ENROLLED
       2016 Legislature                             CS for CS for SB 86
       
       
       
       
       
       
                                                               201686er
    1  
    2         An act relating to scrutinized companies; creating s.
    3         215.4725, F.S.; providing definitions; requiring the
    4         State Board of Administration to identify all
    5         companies that are boycotting Israel or are engaged in
    6         a boycott of Israel in which the public fund owns
    7         direct or indirect holdings by a specified date;
    8         requiring the public fund to create and maintain the
    9         Scrutinized Companies that Boycott Israel List that
   10         names all such companies; requiring the public fund to
   11         provide written notice to a company that is identified
   12         as a scrutinized company; specifying the contents of
   13         the notice; specifying circumstances under which a
   14         company may be removed from the list; prohibiting the
   15         acquisition of certain securities of scrutinized
   16         companies; prescribing reporting requirements;
   17         requiring that certain information be included in the
   18         investment policy statement; authorizing the public
   19         fund to invest in certain scrutinized companies if the
   20         value of all assets under management by the public
   21         fund becomes equal to or less than a specified amount;
   22         requiring the public fund to provide a written report
   23         to the board of trustees of the state board and the
   24         Legislature before such investment occurs; specifying
   25         required contents of the report; reenacting and
   26         amending s. 287.135, F.S., relating to the prohibition
   27         against contracting with scrutinized companies;
   28         providing a definition; prohibiting a state agency or
   29         local governmental entity from contracting for goods
   30         and services that exceed a specified amount if the
   31         company has been placed on the Scrutinized Companies
   32         that Boycott Israel List; requiring inclusion of a
   33         contract provision that authorizes termination of a
   34         contract if a company submits certain false
   35         certification, has been placed on the scrutinized
   36         companies list, or is engaged in a boycott of Israel;
   37         providing exceptions; requiring certification upon
   38         submission of a bid or proposal for certain contracts,
   39         or before a company enters into or renews certain
   40         contracts, with an agency or local governmental entity
   41         that the company is not participating in a boycott of
   42         Israel; providing procedures upon determination that a
   43         company has submitted a false certification; providing
   44         for civil action; providing penalties; providing
   45         attorney fees and costs; providing a statute of
   46         repose; prohibiting a private right of action;
   47         providing for preemption of conflicting ordinances and
   48         rules; revising provisions relating to federal
   49         preemption; providing for severability; providing
   50         effective dates.
   51          
   52  Be It Enacted by the Legislature of the State of Florida:
   53  
   54         Section 1. Section 215.4725, Florida Statutes, is created
   55  to read:
   56         215.4725 Prohibited investments by the State Board of
   57  Administration; companies that boycott Israel.—
   58         (1) DEFINITIONS.—As used in this section, the term:
   59         (a) “Boycott Israel” or “boycott of Israel” means refusing
   60  to deal, terminating business activities, or taking other
   61  actions to limit commercial relations with Israel, or persons or
   62  entities doing business in Israel or in Israeli-controlled
   63  territories, in a discriminatory manner. A statement by a
   64  company that it is participating in a boycott of Israel, or that
   65  it has initiated a boycott in response to a request for a
   66  boycott of Israel or in compliance with, or in furtherance of,
   67  calls for a boycott of Israel, may be considered by the State
   68  Board of Administration to be evidence that a company is
   69  participating in a boycott of Israel. The term does not include
   70  restrictive trade practices or boycotts fostered or imposed by
   71  foreign countries against Israel.
   72         (b) “Company” means a sole proprietorship, organization,
   73  association, corporation, partnership, joint venture, limited
   74  partnership, limited liability partnership, limited liability
   75  company, or other entity or business association, including all
   76  wholly owned subsidiaries, majority-owned subsidiaries, and
   77  parent companies, that exists for the purpose of making profit.
   78         (c) “Direct holdings” in a company means all securities of
   79  that company that are held directly by the public fund or in an
   80  account or fund in which the public fund owns all shares or
   81  interests.
