California Legislature—2015–16 Regular Session

Assembly Bill No. 1551

Introduced by Assembly Member Travis Allen

January 4, 2016

An act to amend Sections 16649.80, 16649.81, 16649.82, 16649.83, 16649.84, 16649.86, 16649.88, and 16649.89 of, and to add Section 16649.85 to, the Government Code, relating to state funds.

LEGISLATIVE COUNSEL’S DIGEST

AB 1551, as introduced, Travis Allen. State funds: divestment: foreign boycotts of Israel.

Existing law prohibits state trust funds, as defined, from making, holding, or renewing investments in business firms or financial institutions that engage in discriminatory business practices in furtherance of, or in compliance with, the Arab League’s economic boycott of Israel, as specified. Existing law also prohibits state moneys, as defined, from being deposited with financial institutions that engage in those discriminatory business practices.

This bill would enact the California Israel Commerce Protection Act. The bill would additionally apply those prohibitions to investment in business firms or financial institutions that engage in discriminatory business practices in furtherance or in compliance with the boycott of Israel, as defined. The bill would require state trust funds to use the most recent federal report on politically motivated acts of boycott, divestment from, and sanctions against Israel to determine which business firms and financial institutions engage in those practices. The bill would make conforming changes and related findings and declarations.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

This act shall be known and may be cited as the
California Israel Commerce Protection Act.

SEC. 2.  

The Legislature finds and declares as follows:

(a) The United States and Israel have a unique bond based on
their shared, enduring values, which are reflected in the virtues
and principles of freedom and democracy, and have stood together
as allies since Israel was first formed as a nation.

(b) For years, California and Israel have established business
partnerships and trade relations with each other, and those
partnerships have helped enhance the agricultural, educational,
energy, entertainment, health, medical, scientific, and water policies
in California, Israel, and the United States.

(c) On March 5, 2014, as the culmination of an effort started as
Assembly Bill 1032 of the 2009-10 Regular Session, the Governor
of California and the Prime Minister of Israel signed a
memorandum of understanding (MOU) for strategic partnerships
for joint innovation, exchanges, and cooperation between California
and Israel.

(d) In July 2015, the Legislature affirmed its support for the
MOU by passing Senate Concurrent Resolution 25, noting that
participants in the MOU had already expanded cooperation between
Israel and California in areas such as alternative energy, agriculture,
business innovation, and academia, and declaring that collaboration
with Israel will foster peace and democracy in the Middle East.

(e) Public retirement systems in this state currently invest on
behalf of the citizens of California in publicly traded foreign
companies that may be at risk due to ties with businesses that are
publicly boycotting Israel.

(f) Investments in publicly traded foreign companies that have
business operations with a company that boycotts Israel risk the
pensions of the dedicated public employees of this state.

(g) Excluding and divesting from companies that boycott Israel
and from portfolios that include those companies will help protect
the public retirement systems in this state from investment losses
related to these business activities and may improve the investment
performance of the public retirement systems.

(h) Israel is recognized around the world as the strongest
democratically elected government in the Middle East and is an
American ally, and that nation’s democracy and relationship with
the United States add to the security and strength of California.

(i) It is unconscionable for this state to invest in companies that
boycott Israel, as California has long standing social, political, and
economic partnerships with the State of Israel.

SEC. 3.  

Section 16649.80 of the Government Code is amended
to read:

16649.80.  

The definitions in this section shall govern the
construction and interpretation of this chapter.

(a) “Investment” or “invest” means the commitment of funds
or other assets to a business firm, including a loan or other
extension of credit made to that firm, or security given for the other
assets to that business enterprise, or the beneficial ownership or
control of a share or interest in that business firm, or of a bond or
other debt instrument issued by that business firm.

(b) “Business firm” means any foreign or domestic organization,
association, corporation, partnership, venture, or other entity, its
subsidiary, or affiliate which exists for profitmaking purposes or
to otherwise secure economic advantage, other than a financial
institution.

