Senate
File
2281
-
Introduced
SENATE
FILE
2281
BY
COMMITTEE
ON
STATE
GOVERNMENT
(SUCCESSOR
TO
SSB
3087)
A
BILL
FOR
An
Act
concerning
investment
of
certain
public
funds
in
and
1
public
contracts
with
companies
that
boycott
Israel.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
NEW
SECTION
.
12J.1
Legislative
findings
and
1
intent.
2
The
general
assembly
is
deeply
concerned
and
does
not
3
support
boycotts
and
related
tactics
that
have
become
a
tool
4
of
economic
warfare
that
threaten
the
sovereignty
and
security
5
of
allies
and
trade
partners
of
the
United
States,
including
6
the
state
of
Israel.
Therefore,
the
general
assembly
intends
7
that
state
funds
and
funds
administered
by
the
state,
including
8
public
employee
retirement
funds,
should
not
be
invested
in,
9
and
public
contracts
should
not
be
entered
into
with,
companies
10
that
refuse
to
engage
in
commerce
with
Israel
and
boycott
11
Israel
or
persons
doing
business
in
Israel
or
territories
12
controlled
by
Israel.
13
Sec.
2.
NEW
SECTION
.
12J.2
Definitions.
14
As
used
in
this
chapter,
unless
the
context
otherwise
15
requires:
16
1.
“Company”
means
any
business
or
business
entity
that
is
17
publicly
traded
and
that
is
not
based
in
the
United
States.
18
2.
“Direct
holdings”
in
a
company
means
all
publicly
traded
19
securities
of
that
company
that
are
held
directly
by
the
public
20
fund
in
an
actively
managed
account
or
fund
in
which
the
public
21
fund
owns
all
shares
or
interests.
22
3.
“Indirect
holdings”
in
a
company
means
all
securities
23
of
that
company
that
are
held
in
an
account
or
fund
managed
24
by
one
or
more
persons
not
employed
by
the
public
fund,
in
25
which
the
public
fund
owns
shares
or
interests
together
with
26
other
investors
not
subject
to
the
provisions
of
this
chapter.
27
Indirect
holdings
include
but
are
not
limited
to
mutual
funds,
28
fund
of
funds,
index
funds,
private
equity
funds,
hedge
funds,
29
and
real
estate
funds.
30
4.
“Public
entity”
means
the
state,
political
subdivisions
31
of
the
state,
public
school
corporations,
and
all
public
32
officers,
boards,
commissions,
departments,
agencies,
and
33
authorities
empowered
by
law
to
enter
into
public
contracts
for
34
the
expenditure
of
public
funds,
including
the
state
board
of
35
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regents
and
institutions
under
the
control
of
the
state
board
1
of
regents.
2
5.
“Public
fund”
means
the
treasurer
of
state,
the
state
3
board
of
regents,
the
public
safety
peace
officers’
retirement
4
system
created
in
chapter
97A,
the
Iowa
public
employees’
5
retirement
system
created
in
chapter
97B,
the
statewide
fire
6
and
police
retirement
system
created
in
chapter
411,
or
the
7
judicial
retirement
system
created
in
chapter
602.
8
6.
“Scrutinized
company”
means
any
company
that
publicly
9
states
it
is
participating
in
a
boycott
of
Israel.
10
Sec.
3.
NEW
SECTION
.
12J.3
Identification
of
companies
——
11
notice.
12
1.
a.
By
March
1,
2017,
the
public
fund
shall
make
its
13
best
efforts
to
identify
or
have
identified
all
scrutinized
14
companies
in
which
the
public
fund
has
direct
or
indirect
15
holdings
or
could
possibly
have
such
holdings
in
the
future
and
16
shall
create
and
make
available
to
the
public
a
scrutinized
17
companies
list
for
that
public
fund.
The
public
fund
shall
18
review
on
an
annual
basis
and
update,
if
necessary,
the
19
scrutinized
companies
list.
20
b.
In
making
its
best
efforts
to
identify
or
have
21
identified
scrutinized
companies,
the
public
fund
may
review
22
and
rely,
in
the
best
judgment
of
the
public
fund,
on
publicly
23
available
information
regarding
companies,
and
including
other
24
information
that
may
be
provided
by
nonprofit
organizations,
25
research
firms,
international
organizations,
and
government
26
entities.
The
public
fund
may
also
contact
asset
managers
27
and
institutional
investors
for
the
public
fund
to
identify
28
scrutinized
companies
based
upon
industry-recognized
lists
of
29
such
companies
that
the
public
fund
may
have
indirect
holdings
30
in.
31
c.
