What This Bill Does
This bill changes the rules for how the Federal Retirement Thrift Investment Board manages the Thrift Savings Fund (a retirement savings program for federal workers and military members). It adds a new requirement that the board must prevent the fund's investments from harming U.S. national security. The bill also requires the Secretary of Labor to create regulations explaining which investments and voting actions are allowed under this new national security rule.
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Who It Affects
- The Federal Retirement Thrift Investment Board (the agency that manages the retirement fund)
- Civil servants (federal government workers)
- Members of the uniformed services (military members)
- The Secretary of Labor
- Secretaries of Defense, Homeland Security and Treasury, and the Attorney General (who must help write regulations)
- Congress (which will receive reports on compliance)
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Key Provisions
- The board must prevent investments and voting activities of the Thrift Savings Fund from harming national security to the maximum extent possible (Sec. 3)
- Fiduciaries (people responsible for managing the fund) cannot be personally sued for money damages or fined for breaking the national security rule before January 1, 2025 (Sec. 3)
- The Secretary of Labor must create regulations within one year describing what investments and voting actions comply with the national security requirement, including standards for determining compliance (Sec. 4)
- Investments in certain Communist Chinese military companies or entities on the Department of Commerce's export control list are presumed to violate the national security requirement (Sec. 4)
- The Secretary of Labor must report to Congress every year starting within two years of the law's passage, explaining which investments and votes were reviewed for national security compliance and what happened in each case (Sec. 4)
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What Changes
If this bill becomes law, the board's legal duty will expand beyond managing the fund for the best financial returns to also include a duty not to harm national security. The board will need to avoid investing in or voting for proposals involving companies from certain countries identified as national security risks, including China, Russia, North Korea, Iran, Syria, Sudan, Venezuela and Cuba. Companies that hold federal contracts worth more than $10,000,000 will be protected from votes that could force them to break those contracts. The fund's managers will have temporary protection from lawsuits until January 1, 2025, giving them time to comply with these new rules.
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Important Definitions
- **Covered country**: China, Russia, North Korea, Iran, Syria, Sudan, Venezuela, Cuba, countries the State Department says support terrorism, or any other country the Secretary of Labor determines poses unnecessary risk to U.S. national security (Sec. 4)
- **Covered vote**: A vote for or an abstention on a proposal involving selling or transferring company assets, merging companies, or electing someone to a board of directors (Sec. 4)
- **Fiduciary**: A person responsible for managing money or property for someone else's benefit (Sec. 3)
- **Industrial resources, critical technology items, and materials essential to national defense**: Not defined in this bill; defined elsewhere in federal law (Sec. 4)
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Effective Date
Not specified in bill text
II
118TH CONGRESS
1ST SESSION
S. 149
To amend title 5, United States Code, to address the responsibilities of
fiduciaries with respect to the Thrift Savings Fund, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY 30, 2023
Mr. RUBIO introduced the following bill; which was read twice and referred
to the Committee on Homeland Security and Governmental Affairs
A BILL
To amend title 5, United States Code, to address the respon-
sibilities of fiduciaries with respect to the Thrift Savings
Fund, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘TSP Fiduciary Secu-
4
rity Act of 2023’’.
5
SEC. 2. FINDINGS.
6
Congress finds the following:
7
(1) The Federal Retirement Thrift Investment
8
Board has a fiduciary duty to manage the Thrift
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•S 149 IS
Savings Fund in the best interest of the beneficiaries
1
of the Fund.
2
(2) The principal beneficiaries of the Thrift
3
Savings Fund are the civil servants of the United
4
States, and members of the uniformed services, who
5
are tasked with defending the national security of
6
the United States.
7
(3) The duty of the Federal Retirement Thrift
8
Investment Board to manage the Thrift Savings
9
Fund in the best interests of the beneficiaries of the
10
Fund includes a duty not to harm the national secu-
11
rity of the United States.
12
SEC. 3. FIDUCIARY RESPONSIBILITIES WITH RESPECT TO
13
THRIFT SAVINGS FUND.
14
Section 8477 of title 5, United States Code, is
15
amended—
16
(1) in subsection (b)(1)—
17
(A) in subparagraph (B), by striking ‘‘;
18
and’’ and inserting a semicolon;
19
(B) in subparagraph (C), by striking the
20
period at the end and inserting ‘‘; and’’; and
21
(C) by adding at the end the following:
22
‘‘(D) to the maximum extent practicable, by
23
preventing the investments of the Thrift Savings
24
Fund (or portions thereof), and the exercise of vot-
25
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3
•S 149 IS
ing rights associated with any such investments,
1
from harming the national security of the United
2
States.’’; and
3
(2) in subsection (e), by adding at the end the
4
following:
5
‘‘(9)(A) Notwithstanding any other provision of this
6
subsection, no fiduciary shall be personally liable for any
7
monetary damages, or be assessed any civil penalty, under
8
this subsection with respect to a breach of the requirement
9
under subsection (b)(1)(D).
