BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 19, 2016


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


          AB 2844  
          (Bloom) - As Amended April 11, 2016


          SUBJECT:  Public contracts:  California Combating the Boycott,  
          Divestment, and Sanctions of Israel Act of 2016

          KEY ISSUES:  

          1)should the state of California refuse to contract with  
            companies that participate in a boycott against Israel, even  
            though A boycott is protected speech and denying a benefit  
            based on the exercise of protected speech is most likely an  
            unconstitutional condition? 

          2)ALTERNATIVELY, SHOULD The state of California refuse to  
            contract with companies that ENGAGE IN DISCRIMINATORY BUSINESS  
            PRACTICES as opposed to protected speech WHICH WOULD most  
            likely BE a condition THAT WOULD SURVIVE CONSTITUTIONAL  
            CHALLENGE?

                                      SYNOPSIS


          This bill is a response to the Boycott, Divestment and Sanctions  
          (BDS) movement, an organized campaign calling upon businesses,  
          unions, churches, universities, and academic associations, among  
          others, to divest all funds from Israel, or from any company  
          that does business in or with Israel.  It calls for boycotts of  
          Israeli goods and products and seeks to prohibit academic and  








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          cultural exchanges between Israel and the United States.  The  
          most commonly asserted goal of BDS is to pressure Israel to  
          change its policies toward, and treatment of, Palestinians in  
          the occupied territories.  The author and supporters of this  
          bill see the BDS movement as a continuation of the Arab League  
          boycott, an effort to isolate and "demonize" Israel.  This bill  
          would, therefore, prohibit a public entity from entering into a  
          contract if the company seeking the contract is participating in  
          a boycott against Israel.  The bill would require the Department  
          of General Services (DGS) to develop a list of companies engaged  
          in a boycott against Israel. The bill sets forth procedures by  
          which a company could seek removal from the list, and it would  
          impose civil penalties on any company that falsely certified  
          that it was not engaged in a boycott of Israel.  As noted in the  
          analysis, the bill in print raises serious and perhaps  
          insurmountable First Amendment concerns.  Most notably, it  
          offers a clear illustration of the "unconstitutional conditions"  
          doctrine, which holds that a government may not condition a  
          government benefit on the recipient's willingness to forgo a  
          constitutional right, and its corollary, that government cannot  
          deny a benefit to penalize a person for exercising a  
          constitutional right.  The Committee has recommended amendments  
          that may address the constitutional issues, but at the time of  
          this writing, the author had not informed the Committee as to  
          whether he would accept the suggested amendments.  The bill is  
          supported by Jewish-American groups, including the Jewish Public  
          Affairs Committee of California and the Simon Wiesenthal Center,  
          as well as the California Teamsters Public Affairs Council.  The  
          bill is opposed by dozens of groups representing a range of  
          civil rights, civil liberties, religious, peace, human rights,  
          and Palestinian groups.  The bill recently passed out the  
          Assembly Committee on Accountability and Administrative Review  
          on a 5-1 vote, with three members abstaining. 


          SUMMARY:  Prohibits a public entity from entering into a  
          contract if the contracting company is participating in a  
          boycott against Israel.  Specifically, this bill:  









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          1)Provides that, notwithstanding any other law, a public entity  
            shall not enter into a contract on or after January 1, 2017,  
            to acquire or dispose of goods, services, information  
            technology, or for construction if the contracting party is  
            participating in a boycott against Israel. 


          2)Prohibits a company that is on a list of designated companies  
            engaging in a boycott of Israel from bidding on, submitting,  
            or entering into or renewing a contract with a public entity  
            to acquire or dispose of goods, services, information  
            technology, or construction for $10,000 or more. 


          3)Requires the Department of General Services (DGS) to create,  
            based upon a specified federal report, a list of companies  
            engaged in a boycott of Israel, and to update that list every  
            180 days.  Requires DGS to provide a company with 90-days  
            prior notice of its intent to place the company on the list.   
            Provides the company with an opportunity to contest its  
            inclusion on the list. 


          4)Requires any company that submits a bid or proposal to enter  
            into or renew a contract for $10,000 or more with a public  
            entity to certify that it is not on the DGS list and is not  
            engaging in a boycott against Israel. If the public entity  
            determines, by credible information, that a company has  
            submitted a false certification, the company shall be subject  
            to a civil penalty of $250,000 dollars or twice the amount of  
            the value of the contract, whichever is greater. Permits a  
            city attorney, county counsel, or district attorney to bring a  
            civil action to recover the civil penalty and associated costs  
            and fees of recovery.  A company that submits a false  
            certification would also be ineligible to bid on any contract  
            for three years.  Requires DGS to submit the name of any  
            company that submits a false certification to the Office of  
            the Attorney General. 








