Florida House Bill 527. HB527 - Boycotting the entities which boycott Israel
An act relating to scrutinized companies; creating s. 3 215.4725, F.S.; providing definitions; requiring the 4 State Board of Administration to identify all 5 companies that are boycotting Israel or are engaged in 6 a boycott of Israel in which the public fund owns 7 direct or indirect holdings; requiring the state board 8 to create and maintain a scrutinized companies list 9 that names all such companies; requiring the state 10 board to provide written notice to a company that is 11 identified as a scrutinized company; specifying 12 contents of the notice; specifying circumstances under 13 which a company may be removed from the list; 14 prohibiting the acquisition of certain securities of 15 scrutinized companies; prescribing reporting 16 requirements; requiring certain information to be 17 included in the investment policy statement; 18 authorizing the state board to invest in certain 19 scrutinized companies if the value of all assets under 20 management by the state board becomes equal to or less 21 than a specified amount; requiring the state board to 22 provide a written report to the Board of Trustees of 23 the state board and the Legislature before such 24 investment occurs; specifying required contents of the 25 report; reenacting and amending s. 287.135, F.S., 26 relating to the prohibition against contracting with scrutinized companies; prohibiting a state agency or 28 local governmental entity from contracting for goods 29 and services that exceed a specified amount if the 30 company has been placed on the Scrutinized Companies 31 that Boycott Israel List; requiring inclusion of a 32 contract provision that authorizes termination of a 33 contract under certain circumstances; providing 34 exceptions; requiring certification upon submission of 35 a bid or proposal for a contract, or before a company 36 enters into or renews a contract, with an agency or 37 governmental entity that the company is not on the 38 Scrutinized Companies that Boycott Israel List; 39 providing that certain contracting prohibitions become 40 inoperative if federal law ceases to authorize the 41 states to enforce certain contracting prohibitions; 42 providing effective dates. 43 44 Be It Enacted by the Legislature of the State of Florida: 45 46 Section 1. Section 215.4725, Florida Statutes, is created 47 to read: 48 215.4725 Prohibited investments by the State Board of 49 Administration; companies that boycott Israel.— 50 (1) DEFINITIONS.—As used in this section, the term: 51 (a) "Boycott Israel" or "boycott of Israel" means refusing 52 to deal with, terminating business activities with, or taking other actions that are intended to penalize, inflict economic 54 harm, or otherwise limit commercial relations with Israel or 55 persons or entities doing business in Israel or in Israeli- 56 controlled territories for reasons other than business, 57 investment, or commercial reasons. The term does not apply to 58 decisions made during the course of a company's ordinary 59 business or for other business, investment, or commercial 60 reasons. A statement by a company that it is participating in a 61 boycott of Israel, or that it has initiated a boycott in 62 response to a request for a boycott of Israel or in compliance 63 with, or in furtherance of, calls for a boycott of Israel, may 64 be considered by the State Board of Administration to be 65 evidence that a company is participating in a boycott of Israel. 66 (b) "Company" means a sole proprietorship, organization, 67 association, corporation, partnership, joint venture, limited 68 partnership, limited liability partnership, limited liability 69 company, or other entity or business association, including all 70 wholly owned subsidiaries, majority-owned subsidiaries, and 71 parent companies, that exists for the purpose of making profit. 72 (c) "Direct holdings" in a company means all securities of 73 that company that are held directly by the state board on behalf 74 of the public fund or in an account or fund in which the state 75 board, on behalf of the public fund, owns all shares or 76 interests. 77 (d) "Indirect holdings" in a company means all securities 78 of that company that are held in a commingled fund or other collective investment, such as a mutual fund, in which the state 80 board, on behalf of the public fund, owns shares or interests 81 together with other investors not subject to this section or 82 that are held in an index fund. 83 (e) "Public fund" means the System Trust Fund as defined 84 in s. 121.021(36). 85 (f) "Scrutinized companies" means companies that boycott 86 Israel or engage in a boycott of Israel. 87 (g) "State board" means the State Board of Administration. 88 (h) "Trustees" means the Board of Trustees of the State 89 Board of Administration. 90 (2) IDENTIFICATION OF COMPANIES.— 91 (a) By August 1, 2016, the state board shall make its best 92 efforts to identify all scrutinized companies in which the state 93 board, on behalf of the public fund, has direct or indirect 94 holdings or could possibly have such holdings in the future. 95 Such efforts include: 96 1. To the extent that the state board finds it 97 appropriate, reviewing and relying on publicly available 98 information regarding companies that boycott Israel, including 99 information provided by nonprofit organizations, research firms, 100 international organizations, and government entities. 