85R2031 KLA-D
 
  By: Taylor of Collin S.B. No. 253
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to investment prohibitions and divestment requirements
  for certain investments of public money.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 404.024(b), Government Code, is amended
  to read as follows:
         (b)  Subject to Chapter 2270, state [State] funds not
  deposited in state depositories shall be invested by the
  comptroller in:
               (1)  direct security repurchase agreements;
               (2)  reverse security repurchase agreements;
               (3)  direct obligations of or obligations the principal
  and interest of which are guaranteed by the United States;
               (4)  direct obligations of or obligations guaranteed by
  agencies or instrumentalities of the United States government;
               (5)  bankers' acceptances that:
                     (A)  are eligible for purchase by the Federal
  Reserve System;
                     (B)  do not exceed 270 days to maturity; and
                     (C)  are issued by a bank whose other comparable
  short-term obligations are rated in the highest short-term rating
  category, within which there may be subcategories or gradations
  indicating relative standing, including such subcategories or
  gradations as "rating category" or "rated," by a nationally
  recognized statistical rating organization, as defined by 15 U.S.C.
  Section 78c [Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
  under the Investment Company Act of 1940 by the Securities and
  Exchange Commission];
               (6)  commercial paper that:
                     (A)  does not exceed 270 days to maturity; and
                     (B)  except as provided by Subsection (i), is
  issued by an entity whose other comparable short-term obligations
  are rated in the highest short-term rating category by a nationally
  recognized statistical rating organization;
               (7)  contracts written by the treasury in which the
  treasury grants the purchaser the right to purchase securities in
  the treasury's marketable securities portfolio at a specified price
  over a specified period and for which the treasury is paid a fee and
  specifically prohibits naked-option or uncovered option trading;
               (8)  direct obligations of or obligations guaranteed by
  the Inter-American Development Bank, the International Bank for
  Reconstruction and Development (the World Bank), the African
  Development Bank, the Asian Development Bank, and the International
  Finance Corporation that have received the highest long-term rating
  categories for debt obligations by a nationally recognized
  statistical rating organization;
               (9)  bonds issued, assumed, or guaranteed by the State
  of Israel;
               (10)  obligations of a state or an agency, county,
  city, or other political subdivision of a state;
               (11)  mutual funds secured by obligations that are
  described by Subdivisions (1) through (6) or by obligations
  consistent with Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
  by the Securities and Exchange Commission, including pooled funds:
                     (A)  established by the Texas Treasury
  Safekeeping Trust Company;
                     (B)  operated like a mutual fund; and
                     (C)  with portfolios consisting only of
  dollar-denominated securities;
               (12)  foreign currency for the sole purpose of
  facilitating investment by state agencies that have the authority
  to invest in foreign securities;
               (13)  asset-backed securities, as defined by the
  Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
  270.2a-7), that are rated at least A or its equivalent by a
  nationally recognized statistical rating organization and that
  have a weighted-average maturity of five years or less; and
               (14)  corporate debt obligations that are rated at
  least A or its equivalent by a nationally recognized statistical
  rating organization and mature in five years or less from the date
  on which the obligations were "acquired," as defined by the
  Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
  270.2a-7).
         SECTION 2.  Section 2256.017, Government Code, is amended to
  read as follows:
         Sec. 2256.017.  EXISTING INVESTMENTS. Except as provided by
  Chapter 2270, an [An] entity is not required to liquidate
  investments that were authorized investments at the time of
  purchase.
         SECTION 3.  Section 2256.024(a), Government Code, is amended
  to read as follows:
         (a)  The authority granted by this subchapter is in addition
  to that granted by other law. Except as provided by Subsection (b)
  and Section 2256.017, this subchapter does not:
               (1)  prohibit an investment specifically authorized by
  other law; or
               (2)  authorize an investment specifically prohibited
  by other law.
         SECTION 4.  Chapter 806, Government Code, is transferred to
  Subtitle F, Title 10, Government Code, redesignated as Chapter 2270
  of that subtitle, and amended to read as follows:
  CHAPTER 2270 [806]. PROHIBITION ON INVESTING PUBLIC MONEY IN
  CERTAIN INVESTMENTS [INVESTMENT IN SUDAN]
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2270.0001 [806.001].  DEFINITIONS. In this chapter:
               (1)  "Active business operations" means all business
  operations that are not inactive business operations.
               (2)  ["Business operations" means engaging in commerce
  in any form in Sudan, including by acquiring, developing,
  maintaining, owning, selling, possessing, leasing, or operating
  equipment, facilities, personnel, products, services, personal
  property, real property, or any other apparatus of business or
  commerce.
               [(3)]  "Company" means a sole proprietorship,
  organization, association, corporation, partnership, joint
  venture, limited partnership, limited liability partnership,
  limited liability company, or other entity or business association
  whose securities are publicly traded, including a wholly owned
  subsidiary, majority-owned subsidiary, parent company, or
  affiliate of those entities or business associations, that exists
  to make a profit.