(c) “Financial institution” means any foreign or domestic bank,
bank holding company, savings and loan association, or credit
union, or any foreign or domestic insurance company, brokerage
firm, securities firm, investment company, mortgage banking
company, finance company, personal property broker, mortgage
loan broker, or consumer credit company, or any affiliate or
subsidiary thereof.

(d) “Business arrangements” means projects, ventures,
undertakings, contractual relations, or other efforts requiring
ongoing or periodic performance by either or both parties.

(e) “Discriminatory business practices” means business
arrangements that are prohibited by Sections 16721 and 16721.5
of the Business and Professions Code.

(f) “State trust moneys” means funds administered by the Public
Employees’ Retirement Fund, the Legislators’ Retirement Fund,
the State Teachers’ Retirement Fund, the Judges’ Retirement Fund,
the Judges’ Retirement System II Fund, the Volunteer Firefighter
Fund, the General Fund portion of the University of California
Retirement Fund, and any funds invested pursuant to this part.

(g) “State trust fund” means the Public Employees’ Retirement
Fund, the Legislators’ Retirement Fund, the State Teachers’
Retirement Fund, the Judges’ Retirement Fund, the Judges’
Retirement System II Fund, the Volunteer Firefighter Fund, and
any investment fund created by this part.

(h) “State moneys” means all money, bonds, and securities in
possession of or collected by any state agency.

(i) “Compliance with the Arab League’s economic boycott of
Israel” means taking any action, with respect to the boycott of
Israel by Arab countries, which is prohibited by the United States
Export Administration Act of 1979.

begin insert

(j) “Compliance with the boycott of Israel” means taking any
action in compliance with an action by a foreign government,
international organization, or affiliated agency of an international
organization, that is politically motivated and intended to penalize
or otherwise limit commercial relations specifically with Israel or
persons doing business in Israel or in Israeli-controlled territories.

end insert

SEC. 4.  

Section 16649.81 of the Government Code is amended
to read:

16649.81.  

begin insert (a) end insert begin insert   end insert On or after January 1, 1994, state trust moneys
shall not be used to make additional or new investments or to renew
existing investments in business firms that engage in discriminatory
business practices in furtherance of or in compliance with the Arab
League’s economic boycott of Israel.

begin insert

(b) On or after January 1, 2017, state trust moneys shall not be
used to make additional or new investments or to renew existing
investments in business firms that engage in discriminatory
business practices in furtherance of or in compliance with the
boycott of Israel.

end insert

SEC. 5.  

Section 16649.82 of the Government Code is amended
to read:

16649.82.  

begin insert (a) end insert begin insert   end insert begin insert Subdivision (a) of end insert Section 16649.81 shall not
apply to any business firm begin delete which, end delete begin insert that, end insert by resolution of its
governing body, adopts a policy not to renew existing, expand
existing, or engage in new, discriminatory business practices in
furtherance of or in compliance with the Arab League’s economic
boycott of Israel. The resolution required by this section shall
include the following statement: “____ (name of business firm)
agrees not to renew existing, expand existing, or engage in new,
discriminatory business practices in furtherance of or in compliance
with the Arab League’s economic boycott of Israel.”

begin insert

(b) Subdivision (b) of Section 16649.81 shall not apply to any
business firm that, by resolution of its governing body, adopts a
policy not to renew existing, expand existing, or engage in new,
discriminatory business practices in furtherance of or in
compliance with the boycott of Israel. The resolution required by
this section shall include the following statement: “____ (name
of business firm) agrees not to renew existing, expand existing, or
engage in new, discriminatory business practices in furtherance
of or in compliance with the boycott of Israel.”

end insert

SEC. 6.  