101 2. Contacting asset managers contracted by the state 102 board, on behalf of the public fund, for information regarding 103 companies that boycott Israel. 104 3. Contacting other institutional investors that prohibit such investments or that have engaged with companies that 106 boycott Israel. 107 (b) Before the first meeting of the state board following 108 the identification of scrutinized companies in accordance with 109 paragraph (a), the state board shall compile and make available 110 the "Scrutinized Companies that Boycott Israel List." 111 (c) The state board shall update and make publicly 112 available quarterly the Scrutinized Companies that Boycott 113 Israel List based on evolving information from, among other 114 sources, those listed in paragraph (a). 115 (3) REQUIRED ACTIONS.—The state board shall adhere to the 116 following procedures for assembling companies on the Scrutinized 117 Companies that Boycott Israel List. 118 (a) Engagement.— 119 1. The state board shall immediately determine the 120 companies on the Scrutinized Companies that Boycott Israel List 121 in which the state board, on behalf of the public fund, owns 122 direct or indirect holdings. 123 2. For each company newly identified under this paragraph 124 after August 1, 2016, the state board shall send a written 125 notice informing the company of its scrutinized company status 126 and that it may become subject to investment prohibition by the 127 state board on behalf of the public fund. The notice must inform 128 the company of the opportunity to clarify its activities 129 regarding the boycott of Israel and encourage the company to 130 cease the boycott of Israel within 90 days in order to avoid qualifying for investment prohibition. 132 3. If, within 90 days after the state board's first 133 engagement with a company pursuant to this paragraph, the 134 company ceases a boycott of Israel, the company shall be removed 135 from the Scrutinized Companies that Boycott Israel List, and 136 this section shall cease to apply to that company unless that 137 company resumes a boycott of Israel. 138 (b) Prohibition.—The state board, on behalf of the public 139 fund, may not acquire securities of companies on the Scrutinized 140 Companies that Boycott Israel List, except as provided in 141 paragraph (c) and subsection (6). 142 (c) Excluded securities.—Notwithstanding this section, 143 paragraph (b) does not apply to: 144 1. Indirect holdings. However, the state board shall 145 submit letters to the managers of such investment funds 146 containing companies that boycott Israel requesting that they 147 consider removing such companies from the fund or create a 148 similar fund having indirect holdings devoid of such companies. 149 If the manager creates a similar fund, the state board, on 150 behalf of the public fund, shall replace all applicable 151 investments with investments in the similar fund in an expedited 152 timeframe consistent with prudent investing standards. For the 153 purposes of this section, an alternative investment, as the term 154 is defined in s. 215.4401, and securities that are not publicly 155 traded are deemed to be indirect holdings. 156 2. Exchange-traded funds.(4) REPORTING.— 158 (a) The state board shall file a report with each member 159 of the trustees, the President of the Senate, and the Speaker of 160 the House of Representatives which includes the Scrutinized 161 Companies that Boycott Israel List within 30 days after the list 162 is created. This report shall be made available to the public. 163 (b) At each quarterly meeting of the trustees thereafter, 164 the state board shall file a report, which shall be made 165 available to the public and to each member of the trustees, the 166 President of the Senate, and the Speaker of the House of 167 Representatives, which includes: 168 1. A summary of correspondence with companies engaged by 169 the state board under subparagraph (3)(a)2. 170 2. All prohibited investments under paragraph (3)(b). 171 3. Any progress made under paragraph (3)(c). 172 4. A list of all publicly traded securities held directly 173 by the public fund. 174 (5) INVESTMENT POLICY STATEMENT OBLIGATIONS.—The state 175 board's actions taken in compliance with this section, including 176 all good faith determinations regarding companies as required by 177 this act, shall be adopted and incorporated into the public 178 fund's investment policy statement as provided in s. 215.475. 179 (6) INVESTMENT IN CERTAIN SCRUTINIZED COMPANIES.— 180 Notwithstanding any other provision of this section, the state 181 board, on behalf of the public fund, may invest in certain 182 scrutinized companies if clear and convincing evidence shows that the value of all assets under management by the state 184 board, on behalf of the public fund, becomes equal to or less 185 than 99.5 percent, or 50 basis points, of the hypothetical value 186 of all assets under management by the state board, on behalf of 187 the public fund, assuming no investment prohibition for any 188 company had occurred under paragraph (3)(b). Cessation of the 189 investment prohibition and any new investment in a scrutinized 190 company is limited to the minimum steps necessary to avoid the 191 contingency described in this subsection. For any cessation of 192 the investment prohibition and new investment authorized by this 193 subsection, the state board shall provide a written report to 194 each member of the trustees, the President of the Senate, and 195 the Speaker of the House of Representatives in advance of the 196 new investment, updated semiannually thereafter as applicable, 197 setting forth the reasons and justification, supported by clear 198 and convincing evidence, for its decisions to cease the 199 investment prohibition in scrutinized companies. 