   82         (d) “Indirect holdings” in a company means all securities
   83  of that company that are held in a commingled fund or other
   84  collective investment, such as a mutual fund, in which the
   85  public fund owns shares or interests, together with other
   86  investors not subject to this section or which are held in an
   87  index fund.
   88         (e) “Public fund” means all funds, assets, trustee, and
   89  other designates under the State Board of Administration
   90  pursuant to part I of chapter 121.
   91         (f) “Scrutinized companies” means companies that boycott
   92  Israel or engage in a boycott of Israel.
   93         (2) IDENTIFICATION OF COMPANIES.—
   94         (a) By August 1, 2016, the public fund shall make its best
   95  efforts to identify all scrutinized companies in which the
   96  public fund has direct or indirect holdings or could possibly
   97  have such holdings in the future. Such efforts include:
   98         1. To the extent that the public fund finds it appropriate,
   99  reviewing and relying on publicly available information
  100  regarding companies that boycott Israel, including information
  101  provided by nonprofit organizations, research firms,
  102  international organizations, and government entities;
  103         2. Contacting asset managers contracted by the public fund
  104  for information regarding companies that boycott Israel; or
  105         3. Contacting other institutional investors that prohibit
  106  such investments or that have engaged with companies that
  107  boycott Israel.
  108         (b) By the first meeting of the public fund following the
  109  identification of scrutinized companies in accordance with
  110  paragraph (a), the public fund shall compile and make available
  111  the “Scrutinized Companies that Boycott Israel List.”
  112         (c) The public fund shall update and make publicly
  113  available quarterly the Scrutinized Companies that Boycott
  114  Israel List based on evolving information from, among other
  115  sources, those listed in paragraph (a).
  116         (3) REQUIRED ACTIONS.—The public fund shall adhere to the
  117  following procedures for assembling companies on the Scrutinized
  118  Companies that Boycott Israel List.
  119         (a) Engagement.
  120         1. The public fund shall immediately determine the
  121  companies on the Scrutinized Companies that Boycott Israel List
  122  in which the public fund owns direct or indirect holdings.
  123         2. For each company newly identified under this paragraph
  124  after August 1, 2016, the public fund shall send a written
  125  notice informing the company of its scrutinized company status
  126  and that it may become subject to investment prohibition by the
  127  public fund. The notice must inform the company of the
  128  opportunity to clarify its activities regarding the boycott of
  129  Israel and encourage the company to cease the boycott of Israel
  130  within 90 days in order to avoid qualifying for investment
  131  prohibition.
  132         3. If, within 90 days after the public fund’s first
  133  engagement with a company pursuant to this paragraph, the
  134  company ceases a boycott of Israel, the company shall be removed
  135  from the Scrutinized Companies that Boycott Israel List, and the
  136  provisions of this section shall cease to apply to that company
  137  unless that company resumes a boycott of Israel.
  138         (b) Prohibition.—The public fund may not acquire securities
  139  of companies on the Scrutinized Companies that Boycott Israel
  140  List, except as provided in paragraph (c) and subsection (6).
  141         (c) Excluded securities.—Notwithstanding the provisions of
  142  this section, paragraph (b) does not apply to:
  143         1. Indirect holdings. However, the public fund shall submit
  144  letters to the managers of such investment funds containing
  145  companies that boycott Israel requesting that they consider
  146  removing such companies from the fund or create a similar fund
  147  having indirect holdings devoid of such companies. If the
  148  manager creates a similar fund, the public fund shall replace
  149  all applicable investments with investments in the similar fund
  150  in an expedited timeframe consistent with prudent investing
  151  standards. For the purposes of this section, an alternative
  152  investment, as the term is defined in s. 215.4401, and
  153  securities that are not publicly traded are deemed to be
  154  indirect holdings.
  155         2. Exchange-traded funds.
