Bill Text: FL S0086 | 2016 | Regular Session | Enrolled
Bill Title: Scrutinized Companies
Spectrum: Slight Partisan Bill (Republican 25-14-2)
Status: (Passed) 2016-03-10 - Chapter No. 2016-36 [S0086 Detail]
Download: Florida-2016-S0086-Enrolled.html
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.