200 Section 2. Effective October 1, 2016, section 287.135, 201 Florida Statutes, is reenacted and amended to read: 202 287.135 Prohibition against contracting with scrutinized 203 companies.— 204 (1) In addition to the terms defined in ss. 287.012 and 205 215.473, as used in this section, the term: 206 (a) "Awarding body" means, for purposes of state 207 contracts, an agency or the department, and for purposes of 208 local contracts, the governing body of the local governmental entity. 210 (b) "Business operations" means, for purposes specifically 211 related to Cuba or Syria, engaging in commerce in any form in 212 Cuba or Syria, including, but not limited to, acquiring, 213 developing, maintaining, owning, selling, possessing, leasing, 214 or operating equipment, facilities, personnel, products, 215 services, personal property, real property, military equipment, 216 or any other apparatus of business or commerce. 217 (c) "Local governmental entity" means a county, 218 municipality, special district, or other political subdivision 219 of the state. 220 (2) A company is ineligible to, and may not, bid on, 221 submit a proposal for, or enter into or renew a contract with an 222 agency or local governmental entity for goods or services of $1 223 million or more if that, at the time of bidding or submitting a 224 proposal for a new contract or renewal of an existing contract, 225 the company: 226 (a) Is on the Scrutinized Companies that Boycott Israel 227 List, created pursuant to s. 215.4725; 228 (b) Is on the Scrutinized Companies with Activities in 229 Sudan List or the Scrutinized Companies with Activities in the 230 Iran Petroleum Energy Sector List, created pursuant to s. 231 215.473;, or 232 (c) Is engaged in business operations in Cuba or SyriaAny contract with an agency or local governmental 237 entity for goods or services of $1 million or more entered into 238 or renewed on or after: 239 (a) July 1, 2011, through June 30, 2012, must contain a 240 provision that allows for the termination of such contract at 241 the option of the awarding body if the company is found to have 242 submitted a false certification as provided under subsection (5) 243 or been placed on the Scrutinized Companies with Activities in 244 Sudan List or the Scrutinized Companies with Activities in the 245 Iran Petroleum Energy Sector List. 246 (b) Any contract with an agency or local governmental 247 entity for goods or services of $1 million or more entered into 248 or renewed on or after July 1, 2012, through September 30, 2016, 249 must contain a provision that allows for the termination of such 250 contract at the option of the awarding body if the company is 251 found to have submitted a false certification as provided under 252 subsection (5), been placed on the Scrutinized Companies with 253 Activities in Sudan List or the Scrutinized Companies with 254 Activities in the Iran Petroleum Energy Sector List, or been 255 engaged in business operations in Cuba or Syria. Has been placed on the Scrutinized Companies that 262 Boycott Israel List; 263 3. Has been placed on the Scrutinized Companies with 264 Activities in Sudan List or the Scrutinized Companies with 265 Activities in the Iran Petroleum Energy Sector List; or 266 4. Has been engaged in business operations in Cuba or 267 Syria. 268 (4) Notwithstanding subsection (2) or subsection (3), an 269 agency or local governmental entity, on a case-by-case basis, 270 may permit a company on the Scrutinized Companies that Boycott 271 Israel List, the Scrutinized Companies with Activities in Sudan 272 List, or the Scrutinized Companies with Activities in the Iran 273 Petroleum Energy Sector List, or a company with business 274 operations in Cuba or Syria, to be eligible for, bid on, submit 275 a proposal for, or enter into or renew a contract for goods or 276 services of $1 million or more under the conditions set forth in 277 paragraph (a) or the conditions set forth in paragraph (b): 278 (a)1. With respect to a company on the Scrutinized 279 Companies with Activities in Sudan List or the Scrutinized 280 Companies with Activities in the Iran Petroleum Energy Sector 281 List, all of the following occur: 282 a. The scrutinized business operations were made before 283 July 1, 2011. 284 b. The scrutinized business operations have not been 285 expanded or renewed after July 1, 2011. 286 c. The agency or local governmental entity determines that it is in the best interest of the state or local community to 288 contract with the company. 289 d. The company has adopted, has publicized, and is 290 implementing a formal plan to cease scrutinized business 291 operations and to refrain from engaging in any new scrutinized 292 business operations. 293 2. With respect to a company engaged in business 294 operations in Cuba or Syria, all of the following occur: 295 a. The business operations were made before July 1, 2012. 