  156         (4) REPORTING.—
  157         (a) The public fund shall file a report with each member of
  158  the Board of Trustees of the State Board of Administration, the
  159  President of the Senate, and the Speaker of the House of
  160  Representatives which includes the Scrutinized Companies that
  161  Boycott Israel List within 30 days after the list is created.
  162  This report shall be made available to the public.
  163         (b) At each quarterly meeting of the Board of Trustees
  164  thereafter, the public fund shall file a report, which shall be
  165  made available to the public and to each member of the Board of
  166  Trustees of the State Board of Administration, the President of
  167  the Senate, and the Speaker of the House of Representatives,
  168  which includes:
  169         1. A summary of correspondence with companies engaged by
  170  the public fund under subparagraph (3)(a)2.;
  171         2. All prohibited investments under paragraph (3)(b);
  172         3. Any progress made under paragraph (3)(c); and
  173         4. A list of all publicly traded securities held directly
  174  by the public fund.
  175         (5) INVESTMENT POLICY STATEMENT OBLIGATIONS.—The public
  176  fund’s actions taken in compliance with this section, including
  177  all good faith determinations regarding companies as required by
  178  this act, shall be adopted and incorporated into the public
  179  fund’s investment policy statement as provided in s. 215.475.
  180         (6) INVESTMENT IN CERTAIN SCRUTINIZED COMPANIES.
  181  Notwithstanding any other provision of this section, the public
  182  fund may invest in certain scrutinized companies if clear and
  183  convincing evidence shows that the value of all assets under
  184  management by the public fund becomes equal to or less than
  185  99.50 percent, or 50 basis points, of the hypothetical value of
  186  all assets under management by the public fund, assuming no
  187  investment prohibition for any company had occurred under
  188  paragraph (3)(b). Cessation of the investment prohibition and
  189  any new investment in a scrutinized company is limited to the
  190  minimum steps necessary to avoid the contingency described in
  191  this subsection. For any cessation of the investment prohibition
  192  and new investment authorized by this subsection, the public
  193  fund shall provide a written report to each member of the Board
  194  of Trustees of the State Board of Administration, the President
  195  of the Senate, and the Speaker of the House of Representatives
  196  in advance of the new investment, updated semiannually
  197  thereafter as applicable, setting forth the reasons and
  198  justification, supported by clear and convincing evidence, for
  199  its decisions to cease the investment prohibition in scrutinized
  200  companies.
  201         Section 2. Effective October 1, 2016, section 287.135,
  202  Florida Statutes, is reenacted and amended to read:
  203         287.135 Prohibition against contracting with scrutinized
  204  companies.—
  205         (1) In addition to the terms defined in ss. 287.012 and
  206  215.473, as used in this section, the term:
  207         (a) “Awarding body” means, for purposes of state contracts,
  208  an agency or the department, and for purposes of local
  209  contracts, the governing body of the local governmental entity.
  210         (b) “Boycott of Israel” has the same meaning as defined in
  211  s. 215.4725.
  212         (c)(b) “Business operations” means, for purposes
  213  specifically related to Cuba or Syria, engaging in commerce in
  214  any form in Cuba or Syria, including, but not limited to,
  215  acquiring, developing, maintaining, owning, selling, possessing,
  216  leasing, or operating equipment, facilities, personnel,
  217  products, services, personal property, real property, military
  218  equipment, or any other apparatus of business or commerce.
  219         (d)(c) “Local governmental entity” means a county,
  220  municipality, special district, or other political subdivision
  221  of the state.
  222         (2) A company is ineligible to, and may not, bid on, submit
  223  a proposal for, or enter into or renew a contract with an agency
  224  or local governmental entity for goods or services of $1 million
  225  or more if that, at the time of bidding or submitting a proposal
  226  for a new contract or renewal of an existing contract, the
  227  company:
  228         (a) Is on the Scrutinized Companies that Boycott Israel
  229  List, created pursuant to s. 215.4725, or is engaged in a
  230  boycott of Israel;
  231         (b)Is on the Scrutinized Companies with Activities in
  232  Sudan List or the Scrutinized Companies with Activities in the
  233  Iran Petroleum Energy Sector List, created pursuant to s.
  234  215.473;, or
  235         (c) Is engaged in business operations in Cuba or Syria, is
  236  ineligible for, and may not bid on, submit a proposal for, or
  237  enter into or renew a contract with an agency or local
  238  governmental entity for goods or services of $1 million or more.
