REFERENCE TITLE: Israel; boycotts; contracts; investments

State of Arizona
House of Representatives
Fifty-second Legislature
Second Regular Session
2016

HB 2617
Introduced by
Representatives Gowan, Allen J, Barton, Borrelli, Bowers, Boyer, Cardenas,
Cobb, Fann, Finchem, Gray, Kern, Livingston, Mitchell, Montenegro, Olson,
Saldate, Stevens, Thorpe, Senators Barto, Begay, Dial, Driggs, Kavanagh:
Representatives Brophy McGee, Campbell, Carter, Coleman, Espinoza,
Lawrence, Leach, Mesnard, Norgaard, Petersen, Rios, Rivero, Shope,
Townsend, Weninger, Senators Donahue, Lesko, Shooter

AN ACT
AMENDING TITLE 35, CHAPTER 2, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 9;
RELATING TO PUBLIC CONTRACTS AND INVESTMENTS.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 35, chapter 2, Arizona Revised Statutes, is amended
by adding article 9, to read:
ARTICLE 9. ISRAEL BOYCOTT DIVESTMENTS
35-393. Definitions
IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES:
1. "BOARD" MEANS THE STATE BOARD OF INVESTMENT ESTABLISHED BY SECTION
35-311.
2. "BOYCOTT" MEANS ENGAGING IN A REFUSAL TO DEAL, TERMINATING BUSINESS
ACTIVITIES OR PERFORMING OTHER ACTIONS THAT ARE INTENDED TO LIMIT COMMERCIAL
RELATIONS WITH ISRAEL OR WITH PERSONS OR ENTITIES DOING BUSINESS IN ISRAEL OR
IN TERRITORIES CONTROLLED BY ISRAEL, IF THOSE ACTIONS ARE TAKEN EITHER:
(a) IN COMPLIANCE WITH OR ADHERENCE TO CALLS FOR A BOYCOTT OF ISRAEL
OTHER THAN THOSE BOYCOTTS TO WHICH 50 UNITED STATES CODE SECTION 4607(c)
APPLIES.
(b) IN A MANNER THAT DISCRIMINATES ON THE BASIS OF NATIONALITY,
NATIONAL ORIGIN OR RELIGION AND THAT IS NOT BASED ON A VALID BUSINESS REASON.
3. "COMPANY" MEANS A SOLE PROPRIETORSHIP, ORGANIZATION, ASSOCIATION,
CORPORATION, PARTNERSHIP, JOINT VENTURE, LIMITED PARTNERSHIP, LIMITED
LIABILITY PARTNERSHIP, LIMITED LIABILITY COMPANY OR OTHER ENTITY OR BUSINESS
ASSOCIATION, AND INCLUDES A WHOLLY OWNED SUBSIDIARY, MAJORITY-OWNED
SUBSIDIARY, PARENT COMPANY OR AFFILIATE.
4. "DIRECT HOLDINGS" MEANS ALL PUBLICLY TRADED SECURITIES OF A COMPANY
THAT ARE HELD DIRECTLY BY THE STATE TREASURER OR A RETIREMENT SYSTEM IN AN
ACTIVELY MANAGED ACCOUNT OR FUND IN WHICH THE RETIREMENT SYSTEM OWNS ALL
SHARES OR INTERESTS.
5. "INDIRECT HOLDINGS" MEANS ALL SECURITIES OF A COMPANY THAT ARE HELD
IN AN ACCOUNT OR FUND, INCLUDING A MUTUAL FUND, THAT IS MANAGED BY ONE OR
MORE PERSONS WHO ARE NOT EMPLOYED BY THE STATE TREASURER OR A RETIREMENT
SYSTEM, IF THE STATE TREASURER OR RETIREMENT SYSTEM OWNS SHARES OR INTERESTS
EITHER:
(a) TOGETHER WITH OTHER INVESTORS THAT ARE NOT SUBJECT TO THIS
SECTION.
(b) THAT ARE HELD IN AN INDEX FUND.
6. "PUBLIC ENTITY" MEANS THIS STATE, A POLITICAL SUBDIVISION OF THIS
STATE OR AN AGENCY, BOARD, COMMISSION OR DEPARTMENT OF THIS STATE OR A
POLITICAL SUBDIVISION OF THIS STATE.
7. "RESTRICTED COMPANIES" MEANS COMPANIES THAT BOYCOTT ISRAEL.
8. "RETIREMENT SYSTEM" MEANS A RETIREMENT PLAN OR SYSTEM THAT IS
ESTABLISHED BY OR PURSUANT TO TITLE 38.
35-393.01. Contracting; prohibition; exceptions
A. A PUBLIC ENTITY MAY NOT ENTER INTO A CONTRACT WITH A COMPANY TO
ACQUIRE OR DISPOSE OF SERVICES, SUPPLIES, INFORMATION TECHNOLOGY OR
CONSTRUCTION UNLESS THE CONTRACT INCLUDES A WRITTEN CERTIFICATION THAT THE