10
‘‘(B) Subparagraph (A) shall cease to have effect be-
11
ginning on January 1, 2025.’’.
12
SEC. 4. REVIEW OF THRIFT SAVINGS FUND FOR COMPLI-
13
ANCE WITH FIDUCIARY DUTIES.
14
(a) IN GENERAL.—Section 8477(f) of title 5, United
15
States Code, is amended—
16
(1) by inserting ‘‘(1)’’ after ‘‘(f)’’; and
17
(2) by adding at the end the following:
18
‘‘(2)(A) Not later than 1 year after the date of enact-
19
ment of this paragraph, the Secretary of Labor, in con-
20
sultation with the Secretary of Defense, the Attorney Gen-
21
eral, the Secretary of Homeland Security, and the Sec-
22
retary of the Treasury, shall prescribe regulations to carry
23
out subsection (b)(1)(D) with respect to each of the fol-
24
lowing:
25
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•S 149 IS
‘‘(i) The investments of the Thrift Savings
1
Fund, which shall include the establishment of
2
standards by which compliance with subsection
3
(b)(1)(D) with respect to the investments of the
4
Thrift Savings Fund (or portions thereof) shall be
5
determined.
6
‘‘(ii) The exercise of voting rights associated
7
with the investments of the Thrift Savings Fund (or
8
portions thereof).
9
‘‘(B) The regulations prescribed under subparagraph
10
(A)(ii) shall include—
11
‘‘(i) the establishment of a process by which the
12
exercise of voting rights described in subparagraph
13
(A)(ii) shall be reviewed by the Secretary of Labor,
14
in consultation with the Secretary of Defense, the
15
Attorney General, the Secretary of Homeland Secu-
16
rity, and the Secretary of the Treasury, for compli-
17
ance with subsection (b)(1)(D) with respect to the
18
exercise of those rights; and
19
‘‘(ii) the establishment of standards by which
20
compliance with subsection (b)(1)(D) with respect to
21
the exercise of voting rights described in subpara-
22
graph (A)(ii) shall be determined, including the fac-
23
tors contributing to a determination that a covered
24
vote would not comply with subsection (b)(1)(D).
25
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•S 149 IS
‘‘(C) For the purposes of any regulation prescribed
1
under subparagraph (A), the Secretary of Labor shall pre-
2
sume that—
3
‘‘(i) an investment of the Thrift Savings Fund
4
(or portions thereof) does not comply with sub-
5
section (b)(1)(D) if the investment invests in—
6
‘‘(I) an entity included on—
7
‘‘(aa) the list of Communist Chinese
8
military companies maintained under sec-
9
tion 1237(b) of the Strom Thurmond Na-
10
tional Defense Authorization Act for Fiscal
11
Year 1999 (50 U.S.C. 1701 note); or
12
‘‘(bb) the entity list maintained by the
13
Bureau of Industry and Security of the
14
Department of Commerce and set forth in
15
Supplement No. 4 to part 744 of title 15,
16
Code of Federal Regulations; or
17
‘‘(II) a parent, subsidiary, or affiliate of,
18
or an entity controlled by, an entity described
19
in subclause (I); and
20
‘‘(ii) an exercise of voting rights associated with
21
any investments of the Thrift Savings Fund (or por-
22
tions thereof) does not comply with subsection
23
(b)(1)(D) if that exercise of voting rights is a cov-
24
ered vote with respect to a proposal that would—
25
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‘‘(I) approve or ratify a transaction, in-
1
cluding a transaction described in subparagraph
2
(D)(ii)(I), that would cause, or would reason-
3
ably be expected to cause, an entity to which
4
the covered vote applies to—
5
‘‘(aa) breach any contract with the
6
Federal Government to which the entity is
7
a party, and under which the consideration
8
provided to the entity over the course of
9
the
entire
contract
is
more
than
10
$10,000,000, if the entity has otherwise
11
complied with all applicable laws and regu-
12
lations in fulfilling the responsibilities of
13
the entity with respect to the contract;
14
‘‘(bb) significantly reduce the produc-
15
tion of, or the capital expenditure or re-
16
search and development expenditure with
17
respect to, any—
18
‘‘(AA) industrial resources, crit-
19
ical technology items, or materials
20
that are essential to the national de-
21
fense (as those terms are defined in
22
section 702 of the Defense Production
23
Act of 1950 (50 U.S.C. 4552)); or
24
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•S 149 IS
‘‘(BB)
emerging
and
1
foundational technology identified by
2
the President under section 1758 of
3
the Export Controls Act of 2018 (50
4
U.S.C. 4817); or
5
‘‘(cc) outsource or substantially sell,
6
whether to any affiliated entity or joint
7
venture, or by contract, to any entity lo-
8
cated in a covered country, any—
9
‘‘(AA) industrial resources, crit-
10
ical technology items, or materials
11
that are essential to the national de-
12
fense (as those terms are defined in
13
section 702 of the Defense Production
14
Act of 1950 (50 U.S.C. 4552)); or
15
‘‘(BB)
emerging
and
16
foundational technology identified by
17
the President under section 1758 of
18
the Export Controls Act of 2018 (50
19
U.S.C. 4817); or
20
‘‘(II) elect to the board of directors of any
21
entity an individual who—
22
‘‘(aa) is a director, officer, employee,
23
or affiliate of any entity described in clause
24
(i)(I);
25
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•S 149 IS
‘‘(bb) at any time during the 5-year
1
period preceding the date on which that
2
election occurs, was as described in item
3
(aa); or
4
‘‘(cc) a reasonable investor would be-
5
lieve supports any proposal described in
6
subclause (I).