  239         (3)(a) Any contract with an agency or local governmental
  240  entity for goods or services of $1 million or more entered into
  241  or renewed on or after:
  242         (a) July 1, 2011, through June 30, 2012, must contain a
  243  provision that allows for the termination of such contract at
  244  the option of the awarding body if the company is found to have
  245  submitted a false certification as provided under subsection (5)
  246  or been placed on the Scrutinized Companies with Activities in
  247  Sudan List or the Scrutinized Companies with Activities in the
  248  Iran Petroleum Energy Sector List.
  249         (b) Any contract with an agency or local governmental
  250  entity for goods or services of $1 million or more entered into
  251  or renewed on or after July 1, 2012, through September 30, 2016,
  252  must contain a provision that allows for the termination of such
  253  contract at the option of the awarding body if the company is
  254  found to have submitted a false certification as provided under
  255  subsection (5), been placed on the Scrutinized Companies with
  256  Activities in Sudan List or the Scrutinized Companies with
  257  Activities in the Iran Petroleum Energy Sector List, or been
  258  engaged in business operations in Cuba or Syria.
  259         (c) October 1, 2016, must contain a provision that allows
  260  for the termination of such contract at the option of the
  261  awarding body if the company:
  262         1. Is found to have submitted a false certification as
  263  provided under subsection (5);
  264         2. Has been placed on the Scrutinized Companies that
  265  Boycott Israel List, or is engaged in a boycott of Israel;
  266         3. Has been placed on the Scrutinized Companies with
  267  Activities in Sudan List or the Scrutinized Companies with
  268  Activities in the Iran Petroleum Energy Sector List; or
  269         4. Has been engaged in business operations in Cuba or
  270  Syria.
  271         (4) Notwithstanding subsection (2) or subsection (3), an
  272  agency or local governmental entity, on a case-by-case basis,
  273  may permit a company on the Scrutinized Companies that Boycott
  274  Israel List, the Scrutinized Companies with Activities in Sudan
  275  List or the Scrutinized Companies with Activities in the Iran
  276  Petroleum Energy Sector List, or a company with business
  277  operations in Cuba or Syria, to be eligible for, bid on, submit
  278  a proposal for, or enter into or renew a contract for goods or
  279  services of $1 million or more under the conditions set forth in
  280  paragraph (a) or the conditions set forth in paragraph (b):
  281         (a)1. With respect to a company on the Scrutinized
  282  Companies with Activities in Sudan List or the Scrutinized
  283  Companies with Activities in the Iran Petroleum Energy Sector
  284  List, all of the following occur:
  285         a. The scrutinized business operations were made before
  286  July 1, 2011.
  287         b. The scrutinized business operations have not been
  288  expanded or renewed after July 1, 2011.
  289         c. The agency or local governmental entity determines that
  290  it is in the best interest of the state or local community to
  291  contract with the company.
  292         d. The company has adopted, has publicized, and is
  293  implementing a formal plan to cease scrutinized business
  294  operations and to refrain from engaging in any new scrutinized
  295  business operations.
  296         2. With respect to a company engaged in business operations
  297  in Cuba or Syria, all of the following occur:
  298         a. The business operations were made before July 1, 2012.
  299         b. The business operations have not been expanded or
  300  renewed after July 1, 2012.
  301         c. The agency or local governmental entity determines that
  302  it is in the best interest of the state or local community to
  303  contract with the company.
  304         d. The company has adopted, has publicized, and is
  305  implementing a formal plan to cease business operations and to
  306  refrain from engaging in any new business operations.
  307         3. With respect to a company on the Scrutinized Companies
  308  that Boycott Israel List, all of the following occur:
  309         a. The boycott of Israel was initiated before October 1,
  310  2016.
  311         b. The company certifies in writing that it has ceased its
  312  boycott of Israel.