The
Iowa
public
employees’
retirement
system,
acting
32
on
behalf
of
the
system
and
other
public
funds
subject
to
33
this
section,
may
develop
and
issue
a
request
for
proposals
34
for
third-party
services
to
complete
the
identification
of
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scrutinized
companies
and
the
compilation
of
a
scrutinized
1
companies
list.
The
Iowa
public
employees’
retirement
system
2
shall
consult
with
all
other
public
funds
on
the
development
of
3
the
request
for
proposals.
However,
selection
of
a
successful
4
proposal
and
the
final
scope
of
services
to
be
provided
shall
5
be
determined
only
by
those
public
funds
that
have
agreed
to
6
utilize
the
third-party
services.
If
more
than
one
public
fund
7
decides
to
utilize
the
third-party
services,
the
participating
8
public
funds
shall
equally
share
the
costs
of
such
services.
9
2.
a.
For
each
company
on
the
scrutinized
companies
list,
10
the
public
fund
shall
send
or
have
sent
a
written
notice
11
informing
the
company
of
its
status
as
a
scrutinized
company
12
and
that
it
may
become
subject
to
divestment
and
restrictions
13
on
investment
in
the
company
by
the
public
fund.
The
notice
14
shall
offer
the
company
the
opportunity
to
clarify
its
15
activities
or
to
cease
its
activities
causing
its
inclusion
16
on
the
scrutinized
company
list.
The
public
fund
or
its
17
representative
shall
continue
to
provide
such
written
notice
on
18
an
annual
basis
if
the
company
remains
a
scrutinized
company.
19
b.
If,
following
notice
as
provided
by
this
section,
a
20
scrutinized
company
ceases
activity
that
designates
it
as
21
a
scrutinized
company
and
submits
a
written
statement
to
22
the
public
fund
that
it
has
ceased
engaging
in
activities
23
boycotting
Israel,
the
company
shall
be
removed
from
the
24
scrutinized
companies
list.
25
Sec.
4.
NEW
SECTION
.
12J.4
Prohibited
investments
——
26
divestment.
27
1.
The
public
fund
shall
not
acquire
publicly
traded
28
securities
of
a
company
on
the
public
fund’s
most
recent
29
scrutinized
companies
list
so
long
as
such
company
remains
on
30
the
public
fund’s
scrutinized
companies
list
as
provided
in
31
this
chapter.
32
2.
a.
The
public
fund
shall
sell,
redeem,
divest,
or
33
withdraw
all
publicly
traded
securities
of
a
company
on
the
34
public
fund’s
list
of
scrutinized
companies,
so
long
as
the
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company
remains
on
that
list,
within
eighteen
months
following
1
the
first
written
notice
sent
to
the
scrutinized
company
as
2
required
by
section
12J.3.
3
b.
This
subsection
shall
not
be
construed
to
require
the
4
premature
or
otherwise
imprudent
sale,
redemption,
divestment,
5
or
withdrawal
of
an
investment,
but
such
sale,
redemption,
6
divestment,
or
withdrawal
shall
be
completed
as
provided
by
7
this
subsection.
8
3.
The
requirements
of
this
section
shall
not
apply
to
9
indirect
holdings
of
a
scrutinized
company.
The
public
10
fund
shall,
however,
submit
letters
to
the
managers
of
such
11
investment
funds
containing
scrutinized
companies
requesting
12
that
they
consider
removing
such
companies
from
the
fund
13
or
create
a
similar
fund
with
indirect
holdings
devoid
of
14
such
companies.
If
the
manager
creates
a
similar
fund
with
15
indirect
holdings
devoid
of
such
companies,
the
public
fund
16
is
encouraged
to
replace
all
applicable
investments
with
17
investments
in
the
similar
fund
consistent
with
prudent
18
investing
standards.
19
Sec.
5.
NEW
SECTION
.
12J.5
Reports.
20
1.
Scrutinized
companies
list.
Each
public
fund
shall,
21
within
thirty
days
after
the
scrutinized
companies
list
is
22
created
or
updated
as
required
by
section
12J.3,
make
the
list
23
available
to
the
public.
24
2.
Annual
report.
On
October
1,
2017,
and
each
October
25
1
thereafter,
each
public
fund
shall
make
available
to
the
26
public,
and
file
with
the
general
assembly,
an
annual
report
27
covering
the
prior
fiscal
year
that
includes
the
following:
28
a.
The
scrutinized
companies
list
as
of
the
end
of
the
29
fiscal
year.
30
b.
A
summary
of
all
written
notices
sent
as
required
by
31
section
12J.3
during
the
fiscal
year.
32
c.
All
investments
sold,
redeemed,
divested,
or
withdrawn
as
33
provided
in
section
12J.4
during
the
fiscal
year.
34
Sec.
6.
NEW
SECTION
.
