[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1637 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 1637

To provide for nonpreemption of measures by State and local governments 
to divest from entities that engage in certain boycott, divestment, or 
  sanctions activities targeting Israel or persons doing business in 
   Israel or Israeli-controlled territories, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 17, 2023

 Mr. Rubio (for himself, Mr. Cassidy, Mr. Braun, Mr. Scott of Florida, 
 Mr. Daines, and Mr. Hagerty) introduced the following bill; which was 
read twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

_______________________________________________________________________

                                 A BILL


 
To provide for nonpreemption of measures by State and local governments 
to divest from entities that engage in certain boycott, divestment, or 
  sanctions activities targeting Israel or persons doing business in 
   Israel or Israeli-controlled territories, 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 2023''.

SEC. 2. NONPREEMPTION OF MEASURES BY STATE AND LOCAL GOVERNMENTS TO 
              DIVEST FROM ENTITIES THAT ENGAGE IN CERTAIN BOYCOTT, 
              DIVESTMENT, OR SANCTIONS ACTIVITIES TARGETING ISRAEL OR 
              PERSONS DOING BUSINESS IN ISRAEL OR ISRAELI-CONTROLLED 
              TERRITORIES.

    (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 (c) 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 an activity described in subsection (b);
            (2) a successor entity or subunit of an entity described in 
        paragraph (1); or
            (3) an entity that owns or controls or is owned or 
        controlled by an entity described in paragraph (1).
    (b) Activities Described.--An activity described in this subsection 
is a commerce-related or investment-related boycott, divestment, or 
sanctions activity in the course of interstate or international 
commerce that is intended to penalize, inflict economic harm on, or 
otherwise limit commercial relations with Israel or persons doing 
business in Israel or Israeli-controlled territories for purposes of 
coercing political action by, or imposing policy positions on, the 
Government of Israel.
    (c) 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--
                    (A) in the case of a measure relating to divestment 
                or investment, to each entity to which the measure is 
                to be applied; and
                    (B) in the case of a measure relating to 
                contracting, of the restrictions imposed by the measure 
                to each prospective contractor before entering into a 
                contract.
            (2) Timing.--A measure relating to divestment or investment 
        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.--In the case of a measure 
        relating to divestment or investment, the State or local 
        government shall provide an opportunity to comment in writing 
        to each entity to which the measure is to be applied. If the 
        entity demonstrates to the State or local government that 
        neither the entity nor any entity related to the entity as 
        described in paragraph (2) or (3) of subsection (a) has 
        knowingly engaged in an activity described in subsection (b), 
        the measure shall not apply to the entity.
            (4) Disclosure in contracting measures.--The State or local 
        government may require, in a measure relating to contracting, 
        that a prospective contractor disclose whether the prospective 
        contractor or any entity related to the prospective contractor 
        as described in paragraph (2) or (3) of subsection (a) 
        knowingly engages in any activity described in subsection (b) 
        before entering into a contract.
            (5) 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 an activity described in 
        subsection (b).
    (d) 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.
    (e) Nonpreemption.--A measure of a State or local government that 
is consistent with subsection (a) is not preempted by any Federal law.
    (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 (c).
            (2) Application of notice and opportunity for comment.--
        Enforcement of a measure described in paragraph (1) shall be 
        subject to the requirements of subsection (c) on and after the 
        date that is 2 years after the date of the enactment of this 
        Act.
    (g) Rules of Construction.--
            (1) 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'').
            (2) 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 Palestinian-Israeli conflict, including border delineation, 
        that can only be resolved through direct negotiations between 
        the parties.
    (h) 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) 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))).
            (3) 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.
            (4) Knowingly.--The term ``knowingly'', with respect to 
        conduct, a circumstance, or a result, means that a person has 
        actual knowledge, or should have known, of the conduct, the 
        circumstance, or the result.
            (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.

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) knowingly engage in any activity described in 
                section 2(b) of the Combating BDS Act of 2023.''.

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

    It is the sense of Congress that--
            (1) 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 
        knowingly engages in any activity described in section 2(b), 
        if--
                    (A) the fiduciary makes that determination using 
                credible information that is available to the public; 
                and
                    (B) the fiduciary prudently determines that the 
                result of that divestment or avoidance of investment 
                would not be expected to provide the employee benefit 
                plan with--
                            (i) a lower rate of return than alternative 
                        investments with commensurate degrees of risk; 
                        or
                            (ii) a higher degree of risk than 
                        alternative investments with commensurate rates 
                        of return; and
            (2) by divesting assets or avoiding the investment of 
        assets as described in paragraph (1), the fiduciary is not 
        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)).

SEC. 5. RULE OF CONSTRUCTION.

    Nothing in this Act shall be construed to infringe upon any right 
protected under the First Amendment to the Constitution of the United 
States.
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