Eliminate Political Boycotts Act

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Model Bill Info
Bill Title Eliminate Political Boycotts Act
Date Introduced December 1, 2022
Type Model Policy
Status Draft
Task Forces Commerce, Insurance and Economic Development; Energy, Environment and Agriculture

Eliminate Political Boycotts Act

Section 1: The [name of state] finds that:

numerous essential American industries are being targeted for boycotting, divesting, and sanctioning by large corporations and public and private institutional investors; the goal of these colluding parties is to starve targeted industries of capital, restrict their productivity, and redirect that capital to favored industries; these parties are working in concert with many state and federal lawmakers and regulators, as evidenced most recently by new climate disclosure rules from the Securities and Exchange Commission; restricting the supply of energy and other essential commodities, without immediate substitutes for those commodities, only serves to raise prices on consumers, profoundly impacting the poorest among us; denying financing to American and European companies, who are among the most socially and environmentally responsible companies in the world, only serves to support hostile nations and less responsible producers; banks are increasingly denying financing to creditworthy companies solely for the purpose of marketing their environmental or social justice credentials, to the detriment of their clients and shareholders; institutional investors are divesting from entire industries and pressuring corporations to commit to environmental goals, such as reducing greenhouse gas emissions to zero by 2050, or social goals, such as diversity quotas, at the expense of investor returns; large investment firms, through their proxy votes on shareholder resolutions and board elections, are colluding to force companies to direct money, time, and attention away from their core responsibility of increasing shareholder returns; corporations are boycotting and sanctioning essential industries, such as fossil fuel and agriculture producers, by refusing to provide them with products or services or imposing undue burdens on them; the collusion of corporations, and institutions to boycott, divest from, or sanction any industry may violate existing antitrust and fiduciary laws and harms consumers, shareholders, and states; and states, when financially prudent, should avoid doing business with companies that engage in such potentially illegal conduct, and threaten harm to the state, its businesses, and its citizens.

Section 2. Prohibition on Contracts with Companies Engaging in Economic Boycotts

Definitions. a. “Company” means a for-profit 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. For the purposes of this section, “company” does not include sole proprietorships.

b. “Governmental entity” means a state agency or political subdivision of this state.

c. “Ordinary business purpose” does not include any purpose to further social, political, or ideological interests. A fiduciary may reasonably be determined to have taken an action, or considered a factor, with a purpose to further social, political, or ideological interests based upon evidence indicating such a purpose, including, but not limited to (i) branding, advertising, statements, explanations, reports, letters to clients, communications with portfolio companies, statements of principles, or commitments, or (ii) participation in, affiliation with, or status as a signatory to, any coalition, initiative, joint statement of principles, or agreement.

d. “Economic boycott” means, without an ordinary business purpose, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, limit commercial relations with, or change or limit the activities of a company because the company, without violating controlling federal or state law:

i. engages in the exploration, production, utilization, transportation, distribution sale, or manufacturing of, fossil fuel-based energy, timber, mining, or agriculture [insert additional industries if needed]; or

ii. does business with a company described by Paragraph (1)(d)(i).

[specific criteria may be added after Paragraph (1)(d)(ii), following the examples below];

iii. does not meet, is not expected to meet, or does not commit to meet environmental standards or disclosure criteria, in particular criteria intended to eliminate, reduce, offset, or disclose greenhouse gas emissions; or

iv. does not meet, is not expected to meet, or does not commit to meet corporate board, or employment, composition, compensation, or disclosure criteria that incorporates characteristics protected in this state under [state civil rights statute].

2. Provision Required in Contract.

a. This section applies only to a contract that:

i. is between a governmental entity and a company with 10 or more full-time employees; and

ii. will pay a company [minimum contract size] or more over the term of the contract that is to be paid wholly or partly from public funds of the governmental entity; provided, however, the provisions of this paragraph shall apply separately to all companies in a multiple party contract.

b. Except as provided by Paragraph (2)(c), a governmental entity may not enter into a contract with a company for goods or services unless the contract contains a written verification from the company that it:

i. does not engage in economic boycotts; and

ii. will not engage in economic boycotts during the term of the contract.

c. Subsection (b) does not apply to a governmental entity that determines the requirements of Subsection (b)

i. are inconsistent with the governmental entity’s constitutional or statutory duties related to the issuance, incurrence, or management of debt obligations or the deposit, custody, management, borrowing, or investment of funds; or

ii. prevent the governmental entity from obtaining the supplies or services to be provided in an economically practicable manner.

d. [other exceptions for constitutional, statutory, or fiduciary duties]

3. Enforcement

a. This article, or any contract subject to this article, may be enforced by the attorney general or [applicable executive branch official].

b. If the attorney general or [applicable executive branch official] has reasonable cause to believe that a person has engaged in, is engaging in, or is about to engage in, a violation of this article, he may:

i. Require such person to file on such forms as he prescribes a statement or report in writing, under oath, as to all the facts and circumstances concerning the violation, and such other data and information as he may deem necessary.

ii. Examine under oath any person in connection with the violation.

iii. Examine any record, book, document, account or paper as he may deem necessary.

iv. Pursuant to an order of the [state trial court], impound any record, book, document, account, paper, or sample or material relating to such practice and retain the same in his possession until the completion of all proceedings undertaken under this article or in the courts.

4. Applicability and Effective Date