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          5)Defines "boycott of Israel" to mean refusing to deal with,  
            terminating business activities with, or taking other actions  
            that are intended to penalize, inflict economic harm, or  
            otherwise limit commercial relations with Israel or persons or  
            entities incorporated with Israel or doing business in Israel  
            for reasons other than business, investment, or commercial  
            reasons.  Specifies that "boycott" does not include any of the  
            following: a decision based on business or economic reasons;  
            termination or prohibition of commercial activity within a  
            particular jurisdiction that is required by federal or state  
            law. 


          6)Defines "company" to mean a sole proprietorship, organization,  
            association, corporation, partnership, joint venture, limited  
            partnership, limited liability partnership, limited liability  
            company, or other business association, including all wholly  
            owned subsidiaries, majority-owned subsidiaries, and parent  
            companies, that exist for the purpose of making profit. 


          EXISTING LAW:  


          1)Prohibits Congress and, through the Fourteenth Amendment, any  
            state from abridging freedom of speech or of the press.   
            (United States Constitution, Amendments I and XIV.) 


          2)Provides that every person may freely speak, write and publish  
            his or her sentiments on all subjects, being responsible for  
            the abuse of this right. Provides that no law may restrain or  
            abridge liberty of speech or press.  (California Constitution,  
            Article I, Section 2(a).) 


          3)Holds that an economic boycott, even though it may cause  








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            economic disruption, is protected expression under the First  
            Amendment.  (NAACP v. Claiborne Hardware Co. (1982) 458 U.S.  
            886.) 


          4)Holds, under the unconstitutional conditions doctrine, that  
            the government cannot condition a benefit on the requirement  
            that a person forgo a constitutional right, and, as a  
            necessary corollary, that the government may not deny a  
            benefit to a person because he or she exercises a  
            constitutional right. (Regan v. Taxation with Representation  
            of Washington (1983) 461 U.S. 540, 545, citing Perry v.  
            Sindermann (1958) 408 U.S. 593, 597; see also Speiser v.  
            Randall (1958) 357 U.S. 513, especially at 518-519;  Federal  
            Communications Commission v. League of Women Voters (1984) 468  
            U.S. 364; Legal Services Corporation v. Velazquez (2001) 531  
            U.S. 533; and Rumsfeld v. Forum for Academic and Institutional  
            Rights (2006) 574 U.S. 47, 59.)


          FISCAL EFFECT:  As currently in print this bill is keyed fiscal.  



          COMMENTS:  According to the author and sponsors, this bill is a  
          response to the Boycott, Divestment and Sanctions (BDS)  
          movement, an organized, international campaign calling upon  
          businesses, unions, churches, universities, and academic  
          associations, among others, to divest any funds or investments  
          in Israel, or any company that does business in Israel.  It  
          calls for boycotts of Israeli goods and products, and seeks to  
          prohibit academic and exchanges between Israel and the United  
          States.  The most commonly asserted purpose of these actions to  
          pressure Israel to change its policies toward, and treatment of,  
          Palestinians in the occupied territories. While the proponents  
          of this bill depict the BDS movement as an anti-Semitic,  
          internationally-led effort to demonize Israel, the opponents of  
          this bill - including many Jewish American groups who have  
          nothing to do with the BDS movement - contend that the purpose  








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          is to change Israel's policies.  Both proponents and opponents  
          are understandably passionate about this bill, which pits one  
          group who is deeply and genuinely concerned about the fate of  
          Israel's existence, against another group that is just as deeply  
          and genuinely concerned about the fate of Palestinians in the  
          occupied territories.  This analysis, however, deals with a  
          different issue: whether the provisions of this bill would  
          likely violate the First Amendment.  Not surprisingly,  
          proponents of the bill seem quite certain that it does not  
          violate the First Amendment; while opponents are equally certain  
          that it does.  This analysis presumes that matters of  
          constitutional law are rarely if ever certain.  It concludes  
          that the bill in print raises very serious and possibly  
          insurmountable First Amendment concerns; however, it also  
          concludes that if the bill were amended to focus on  
          discriminatory "practices," as opposed to boycotts, it would be  
          more likely to withstand a First Amendment challenge. 