12J.6
Public
entities
——
contract
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requirements.
1
A
public
entity
shall
not
enter
into
a
contract
of
one
2
thousand
dollars
or
more
with
a
scrutinized
company
included
on
3
a
scrutinized
company
list
created
by
a
public
fund
pursuant
4
to
section
12J.3
to
acquire
or
dispose
of
services,
supplies,
5
information
technology,
or
construction.
6
Sec.
7.
NEW
SECTION
.
12J.7
Legal
obligations
——
immunity.
7
With
respect
to
actions
taken
in
compliance
with
this
8
chapter,
including
all
good-faith
determinations
regarding
9
companies
as
required
by
this
chapter,
the
public
fund
shall
10
be
immune
from
any
liability
and
exempt
from
any
conflicting
11
statutory
or
common
law
obligations,
including
any
such
12
obligations
in
respect
to
choice
of
asset
managers,
investment
13
funds,
or
investments
for
the
public
fund’s
securities
14
portfolios.
15
EXPLANATION
16
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
17
the
explanation’s
substance
by
the
members
of
the
general
assembly.
18
This
bill
creates
new
Code
chapter
12J,
which
restricts
the
19
treasurer
of
state,
the
state
board
of
regents,
the
Iowa
public
20
employees’
retirement
system
(IPERS),
the
public
safety
peace
21
officers’
retirement
system,
the
statewide
fire
and
police
22
retirement
system,
and
the
judicial
retirement
system,
defined
23
as
“public
funds”,
from
directly
investing
in
certain
companies
24
engaged
in
a
boycott
of
Israel.
The
bill
also
requires
all
25
public
entities,
including
the
state
and
political
subdivisions
26
of
the
state,
not
to
enter
into
a
contract
of
$1,000
or
more
27
with
a
scrutinized
company
included
on
a
scrutinized
company
28
list
created
by
a
public
fund.
29
Concerning
public
funds,
the
bill
requires
each
public
30
fund
to
develop
and
maintain
a
list
of
scrutinized
companies
31
that
the
fund
has
direct
or
indirect
holdings
in
or
in
which
32
the
fund
may
invest
in
the
future.
Each
public
fund
shall
33
determine
this
list
by
March
1,
2017,
and
update
it
on
an
34
annual
basis.
The
bill
defines
“scrutinized
companies”
as
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those
companies
that
publicly
state
they
are
participating
1
in
a
boycott
of
Israel.
The
bill
defines
a
“company”
as
any
2
business
that
is
publicly
traded
and
not
based
in
the
United
3
States.
Once
a
company
is
listed
on
the
scrutinized
companies
4
list
of
a
public
fund,
the
bill
requires
the
public
fund
to
5
send
a
notice
to
that
company
relative
to
the
requirements
of
6
the
bill,
to
include
notice
that
the
company
may
qualify
for
7
divestment
and
other
investment
restrictions
by
the
public
8
fund.
9
New
Code
section
12J.4
requires
that
a
public
fund
not
invest
10
in,
and
shall
divest
from,
holdings
in
a
scrutinized
company.
11
If
the
public
fund
has
direct
holdings
in
the
company,
the
12
public
fund
shall
proceed
to
divest
all
assets
with
that
13
company
in
18
months
so
long
as
the
company
continues
active
14
business
operations
in
Israel.
The
bill
provides
that
a
public
15
fund
shall
not
be
required
to
divest
or
refrain
from
investing
16
in
a
company
if
the
public
fund
has
indirect
holdings,
and
not
17
direct
holdings,
in
that
company.
However,
public
funds
are
18
encouraged
to
move
their
indirect
holdings
to
funds
that
do
19
not
include
scrutinized
companies.
The
bill
defines
indirect
20
holdings
to
include
shares
in
an
account
or
fund
managed
by
21
persons
not
employed
by
the
public
fund,
including
mutual
22
funds,
private
equity
funds,
and
other
similar
funds.
23
The
bill
further
requires
each
public
fund
to
prepare
24
and
make
available
to
the
public,
and
file
with
the
general
25
assembly,
an
annual
report,
beginning
October
1,
2017,
26
concerning
actions
taken
by
the
public
fund
relative
to
the
27
requirements
of
new
Code
chapter
12J
in
the
previous
fiscal
28
year.
29
The
bill
further
provides
that
with
respect
to
actions
30
taken
in
compliance
with
this
bill,
including
all
good-faith
31
determinations
regarding
companies
as
required,
the
public
32
fund
shall
be
immune
from
any
liability
and
exempt
from
any
33
conflicting
statutory
or
common
law
obligations,
including
34
any
such
obligations
in
respect
to
choice
of
asset
managers,
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investment
funds,
or
investments
for
the
public
fund.
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