II 114th CONGRESS 2d Session S. 2531 IN THE SENATE OF THE UNITED STATES February 10, 2016 Mr. Kirk (for himself and Mr. Manchin ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To authorize State and local governments to divest from entities that engage in commerce-related 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 certain boycott, divestment, 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-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) 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 before applying the measure with respect to the entity. (2) Rule of construction Paragraph (1) shall not be construed to prohibit a State or local government from taking additional steps to provide due process with respect to an entity to which a measure is to be applied under subsection (a). (c) Nonpreemption A measure of a State or local government authorized under subsection (a) is not preempted by any Federal law. (d) 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. (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. ) (commonly known as the McCarran-Ferguson Act ). (f) Definitions In this section: (1) Assets (A) In general Except as provided in subparagraph (B), the term assets means any pension, retirement, annuity, or endowment fund, or similar instrument, that is controlled by a State or local government. (B) 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. ). (2) 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 in Israel or in Israeli-controlled territories for purposes of coercing political action by, or imposing policy positions on, the Government of Israel. (3) Entity The term entity includes— (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 includes— (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 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. (6) State or local government The term State or local government includes— (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) ) 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 2016 . .