          What the Bill Does:  As currently in print, this bill would  
          prohibit a public entity, on or after January 1, 2017, from  
          entering into a contract with a company if the company seeking  
          the contract is participating in a boycott against Israel.  It  
          would, correspondingly, prohibit a company participating in a  
          boycott against Israel from bidding on a contract with any  
          public agency if the contract is valued at more than $10,000.   
          The bill would also require the Department of General Services  
          (DGS) to develop a list of companies that it determines are  
          engaged in a boycott against Israel.  In order to develop this  
          list, DGS is directed to use a report that the President of  
          United States will be required to submit to Congress pursuant to  
          the recently signed HR 644, known as the Trade Facilitation and  
          Trade Enforcement Act of 2015.  DGS would be required to update  
          its list every 180 days. 


          Once the relevant companies are identified and the list becomes  
          effective, DGS would provide each company with 90 days' written  
          notice of its intent to include the company on the list.  The  








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          notified company would be afforded an opportunity to contact DGS  
          in writing if it believed that it had been wrongly placed on the  
          list.  The bill does not specify what would happens if DGS were  
          not persuaded by the company's claim, or what remedies, if any,  
          the company would have after that point. 


          In addition, the bill requires any company that submits a bid  
          for a new contract, or for renewal of an existing contract, to  
          "certify" that it is not on the DGS list and is not engaged in a  
          boycott of Israel.  If DGS or the contracting public entity  
          determined, based on "credible evidence," that the company was  
          engaged in a boycott of Israel after certifying that it was not,  
          the company would be liable for a civil penalty of $250,000 or  
          twice the value of the contract, whichever is greater. 


          The bill defines "boycott of Israel" in a customary way:   
          refusing to deal with, terminating business activities with, or  
          taking other actions that are intended to penalize, inflict  
          economic harm, or otherwise limit commercial relations with  
          Israel, or with persons or entities doing business in Israel,  
          for other than business, investment, or commercial reasons.  The  
          bill specifies that "boycott" does not mean a decision for  
          business or economic reasons.  While the definition is  
          customary, it nonetheless illustrates a problem when applied to  
          this context; it may be difficult to distinguish when a decision  
          is made to inflict harm on Israel from when a decision is made  
          for "business or economic reasons."  That is especially  
          difficult considering that the very purpose of a boycott is to  
          exert economic pressure.  What if a company decided to stop  
          doing business with Israel, not out of sympathy with the  
          boycott, but because it feared that, in light of the boycott,  
          continuing to do business with Israel would hurt its business?   
          Would that decision constitute impermissible "participation" in  
          the boycott, or would it be a decision for business and economic  
          reasons?   










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          Problems with the DGS "List" of Companies:  Before addressing  
          the larger constitutional issues, it is necessary to consider a  
          practical problem with the bill in print.  As noted, the bill  
          requires DGS to develop a list of companies engaged in a boycott  
          of Israel, based on a report required by "Section 909" of the  
          Trade Facilitation and Trade Enforcement Act of 2015.  (In fact,  
          "Section 909" refers to the section of the bill, HR 644, that  
          enacts the Act; the Act itself will have a different section  
          number in the United States Codes, but that is an easily  
          addressed technical problem.)  However, it is not clear how the  
          report required by Section 909 could possibly provide DGS with  
          any information to help it develop a list of private companies  
          engaged in a boycott against Israel. Section 909 does not  
          require that the report contain any information on private  
          companies engaged in a boycott of Israel.  Rather, it requires  
          the report to include a "description" of barriers to trade with  
          Israel and a summary of what the President has done to remove  
          those barriers.  The final part of the report requires  
          information on "decisions by foreign persons, including  
          corporate entities and state-affiliated financial institutions,  
          that limit or prohibit economic relations with Israel or persons  
          doing business in Israel or in any territory controlled by  
          Israel."  It seems unlikely that DGS could develop a meaningful  
          list of "companies" engaged in a boycott of Israel when all that  
          the report calls for is a description of barriers to trade with  
          Israel; a summary of what the President has done to remove those  
          barriers; and information about "decisions by foreign persons"  
          that limit or prohibit economic relations with Israel.  There is  
          no indication that the report will include any information about  
          companies, foreign or domestic, that are participating in a  
          boycott of Israel. 