               (3)  "Designated foreign terrorist organization" means
  a foreign terrorist organization designated by the comptroller on
  the list prepared as required by Section 2270.0153.
               (4)  ["Complicit" means taking actions that have
  directly supported or promoted the genocidal campaign in Darfur,
  including:
                     [(A)     preventing members of Darfur's victimized
  population from communicating with each other;
                     [(B)     encouraging Sudanese citizens to speak out
  against an internationally approved security force for Darfur; or
                     [(C)     actively working to deny, cover up, or alter
  the record on human rights abuses in Darfur.
               [(5)]  "Direct holdings" in a company["] means all
  securities of that company held directly by an investing [a state
  governmental] entity in an account or fund in which an investing [a
  state governmental] entity owns all shares or interests.
               (5) [(6)     "Government of Sudan" means the government in
  Khartoum, Sudan, which is led by the National Congress Party,
  formerly known as the National Islamic Front, or any successor
  government formed on or after October 13, 2006, including the
  coalition National Unity Government agreed upon in the
  Comprehensive Peace Agreement for Sudan.     The term does not include
  the regional government of southern Sudan.
               [(7)]  "Inactive business operations" means the mere
  continued holding or renewal of rights to property previously
  operated to generate revenue but not presently deployed to generate
  revenue.
               (6) [(8)]  "Indirect holdings" in a company["] means
  all securities of that company held in an account or fund, such as a
  mutual fund, managed by one or more persons not employed by an
  investing [a state governmental] entity, in which the investing
  [state governmental] entity owns shares or interests together with
  other investors not subject to 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.
               (7)  "Investing entity" means:
                     (A)  an entity subject to Chapter 2256;
                     (B)  the Employees Retirement System of Texas;
                     (C)  the Teacher Retirement System of Texas; and
                     (D)  the comptroller with respect to the
  comptroller's investment of state funds.
               (8) [(9)]  "Listed company" means a company listed by
  the comptroller under Section 2270.0201 [806.051].
               (9) [(10)     "Marginalized populations of Sudan"
  includes:
                     [(A)     the portion of the population in the Darfur
  region that has been genocidally victimized;
                     [(B)     the portion of the population of southern
  Sudan victimized by Sudan's North-South civil war;
                     [(C)     the Beja, Rashidiya, and other similarly
  underserved groups of eastern Sudan;
                     [(D)     the Nubian and other similarly underserved
  groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
  regions; and
                     [(E)     the Amri, Hamadab, Manasir, and other
  similarly underserved groups of northern Sudan.
               [(11)     "Military equipment" means weapons, arms,
  military supplies, and equipment that readily may be used for
  military purposes, including radar systems or military-grade
  transport vehicles or supplies or services sold or provided
  directly or indirectly to any force actively participating in armed
  conflict in Sudan.
               [(12)     "Mineral extraction activities" includes
  exploring, extracting, processing, transporting, or wholesale
  selling or trading of elemental minerals or associated metal alloys
  or oxides (ore), including gold, copper, chromium, chromite,
  diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
  well as facilitating those activities, including by providing
  supplies or services in support of those activities.
               [(13)  "Oil-related activities" includes:
                     [(A)  owning rights to oil blocks;
                     [(B)     exporting, extracting, producing, refining,
  processing, exploring for, transporting, selling, or trading of
  oil;
                     [(C)     constructing, maintaining, or operating a
  pipeline, refinery, or other oil-field infrastructure; or
                     [(D)     facilitating oil-related activities,
  including by providing supplies or services in support of the
  activities, except that the mere retail sale of gasoline and
  related consumer products is not an oil-related activity.
               [(14)     "Power production activities" means any
  business operation that involves a project commissioned by the
  National Electricity Corporation of Sudan or another similar
  Government of Sudan entity whose purpose is to facilitate power
  generation and delivery, including establishing power-generating
  plants or hydroelectric dams, selling or installing components for
  the project, and providing service contracts related to the
  installation or maintenance of the project, as well as facilitating
  those activities, including by providing supplies or services in
  support of those activities.
               [(15)]  "Scrutinized company" means:
                     (A)  a company that:
                           (i) [(A)]  engages in scrutinized business
  operations described by Section 2270.0052 [806.002]; or
                           (ii) [(B)]  has been complicit in the Darfur
  genocide during any preceding 20-month period;
                     (B)  a company that engages in scrutinized
  business operations described by Section 2270.0102; and
                     (C)  a company that engages in scrutinized
  business operations described by Section 2270.0152.
