HF 1902

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/20/2023 07:12pm

A bill for an act
relating to state government; prohibiting the State Board of Investment from
investing in companies that boycott mining, energy production, production
agriculture, or commercial lumber production; requiring the State Board of
Investment to divest from companies that boycott mining, energy production,
production agriculture, or commercial lumber production; prohibiting the state of
Minnesota or any state agency from entering into contracts with companies that
boycott mining, energy production, production agriculture, or commercial lumber
production; prohibiting banks, credit unions, financial institutions, payment
processors, savings and loan associations, and trust companies from discriminating
against people based on certain subjective criteria; providing for civil penalties;
requiring a report; proposing coding for new law in Minnesota Statutes, chapters
11A; 16; 46.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin TITLE.
new text end

new text begin This act shall be cited as "The Stop Environmental Social Governance (ESG) and Social
Credit Score Discrimination Act."
new text end

Sec. 2.

new text begin [11A.246] PROHIBITING INVESTMENT IN COMPANIES THAT
BOYCOTT MINING, ENERGY PRODUCTION, PRODUCTION AGRICULTURE,
OR COMMERCIAL LUMBER PRODUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Boycott" means refusing to deal with, terminating business activities with, or
otherwise taking any action that is intended to penalize, inflict economic harm on, or limit
commercial relations with a company because the company does not commit or pledge to
meet environmental standards beyond applicable federal and state law or because the
company conducts business with another company that does not commit or pledge to meet
environmental standards beyond applicable federal and state law.
new text end

new text begin (c) "Direct holdings" means all publicly traded debt and equity securities of a company
that are held directly by the State Board of Investment or held in an account or fund in which
the State Board of Investment owns all shares or interests.
new text end

new text begin (d) "Director" means the executive director of the State Board of Investment.
new text end

new text begin (e) "Listed company" means that the director has determined that the company boycotts
mining, energy production, production agriculture, or commercial lumber production.
new text end

new text begin (f) "State board" means the State Board of Investment.
new text end

new text begin Subd. 2. new text end

new text begin Combined investment fund. new text end

new text begin The requirements of this section apply only to
assets in the Minnesota combined investment funds established under section 11A.14 and
do not apply to any of the other funds managed and administered by the state board.
new text end

new text begin Subd. 3. new text end

new text begin No new investment. new text end

new text begin The state board shall not invest in stocks, debt, or other
securities of any listed company.
new text end

new text begin Subd. 4. new text end

new text begin Divestment. new text end

new text begin The state board shall, in accordance with prudent investment
standards, divest from any stocks, debt, or other securities of any listed company that are
direct holdings of the state board. The board must complete divestment pursuant to this
subdivision by July 1, 2028.
new text end

new text begin Subd. 5. new text end

new text begin Review process. new text end

new text begin A company that the director determines is a listed company
may request a review of that determination by submitting to the director a request for review
along with evidence showing that the company does not boycott mining, energy production,
production agriculture, or commercial lumber production. Upon receipt by the director of
sufficient evidence showing that such a company does not boycott mining, energy production,
production agriculture, or commercial lumber production, the company is no longer
considered a listed company for purposes of the requirements in this section.
new text end

new text begin Subd. 6. new text end

new text begin Reporting. new text end

new text begin By January 15 of each calendar year, the state board shall submit
a report to the chairs and ranking minority members of the legislative committees and
divisions with jurisdiction over the state board. The report must be based on the state board's
holdings and information available as of June 30 of the preceding year. The report must
include:
new text end

new text begin (1) the name of each listed company;
new text end

new text begin (2) the name of each company that the director determines meets the definition of a
listed company in which the state board is invested and the value of those investments; and
new text end

new text begin (3) the name of each listed company from which the state board has divested under this
section and the value of the corresponding divested securities.
new text end

new text begin Subd. 7. new text end

new text begin Other legal obligations. new text end

new text begin The state board is exempt from any statutory or
common law obligations that conflict with actions taken in compliance with this section,
including all good faith determinations under subdivision 6, and determinations regarding
the choice of asset managers, investment funds, or investments.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023.
new text end

Sec. 3.

