SB667 - Relating to prohibiting certain state governmental entities from investing in certain Chinese-affiliated entities.

      S.B. No. 667         AN ACT   relating to prohibiting certain state governmental entities from   investing in certain Chinese-affiliated entities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle A, Title 8, Government Code, is amended   by adding Chapter 809A to read as follows:   CHAPTER 809A. PROHIBITION ON INVESTMENT IN CERTAIN   CHINESE-AFFILIATED ENTITIES   SUBCHAPTER A. GENERAL PROVISIONS           Sec. 809A.001.  DEFINITIONS. In this chapter:                 (1)     "Chinese-affiliated entity"   means a publicly   traded entity that:                       (A)  is both:                             (i)     incorporated or headquartered in the   People's Republic of China, including in the Hong Kong special   administrative region, other than a U.S. subsidiary, as that term   is defined by 15 C.F.R. Section 772.1; and                             (ii)     publicly confirmed to be controlled by   the People's Republic of China, the Chinese Communist Party, or a   provincial division, municipality, governmental agency, sovereign   wealth fund, or political instrumentality of the People's Republic   of China; or                       (B)     is identified by one or more of the   appropriate government agencies to be required by the National   Intelligence Law of the People's Republic of China (2017), as   amended in 2018, or any successor law, to support, assist, and   cooperate with the state intelligence work of the People's Republic   of China and keep the secrets of the national intelligence work of   the People's Republic of China.                 (2)     "Direct holdings" means, with respect to a   restricted entity, all securities of that restricted entity held   directly by a state governmental entity in an account or fund in   which a state governmental entity owns all shares or interests.                 (3)     "Entity" means a for-profit sole proprietorship,   organization, association, corporation, partnership, joint   venture, limited partnership, limited liability partnership, or   limited liability company, including a wholly owned subsidiary,   majority-owned subsidiary, parent company, or affiliate of those   entities or business associations, that exists to make a profit.                 (4)     "Indirect holdings" means, with respect to a   restricted entity, all securities of that restricted entity held in   an account or fund, such as a mutual fund, managed by one or more   persons not employed by a state governmental entity, in which the   state governmental entity owns shares or interests together with   other investors not subject to the provisions of this chapter. The   term does not include money invested under a plan described by   Section 401(k) or 457 of the Internal Revenue Code of 1986 (26   U.S.C. Section 401(k) or 457).                 (5)     "Listed restricted entity" means a restricted   entity listed by the comptroller under Section 809A.051.                 (6)     "Restricted entity" means a Chinese-affiliated   entity or other entity associated with the People's Republic of   China that is identified or included on an entities list maintained   by the federal government for the purpose of imposing prohibitions   or restrictions on or against entities to address national security   concerns, protect human rights, or combat unfair trade practices.     The term includes an entity that:                       (A)     is listed on the entity list under supplement   No. 4 to 15 C.F.R. Part 744 as associated with the People's Republic   of China because there is reasonable cause to believe the entity is   involved, has been involved, or poses a significant risk of being or   becoming involved in activities contrary to the national security   or foreign policy interests of the United States of America; and                       (B)     is listed in the Federal Register by the   United States Secretary of Defense as a Chinese military company   operating directly or indirectly in the United States or in any   territory or possession of the United States on the most recent list   compiled under Section 1260H of the William M. (Mac) Thornberry   National Defense Authorization Act for Fiscal Year 2021 (Pub. L.   No. 116-283, reprinted in note, 10 U.S.C. Section 113), or any   successor list of Chinese military companies the secretary is   required by law to compile and publish.                 (7)  "State governmental entity" means:                       (A)     the Employees Retirement System of Texas,   including a retirement system administered by that system;                       (B)  the Teacher Retirement System of Texas;                       (C)  the Texas Municipal Retirement System;                       (D)     the Texas County and District Retirement   System;                       (E)     the Texas Emergency Services Retirement   System; or                       (F)  the permanent school fund.           Sec.   809A.002.     OTHER LEGAL OBLIGATIONS.   With respect to   actions taken in compliance with this chapter, including all good   faith determinations regarding restricted entities as required by   this chapter, a state governmental entity and the comptroller are   exempt from any conflicting statutory or common law obligations,   including any obligations with respect to making investments,   divesting from any investment, preparing or maintaining any list of   restricted entities, or choosing asset managers, investment funds,   or investments for the state governmental entity's securities   portfolios.           