the notice requirement of subsection (b) to divest the assets of the State or local government from, or prohibit investment of the assets of the State or local government in— (1) an entity that the State or local government determines, using credible information available to the public, engages in a commerce 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) Notice requirement (1) In general A State or local government shall provide written notice to each entity to which a measure taken by the State or local government under subsection (a) is to be applied. (2) Rule of construction Nothing in paragraph (1) shall be construed to prohibit a State or local government from taking additional steps to provide due process with respect to each entity described in paragraph (1) for purposes of carrying out this section. (c) Nonpreemption A measure of a State or local government authorized under subsection (a) is not preempted by any Federal law or regulation. (d) Effective date This section applies to measures adopted by a State or local government before, on, or after the date of the enactment of this Act. (e) Rule of construction 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 (f) 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) Boycott, divestment, or sanctions activity targeting Israel The term boycott, divestment, or sanctions activity targeting Israel (3) 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) (4) 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. (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) engage in boycott, divestment, or sanctions activity targeting Israel described in section 2 of the Combating BDS Act of 2016. .

Summary: Combating BDS Act of 2016 This bill authorizes a state or local government to adopt and enforce measures to divest its assets from, or prohibit investment of its assets in: (1) an entity that such government determines, using credible information available to the public, 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 government shall provide written notice to such an entity before applying such a measure. Such a measure by a state or local government is not preempted by any federal law or regulation. The bill applies to measures adopted by a state or local government before, on, or after the date of this Act's enactment. The bill amends the Investment Company Act of 1940 to prohibit any person from bringing any civil, criminal, or administrative action against any registered investment company, or any officer or employee thereof, based solely upon such company divesting from, or avoiding investing in, securities issued by persons that such company determines, using credible information available to the public, engage in commerce or investment-related boycotts, divestments, or sanctions activities targeting Israel.