Section 16649.83 of the Government Code is amended
to read:

16649.83.  

begin insert (a) end insert begin insert   end insert On or after January 1, 1994, state trust moneys
shall not be used to make additional or new investments or to renew
existing investments in financial institutions that engage in
discriminatory business practices in furtherance of or in compliance
with the Arab League’s economic boycott of Israel.

begin insert

(b) On or after January 1, 2017, state trust moneys shall not be
used to make additional or new investments or to renew existing
investments in financial institutions that engage in discriminatory
business practices in furtherance of or in compliance with the
boycott of Israel.

end insert

SEC. 7.  

Section 16649.84 of the Government Code is amended
to read:

16649.84.  

begin insert (a) end insert begin insert   end insert begin insert Subdivision (a) of end insert Section 16649.83 shall not
apply to any financial institution begin delete which, end delete begin insert that, end insert by resolution of its
governing body, adopts a policy not to renew existing, expand
existing, or engage in new, discriminatory business practices in
furtherance of or in compliance with the Arab League’s economic
boycott of Israel. The resolution required by this section shall
include the following statement: “____ (name of financial
institution) agrees not to renew existing, expand existing, or engage
in new, discriminatory business practices in furtherance of or in
compliance with the Arab League’s economic boycott of Israel.”

begin insert

(b) Subdivision (b) of Section 16649.83 shall not apply to any
financial institution that, by resolution of its governing body,
adopts a policy not to renew existing, expand existing, or engage
in new, discriminatory business practices in furtherance of or in
compliance with the boycott of Israel. The resolution required by
this section shall include the following statement: “____ (name
of financial institution) agrees not to renew existing, expand
existing, or engage in new, discriminatory business practices in
furtherance of or in compliance with the boycott of Israel.”

end insert

SEC. 8.  

Section 16649.85 is added to the Government Code,
to read:

16649.85.  

Beginning January 1, 2017, and annually thereafter,
state trust funds shall use the most recent federal report on
politically motivated acts of boycott, divestment from, and
sanctions against Israel to determine which business firms and
financial institutions engage in discriminatory business practices
in furtherance of or in compliance with the boycott of Israel.

SEC. 9.  

Section 16649.86 of the Government Code is amended
to read:

16649.86.  

(a) A copy of a resolution, as described in Sections
16649.82 and 16649.84, shall be submitted to the Treasurer and
to the chief administrative officer of each state trust fund.
Information shall also be submitted by business firms that provides
a description of the discriminatory business practices in furtherance
of or in compliance with the Arab League’s economic boycott of
Israel begin insert or in compliance with the boycott of Israel end insert in existence as
of the date of the resolution.

(b) The copy of a resolution shall be accompanied by a
certification, under penalty of perjury, that the adopted policy is
being complied with. Annually thereafter a certification, under
penalty of perjury, that the adopted policy is being complied with
shall be submitted to the Treasurer.

(c) The resolution and the information submitted to the Treasurer
shall be deemed public documents and shall be open to public
inspection.

SEC. 10.  

Section 16649.88 of the Government Code is amended
to read:

16649.88.  

begin insert (a) end insert begin insert   end insert Effective January 1, 1998, state trust funds shall
not make or hold any investment in any business firm or financial
institution that engages in discriminatory business practices in
furtherance of or in compliance with the Arab League’s economic
boycott of Israel.

begin insert

(b) Effective January 1, 2017, state trust funds shall not make
or hold any investment in any business firm or financial institution
that engages in discriminatory business practices in furtherance
of or in compliance with the boycott of Israel.

end insert

SEC. 11.  

Section 16649.89 of the Government Code is amended
to read:

16649.89.  

begin insert (a end insert begin insert ) end insert begin insert   end insert State moneys shall not be deposited with
financial institutions that, following January 1, 1994, engage in
discriminatory business practices in furtherance of or in compliance
with the Arab League’s economic boycott of Israel.

begin insert

(b) State moneys shall not be deposited with financial institutions
that, following January 1, 2017, engage in discriminatory business
practices in furtherance of or in compliance with the boycott of
Israel.

end insert