          The Unconstitutional Conditions Doctrine: Proponents of the bill  
          have suggested that this bill does not violate the First  
          Amendment because it would not prohibit anyone from engaging in  
          a boycott; it would only provide that those who do so would  
          forgo the privilege, not the right, to seek a government  
          contract.  This reasoning, however, ignores the well-established  








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          "unconstitutional conditions" doctrine.  An underlying principle  
          of the doctrine is that the government cannot condition the  
          receipt of a government benefit upon the recipient's willingness  
          to forgo a constitutional right.  The U.S. Supreme Court has  
          also recognized a necessary corollary: just as the government  
          may not condition a benefit on a willingness to forgo a  
          constitutional right, it may not deny a benefit to a person  
          because he or she has exercised a constitutional right.  As a  
          number of constitutional scholars have noted, the  
          unconstitutional conditions doctrine is especially relevant when  
          the constitutional right is one of the "preferred rights" of the  
          First Amendment.  The doctrine is also bolstered by the  
          principle that the government may not leverage a benefit to  
          prohibit indirectly what it cannot constitutionally prohibit in  
          a direct manner.  Because a government cannot prohibit speech  
          directly (and the Supreme Court, as noted below, has held that a  
          peaceful boycott is protected speech), it cannot withhold a  
          government benefit to achieve that unconstitutional end  
          indirectly. (For a concise overview of the doctrine see Erwin  
          Chemerinsky Constitutional Law: Policies and Principles 3d. Ed.,  
          pp. 980-984; for a more extended treatment see Kathleen  
          Sullivan, "Unconstitutional Conditions," 102 Harvard Law Review  
          1413 (1989).) 


          The author submitted to the Committee a four-page article from  
          the magazine, Tablet, to provide the Committee with what was  
          described as a legal "analysis" purporting to show the  
          inapplicability of the unconstitutional conditions to this  
          issue.  While the article is indeed written by a respected  
          constitutional law scholar, Eugene Kontorovich of Northwestern  
          University School of Law, it is not a scholarly analysis of the  
          issue.  For example, the article begins by comparing the  
          legislative approach endorsed by this bill with federal and  
          state laws that require contractors to not discriminate "on the  
          basis of sexual orientation or gender identity," because there  
          is "no doubt that the First Amendment protects a potential  
          contractor's belief that homosexuality is wicked behavior."  The  
          obvious problem with this comparison is that unlawful  








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          discrimination is not protected speech.  Under those federal and  
          state laws, a contractor is not denied a contract because of his  
          or her constitutionally protected "belief" that homosexuality is  
          wicked; rather, the contractor is denied the contract because  
          discrimination in employment on those grounds is an illegal  
          "practice."  There is a substantial difference between the  
          government refusing to contract with someone who engages in an  
          illegal practice, on the one hand, and the government refusing  
          to contract with someone who engages in a legal boycott, on the  
          other hand, because the U.S. recognizes a boycott as protected  
          speech.  (NAACP v. Claiborne Hardware Co. (1982) 458 U.S. 886.)   
           No court has ever held that unlawful discrimination is  
          protected speech. 


          Professor Kontorovich's Tablet article also compares legislation  
          of the sort proposed by this bill to a law or policy that  
          prohibits someone from wearing an "obscene T-shirt," even though  
          "wearing obscene T-shirts is a clear First Amendment right, more  
          obviously expressive than refusing to do business with Israeli  
          companies.  Yet states can obviously rethink contracts to  
          companies whose executives habitually show up to meetings in  
          such shirts, because wearing obscene T-shirts is also bad  
          business."   The problem with this comparison is that  
          "obscenity" is a classic example of "unprotected speech" under  
          First Amendment case law.  Thus wearing an obscene T-shirt is  
          not "a clear First Amendment right."  Professor Kontorovich next  
          discusses the U.S. Supreme Court's decision in Rumsfeld v. Forum  
          for Academic and Institutional Rights (2006) without noting that  
          the decision actually endorsed the unconstitutional conditions  
          doctrine, holding that the "government may not deny a benefit to  
          a person on a basis that infringes constitutionally protected .  
          . . freedom of speech even if he had not entitlement to that  
          benefit."  (Rumsfeld, supra, 574 U.S. 47, at 59.)  The Court  
          upheld a policy in that particular case not because it rejected  
          the unconstitutional conditions doctrine, but because it found  
          the specific prohibited activity was "conduct" not "speech."   
          Professor Kontorovich fails to acknowledge that the Court has  
          held that a boycott is speech.  (Curiously, Professor  








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          Kontorovich claims that those who cite NAACP v. Claiborne for  
          the proposition that boycotts are protected speech are trying to  
          "confuse people," and that it "takes more than waving one's  
          hands in the direction of a Supreme Court case to make a legal  
          argument."  But it also does not prove that a United State  
          Supreme Court case, widely and repeated cited as holding that a  
          boycott is speech, is not relevant by merely asserting so.   
          Professor Kantorovich claims that the case only held that the  
          picketing and speeches that accompanied the boycott were  
          protected.  It is certainly true that the Court found the  
          picketing and speeches to be protected speech.  But it is  
          equally true that the Court found that a boycott itself, unless  
          accompanied by violence or other unlawful activity, is also  
          protected speech.)