Sec.   809A.003.     INDEMNIFICATION OF STATE GOVERNMENTAL   ENTITIES, EMPLOYEES, AND OTHERS.   In a cause of action based on an   action, inaction, decision, divestment, investment, restricted   entity communication, report, or other determination made or taken   in connection with this chapter, the state shall, without regard to   whether the person performed services for compensation, indemnify   and hold harmless for actual damages, court costs, and attorney's   fees adjudged against, and defend:                 (1)     an employee, a member of the governing body, or any   other officer of a state governmental entity;                 (2)  a contractor of a state governmental entity;                 (3)     a former employee, a former member of the   governing body, or any other former officer of a state governmental   entity who was an employee, member of the governing body, or other   officer when the act or omission on which the damages are based   occurred;                 (4)     a former contractor of a state governmental entity   who was a contractor when the act or omission on which the damages   are based occurred; and                 (5)  a state governmental entity.           Sec.   809A.004.     NO PRIVATE CAUSE OF ACTION.   (a)   A person,   including a member, retiree, or beneficiary of a retirement system   to which this chapter applies, an association, a research firm, a   restricted entity, or any other person may not sue or pursue a   private cause of action against the state, a state governmental   entity, a current or former employee, a member of the governing   body, or any other officer of a state governmental entity, or a   contractor of a state governmental entity, for any claim or cause of   action, including breach of fiduciary duty, or for violation of any   constitutional, statutory, or regulatory requirement in connection   with any action, inaction, decision, divestment, investment,   restricted entity communication, report, or other determination   made or taken in connection with this chapter.           (b)     A person who files suit against the state, a state   governmental entity, an employee, a member of the governing body,   or any other officer of a state governmental entity, or a contractor   of a state governmental entity, is liable for paying the costs and   attorney's fees of a person sued in violation of this section.           Sec.   809A.005.     INAPPLICABILITY OF REQUIREMENTS   INCONSISTENT WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES.   A   state governmental entity is not subject to a requirement of this   chapter if the state governmental entity determines that the   requirement would be inconsistent with its fiduciary   responsibility with respect to the investment of its assets or   other duties imposed by law relating to the investment of its   assets, including the duty of care established under Section 67,   Article XVI, Texas Constitution.           Sec.   809A.006.     RELIANCE ON FEDERAL DETERMINATION AND   RESTRICTED ENTITY RESPONSE.   The comptroller may rely on the   following, in the following order of priority, without conducting   any further investigation, research, or inquiry:                 (1)     a determination by a federal agency or officer   made under a federal law, regulation, or executive order regarding   whether an entity is a restricted entity; and                 (2)     a restricted entity's response to a communication   made under this chapter.   SUBCHAPTER B.   DUTIES REGARDING INVESTMENTS           Sec.   809A.051.     LISTED RESTRICTED ENTITIES.   (a)   The   comptroller shall prepare and maintain, and provide to each state   governmental entity, a list of all restricted entities.   In   maintaining the list, the comptroller may:                 (1)     review and rely, as appropriate in the   comptroller's judgment, on publicly available information   regarding restricted entities, including information provided or   made available by federal, state, or local governments, nonprofit   organizations, research firms, and international organizations;   and                 (2)     request written verification from a restricted   entity that it does not meet any of the criteria in Section   809A.001(6) and rely, as appropriate in the comptroller's judgment   and without conducting further investigation, research, or   inquiry, on the entity's written response to the request.           (b)     A restricted entity that fails to provide to the   comptroller a written verification under Subsection (a)(2) before   the 61st day after receiving the request from the comptroller is   presumed to be a restricted entity.           (c)     The comptroller shall update the list annually or more   often as the comptroller considers necessary, but not more often   than quarterly, based on information from, among other sources,   those listed in Subsection (a).           (d)     Not later than the 30th day after the date the list of   restricted entities is first provided or updated, the comptroller   shall file the list with the presiding officer of each house of the   legislature and the attorney general and post the list on a publicly   available Internet website.      &# [Text truncated for display. 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