               [(16)     "Social development company" means a company
  whose primary purpose in Sudan is to provide humanitarian goods or
  services, including medicine or medical equipment, agricultural
  supplies or infrastructure, educational opportunities,
  journalism-related activities, information or information
  materials, spiritual-related activities, services of a purely
  clerical or reporting nature, food, clothing, or general consumer
  goods that are unrelated to oil-related activities, mineral
  extraction activities, or power production activities.
               [(17)     "State governmental entity" means the Employees
  Retirement System of Texas or the Teacher Retirement System of
  Texas.
               [(18)     "Substantial action" means adopting,
  publicizing, and implementing a formal plan to cease scrutinized
  business operations within one year and to refrain from any such new
  business operations, undertaking significant humanitarian efforts
  on behalf of one or more marginalized populations of Sudan, or,
  through engagement with the Government of Sudan, materially
  improving conditions for the genocidally victimized population in
  Darfur.]
         Sec. 2270.0002 [806.002.     SCRUTINIZED BUSINESS OPERATIONS.
  A company engages in scrutinized business operations if:
               [(1)     the company has business operations that involve
  contracts with or providing supplies or services to the Government
  of Sudan, a company in which the Government of Sudan has any direct
  or indirect equity share, a Government of Sudan-commissioned
  consortium or project, or a company involved in a Government of
  Sudan-commissioned consortium or project, and:
                     [(A)     more than 10 percent of the company's
  revenues or assets linked to Sudan involve oil-related activities
  or mineral extraction activities, less than 75 percent of the
  company's revenue or assets linked to Sudan involve contracts with
  or provision of oil-related or mineral extracting products or
  services to the regional government of southern Sudan or a project
  or consortium created exclusively by that regional government, and
  the company has failed to take substantial action; or
                     [(B)     more than 10 percent of the company's
  revenue or assets linked to Sudan involve power production
  activities, less than 75 percent of the company's power production
  activities include projects whose intent is to provide power or
  electricity to the marginalized populations of Sudan, and the
  company has failed to take substantial action; or
               [(2)     the company supplies military equipment in Sudan,
  unless:
                     [(A)     the company clearly shows that the military
  equipment cannot be used to facilitate offensive military actions
  in Sudan; or
                     [(B)     the company implements rigorous and
  verifiable safeguards to prevent use of that equipment by forces
  actively participating in armed conflict, including:
                           [(i)     using post-sale tracking of the
  equipment by the company;
                           [(ii)     obtaining certification from a
  reputable and objective third party that the equipment is not being
  used by a party participating in armed conflict in Sudan; or
                           [(iii)     selling the equipment solely to the
  regional government of southern Sudan or any internationally
  recognized peacekeeping force or humanitarian organization.
         [Sec.   806.003.     SOCIAL DEVELOPMENT COMPANY.
  Notwithstanding any other law, a social development company that is
  not complicit in the Darfur genocide is not a scrutinized company.
         [Sec. 806.004].  EXCEPTION. Notwithstanding any other law,
  a company that the United States government affirmatively declares
  to be excluded from its federal sanctions regime relating to Sudan,
  its federal sanctions regime relating to Iran, or any federal
  sanctions regime relating to a designated foreign terrorist
  organization is not subject to divestment or investment prohibition
  under this chapter.
         Sec. 2270.0003 [806.005].  OTHER LEGAL OBLIGATIONS. With
  respect to actions taken in compliance with this chapter, including
  all good faith determinations regarding companies as required by
  this chapter, an investing [a state governmental] entity is 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 companies, or
  choosing asset managers, investment funds, or investments for the
  [state governmental] entity's securities portfolios.
         Sec. 2270.0004.  INAPPLICABILITY OF CERTAIN REQUIREMENTS
  INCONSISTENT WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES.  
  An investing entity described by Section 2270.0001(7)(B) or (C) is
  not subject to a requirement of this chapter if the entity
  determines that the requirement would be inconsistent with the
  entity's fiduciary responsibility with respect to the investment of
  entity assets or other duties imposed by law relating to the
  investment of entity assets, including the duty of care established
  under Section 67, Article XVI, Texas Constitution.
         Sec. 2270.0005.  CONFLICT WITH OTHER LAW. To the extent of a
  conflict between this chapter and a provision of Chapter 404 or 2256
  regarding an investing entity's investments, this chapter
  prevails.
         Sec. 2270.0006 [806.006].  INDEMNIFICATION OF INVESTING
  [STATE GOVERNMENTAL] ENTITIES, EMPLOYEES, AND OTHERS. In a cause
  of action based on an action, inaction, decision, divestment,
  investment, company 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 an investing [a state governmental] entity;
               (2)  a contractor of an investing [a state
  governmental] entity;
               (3)  a former employee, a former member of the
  governing body, or any other former officer of an investing [a state
  governmental] entity who was an employee or officer when the act or
  omission on which the damages are based occurred; [and]
               (4)  a former contractor of an investing [a state
  governmental] entity who was a contractor when the act or omission
  on which the damages are based occurred; and
               (5)  an investing entity.