          In sum, notwithstanding the claims of Professor Kontorovich, the  
          well-established unconstitutional conditions doctrine provides  
          that the government may not condition a benefit on the  
          recipient's willingness to forgo a constitutional right, nor can  
          it deny a government benefit to a person because that person has  
          exercised a constitutional right.  While it is true that  
          "conduct," as opposed to "speech," is not protected by the First  
                                                                             Amendment, the U.S. Supreme Court has held that a boycott is a  
          form of protected speech.  This bill, as currently in print,  
          would prohibit a public entity from contracting with a private  
          company that engages in a boycott of Israel.  It would require a  
          company wishing to contract with the state to certify that is  
          not engaged in a boycott of Israel (a possible coerced speech  
          problem) and impose draconian and unprecedented penalties  
          ($250,000 or twice the value of the contract) for any false  
          certification.  It allows the company to submit a letter to DGS  
          challenging its placement on a list of companies boycotting  
          Israel, but it provides no legal remedy if DGS rejects this  
          challenge.  It is difficult to imagine legislation more clearly  
          calculated to have a chilling impact of the exercise of  
          protected speech. 










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          Federal and State Laws Restricting Boycotts Do Not Justify the  
          Approach Taken in this Bill. In addition to dismissing the  
          unconstitutional conditions doctrine, proponents of this bill  
          also claim that the approach adopted by this bill squares with  
          prior California legislation and current federal legislation.    
          It is true that federal and state laws were passed, beginning in  
          the 1970s, in response to the Arab League boycott.   However,  
          while one could question the constitutionality of those laws as  
          well, it should be noted that those laws are different from this  
          bill in very substantial ways.  


          Since 1977, federal law has imposed various restrictions on  
          foreign entities that boycott Israel, as well as restrictions on  
          private entities that participate in boycotts against Israel  
          fostered by foreign states.  For example, the federal Foreign  
          Relations Authorization Act of 1994, like AB 2844, prohibits  
          government contracts with persons or entities boycotting of  
          Israel.  However, the differences between that Act and this bill  
          are substantial and revealing.  The Act prohibited the  
          Department of State from entering into any contract with either  
          of the following:


               (A)   with  a foreign person that complies with the Arab  
                League boycott of Israel, or 

              (B)  with  a foreign or United States person that  
             discriminates in the award of subcontracts on the basis of  
             religion. (22 USC Section 2679c (1)(A)-(B); emphasis  
             added.)


          In other words, the Department of State may not enter into  
          contracts with a "foreign person" that participates in the Arab  
          League boycott of Israel; but, significantly, when it comes to a  
          "United States person" (defined elsewhere in the statute as a  
          United States resident or citizen) the prohibition only applies  
          if that person "discriminates . . . on the basis of religion."   








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          In other words, when it comes to a citizen or resident of the  
          United States, as opposed to a "foreign person," the contract  
          cannot be denied simply because the person participated in the  
          Arab League boycott of Israel.  That person must have done  
          something more; that person must have also "discriminated" -  
          engaged in conduct, not speech - "on the basis of religion."   
          Clearly, Congress understood that American citizens could not be  
          denied a government contract simply for engaging in a boycott of  
          Israel, even one unquestionably led by for a foreign entity and  
          disfavored by the American government.  A U.S. resident or  
          citizen, protected by the First Amendment, could only be denied  
          a contract if he or she engaged in a discriminatory practice  
          "based on religion."  Clearly, Congress understood that a  
          boycott is speech that is protected by the First Amendment,  
          while discriminatory practices are conduct and therefore  
          unprotected. 


          This federal law is remarkably consistent with California's  
          existing Arab League boycott law, enacted in 1992, two years  
          before the federal law cited above.  Codified as Government Code  
          Section 16649.80 et seq., the California law prohibits the State  
          of California from investing funds in financial institutions  
          engaged in the Arab League boycott of Israel.  The author and  
          supporters of AB 2844 cite this existing law as supporting the  
          constitutionality of the bill under consideration.  However, the  
          California statute is substantially different than AB 2844.   
          Specifically, the 1992 legislation does not apply to companies  
          that engage in a boycott, but rather to companies "engaging in  
          discriminatory business practices" in furtherance of a boycott  
          of Israel.  (Government Code Section 16649.82.)  The existing  
          law then defines "discriminatory business practices" to mean any  
          activity prohibited by Business & Professions Code Section 16721  
          and 16721.5.  These sections, in turn, prohibit business  
          discrimination "on the basis of any characteristic listed" in  
          the Unruh Civil Rights Act.  Clearly the existing law is much  
          more limited than AB 2844, because it does not condition the  
          benefit on forgoing the exercise of free speech but instead  
          denies the benefit based upon the company's engagement in  








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          discriminatory "practices" that are already prohibited by law.   
          It is one thing to say that the state will not contract with, or  
          invest in, any company that violates anti-discrimination laws or  
          engages in discriminatory behavior based on the protected  
          characteristics in the Unruh Act; it is quite another to say  
          that the state will not contract with a company that  
          participates in a lawful boycott.  


