[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6528 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 6528
To encourage State and local governments to prohibit certain investment
activities in the People's Republic of China, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 30, 2023
Mr. Johnson of South Dakota (for himself, Mr. Moolenaar, Mr. Wittman,
Mrs. Hinson, and Mr. Gimenez) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To encourage State and local governments to prohibit certain investment
activities in the People's Republic of China, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``PRC Accountability and Divestment
Act of 2023''.
SEC. 2. AUTHORITY OF STATE OR LOCAL GOVERNMENTS TO DIVEST FROM CERTAIN
ENTITIES THAT INVEST IN CHINA.
(a) Sense of Congress.--It is the sense of Congress that the United
States should support the decision of any State or local government
that for moral, prudential, or reputational reasons divests from, or
prohibits the investment of assets of the State or local government in,
a person that engages in investment activities in the People's Republic
of China, as described in subsection (c).
(b) Authority To Divest.--Notwithstanding any other provision of
law, a State or local government may adopt and enforce measures that
meet the requirements of subsection (d) to divest the assets of the
State or local government from, or prohibit investment of the assets of
the State or local government in, any person that the State or local
government determines, using credible information available to the
public, engages in investment activities in the People's Republic of
China described in subsection (c).
(c) Investment Activities Described.--A person described in this
subsection engages in investment activities in the People's Republic of
China if the person has an investment in any of the following:
(1) A Chinese entity--
(A) designated by Executive Order 13959 (50 U.S.C.
1701 note; relating to addressing the threat from
securities investments that finance Communist Chinese
military companies);
(B) designated by Executive Order 14105 (88 Fed.
Reg. 54867; relating to addressing United States
investments in certain national security technologies
and products in countries of concern); or
(C) included in the List of Specially Designated
Nationals and Blocked Persons maintained by the Office
of Foreign Assets Control.
(2) A Chinese entity--
(A) included on the Non-SDN Chinese Military-
Industrial Complex Companies List (NS-CMIC List)
maintained by the Office of Foreign Assets Control of
the Department of the Treasury under Executive Order
14032;
(B) that is a Chinese military company or a
military-civil fusion contributor and included on the
list maintained by the Department of Defense in
accordance with section 1260H(b) of the National
Defense Authorization Act for Fiscal Year 2021 (10
U.S.C. 113 note);
(C) included on the list required under section
1237 of the National Defense Authorization Act for
Fiscal Year 1999 (50 U.S.C. 1701 note);
(D) included on the Entity List set forth in
Supplement No. 4 to part 744 of the Export
Administration Regulations;
(E) included on the Denied Persons List described
in section 764.3(a)(2) of the Export Administration
Regulations;
(F) included on the Unverified List set forth in
Supplement No. 6 to part 744 of the Export
Administration Regulations;
(G) included on the Military End User List set
forth in Supplement No. 7 to part 744 of the Export
Administration Regulations;
(H) that produces or provides communications
equipment or service on the list published by the
Federal Communications Commission under section 2(a) of
the Secure and Trusted Communications Networks Act of
2019 (47 U.S.C. 1601(a));
(I) included on the on the Uyghur Forced Labor
Prevention Act Entity List, maintained by the
Department of Homeland Security;
(J) included on the Withhold Release Orders and
Findings List maintained by the Commissioner of U.S.
Customs and Border Protection pursuant to the Uyghur
Forced Labor Prevention Act (Public Law 117-78);
(K) included on the list of covered issuers (as
defined in section 104 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7214)) maintained by the Securities and
Exchange Commission; or
(L) any other list maintained by the United States
Government that designates a Chinese entities for a
restriction relating to investment, contracting, or
procurement.
(3) A Chinese entity otherwise subject to the control of a
Chinese entity listed in (1) or (2).
(4) Any agency or instrumentality of the People's Republic
of China.
(d) Requirements.--Any measure taken by a State or local government
under subsection (b) shall meet the following requirements:
(1) Notice.--The State or local government shall provide
written notice to each person to which a measure is to be
applied.
(2) Timing.--The measure shall apply to a person not
earlier than the date that is 90 days after the date on which
written notice is provided to the person under paragraph (1).
(3) Opportunity for hearing.--The State or local government
shall provide an opportunity to comment in writing to each
person to which a measure is to be applied. If the person
demonstrates to the State or local government that the person
does not engage in investment activities in the People's
Republic of China described in subsection (c), the measure
shall not apply to the person.
(4) Sense of congress on avoiding erroneous targeting.--It
is the sense of Congress that a State or local government
should not adopt a measure under subsection (b) with respect to
a person unless the State or local government has made every
effort to avoid erroneously targeting the person and has
verified that the person engages in investment activities in
the People's Republic of China described in subsection (c).
(e) Notice to Department of Justice.--Not later than 30 days after
adopting a measure pursuant to subsection (b), a State or local
government shall submit written notice to the Attorney General
describing the measure.
(f) Rule of Construction.--A Federal law or regulation, including
this Act, shall not preempt any measure of a State or local government
authorized under subsection (b).
(g) Effective Date.--
(1) In general.--Except as provided in paragraph (2) or
subsection (h), this section applies to measures adopted by a
State or local government before, on, or after the date of the
enactment of this Act.