296 b. The business operations have not been expanded or 297 renewed after July 1, 2012. 298 c. The agency or local governmental entity determines that 299 it is in the best interest of the state or local community to 300 contract with the company. 301 d. The company has adopted, has publicized, and is 302 implementing a formal plan to cease business operations and to 303 refrain from engaging in any new business operations. 304 3. With respect to a company on the Scrutinized Companies 305 that Boycott Israel List, all of the following occur: 306 a. The scrutinized business operations were made before 307 October 1, 2016. 308 b. The scrutinized business operations have not been 309 expanded or renewed after October 1, 2016. 310 c. The agency or local governmental entity determines that 311 it is in the best interest of the state or local community to 312 contract with the company.d. The company has adopted, has publicized, and is 314 implementing a formal plan to cease scrutinized business 315 operations and to refrain from engaging in any new scrutinized 316 business operations. 317 (b) One of the following occurs: 318 1. The local governmental entity makes a public finding 319 that, absent such an exemption, the local governmental entity 320 would be unable to obtain the goods or services for which the 321 contract is offered. 322 2. For a contract with an executive agency, the Governor 323 makes a public finding that, absent such an exemption, the 324 agency would be unable to obtain the goods or services for which 325 the contract is offered. 326 3. For a contract with an office of a state constitutional 327 officer other than the Governor, the state constitutional 328 officer makes a public finding that, absent such an exemption, 329 the office would be unable to obtain the goods or services for 330 which the contract is offered. 331 (5) At the time a company submits a bid or proposal for a 332 contract or before the company enters into or renews a contract 333 with an agency or governmental entity for goods or services of 334 $1 million or more, the company must certify that the company is 335 not on the Scrutinized Companies that Boycott Israel List, the 336 Scrutinized Companies with Activities in Sudan List, or the 337 Scrutinized Companies with Activities in the Iran Petroleum 338 Energy Sector List, or that it does not have business operations in Cuba or Syria. 340 (a) If, after the agency or the local governmental entity 341 determines, using credible information available to the public, 342 that the company has submitted a false certification, the agency 343 or local governmental entity shall provide the company with 344 written notice of its determination. The company shall have 90 345 days following receipt of the notice to respond in writing and 346 to demonstrate that the determination of false certification was 347 made in error. If the company does not make such demonstration 348 within 90 days after receipt of the notice, the agency or the 349 local governmental entity shall bring a civil action against the 350 company. If a civil action is brought and the court determines 351 that the company submitted a false certification, the company 352 shall pay the penalty described in subparagraph 1. and all 353 reasonable attorney fees and costs, including any costs for 354 investigations that led to the finding of false certification. 355 1. A civil penalty equal to the greater of $2 million or 356 twice the amount of the contract for which the false 357 certification was submitted shall be imposed. 358 2. The company is ineligible to bid on any contract with 359 an agency or local governmental entity for 3 years after the 360 date the agency or local governmental entity determined that the 361 company submitted a false certification. 362 (b) A civil action to collect the penalties described in 363 paragraph (a) must commence within 3 years after the date the 364 false certification is submitted.(6) Only the agency or local governmental entity that is a 366 party to the contract may cause a civil action to be brought 367 under this section. This section does not create or authorize a 368 private right of action or enforcement of the penalties provided 369 in this section. An unsuccessful bidder, or any other person 370 other than the agency or local governmental entity, may not 371 protest the award of a contract or contract renewal on the basis 372 of a false certification. 373 (7) This section preempts any ordinance or rule of any 374 agency or local governmental entity involving public contracts 375 for goods or services of $1 million or more with a company 376 engaged in scrutinized business operations. 377 (8) The contracting prohibitions in this section 378 applicable to companies on the Scrutinized Companies with 379 Activities in Sudan List or the Scrutinized Companies with 380 Activities in the Iran Petroleum Energy Sector List or to 381 companies engaged in business operations in Cuba or Syria become 382 This section becomes inoperative on the date that federal law 383 ceases to authorize the states to adopt and enforce such the 384 contracting prohibitions of the type provided for in this 385 section. 386 Section 3. Except as otherwise expressly provided in this 387 act, this act shall take effect upon becoming a law.