Bill Text: TX SB24 | 2021 | 87th Legislature 1st Special Session | Introduced

Texas Senate Bill 24 (Prior Session Legislation)

Introduced

Bill Title: Relating to state investments in social media companies that censor political speech.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2021-07-13 - Co-author authorized [SB24 Detail]

Download: Texas-2021-SB24-Introduced.html



	By: Kolkhorst	S.B. No. 24


	A BILL TO BE ENTITLED
	AN ACT
	relating to state investments in social media companies that censor
	political speech.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subtitle A, Title 8, Government Code, is amended
	by adding Chapter 809 to read as follows:
	CHAPTER 809. PROHIBITION ON INVESTMENT IN SOCIAL MEDIA COMPANIES
	THAT CENSOR POLITICAL SPEECH
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 809.001. DEFINITIONS. In this chapter:
	(1) "Company" means a for-profit sole proprietorship,
	organization, association, corporation, partnership, joint
	venture, limited partnership, limited liability partnership, or
	limited liability company, including a wholly owned subsidiary,
	majority-owned subsidiary, parent company, or affiliate of those
	entities or business associations, that exists to make a profit.
	(2) "Direct holdings" means, with respect to a
	company, all securities of that company held directly by a state
	governmental entity in an account or fund in which a state
	governmental entity owns all shares or interests.
	(3) "Indirect holdings" means, with respect to a
	company, 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 a state governmental entity, in which the state governmental
	entity owns shares or interests together with other investors not
	subject to the provisions of 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.
	(4) "Listed company" means a company listed by the
	attorney general under Section 809.051.
	(5) "Political speech" means speech relating to the
	state, government, public administration, government policymaking,
	including speech by a governmental entity or candidates for public
	office, and social issues.
	(6) "Social media website" means an Internet website
	or application that is open to the public and enables users to
	communicate with each other by posting information, comments,
	messages, or images. The term does not include a website or
	application:
	(A) with 75 million or fewer users;
	(B) that has been affiliated with a religion or
	political party;
	(C) that is primarily used as an e-mail service;
	or
	(D) that consists primarily of content, such as
	news, sports, or entertainment content, that:
	(i) is curated by the owner or operator of
	the website or application and is not user-generated; and
	(ii) provides the basis for any chat,
	comment, or interactive functionality on the website or
	application.
	(7) "State governmental entity" means:
	(A) the Employees Retirement System of Texas,
	including a retirement system administered by that system;
	(B) the Teacher Retirement System of Texas;
	(C) the Texas Municipal Retirement System;
	(D) the Texas County and District Retirement
	System;
	(E) the Texas Emergency Services Retirement
	System; and
	(F) the permanent school fund.
	(8) "User" means a person that posts, uploads,
	transmits, or otherwise publishes content through a social media
	website.
	Sec. 809.002. 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, a state governmental entity and the comptroller are 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. 809.003. INDEMNIFICATION OF 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 a state governmental entity;
	(2) a contractor of a state governmental entity;
	(3) a former employee, a former member of the
	governing body, or any other former officer of a state governmental
	entity who was an employee, member of the governing body, or other
	officer when the act or omission on which the damages are based
	occurred;
	(4) a former contractor of a state governmental entity
	who was a contractor when the act or omission on which the damages
	are based occurred; and
	(5) a state governmental entity.
	Sec. 809.004. NO PRIVATE CAUSE OF ACTION. (a) A person,
	including a member, retiree, or 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, a state governmental entity, a current
	or former employee, a member of the governing body, or any other
	officer of a state governmental entity, or a contractor of 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, a state
	governmental entity, an employee, a member of the governing body,
	or any other officer of a state governmental entity, or a contractor
	of a state governmental entity is liable for paying the costs and
	attorney's fees of a person sued in violation of this section.
	Sec. 809.005. INAPPLICABILITY OF REQUIREMENTS INCONSISTENT
	WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES. A state
	governmental entity is not subject to a requirement of this chapter
	if the state governmental entity determines that the requirement
	would be inconsistent with its 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.
	SUBCHAPTER B. DUTIES REGARDING INVESTMENTS
	Sec. 809.051. LISTED COMPANIES. (a) The attorney general
	shall prepare and maintain, and provide to each state governmental
	entity, a list of companies that own a social media website that
	censors political speech by:
	(1) removing, banning, or demonetizing a user on the
	basis that the user posted, uploaded, transmitted, or published
	political speech; or
	(2) otherwise restricts a user's ability to post,
	upload, transmit, or publish political speech.
	(b) In maintaining the list, the attorney general may review
	and rely, as appropriate in the attorney general's judgment, on
	publicly available information regarding companies that own a
	social media website, including information provided by the state,
	nonprofit organizations, research firms, international
	organizations, and governmental entities.
	(c) The attorney general may not include an Internet service
	provider on a list prepared under this section.
	(d) The attorney general shall update the list annually or
	more often as the attorney general considers necessary, but not
	more often than quarterly, based on information from, among other
	sources, those listed in Subsection (b).
	(e) Not later than the 30th day after the date the list of
	companies is first provided or updated, the attorney general shall
	file the list with the presiding officer of each house of the