  313         c. The agency or local governmental entity determines that
  314  it is in the best interest of the state or local community to
  315  contract with the company.
  316         d. The company has adopted, has publicized, and is
  317  implementing a formal plan to cease scrutinized business
  318  operations and to refrain from engaging in any new scrutinized
  319  business operations.
  320         (b) One of the following occurs:
  321         1. The local governmental entity makes a public finding
  322  that, absent such an exemption, the local governmental entity
  323  would be unable to obtain the goods or services for which the
  324  contract is offered.
  325         2. For a contract with an executive agency, the Governor
  326  makes a public finding that, absent such an exemption, the
  327  agency would be unable to obtain the goods or services for which
  328  the contract is offered.
  329         3. For a contract with an office of a state constitutional
  330  officer other than the Governor, the state constitutional
  331  officer makes a public finding that, absent such an exemption,
  332  the office would be unable to obtain the goods or services for
  333  which the contract is offered.
  334         (5) At the time a company submits a bid or proposal for a
  335  contract or before the company enters into or renews a contract
  336  with an agency or governmental entity for goods or services of
  337  $1 million or more, the company must certify that the company is
  338  not participating in a boycott of Israel, on the Scrutinized
  339  Companies with Activities in Sudan List or the Scrutinized
  340  Companies with Activities in the Iran Petroleum Energy Sector
  341  List, or that it does not have business operations in Cuba or
  342  Syria.
  343         (a) If, after the agency or the local governmental entity
  344  determines, using credible information available to the public,
  345  that the company has submitted a false certification, the agency
  346  or local governmental entity shall provide the company with
  347  written notice of its determination. The company shall have 90
  348  days following receipt of the notice to respond in writing and
  349  to demonstrate that the determination of false certification was
  350  made in error. If the company does not make such demonstration
  351  within 90 days after receipt of the notice, the agency or the
  352  local governmental entity shall bring a civil action against the
  353  company. If a civil action is brought and the court determines
  354  that the company submitted a false certification, the company
  355  shall pay the penalty described in subparagraph 1. and all
  356  reasonable attorney fees and costs, including any costs for
  357  investigations that led to the finding of false certification.
  358         1. A civil penalty equal to the greater of $2 million or
  359  twice the amount of the contract for which the false
  360  certification was submitted shall be imposed.
  361         2. The company is ineligible to bid on any contract with an
  362  agency or local governmental entity for 3 years after the date
  363  the agency or local governmental entity determined that the
  364  company submitted a false certification.
  365         (b) A civil action to collect the penalties described in
  366  paragraph (a) must commence within 3 years after the date the
  367  false certification is submitted.
  368         (6) Only the agency or local governmental entity that is a
  369  party to the contract may cause a civil action to be brought
  370  under this section. This section does not create or authorize a
  371  private right of action or enforcement of the penalties provided
  372  in this section. An unsuccessful bidder, or any other person
  373  other than the agency or local governmental entity, may not
  374  protest the award of a contract or contract renewal on the basis
  375  of a false certification.
  376         (7) This section preempts any ordinance or rule of any
  377  agency or local governmental entity involving public contracts
  378  for goods or services of $1 million or more with a company
  379  engaged in scrutinized business operations.
  380         (8) The contracting prohibitions in this section applicable
  381  to companies on the Scrutinized Companies with Activities in
  382  Sudan List or the Scrutinized Companies with Activities in the
  383  Iran Petroleum Energy Sector List or to companies engaged in
  384  business operations in Cuba or Syria become This section becomes
  385  inoperative on the date that federal law ceases to authorize the
  386  states to adopt and enforce such the contracting prohibitions of
  387  the type provided for in this section.
  388         Section 3. If any provision of this act or its application
  389  to any person or circumstance is held invalid, the invalidity
  390  does not affect other provisions or applications of this act
  391  which can be given effect without the invalid provision or
  392  application, and to this end the provisions of this act are
  393  declared severable.
  394         Section 4. Except as otherwise expressly provided in this
  395  act, this act shall take effect upon becoming a law.