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COMPANY IS NOT CURRENTLY ENGAGED IN, AND AGREES FOR THE DURATION OF THE
CONTRACT TO NOT ENGAGE IN, A BOYCOTT OF ISRAEL.
B. THIS SECTION DOES NOT APPLY IF EITHER:
1. THE COMPANY OFFERS TO PROVIDE THE SERVICES, SUPPLIES, INFORMATION
TECHNOLOGY OR CONSTRUCTION FOR AT LEAST TWENTY PERCENT LESS THAN EACH OTHER
QUALIFIED COMPANY.
2. THE CONTRACT HAS A TOTAL POTENTIAL VALUE OF LESS THAN ONE THOUSAND
DOLLARS.
35-393.02. Investment; restricted companies list; notice;
immunity
A. ON OR BEFORE APRIL 1 OF EACH YEAR, THE BOARD SHALL PREPARE A LIST
OF RESTRICTED COMPANIES AND SHALL DISTRIBUTE THE LIST TO THE STATE TREASURER
AND EACH RETIREMENT SYSTEM.
B. IN PREPARING THE LIST OF RESTRICTED COMPANIES, THE BOARD MAY
CONSIDER AT LEAST THE FOLLOWING:
1. PUBLICLY AVAILABLE INFORMATION, INCLUDING INFORMATION PROVIDED BY
NONPROFIT ORGANIZATIONS, RESEARCH FIRMS AND GOVERNMENT ENTITIES.
2. INFORMATION PREPARED BY AN INDEPENDENT RESEARCH FIRM RETAINED BY
THE BOARD.
3. A STATEMENT BY A COMPANY THAT IT IS PARTICIPATING IN A BOYCOTT OF
ISRAEL OR THAT IT HAS TAKEN A BOYCOTT ACTION AT THE REQUEST OF, IN COMPLIANCE
WITH OR IN FURTHERANCE OF CALLS FOR A BOYCOTT OF ISRAEL.
C. THE BOARD SHALL NOTIFY EACH COMPANY THAT IS INCLUDED ON THE LIST OF
RESTRICTED COMPANIES THAT THE COMPANY IS SUBJECT TO DIVESTMENT BY THE STATE
TREASURER AND THE RETIREMENT SYSTEMS.
D. IF A COMPANY THAT RECEIVES NOTICE PURSUANT TO SUBSECTION C OF THIS
SECTION SUBMITS A WRITTEN CERTIFICATION TO THE BOARD THAT IT HAS CEASED ITS
BOYCOTT OF ISRAEL AND WILL NOT ENGAGE IN A BOYCOTT OF ISRAEL FOR THE PERIOD
OF TIME THAT THE STATE TREASURER OR A RETIREMENT SYSTEM INVESTS IN THE
COMPANY, THE BOARD SHALL:
1. REMOVE THE COMPANY FROM THE RESTRICTED LIST.
2. NOTIFY THE STATE TREASURER AND THE RETIREMENT SYSTEMS WITHIN TEN
BUSINESS DAYS AFTER RECEIPT OF THE WRITTEN CERTIFICATION OF THE REMOVAL.
E. THE STATE TREASURER AND EACH RETIREMENT SYSTEM SHALL:
1. SELL, REDEEM, DIVEST OR WITHDRAW ALL DIRECT HOLDINGS OF A
RESTRICTED COMPANY FROM THE ASSETS UNDER THEIR MANAGEMENT IN AN ORDERLY AND
FIDUCIALLY RESPONSIBLE MANNER WITHIN THREE MONTHS AFTER RECEIVING THE LIST OF
RESTRICTED COMPANIES PURSUANT TO SUBSECTION A OF THIS SECTION. ON OR BEFORE
AUGUST 1 OF EACH YEAR, THE STATE TREASURER AND EACH RETIREMENT SYSTEM SHALL
NOTIFY THE BOARD REGARDING INVESTMENTS THAT ARE SOLD, REDEEMED, DIVESTED OR
WITHDRAWN PURSUANT TO THIS PARAGRAPH.
2. NOT ACQUIRE SECURITIES OF A RESTRICTED COMPANY AS PART OF THEIR
DIRECT HOLDINGS.

