[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6528 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 6528

To encourage State and local governments to prohibit certain investment 
 activities in the People's Republic of China, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 30, 2023

 Mr. Johnson of South Dakota (for himself, Mr. Moolenaar, Mr. Wittman, 
Mrs. Hinson, and Mr. Gimenez) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To encourage State and local governments to prohibit certain investment 
 activities in the People's Republic of China, 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 ``PRC Accountability and Divestment 
Act of 2023''.

SEC. 2. AUTHORITY OF STATE OR LOCAL GOVERNMENTS TO DIVEST FROM CERTAIN 
              ENTITIES THAT INVEST IN CHINA.

    (a) Sense of Congress.--It is the sense of Congress that the United 
States should support the decision of any State or local government 
that for moral, prudential, or reputational reasons divests from, or 
prohibits the investment of assets of the State or local government in, 
a person that engages in investment activities in the People's Republic 
of China, as described in subsection (c).
    (b) Authority To Divest.--Notwithstanding any other provision of 
law, a State or local government may adopt and enforce measures that 
meet the requirements of subsection (d) to divest the assets of the 
State or local government from, or prohibit investment of the assets of 
the State or local government in, any person that the State or local 
government determines, using credible information available to the 
public, engages in investment activities in the People's Republic of 
China described in subsection (c).
    (c) Investment Activities Described.--A person described in this 
subsection engages in investment activities in the People's Republic of 
China if the person has an investment in any of the following:
            (1) A Chinese entity--
                    (A) designated by Executive Order 13959 (50 U.S.C. 
                1701 note; relating to addressing the threat from 
                securities investments that finance Communist Chinese 
                military companies);
                    (B) designated by Executive Order 14105 (88 Fed. 
                Reg. 54867; relating to addressing United States 
                investments in certain national security technologies 
                and products in countries of concern); or
                    (C) included in the List of Specially Designated 
                Nationals and Blocked Persons maintained by the Office 
                of Foreign Assets Control.
            (2) A Chinese entity--
                    (A) included on the Non-SDN Chinese Military-
                Industrial Complex Companies List (NS-CMIC List) 
                maintained by the Office of Foreign Assets Control of 
                the Department of the Treasury under Executive Order 
                14032;
                    (B) that is a Chinese military company or a 
                military-civil fusion contributor and included on the 
                list maintained by the Department of Defense in 
                accordance with section 1260H(b) of the National 
                Defense Authorization Act for Fiscal Year 2021 (10 
                U.S.C. 113 note);
                    (C) included on the list required under section 
                1237 of the National Defense Authorization Act for 
                Fiscal Year 1999 (50 U.S.C. 1701 note);
                    (D) included on the Entity List set forth in 
                Supplement No. 4 to part 744 of the Export 
                Administration Regulations;
                    (E) included on the Denied Persons List described 
                in section 764.3(a)(2) of the Export Administration 
                Regulations;
                    (F) included on the Unverified List set forth in 
                Supplement No. 6 to part 744 of the Export 
                Administration Regulations;
                    (G) included on the Military End User List set 
                forth in Supplement No. 7 to part 744 of the Export 
                Administration Regulations;
                    (H) that produces or provides communications 
                equipment or service on the list published by the 
                Federal Communications Commission under section 2(a) of 
                the Secure and Trusted Communications Networks Act of 
                2019 (47 U.S.C. 1601(a));
                    (I) included on the on the Uyghur Forced Labor 
                Prevention Act Entity List, maintained by the 
                Department of Homeland Security;
                    (J) included on the Withhold Release Orders and 
                Findings List maintained by the Commissioner of U.S. 
                Customs and Border Protection pursuant to the Uyghur 
                Forced Labor Prevention Act (Public Law 117-78);
                    (K) included on the list of covered issuers (as 
                defined in section 104 of the Sarbanes-Oxley Act of 
                2002 (15 U.S.C. 7214)) maintained by the Securities and 
                Exchange Commission; or
                    (L) any other list maintained by the United States 
                Government that designates a Chinese entities for a 
                restriction relating to investment, contracting, or 
                procurement.
            (3) A Chinese entity otherwise subject to the control of a 
        Chinese entity listed in (1) or (2).
            (4) Any agency or instrumentality of the People's Republic 
        of China.
    (d) Requirements.--Any measure taken by a State or local government 
under subsection (b) shall meet the following requirements:
            (1) Notice.--The State or local government shall provide 
        written notice to each person to which a measure is to be 
        applied.
            (2) Timing.--The measure shall apply to a person not 
        earlier than the date that is 90 days after the date on which 
        written notice is provided to the person under paragraph (1).
            (3) Opportunity for hearing.--The State or local government 
        shall provide an opportunity to comment in writing to each 
        person to which a measure is to be applied. If the person 
        demonstrates to the State or local government that the person 
        does not engage in investment activities in the People's 
        Republic of China described in subsection (c), the measure 
        shall not apply to the person.
            (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 (b) with respect to 
        a person unless the State or local government has made every 
        effort to avoid erroneously targeting the person and has 
        verified that the person engages in investment activities in 
        the People's Republic of China described in subsection (c).
    (e) Notice to Department of Justice.--Not later than 30 days after 
adopting a measure pursuant to subsection (b), a State or local 
government shall submit written notice to the Attorney General 
describing the measure.
    (f) Rule of Construction.--A Federal law or regulation, including 
this Act, shall not preempt any measure of a State or local government 
authorized under subsection (b).
    (g) Effective Date.--
            (1) In general.--Except as provided in paragraph (2) or 
        subsection (h), this section applies to measures adopted by a 
        State or local government before, on, or after the date of the 
        enactment of this Act.
            (2) Notice requirements.--Except as provided in subsection 
        (h), subsections (d) and (e) apply to measures adopted by a 
        State or local government on or after the date of the enactment 
        of this Act.
    (h) Authorization for Prior Enacted Measures.--
            (1) In general.--Notwithstanding any other provision of 
        this section or any other provision of law, a State or local 
        government may enforce a measure (without regard to the 
        requirements of subsection (d), except as provided in paragraph 
        (2)) adopted by the State or local government before the date 
        of the enactment of this Act that provides for the divestment 
        of assets of the State or local government from, or prohibits 
        the investment of the assets of the State or local government 
        in, any person that the State or local government determines, 
        using credible information available to the public, engages in 
        investment activities in the People's Republic of China 
        (determined without regard to subsection (c)) or other business 
        activities in the People's Republic of China that are 
        identified in the measure.
            (2) Application of notice requirements.--A measure 
        described in paragraph (1) shall be subject to the requirements 
        of paragraphs (1) and (2) and the first sentence of paragraph 
        (3) of subsection (d) on and after the date that is 2 years 
        after the date of the enactment of this Act.
    (i) Definitions.--In this section:
            (1) Assets.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``assets'' refers to public monies and 
                includes 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) Chinese entity.--The term ``Chinese entity'' means--
                    (A) a person that is incorporated in, has a 
                principal place of business in, or is organized under 
                the laws of the People's Republic of China;
                    (B) a person whose equity securities are traded in 
                the ordinary course of business on one or more 
                exchanges in the People's Republic of China; or
                    (C) a person who is controlled by a single entity 
                or individual, that is--
                            (i) a citizen, national, or resident of the 
                        People's Republic of China, other than an 
                        individual who is--
                                    (I) a citizen or lawful permanent 
                                resident of the United States; or
                                    (II) domiciled in Taiwan and 
                                possesses a valid identification card 
                                or number issued by the Government of 
                                Taiwan;
                            (ii) an agent or instrumentality of the 
                        People's Republic of China; or
                            (iii) a person described in subparagraph 
                        (A) or (B).
            (3) Control.--The term ``control'' has the meaning given 
        that term in part 800.208 of title 31, Code of Federal 
        Regulations, or any successor regulations.
            (4) Investment.--The ``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) Measure.--The term ``measure'' means a law or 
        regulation.
            (6) People's republic of china.--The term ``People's 
        Republic of China'' includes any and all Special Administrative 
        Regions of China, including Hong Kong and Macau but not 
        including Taiwan.
            (7) Person.--The term ``person'' means--
                    (A) a natural person, corporation, company, 
                business association, partnership, society, trust, or 
                any other nongovernmental entity, organization, or 
                group;
                    (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))); and
                    (C) any successor, subunit, parent entity, or 
                subsidiary of, or any entity under common ownership or 
                control with, any entity described in subparagraph (A) 
                or (B).
            (8) 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;
                    (C) any other governmental instrumentality of a 
                State or locality; and
                    (D) any public institution of higher education 
                within the meaning of the Higher Education Act of 1965 
                (20 U.S.C. 1001 et seq.).
            (9) State.--The term ``State'' means each of the several 
        States.