          Proposed Committee Amendments:  As currently in print, AB 2844  
          does not appear to the Committee able to pass constitutional  
          muster, and even if it could, the mechanism for identifying  
          relevant companies is simply not up to the task.  The Committee  
          therefore strongly recommends that the author amend the bill to  
          model the 1992 statute on the Arab League boycott of Israel  
          (Government Code Section 16649.80 et seq.)  As proponents of  
          this bill have repeatedly told the Committee, this statute has  
          never been challenged on constitutional grounds.  This appears  
          to be true, but that also means that the statute has never been  
          upheld as constitutional.  It may be that the statute was never  
          challenged because apparently it was rarely if ever used.  At  
          any rate, the existing state law, like the federal statute noted  
          above, raises less compelling constitutional concerns because it  
          focuses on "discriminatory business practices" linked to  
          existing prohibitions in the Unruh Act, instead of focusing on  
          boycotts which, unless coupled with other kinds of unlawful  
          conduct, are protected speech under the First Amendment.  In  
          addition, the Committee's proposed amendments would remove any  
          reference to a DGS list and the federal report that, even when  
          it comes into existence, will not keep track of companies  
          engaged in boycotts against Israel.  In addition, the  
          Committee's proposed amendments would not single out Israel, but  
          would rather apply to discriminatory business practices against  
          any sovereign nation or peoples, including, but not limited to,  
          Israel.  Broadening the statute in this way may address some of  
          the problematic, one-sided "viewpoint discrimination" in the  
          current version of the bill. 










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          The Committee proposes the following amendments: 


             -    Throughout the bill replace "boycott against Israel"  
               with "discriminatory business practices in furtherance of a  
               boycott of a sovereign nation or peoples recognized by the  
               government of the United States, including, but not limited  
               to, the State of Israel."
             -    Add a definition of "discriminatory business practices"  
               that is identical to the existing Arab League boycott  
               statute (GC 16649.80 et seq.), which requires  
               discrimination based on a characteristic listed in the  
               Unruh Act.  


             -    Delete subdivision (c) which requires the DGS to consult  
               the President's report from HR 644 in order to create a  
               "list." 


             -    Insert a new subdivision (c) that requires the Attorney  
               General to develop, keep, and maintain a list of companies  
               that engage in discriminatory business practices in  
               furtherance of a boycott of a sovereign nation or peoples. 


             -    Make conforming changes in the subsequent subdivisions  
               so as to account for the removal of the DGS list  
               requirement.  Where appropriate in the subsequent  
               subdivisions replace DGS with "Attorney General." 


             -    While keeping the provisions that allow the company to  
               challenge its inclusion on the list, delete the sections  
               that require a company to certify that it is not engaged in  
               a discriminatory business practice and penalize the company  
               if it makes a false certification.  It seems unduly harsh  
               to require a company to certify or prove what it is not  
               under the threat of such a severe penalty. 








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          ARGUMENTS IN SUPPORT:  According to the author:


             Since 2004, organized campaigns around the world have  
             promoted a policy of Boycott, Divestment and Sanctions  
             (BDS) against Israel. Campaigns have been launched  
             demanding the "divestment" of university, municipal,  
             church, union and other investment portfolios from  
             companies that do business with Israel, as well as the  
             banning of Israeli products, professionals, academics,  
             academic institutions and artistic performances (in Israel  
             and abroad). 


             The arbitrary nature of these boycotts and divestments has  
             caused concern about financial uncertainty within  
             investment portfolios and has caused corporations to stray  
             from their fiduciary responsibilities.


             In July 2015, the Legislature affirmed its support for the  
             MOU by passing SCR 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.


             Companies adhering to boycotts of Israel undermine the  
             aforesaid policy and purpose of encouraging trade,  
             business, and academic cooperation between California and  
             Israel. Therefore, it is in the best interest of the State  
             of California that it not contract with any company  
             participating in a boycott of Israel.