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3. REQUEST THAT MANAGERS OF THEIR INDIRECT HOLDINGS CONSIDER SELLING,
REDEEMING, DIVESTING OR WITHDRAWING HOLDINGS OF A RESTRICTED COMPANY FROM THE
ASSETS UNDER THEIR MANAGEMENT.
F. WITH RESPECT TO ANY ACTION PERFORMED PURSUANT TO THIS SECTION, THE
BOARD, THE STATE TREASURER, EACH RETIREMENT SYSTEM AND ANY PERSON ACTING ON
BEHALF OF THE BOARD, THE STATE TREASURER OR THE RETIREMENT SYSTEM:
1. ARE EXEMPT FROM ANY CONFLICTING STATUTORY OR COMMON LAW OBLIGATION
OR FIDUCIARY DUTIES WITH RESPECT TO CHOICE OF ASSET MANAGERS, INVESTMENT
FUNDS OR INVESTMENTS.
2. ARE SUBJECT TO TITLE 12, CHAPTER 7, ARTICLE 2 REGARDING IMMUNITY
FOR ACTS AND OMISSIONS.
3. ARE INDEMNIFIED AND HELD HARMLESS BY THIS STATE FROM CLAIMS,
DEMANDS, SUITS, ACTIONS, DAMAGES, JUDGMENTS, COSTS, CHARGES AND EXPENSES,
INCLUDING ATTORNEY FEES, AND AGAINST ALL LIABILITY, LOSSES AND DAMAGES
BECAUSE OF A DECISION TO SELL, REDEEM, DIVEST OR WITHDRAW HOLDINGS OF A
RESTRICTED COMPANY MADE PURSUANT TO THIS SECTION.
35-393.03. Severability
IF ANY PROVISION OF THIS ARTICLE OR ITS APPLICATION TO ANY PERSON OR
CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY DOES NOT AFFECT ANY OTHER
PROVISION OR APPLICATION OF THIS ARTICLE THAT CAN BE GIVEN EFFECT WITHOUT THE
INVALID PROVISION OR APPLICATION, AND TO THIS END THE PROVISIONS OF THIS
ARTICLE ARE SEVERABLE.
Sec. 2. Legislative findings
A. Boycotts and related tactics have become a tool of economic warfare
that threaten the sovereignty and security of key allies and trade partners
of the United States.
B. The state of Israel is the most prominent target of such boycott
activity, beginning with the Arab League Boycott adopted in 1945, even before
Israel's declaration of independence as the reestablished national state of
the Jewish people.
C. Companies that refuse to deal with United States trade partners
such as Israel, or entities that do business with or in such countries, make
discriminatory decisions on the basis of national origin that impair those
companies' commercial soundness.
D. It is the public policy of the United States, as enshrined in
several federal acts, including 50 United States Code section 4607, to oppose
such boycotts, and Congress has concluded as a matter of national trade
policy that cooperation with Israel materially benefits United States
companies and improves American competitiveness.
E. Israel in particular is known for its dynamic and innovative
approach in many business sectors, and a company's decision to discriminate
against Israel, Israeli entities or entities that do business with Israel or
in Israel is an unsound business practice making the company an unduly risky
contracting partner or vehicle for investment.

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F. This state seeks to implement Congress's announced policy of
"examining a company's promotion or compliance with unsanctioned boycotts,
divestment from, or sanctions against Israel as part of its consideration in
awarding grants and contracts and supports the divestment of State assets
from companies that support or promote actions to boycott, divest from, or
sanction Israel."

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