         Sec. 2270.0007 [806.007].  NO PRIVATE CAUSE OF ACTION. (a)
  A person, including a member, retiree, and beneficiary of a
  retirement system to which this chapter applies, an association, a
  research firm, a company, or any other person may not sue or pursue
  a private cause of action against the state, an investing [a state
  governmental] entity, an employee, a member of the governing body,
  or any other officer of an investing [a state governmental] entity,
  or a contractor of an investing [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, company communication, report, or other
  determination made or taken in connection with this chapter.
         (b)  A person who files suit against the state, an investing
  [a state governmental] entity, an employee, a member of the
  governing body, or any other officer of an investing [a state
  governmental] entity, or a contractor of an investing [a state
  governmental] entity, is liable for paying the costs and attorney's
  fees of a person sued in violation of this section.
         Sec. 2270.0008.  RELIANCE ON COMPANY RESPONSE.  The
  comptroller in administering this chapter and an investing entity
  may rely on a company's response to a notice or communication made
  under this chapter without conducting any further investigation,
  research, or inquiry.
  SUBCHAPTER B. GENERAL PROVISIONS RELATING TO INVESTMENTS IN SUDAN
         Sec. 2270.0051.  DEFINITIONS. In this subchapter:
               (1)  "Business operations" means engaging in commerce
  in any form in Sudan, including by acquiring, developing,
  maintaining, owning, selling, possessing, leasing, or operating
  equipment, facilities, personnel, products, services, personal
  property, real property, or any other apparatus of business or
  commerce.
               (2)  "Complicit" means taking actions that have
  directly supported or promoted the genocidal campaign in Darfur,
  including:
                     (A)  preventing members of Darfur's victimized
  population from communicating with each other;
                     (B)  encouraging Sudanese citizens to speak out
  against an internationally approved security force for Darfur; or
                     (C)  actively working to deny, cover up, or alter
  the record on human rights abuses in Darfur.
               (3)  "Government of Sudan" means the government in
  Khartoum, Sudan, which is led by the National Congress Party,
  formerly known as the National Islamic Front, or any successor
  government formed on or after October 13, 2006, including the
  coalition National Unity Government agreed upon in the
  Comprehensive Peace Agreement for Sudan.  The term does not include
  the regional government of southern Sudan.
               (4)  "Marginalized populations of Sudan" includes:
                     (A)  the portion of the population in the Darfur
  region that has been genocidally victimized;
                     (B)  the portion of the population of southern
  Sudan victimized by Sudan's North-South civil war;
                     (C)  the Beja, Rashidiya, and other similarly
  underserved groups of eastern Sudan;
                     (D)  the Nubian and other similarly underserved
  groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
  regions; and
                     (E)  the Amri, Hamadab, Manasir, and other
  similarly underserved groups of northern Sudan.
               (5)  "Military equipment" means weapons, arms,
  military supplies, and equipment that readily may be used for
  military purposes, including radar systems or military-grade
  transport vehicles or supplies or services sold or provided
  directly or indirectly to any force actively participating in armed
  conflict in Sudan.
               (6)  "Mineral extraction activities" includes
  exploring, extracting, processing, transporting, or wholesale
  selling or trading of elemental minerals or associated metal alloys
  or oxides (ore), including gold, copper, chromium, chromite,
  diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
  well as facilitating those activities, including by providing
  supplies or services in support of those activities.
               (7)  "Oil-related activities" includes:
                     (A)  owning rights to oil blocks;
                     (B)  exporting, extracting, producing, refining,
  processing, exploring for, transporting, selling, or trading of
  oil;
                     (C)  constructing, maintaining, or operating a
  pipeline, refinery, or other oil-field infrastructure; or
                     (D)  facilitating oil-related activities,
  including by providing supplies or services in support of the
  activities, except that the mere retail sale of gasoline and
  related consumer products is not an oil-related activity.
               (8)  "Power production activities" means any business
  operation that involves a project commissioned by the National
  Electricity Corporation of Sudan or another similar government of
  Sudan entity whose purpose is to facilitate power generation and
  delivery, including establishing power-generating plants or
  hydroelectric dams, selling or installing components for the
  project, and providing service contracts related to the
  installation or maintenance of the project, as well as facilitating
  those activities, including by providing supplies or services in
  support of those activities.
               (9)  "Social development company" means a company whose
  primary purpose in Sudan is to provide humanitarian goods or
  services, including medicine or medical equipment, agricultural
  supplies or infrastructure, educational opportunities,
  journalism-related activities, information or information
  materials, spiritual-related activities, services of a purely
  clerical or reporting nature, food, clothing, or general consumer
  goods that are unrelated to oil-related activities, mineral
  extraction activities, or power production activities.