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          The Jewish Public Affairs Committee of California (JPACC)  
          writes that this bill "reaffirms a commitment to increased  
          cooperation, trade, and mutually beneficial partnerships  
          between California and Israel on key issues such as water and  
          energy.  Similar to the author's statement above, JPACC  
          stresses that the BDS movement seeks to damage this important  
          relationship but adds that, in addition to this, the BDS  
          movement seeks to "demonize and isolate Israel on our  
          campuses, in our communities, and on the world stage."  JPACC  
          claims that "BDS does not further efforts to negotiate a  
          lasting peace for the people of Israel and the Palestinians,  
          but rather seeks to isolate one party rather than build trust  
          and goodwill between both.  With recent BDS efforts intent on  
          harming public opinion and delegitimizing Israel," JPACC  
          concludes, "there is no more crucial time to pass this  
          legislation."


          ARGUMENTS IN OPPOSITION:  Representatives of the Berkeley and  
          Sacramento chapters of Jewish Voice for Peace (JVP) argue that  
          "in the guise of expressing concern for purported discriminatory  
          practices affecting Israel, the true agenda for these bills [AB  
          2844 as well as AB 1551 and AB 1552] is to shield Israel from  
          growing criticism of its policies and from nonviolent measures  
          taken to express and make meaningful that criticism."  In  
          addressing the constitutionality of this measure, JVP cites  
          several court cases holding that "boycotts are protected speech  
          and therefore must be accorded the highest level of First  
          Amendment protection."   JVP cites two U.S Supreme Court  
          decisions holding that government contractors cannot be punished  
          for political beliefs. JVP quotes the following language from  
          the 1996 case, O'Hare Truck Service Inc. v. City of Northlake:  
          "[government] may not deny a benefit to a person on a basis that  
          infringes his constitutionally protect interest - especially,  
          his interest in freedom of speech. For if the government could  
          deny a benefit to a person because of his constitutionally  
          protected speech or associations, his exercise of those freedoms  
          would in effect be penalized and inhibited . . . Such  
          interference with constitutional rights is impermissible."   








                                                                    AB 2844


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          Finally JVP argues that the bill's mechanisms for identifying  
          the blacklisted companies and implementing the measure are  
          "impossibly vague, and enforcement would therefore be capricious  
          and arbitrary."  JVP concludes that AB 2844 is "deeply flawed"  
          and "an utterly unconstitutional undertaking." 


          The American Civil Liberties Union of California opposes AB 2844  
          because it would penalize constitutionally-protected political  
          speech.  ACLU argues that that "however sympathetic one might be  
          to the cause the government seeks to support, the constitutional  
          rights to free speech cannot depend on whether the content of  
          the speech is admired or abhorred. Nor can any governmental  
          right to speak in aid of its interests outweigh the individual  
          right of its people to disagree. If governmental speech rights  
          trumped individual speech rights, the First Amendment would have  
          no meaning."  ACLU also disputes the claims of the author and  
          supporters that this bill is about promoting trade and  
          cooperation between Israel and California, pointing to  
          statements in the bill's fact sheet and supporter statements  
          made elsewhere suggesting that the bill is motivated by  
          opposition to the political beliefs and motives of the BDS  
          movement and its critical stance on Israel.  From the ACLU's  
          point of view, therefore, this bill is clearly a content-based,  
          if not viewpoint-based, infringement on free speech rights.   
          ACLU concludes: "Just as the government may not exercise its  
          sovereign power against its people in retaliation for their  
          political speech, it cannot deprive them of valuable financial  
          benefits to chill their speech on matters of public concern  
          without a compelling governmental interest - and unquestionably  
          not because it prefers another view. To uphold the right to  
          engage in a boycott is not necessarily to support its aims or  
          objectives - just as to uphold freedom of speech is not to  
          endorse the ideas expressed."


          RELATED LEGISLATION:  AB 1552 (Allen), currently awaiting  
          referral in Assembly Rules Committee, would generally prohibit a  
          public entity from entering into a contract to acquire or  








                                                                    AB 2844


                                                                    Page  19





          dispose of goods, services, information technology, or  
          construction unless the contract includes a representation that  
          the contractor is not currently engaged in, and an agreement  
          that the contractor will not during the duration of the contract  
          engage in, the boycott, as defined, of a person or an entity  
          based in or doing business with a jurisdiction with which the  
          state can enjoy open trade, defined as a state that is a member  
          of the World Trade Organization. 


          AB 1551 (Allen), also awaiting referral in Assembly Rules  
          Committee, would prohibit the investment of certain state funds  
          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. 


          REGISTERED SUPPORT / OPPOSITION:




          Support


          30 Years After


          Agudath Israel of California


          Alpha Epsilon Pi Fraternity, Inc.