new text begin [16.0531] PROHIBITING STATE CONTRACTS WITH COMPANIES
BOYCOTTING MINING, ENERGY PRODUCTION, PRODUCTION
AGRICULTURE, OR COMMERCIAL LUMBER PRODUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For the purposes of this chapter, "boycott" means refusing
to deal with, terminating business activities with, or otherwise taking any action that is
intended to penalize, inflict economic harm on, or limit commercial relations with a company
because the company does not commit or pledge to meet environmental standards beyond
applicable federal and state law or because the company conducts business with another
company that does not commit or pledge to meet environmental standards beyond applicable
federal and state law.
new text end

new text begin Subd. 2. new text end

new text begin Boycotting prohibited. new text end

new text begin (a) In a state contract for goods or services, a vendor
must certify that: (1) the vendor does not boycott mining, energy production, production
agriculture, or commercial lumber production companies; and (2) the vendor will not boycott
mining, energy production, production agriculture, or commercial lumber production
companies. This section applies to all state agencies, including the Minnesota State Colleges
and Universities and to contracts entered into by entities in the legislative branch.
new text end

new text begin (b) The commissioners of administration and management and budget shall exercise
appropriate due diligence in selecting vendors for goods or services to avoid contracting
with companies that boycott mining, energy production, production agriculture, or
commercial lumber production. The commissioners shall implement measures designed to
meet the objective of this section and take the steps necessary to confirm that vendors have
satisfied the requirements of this section.
new text end

new text begin Subd. 3. new text end

new text begin Civil penalty. new text end

new text begin If a court finds that a vendor boycotted mining, energy production,
production agriculture, or commercial lumber production companies during the duration of
a contract with the state for goods or services, the court must assess a civil penalty of $10,000
on the vendor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2023, and applies to contracts
entered into on or after that date.
new text end

Sec. 4.

new text begin [46.36] DISCRIMINATION PROHIBITED.
new text end

new text begin Subdivision 1. new text end

new text begin Discrimination prohibited. new text end

new text begin (a) A bank, credit union, financial institution,
payment processor, savings and loan association, or trust company shall not refuse to provide
financial services of any kind to, refrain from continuing to provide existing financial
services to, terminate existing financial services with, or otherwise discriminate in the
provision of financial services against a person based on the following:
new text end

new text begin (1) the person's political affiliation; or
new text end

new text begin (2) any value-based or impact-based criteria, including but not limited to social credit
scores or environmental, social, and governance credit factors.
new text end

new text begin (b) Notwithstanding any other provision to the contrary, a financial institution may offer
investments, products, or services to a potential customer or investor based on subjective
standards only if the standards are fully disclosed and explained to the potential customer
or investor before entering into a contract for the investment, product, or service. The
financial institution shall obtain a signature from the potential customer or investor attesting
that the financial institution has disclosed and explained the subjective standards being used
by the financial institution.
new text end

new text begin (c) The provisions of this section must not be construed in any manner that would
interfere with a financial institution's ability to discontinue or refuse to conduct business
with a person when the action is necessary for the physical safety of the financial institution's
employees.
new text end

new text begin (d) The legislature declares that the practice of discriminating against a person or entity
in this state based upon the person's or entity's social credit score or any other valuation
based on environmental, social, and governmental credit factors is a matter of statewide
concern and that discrimination based on such scores and metrics is not only a threat to the
rights and proper privileges of this state's inhabitants but menaces the institutions and
foundation of a free democratic state and threatens the peace, order, health, safety, and
general welfare of this state and its inhabitants.
new text end

new text begin Subd. 2. new text end

new text begin Civil remedy. new text end

new text begin A person who is refused services by a bank, credit union, financial
institution, payment processor, savings and loan association, or trust company as described
in subdivision 1 may bring an action for injunctive relief, a civil penalty of $10,000, and
actual, incidental, and consequential damages sustained by the person as a result of the
refusal. If a court finds a violation of subdivision 1, the court must assess a civil penalty of
$10,000 on the bank, credit union, financial institution, payment processor, savings and
loan association, or trust company, in addition to an award of damages. A plaintiff or class
successful in a legal or equitable action under this section is entitled to the costs of the
action, plus reasonable attorney fees.
new text end

Sec. 5. new text begin SEVERABILITY.
new text end

new text begin The provisions of this act are severable. If any provision of this act or its application is
held invalid, that invalidity does not affect other provisions or applications that can be given
effect without the invalid provision or application.
new text end