               (10)  "Substantial action" means adopting,
  publicizing, and implementing a formal plan to cease scrutinized
  business operations within one year and to refrain from any such new
  business operations, undertaking significant humanitarian efforts
  on behalf of one or more marginalized populations of Sudan, or,
  through engagement with the government of Sudan, materially
  improving conditions for the genocidally victimized population in
  Darfur.
         Sec. 2270.0052.  SCRUTINIZED BUSINESS OPERATIONS IN SUDAN.
  A company engages in scrutinized business operations in Sudan if:
               (1)  the company has business operations that involve
  contracts with or providing supplies or services to the government
  of Sudan, a company in which the government of Sudan has any direct
  or indirect equity share, a government of Sudan-commissioned
  consortium or project, or a company involved in a government of
  Sudan-commissioned consortium or project, and:
                     (A)  more than 10 percent of the company's
  revenues or assets linked to Sudan involve oil-related activities
  or mineral extraction activities, less than 75 percent of the
  company's revenue or assets linked to Sudan involve contracts with
  or provision of oil-related or mineral extracting products or
  services to the regional government of southern Sudan or a project
  or consortium created exclusively by that regional government, and
  the company has failed to take substantial action; or
                     (B)  more than 10 percent of the company's revenue
  or assets linked to Sudan involve power production activities, less
  than 75 percent of the company's power production activities
  include projects whose intent is to provide power or electricity to
  the marginalized populations of Sudan, and the company has failed
  to take substantial action; or
               (2)  the company supplies military equipment in Sudan,
  unless:
                     (A)  the company clearly shows that the military
  equipment cannot be used to facilitate offensive military actions
  in Sudan; or
                     (B)  the company implements rigorous and
  verifiable safeguards to prevent use of that equipment by forces
  actively participating in armed conflict, including:
                           (i)  using post-sale tracking of the
  equipment by the company;
                           (ii)  obtaining certification from a
  reputable and objective third party that the equipment is not being
  used by a party participating in armed conflict in Sudan; or
                           (iii)  selling the equipment solely to the
  regional government of southern Sudan or any internationally
  recognized peacekeeping force or humanitarian organization.
         Sec. 2270.0053.  SOCIAL DEVELOPMENT COMPANY.  
  Notwithstanding any other law, a social development company that is
  not complicit in the Darfur genocide is not a scrutinized company
  under Section 2270.0001(9)(A).
  SUBCHAPTER C. GENERAL PROVISIONS RELATING TO INVESTMENTS IN IRAN
         Sec. 2270.0101.  DEFINITIONS. In this subchapter:
               (1)  "Business operations" means engaging in commerce
  in any form in Iran, including by acquiring, developing,
  maintaining, owning, selling, possessing, leasing, or operating
  equipment, facilities, personnel, products, services, personal
  property, real property, or any other apparatus of business or
  commerce.
               (2)  "Military equipment" means weapons, arms,
  military supplies, and equipment that readily may be used for
  military purposes, including radar systems and military-grade
  transport vehicles.
         Sec. 2270.0102.  SCRUTINIZED BUSINESS OPERATIONS IN IRAN.  A
  company engages in scrutinized business operations in Iran if:
               (1)  the company has business operations that involve
  contracts with or providing supplies or services to the government
  of Iran, a company in which the government of Iran has any direct or
  indirect equity share, a consortium or project commissioned by the
  government of Iran, or a company involved in a consortium or project
  commissioned by the government of Iran; or
               (2)  the company supplies military equipment to Iran.
  SUBCHAPTER D. GENERAL PROVISIONS RELATING TO INVESTMENTS
  IN CERTAIN FOREIGN TERRORIST ORGANIZATIONS
         Sec. 2270.0151.  DEFINITIONS. In this subchapter:
               (1)  "Business operations" means engaging in commerce
  in any form, including by acquiring, developing, maintaining,
  owning, selling, possessing, leasing, or operating equipment,
  facilities, personnel, products, services, personal property, real
  property, or any other apparatus of business or commerce.
               (2)  "Terroristic equipment" means weapons, arms,
  military supplies, and equipment that readily may be used for
  terroristic purposes or activities.
         Sec. 2270.0152.  SCRUTINIZED BUSINESS OPERATIONS WITH
  DESIGNATED FOREIGN TERRORIST ORGANIZATION.  A company engages in
  scrutinized business operations with a designated foreign
  terrorist organization if:
               (1)  the company has business operations that involve:
                     (A)  a contract with or providing supplies or
  services to a designated foreign terrorist organization;
                     (B)  a company in which a designated foreign
  terrorist organization has any direct or indirect equity share;
                     (C)  a consortium or project commissioned by a
  designated foreign terrorist organization; or
                     (D)  a company involved in a consortium or project
  commissioned by a designated foreign terrorist organization; or
               (2)  the company supplies terroristic equipment to a
  designated foreign terrorist organization.