(2) Notice requirements.--Except as provided in subsection
(h), subsections (d) and (e) apply to measures adopted by a
State or local government on or after the date of the enactment
of this Act.
(h) Authorization for Prior Enacted Measures.--
(1) In general.--Notwithstanding any other provision of
this section or any other provision of law, a State or local
government may enforce a measure (without regard to the
requirements of subsection (d), except as provided in paragraph
(2)) adopted by the State or local government before the date
of the enactment of this Act that provides for the divestment
of assets of the State or local government from, or prohibits
the investment of the assets of the State or local government
in, any person that the State or local government determines,
using credible information available to the public, engages in
investment activities in the People's Republic of China
(determined without regard to subsection (c)) or other business
activities in the People's Republic of China that are
identified in the measure.
(2) Application of notice requirements.--A measure
described in paragraph (1) shall be subject to the requirements
of paragraphs (1) and (2) and the first sentence of paragraph
(3) of subsection (d) on and after the date that is 2 years
after the date of the enactment of this Act.
(i) Definitions.--In this section:
(1) Assets.--
(A) In general.--Except as provided in subparagraph
(B), the term ``assets'' refers to public monies and
includes any pension, retirement, annuity, or endowment
fund, or similar instrument, that is controlled by a
State or local government.
(B) Exception.--The term ``assets'' does not
include employee benefit plans covered by title I of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1001 et seq.).
(2) Chinese entity.--The term ``Chinese entity'' means--
(A) a person that is incorporated in, has a
principal place of business in, or is organized under
the laws of the People's Republic of China;
(B) a person whose equity securities are traded in
the ordinary course of business on one or more
exchanges in the People's Republic of China; or
(C) a person who is controlled by a single entity
or individual, that is--
(i) a citizen, national, or resident of the
People's Republic of China, other than an
individual who is--
(I) a citizen or lawful permanent
resident of the United States; or
(II) domiciled in Taiwan and
possesses a valid identification card
or number issued by the Government of
Taiwan;
(ii) an agent or instrumentality of the
People's Republic of China; or
(iii) a person described in subparagraph
(A) or (B).
(3) Control.--The term ``control'' has the meaning given
that term in part 800.208 of title 31, Code of Federal
Regulations, or any successor regulations.
(4) Investment.--The ``investment'' includes--
(A) a commitment or contribution of funds or
property;
(B) a loan or other extension of credit; and
(C) the entry into or renewal of a contract for
goods or services.
(5) Measure.--The term ``measure'' means a law or
regulation.
(6) People's republic of china.--The term ``People's
Republic of China'' includes any and all Special Administrative
Regions of China, including Hong Kong and Macau but not
including Taiwan.
(7) Person.--The term ``person'' means--
(A) a natural person, corporation, company,
business association, partnership, society, trust, or
any other nongovernmental entity, organization, or
group;
(B) any governmental entity or instrumentality of a
government, including a multilateral development
institution (as defined in section 1701(c)(3) of the
International Financial Institutions Act (22 U.S.C.
262r(c)(3))); and
(C) any successor, subunit, parent entity, or
subsidiary of, or any entity under common ownership or
control with, any entity described in subparagraph (A)
or (B).
(8) State or local government.--The term ``State or local
government'' includes--
(A) any State and any agency or instrumentality
thereof;
(B) any local government within a State, and any
agency or instrumentality thereof;
(C) any other governmental instrumentality of a
State or locality; and
(D) any public institution of higher education
within the meaning of the Higher Education Act of 1965
(20 U.S.C. 1001 et seq.).
(9) State.--The term ``State'' means each of the several
States.
SEC. 3. SAFE HARBOR FOR CHANGES OF INVESTMENT POLICIES BY ASSET
MANAGERS.
(a) In General.--Section 13(c)(1) of the Investment Company Act of
1940 (15 U.S.C. 80a-13(c)(1)) is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(C) engage in investment activities in the
People's Republic of China described in section 2(c) of
the PRC Accountability and Divestment Act of 2023.''.
(b) Regulations.--Not later than 120 days after the date of the
enactment of this Act, the Securities and Exchange Commission shall
issue any revisions the Commission determines to be necessary to the
regulations requiring disclosure by each registered investment company
that divests itself of securities in accordance with section 13(c) of
the Investment Company Act of 1940 to include divestments of securities
in accordance with paragraph (1)(C) of such section, as added by
subsection (a).
SEC. 4. SENSE OF CONGRESS REGARDING CERTAIN ERISA PLAN INVESTMENTS.
It is the sense of Congress that a fiduciary of an employee benefit
plan, as defined in section 3(3) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(3)), may divest plan assets from,
or avoid investing plan assets in, any person the fiduciary determines
engages in investment activities in the People's Republic of China
described in section 2(c) of this Act, without breaching the
responsibilities, obligations, or duties imposed upon the fiduciary by
subparagraph (A) or (B) of section 404(a)(1) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104(a)(1)), if--
(1) the fiduciary makes such determination using credible
information that is available to the public; and
(2) the fiduciary prudently determines that the result of
such divestment or avoidance of investment would not be
expected to provide the employee benefit plan with--
(A) a lower rate of return than alternative
investments with commensurate degrees of risk; or
(B) a higher degree of risk than alternative
investments with commensurate rates of return.
<all>