SEC. 3. SAFE HARBOR FOR CHANGES OF INVESTMENT POLICIES BY ASSET 
              MANAGERS.

    (a) In General.--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'' at the end;
            (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 investment activities in the 
                People's Republic of China described in section 2(c) of 
                the PRC Accountability and Divestment Act of 2023.''.
    (b) Regulations.--Not later than 120 days after the date of the 
enactment of this Act, the Securities and Exchange Commission shall 
issue any revisions the Commission determines to be necessary to the 
regulations requiring disclosure by each registered investment company 
that divests itself of securities in accordance with section 13(c) of 
the Investment Company Act of 1940 to include divestments of securities 
in accordance with paragraph (1)(C) of such section, as added by 
subsection (a).

SEC. 4. SENSE OF CONGRESS REGARDING CERTAIN ERISA PLAN INVESTMENTS.

    It is the sense of Congress that 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)), may divest plan assets from, 
or avoid investing plan assets in, any person the fiduciary determines 
engages in investment activities in the People's Republic of China 
described in section 2(c) of this Act, without 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)), if--
            (1) the fiduciary makes such determination using credible 
        information that is available to the public; and
            (2) the fiduciary prudently determines that the result of 
        such divestment or avoidance of investment would not be 
        expected to provide the employee benefit plan with--
                    (A) a lower rate of return than alternative 
                investments with commensurate degrees of risk; or
                    (B) a higher degree of risk than alternative 
                investments with commensurate rates of return.
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