         Sec. 2270.0153.  DESIGNATION OF FOREIGN TERRORIST
  ORGANIZATIONS. (a)  The comptroller shall prepare and maintain a
  list of foreign organizations designated by the comptroller as
  foreign terrorist organizations.
         (b)  In preparing and maintaining the list under Subsection
  (a), the comptroller:
               (1)  shall consider including a foreign organization
  designated as a foreign terrorist organization by the United States
  secretary of state as authorized by 8 U.S.C. Section 1189; and
               (2)  may review and rely, as appropriate in the
  comptroller's judgment, on other available information regarding
  foreign organizations, including information provided by a federal
  or state governmental entity, a nonprofit organization, a research
  firm, or an international organization.
         (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 sources listed in
  Subsection (b) and any other sources.
         (d)  Not later than the 30th day after the date the list of
  designated foreign terrorist organizations is first prepared or is
  updated, the comptroller shall:
               (1)  file the list with the presiding officer of each
  house of the legislature and the attorney general; and
               (2)  post the list on the comptroller's Internet
  website.
  SUBCHAPTER E [B]. DUTIES REGARDING INVESTMENTS
         Sec. 2270.0201 [806.051].  LISTED COMPANIES. (a) The
  comptroller shall prepare and maintain[, and provide to each state
  governmental entity,] a list of all scrutinized companies.  The
  list must be categorized according to:
               (1)  companies that are scrutinized companies under
  Section 2270.0001(9)(A);
               (2)  companies that are scrutinized companies under
  Section 2270.0001(9)(B); and
               (3)  companies that are scrutinized companies under
  Section 2270.0001(9)(C).
         (b)  In maintaining the list of scrutinized companies under
  Subsection (a), the comptroller may review and rely, as appropriate
  in the comptroller's judgment, on publicly available information
  regarding companies with business operations in Sudan, in Iran, or
  with designated foreign terrorist organizations, as applicable,
  including information provided by the state, nonprofit
  organizations, research firms, international organizations, and
  governmental entities.
         (c) [(b)]  The comptroller shall update the list of
  scrutinized companies under Subsection (a) 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 (b) [(a)].
         (d)  The comptroller shall:
               (1)  provide each list prepared or updated under this
  section to each investing entity; and
               (2)  post each list on the comptroller's Internet
  website.
         (e) [(c)]  Not later than the 30th day after the date a [the]
  list of scrutinized companies is [first] provided [or updated], the
  comptroller shall file the list of scrutinized companies with the
  presiding officer of each house of the legislature and the attorney
  general.
         (f)  For purposes of the prohibitions and duties under this
  chapter, the date the comptroller posts on the comptroller's
  Internet website a list of scrutinized companies under this section
  is considered the date the comptroller receives notice of the list.
         Sec. 2270.0202 [806.052].   IDENTIFICATION OF INVESTMENT IN
  LISTED COMPANIES.  Not later than the 30th day after the date an
  investing [a state governmental] entity receives a [the] list
  provided under Section 2270.0201 [806.051], the [state
  governmental] entity shall notify the comptroller of the listed
  companies in which the [state governmental] entity owns direct or
  indirect holdings.
         Sec. 2270.0203 [806.053].  NOTICE TO LISTED COMPANY ENGAGED
  IN INACTIVE BUSINESS OPERATIONS. For each listed company
  identified under Section 2270.0202 [806.052] that is engaged in
  only inactive scrutinized business operations, the investing
  [state governmental] entity shall send a written notice informing
  the company of this chapter and encouraging the company to continue
  to refrain from initiating active business operations in Sudan, in
  Iran, and with designated foreign terrorist organizations until it
  is able to avoid being considered a listed company.  The investing
  [state governmental] entity shall continue the correspondence as
  the entity considers necessary, but is not required to initiate
  correspondence more often than semiannually.
         Sec. 2270.0204 [806.054].  ACTIONS RELATING TO LISTED
  COMPANY ENGAGED IN ACTIVE BUSINESS OPERATIONS. (a) For each listed
  company identified under Section 2270.0202 [806.052] that is
  engaged in scrutinized active business operations, the investing
  [state governmental] entity shall send a written notice informing
  the company of its listed company status and warning the company
  that it may become subject to divestment by investing [state
  governmental] entities.
         (b)  The notice shall offer the company the opportunity to
  clarify its Sudan-related, Iran-related, or designated foreign
  terrorist organization-related activities, as applicable, and
  shall encourage the company, not later than the 90th day after the
  date the company receives notice under this section, to either
  cease all [its] scrutinized business operations as described by
  Sections 2270.0052, 2270.0102, and 2270.0152, or convert such
  operations to inactive business operations in order to avoid
  qualifying for divestment by investing [state governmental]
  entities.
