Title: Combating BDS Act of 2017
Policy area: Finance and Financial Sector

Summary:
Combating BDS Act of 2017
This bill allows 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.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2856 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 2856

To provide for nonpreemption of measures by State and local governments 
 to divest from entities that engage in commerce-related or investment-
 related boycott, divestment, or sanctions activity targeting Israel, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 8, 2017

  Mr. McHenry (for himself, Mr. Vargas, Mr. Royce of California, Mr. 
  Gottheimer, Mr. Emmer, Mr. Sherman, Mr. Roskam, and Mr. Schneider) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
To provide for nonpreemption of measures by State and local governments 
 to divest from entities that engage in commerce-related or investment-
 related boycott, divestment, or sanctions activity targeting Israel, 
                        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 ``Combating BDS Act of 2017''.

SEC. 2. NONPREEMPTION OF MEASURES BY STATE AND LOCAL GOVERNMENTS TO 
              DIVEST FROM ENTITIES THAT ENGAGE IN 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 any 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 any 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 any 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) Definitions and Rules of Construction.--
            (1) Definitions.--In this section:
                    (A) Assets.--
                            (i) In general.--Except as provided in 
                        clause (ii), the term ``assets'' means any 
                        pension, retirement, annuity, or endowment 
                        fund, or similar instrument, that is controlled 
                        by a State or local government.
                            (ii) 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.).
                    (B) 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 as described in 
                section 102(b)(20)(B) of the Bipartisan Congressional 
                Trade Priorities and Accountability Act of 2015 (19 
                U.S.C. 4201(b)(20)(B)).
                    (C) Entity.--The term ``entity'' includes--
                            (i) any corporation, company, business 
                        association, partnership, or trust; and
                            (ii) 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))).
                    (D) Investment.--The term ``investment'' includes--
                            (i) a commitment or contribution of funds 
                        or property;
                            (ii) a loan or other extension of credit; 
                        and
                            (iii) the entry into or renewal of a 
                        contract for goods or services.
                    (E) 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.
                    (F) State or local government.--The term ``State or 
                local government'' includes--
                            (i) any State and any agency or 
                        instrumentality thereof;
                            (ii) any local government within a State 
                        and any agency or instrumentality thereof; and
                            (iii) any other governmental 
                        instrumentality of a State or locality.
            (2) Rules of construction.--
                    (A) 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'').
                    (B) 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.
                    (C) Scope of nonpreemption.--Nothing in this 
                section shall be construed as establishing a basis for 
                preempting or implying preemption of State measures 
                relating to actions to boycott, divest from, or 
                sanction Israel that are outside the scope of 
                subsection (a).

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.''.
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