Sec. 2. Authority of State or local governments to divest from certain entities that invest in China

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

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). 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). 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: A Chinese entity— 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); 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 included in the List of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control. A Chinese entity— 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; 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); included on the list required under section 1237 of the National Defense Authorization Act for Fiscal Year 1999 ( 50 U.S.C. 1701 note); included on the Entity List set forth in Supplement No. 4 to part 744 of the Export Administration Regulations; included on the Denied Persons List described in section 764.3(a)(2) of the Export Administration Regulations; included on the Unverified List set forth in Supplement No. 6 to part 744 of the Export Administration Regulations; included on the Military End User List set forth in Supplement No. 7 to part 744 of the Export Administration Regulations; 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) ); included on the on the Uyghur Forced Labor Prevention Act Entity List, maintained by the Department of Homeland Security; 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 ); 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 any other list maintained by the United States Government that designates a Chinese entities for a restriction relating to investment, contracting, or procurement. A Chinese entity otherwise subject to the control of a Chinese entity listed in

(1)or (2). Any agency or instrumentality of the People’s Republic of China. Any measure taken by a State or local government under subsection

(b)shall meet the following requirements: The State or local government shall provide written notice to each person to which a measure is to be applied. 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). 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. 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). 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. A Federal law or regulation, including this Act, shall not preempt any measure of a State or local government authorized under subsection (b). 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. 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. 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. 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. In this section: 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. 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. ). The term Chinese entity means— 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; 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 a person who is controlled by a single entity or individual, that is— a citizen, national, or resident of the People’s Republic of China, other than an individual who is— a citizen or lawful permanent resident of the United States; or domiciled in Taiwan and possesses a valid identification card or number issued by the Government of Taiwan; an agent or instrumentality of the People’s Republic of China; or a person described in subparagraph

(A)or (B). The term control has the meaning given that term in part 800.208 of title 31, Code of Federal Regulations, or any successor regulations. The investment includes— a commitment or contribution of funds or property; a loan or other extension of credit; and the entry into or renewal of a contract for goods or services. The term measure means a law or regulation. 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. The term person means— a natural person, corporation, company, business association, partnership, society, trust, or any other nongovernmental entity, organization, or group; 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 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). The term State or local government includes— any State and any agency or instrumentality thereof; any local government within a State, and any agency or instrumentality thereof; any other governmental instrumentality of a State or locality; and any public institution of higher education within the meaning of the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ). The term State means each of the several States.

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