         (c)  If, during the time provided by Subsection (b), the
  company ceases scrutinized business operations described by that
  subsection, the comptroller shall remove the company from the list
  of scrutinized companies and this chapter will no longer apply to
  the company unless it resumes scrutinized business operations.
         (d)  If, during the time provided by Subsection (b), the
  company converts its scrutinized active business operations to
  inactive business operations, the company is subject to all
  provisions of this chapter relating to inactive business
  operations.
         (e)  If, after the time provided by Subsection (b) expires,
  the listed company continues to have scrutinized active business
  operations, the investing [state governmental] entity shall sell,
  redeem, divest, or withdraw all publicly traded securities of the
  company, except securities described by Section 2270.0207
  [806.057], according to the schedule provided by Section 2270.0206
  [806.056].
         Sec. 2270.0205 [806.055].  ACTIONS RELATING TO LISTED
  COMPANY COMPLICIT IN GENOCIDE. (a) In this section, "complicit"
  has the meaning assigned by Section 2270.0051.
         (b)  For each company identified under Section 2270.0202
  [806.052] that has been complicit, the investing [state
  governmental] entity shall send a written notice informing the
  company of its listed company status and warning the company that it
  may become subject to divestment by the investing [state
  governmental] entity.
         (c) [(b)]  The notice must require the listed company to
  refrain from taking any further action that would make it
  complicit.
         (d) [(c)]  If, after receiving the notice under Subsection
  (b) [(a)], the listed company takes additional action that makes
  the company complicit, the investing [state governmental] entity
  shall sell, redeem, divest, or withdraw all publicly traded
  securities of the company, except securities described by Section
  2270.0207 [806.057], according to the schedule provided by Section
  2270.0206 [806.056].
         Sec. 2270.0206 [806.056].  DIVESTMENT OF ASSETS. (a) An
  investing [A state governmental] entity required to sell, redeem,
  divest, or withdraw all publicly traded securities of a listed
  company shall comply with the following schedule:
               (1)  at least 50 percent of those assets shall be
  removed from the investing [state governmental] entity's assets
  under management not later than the 270th day after the date the
  company receives notice under Section 2270.0204 [806.054] or
  2270.0205 [806.055] or Subsection (b); and
               (2)  100 percent of those assets shall be removed from
  the investing [state governmental] entity's assets under
  management not later than the 450th day after the date the company
  receives notice under Section 2270.0204 [806.054] or 2270.0205
  [806.055] or Subsection (b).
         (b)  If a company that ceased scrutinized active business
  operations after receiving notice under Section 2270.0204
  [806.054] resumes scrutinized active business operations, the
  investing [state governmental] entity shall send a written notice
  to the company informing it that the [state governmental] entity
  will sell, redeem, divest, or withdraw all publicly traded
  securities of the scrutinized company according to the schedule in
  Subsection (a).
         (c)  An investing [A state governmental] entity may delay the
  schedule for divestment under Subsection (a) only to the extent
  that the [state governmental] entity determines, in the [state
  governmental] entity's good faith judgment, that divestment from
  listed companies will likely result in a loss in value described by
  Section 2270.0208(a) [806.058(a)].  If the [a state governmental]
  entity delays the schedule for divestment, the [state governmental]
  entity shall submit a report to the presiding officer of each house
  of the legislature and the attorney general stating the reasons and
  justification for the [state governmental] entity's delay in
  divestment from listed companies.  The report must include
  documentation supporting its determination that the divestment
  would result in a loss in value described by Section 2270.0208(a)
  [806.058(a)], including objective numerical estimates.  The
  investing [state governmental] entity shall update the report every
  six months.
         Sec. 2270.0207 [806.057].  INVESTMENTS EXEMPTED FROM
  DIVESTMENT. An investing [A state governmental] entity is not
  required to divest from any indirect holdings in actively managed
  investment funds or private equity funds.  The investing [state
  governmental] entity shall submit letters to the managers of
  investment funds containing listed companies requesting that they
  consider removing those companies from the fund or create a similar
  actively managed fund with indirect holdings devoid of listed
  companies.  If the manager creates a similar fund with
  substantially the same management fees and same level of investment
  risk, the investing [state governmental] entity shall replace all
  applicable investments with investments in the similar fund in an
  expedited time frame consistent with prudent fiduciary standards.
         Sec. 2270.0208 [806.058].  AUTHORIZED INVESTMENT IN LISTED
  COMPANIES. (a) An investing [A state governmental] entity may
  cease divesting from or may reinvest in one or more listed companies
  if clear and convincing evidence shows that the value for all assets
  under management by the [state governmental] entity becomes equal
  to or less than 99.7 percent of the hypothetical value of all assets
  under management by the [state governmental] entity had the [state
  governmental] entity not divested from listed companies under this
  chapter.