          Alpha Epsilon Pi, California Polytechnic State University, San  








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                                                                    Page  20





          Luis Obispo


          Alpha Epsilon Pi, Chapman University


          Alpha Epsilon Pi, Claremont Colleges


          Alpha Epsilon Pi, CSU, Chico


          Alpha Epsilon Pi, CSU, Fullerton


          Alpha Epsilon Pi, CSU, Northridge


          Alpha Epsilon Pi, CSU, San Jose


          Alpha Epsilon Pi, UC Berkeley


          Alpha Epsilon Pi, UC Davis


          Alpha Epsilon Pi, UC Irvine


          Alpha Epsilon Pi, UCLA


          Alpha Epsilon Pi, UC Riverside


          Alpha Epsilon Pi, UC Santa Cruz










                                                                    AB 2844


                                                                    Page  21





          Alpha Epsilon Pi, UC Santa Barbara


          Alpha Epsilon Pi, UC San Diego


          Alpha Epsilon Pi, San Diego State University


          Alpha Epsilon Pi, San Francisco State University


          American Jewish Committee


          California Teamsters Public Affairs Council


          Chabad of San Diego State University


          Democrats for Israel Los Angeles


          Israeli-American Council


          Israeli-American Nexus


          Jewish Public Affairs Committee of California


          Simon Wiesenthal Center


          StandWithUs










                                                                    AB 2844


                                                                    Page  22







          Opposition


          American Muslims for Palestine, various chapters
          American-Arab Anti-Discrimination Committee
          American Friends Service Committee
          American Muslims for Palestine
          Arab American Civic Council
          Arab American Cultural Center of Silicon Valley
          Arab Resource and Organizing Center, SF Bay Area
          Bay Area Women in Black
          BDS-LA for Justice in Palestine
          Bill of Rights Defense Committee
          Center for Constitutional Rights
          Council on American Islamic Relations, California
          California Democratic Party, Arab American Caucus
          Chico Palestine Action Group
          Coalition of Palestinian American Organizations
          Cognitive Liberty
          Culture and Conflict Forum
          Defending Dissent Foundation
          Davis Committee for Palestinian Rights
          East Timor Action Network
          Episcopal Peace Fellowship, Palestine Israel Network 
          Friends Committee on Legislation, California
          Friends of Sabeel North America 
          Free Palestine Movement 
          If Americans Knew
          International Jewish Anti-Zionist Network (IJAN)
          International Solidarity Movement, Northern California
          Islah Reparations Project
          Islamic Shura Council of Southern California
          Israel/Palestine Task Force of the California Nevada Conference  
          of United Methodists


          Jewish Voice for Peace, various chapters








                                                                    AB 2844


                                                                    Page  23





          Justice for Palestinians, San Jose
          Kairos USA
          Keep Hope Alive -- Bay Area Presbyterians
          LA Jews for Peace
          Middle East Peace Task Force, Southwest California Synod,  
            Evangelical Lutheran Church 
          National Lawyers Guild, various chapters
          North Coast Coalition for Palestine
          Northern California Islamic Council
          Our Developing World
          Palestine American Congress
          Palestine American League
          Palestine Israel Action Committee
          Palestine-Israel Working Group of Nevada County
          Palestine Legal 
          Palestine Political Action Committee
          Palestinian American Women's Association
          Palestinian Youth Movement-USA
          Peace Action of San Mateo Co. 
          Peninsula Peace and Justice Center
          People for Palestinian-Israeli Justice
          Petaluma Progressives
          Pilgrims of Ibillin
          Queers Undermining Israeli Terrorism
          Ramallah Club of San Jose
          Rebuilding Alliance
          Resource Center for Non-Violence, Santa Cruz
          Sacramento Regional Coalition for Palestinian Rights
          San Jose Peace and Justice Center
          Social Justice Center of Marin
          Students for Justice in Palestine, various chapters
          Sustainable Agriculture Water and Health (SAWAH)
          Syria Solidarity Movement
          UAW 2865 Joint Council/Executive Board
          Unitarian Universalists for Justice in the Middle East
          United Church of Christ Palestine Israel Network
          United Methodist Kairos Response 
          U.S. Campaign to End the Israeli Occupation
          U.S. Palestinian Community Network








                                                                    AB 2844


                                                                    Page  24





          Veterans for Peace, Chapter 87, Sacramento
          Voices for Justice in Palestine, Rossmoor, Walnut Creek
          Washington Interfaith Alliance for Middle East Peace 
          Wellstone Progressive Democrats of Sacramento
          Women's International League for Peace & Freedom, various  
          chapters 
          14 Friends of Palestine, Marin County
          Several individual letters and e-mails


          Analysis Prepared by:Thomas Clark / JUD. / (916) 319-2334