7
‘‘(D) In this paragraph—
8
‘‘(i) the term ‘covered country’ means—
9
‘‘(I) the People’s Republic of China, the
10
Russian Federation, North Korea, Iran, Syria,
11
Sudan, Venezuela, or Cuba;
12
‘‘(II) any country, the government of which
13
the Secretary of State determines has provided
14
support for international terrorism pursuant
15
to—
16
‘‘(aa) section 1754(c)(1)(A) of the Ex-
17
port Control Reform Act of 2018 (50
18
U.S.C. 4813(c)(1)(A));
19
‘‘(bb) section 620A of the Foreign As-
20
sistance Act of 1961 (22 U.S.C. 2371);
21
‘‘(cc) section 40 of the Arms Export
22
Control Act (22 U.S.C. 2780); or
23
‘‘(dd) any other provision of law; or
24
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•S 149 IS
‘‘(III) any other country that the Secretary
1
of Labor, in consultation with the Secretary of
2
Defense, the Attorney General, the Secretary of
3
Homeland Security, and the Secretary of the
4
Treasury, designates as posing an undue or un-
5
necessary risk to the national security of the
6
United States; and
7
‘‘(ii) the term ‘covered vote’ means a vote in
8
favor of (or an abstention with respect to) a pro-
9
posal to—
10
‘‘(I) approve or ratify a transaction involv-
11
ing an entity, including—
12
‘‘(aa) any sale of, or other disposition
13
of (whether in a single or a series of trans-
14
actions) assets or capital stock; and
15
‘‘(bb) any merger, consolidation, joint
16
venture, partnership, spin-off, reverse spin-
17
off, dissolution, restructuring, recapitaliza-
18
tion, liquidation, or any other business
19
combination or strategic transaction; or
20
‘‘(II) elect an individual to the board of di-
21
rectors of the entity that is the subject of the
22
proposal.’’.
23
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•S 149 IS
(b) REVIEW OF EXERCISE OF VOTING RIGHTS; RE-
1
PORT TO CONGRESS.—Section 8438 of title 5, United
2
States Code, is amended—
3
(1) in subsection (f)—
4
(A) by inserting ‘‘(1)’’ after ‘‘(f)’’; and
5
(B) by adding at the end the following:
6
‘‘(2) For the purposes of paragraph (1), a review of
7
the exercise of voting rights for compliance with section
8
8477(b)(1)(D), including under the regulations prescribed
9
under section 8477(f)(2), shall not be considered to be the
10
exercise of voting rights associated with the ownership of
11
securities by the Thrift Savings Fund.’’; and
12
(2) by adding at the end the following:
13
‘‘(i) Not later than 2 years after the date of enact-
14
ment of this subsection, and annually thereafter, the Sec-
15
retary of Labor shall submit to the Committee on Home-
16
land Security and Governmental Affairs of the Senate and
17
the Committee on Oversight and Accountability of the
18
House of Representatives a report regarding—
19
‘‘(1) for the year covered by the report, the in-
20
vestments of the Thrift Savings Fund (or portions
21
thereof), and the exercise of voting rights associated
22
with any such investments, that have been reviewed
23
for compliance with section 8477(b)(1)(D); and
24
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•S 149 IS
‘‘(2) the outcome with respect to enforcement of
1
each review conducted under paragraph (1) and a
2
justification for that outcome.’’.
3
Æ
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