         (b)  An investing [A state governmental] entity may invest in
  a listed company as provided by this section only to the extent
  necessary to ensure that the value of the assets managed by the
  [state governmental] entity does not fall below the value described
  by Subsection (a).
         (c)  Before an investing [a state governmental] entity may
  invest in a listed company under this section, the [state
  governmental] entity must provide a written report to the presiding
  officer of each house of the legislature and the attorney general
  setting forth the reason and justification, supported by clear and
  convincing evidence, for its decisions to cease divestment, to
  reinvest, or to remain invested in a listed company.
         (d)  The investing [state governmental] entity shall update
  the report required by Subsection (c) semiannually, as applicable.
         (e)  This section does not apply to reinvestment in a company
  that has ceased to be a listed company.
         Sec. 2270.0209 [806.059].  PROHIBITED INVESTMENTS. Except
  as provided by Sections 2270.0002 [806.004] and 2270.0208
  [806.058], an investing [a state governmental] entity may not
  acquire securities of a listed company.
  SUBCHAPTER F [C]. EXPIRATION; REPORT; ENFORCEMENT
         Sec. 2270.0251 [806.101].  EXPIRATION OF CHAPTER. This
  chapter expires September 1, 2037 [on the earliest of:
               [(1)     the date on which the United States Congress or
  the president of the United States declares that the Darfur
  genocide has been halted for at least 12 months;
               [(2)     the date on which the United States revokes its
  sanctions against the Government of Sudan; or
               [(3)     the date on which the United States Congress or
  the president of the United States, through legislation or
  executive order, declares that mandatory divestment of the type
  provided for in this chapter interferes with the conduct of United
  States foreign policy].
         Sec. 2270.0252 [806.102].  REPORT.  Not later than December
  31 of each year, each investing [state governmental] entity shall:
               (1)  file a publicly available report with the
  presiding officer of each house of the legislature and[,] the
  attorney general[, and the United States presidential special envoy
  to Sudan] that:
                     (A) [(1)]  identifies all investments sold,
  redeemed, divested, or withdrawn in compliance with Section
  2270.0206 [806.056];
                     (B) [(2)]  identifies all prohibited investments
  under Section 2270.0209 [806.059]; and
                     (C) [(3)]  summarizes any changes made under
  Section 2270.0207; and
               (2)  file a report with the United States presidential
  special envoy to Sudan that identifies investments in Sudan
  identified in the report as required by Subdivisions (1)(A) and (B)
  and summarizes any changes made under Section 2270.0207 related to
  those investments [806.057].
         Sec. 2270.0253 [806.103].  ENFORCEMENT. The attorney
  general may bring any action necessary to enforce this chapter.
         SECTION 5.  Chapter 807, Government Code, is repealed.
         SECTION 6.  (a)  On the effective date of this Act, all
  powers, duties, and functions of the State Pension Review Board
  under Chapter 807, Government Code, as repealed by this Act, are
  transferred to the comptroller of public accounts.
         (b)  All of the following that relate to a power, duty, or
  function transferred under Subsection (a) of this section are
  transferred to the comptroller of public accounts on the effective
  date of this Act:
               (1)  all obligations and contracts;
               (2)  all property and records in the custody of the
  State Pension Review Board;
               (3)  all funds appropriated by the legislature and
  other money;
               (4)  all complaints, investigations, or contested
  cases that are pending before the State Pension Review Board,
  without change in status; and
               (5)  all necessary personnel.
         (c)  A rule, policy, or form adopted by or on behalf of the
  State Pension Review Board that relates to a power, duty, or
  function transferred under Subsection (a) of this section becomes a
  rule, policy, or form of the comptroller of public accounts on the
  transfer of the related power, duty, or function and remains in
  effect:
               (1)  until altered by the comptroller of public
  accounts; or
               (2)  unless it conflicts with a rule, policy, or form of
  the comptroller of public accounts.
         (d)  An action brought or proceeding commenced before the
  date of a transfer under this section, including a contested case or
  a remand of an action or proceeding by a reviewing court, is
  governed by the laws and rules applicable to the action or
  proceeding before the transfer.
         SECTION 7.  Not later than September 1, 2017, the
  comptroller of public accounts shall prepare the initial list of
  designated foreign terrorist organizations as required by Section
  2270.0153, Government Code, as added by this Act.
         SECTION 8.  Not later than October 1, 2017, the comptroller
  of public accounts shall:
               (1)  prepare an updated list of scrutinized companies
  required by Section 2270.0201, Government Code, as added by this
  Act;
               (2)  provide the list to each investing entity, as
  defined by Section 2270.0001, Government Code, as added by this
  Act; and
               (3)  post the list on the comptroller's Internet
  website.
         SECTION 9.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect on the 91st day after the last day of the
  legislative session.