	legislature and post the list on a publicly available website.
	Sec. 809.052. IDENTIFICATION OF INVESTMENT IN LISTED
	COMPANIES. Not later than the 30th day after the date a state
	governmental entity receives the list provided under Section
	809.051, the state governmental entity shall notify the attorney
	general of the listed companies in which the state governmental
	entity owns direct holdings or indirect holdings.
	Sec. 809.053. ACTIONS RELATING TO LISTED COMPANY. (a) For
	each listed company identified under Section 809.052, the state
	governmental entity shall send a written notice:
	(1) informing the company of its status as a listed
	company;
	(2) warning the company that it may become subject to
	divestment by state governmental entities after the expiration of
	the period described by Subsection (b); and
	(3) offering the company the opportunity to clarify
	its activities related to censorship of political speech.
	(b) Not later than the 90th day after the date the company
	receives notice under Subsection (a), the company must cease
	censoring political speech in order to avoid qualifying for
	divestment by state governmental entities.
	(c) If, during the time provided by Subsection (b), the
	company ceases censoring political speech, the attorney general
	shall remove the company from the list maintained under Section
	809.051 and this chapter will no longer apply to the company unless
	it resumes censoring political speech.
	(d) If, after the time provided by Subsection (b) expires,
	the company continues to censor political speech, the state
	governmental entity shall sell, redeem, divest, or withdraw all
	publicly traded securities of the company, except securities
	described by Section 809.055, according to the schedule provided by
	Section 809.054.
	Sec. 809.054. DIVESTMENT OF ASSETS. (a) 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 must be removed
	from the state governmental entity's assets under management not
	later than the 180th day after the date the company receives notice
	under Section 809.053 or Subsection (b) unless the state
	governmental entity determines, based on a good faith exercise of
	its fiduciary discretion and subject to Subdivision (2), that a
	later date is more prudent; and
	(2) 100 percent of those assets must be removed from
	the state governmental entity's assets under management not later
	than the 360th day after the date the company receives notice under
	Section 809.053 or Subsection (b).
	(b) If a company that ceased censoring political speech
	after receiving notice under Section 809.053 resumes censoring
	political speech, the 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 company according to the schedule
	in Subsection (a).
	(c) Except as provided by Subsection (a), a state
	governmental entity may delay the schedule for divestment under
	that subsection only to the extent that the state governmental
	entity determines, in the state governmental entity's good faith
	judgment, and consistent with the entity's fiduciary duty, that
	divestment from listed companies will likely result in a loss in
	value or a benchmark deviation described by Section 809.056(a). If
	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 or a benchmark deviation
	described by Section 809.056(a), including objective numerical
	estimates. The state governmental entity shall update the report
	every six months.
	Sec. 809.055. INVESTMENTS EXEMPTED FROM DIVESTMENT. A
	state governmental entity is not required to divest from any
	indirect holdings in actively or passively managed investment funds
	or private equity funds. The state governmental entity shall
	submit letters to the managers of each investment fund containing
	listed companies requesting that they remove those companies from
	the fund or create a similar actively or passively managed fund with
	indirect holdings devoid of listed companies. If a manager creates
	a similar fund with substantially the same management fees and same
	level of investment risk and anticipated return, the state
	governmental entity may replace all applicable investments with
	investments in the similar fund in a time frame consistent with
	prudent fiduciary standards but not later than the 450th day after
	the date the fund is created.
	Sec. 809.056. AUTHORIZED INVESTMENT IN LISTED COMPANIES.
	(a) A state governmental entity may cease divesting from one or
	more listed companies only if clear and convincing evidence shows
	that:
	(1) the state governmental entity has suffered or will
	suffer a loss in the hypothetical value of all assets under
	management by the state governmental entity as a result of having to
	divest from listed companies under this chapter; or
	(2) an individual portfolio that uses a
	benchmark-aware strategy would be subject to an aggregate expected
	deviation from its benchmark as a result of having to divest from
	listed companies under this chapter.
	(b) A state governmental entity may cease divesting from a
	listed company as provided by this section only to the extent
	necessary to ensure that the state governmental entity does not
	suffer a loss in value or deviate from its benchmark as described by
	Subsection (a).
	(c) Before a state governmental entity may cease divesting
	from a listed company under this section, the state governmental
	entity must provide a written report to the comptroller, 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 deciding to cease
	divestment or to remain invested in a listed company.
	(d) The 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 is no longer a listed company.
	Sec. 809.057. PROHIBITED INVESTMENTS. Except as provided
	by Section 809.056, a state governmental entity may not acquire
	securities of a listed company.
	SUBCHAPTER C. REPORT; ENFORCEMENT
	Sec. 809.101. REPORT. Not later than January 15 of each
	year, each state governmental entity shall file a publicly
	available report with the presiding officer of each house of the
	legislature and the attorney general that:
	(1) identifies all securities sold, redeemed,
	divested, or withdrawn in compliance with Section 809.054;
	(2) identifies all prohibited investments under
	Section 809.057; and
	(3) summarizes any changes made under Section 809.055.
	Sec. 809.102. ENFORCEMENT. The attorney general may bring
	any action necessary to enforce this chapter.
	SECTION 2. This Act takes effect on the 91st day after the
	last day of the legislative session.