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SB-1328 Prohibited investments and contracts: Russia and Belarus.(2021-2022)

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Date Published: 05/20/2022 12:01 PM
SB1328:v95#DOCUMENT

Amended  IN  Senate  May 19, 2022
Amended  IN  Senate  April 19, 2022
Amended  IN  Senate  March 23, 2022
Amended  IN  Senate  March 03, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 1328

Introduced by Senators McGuire and Cortese
(Principal coauthor: Senator Dodd)
(Principal coauthors: Assembly Members Gabriel, Gipson, and Cristina Garcia)
(Coauthors: Senators Archuleta, Becker, Borgeas, Caballero, Durazo, Eggman, Hertzberg, Hueso, Hurtado, Leyva, Min, Newman, Nielsen, Ochoa Bogh, Portantino, Rubio, Stern, Umberg, and Wiener)
(Coauthors: Assembly Members Aguiar-Curry, Arambula, Bennett, Berman, Bloom, Boerner Horvath, Bryan, Carrillo, Cunningham, Megan Dahle, Daly, Davies, Gallagher, Jones-Sawyer, Lackey, Lee, Levine, Low, Maienschein, Mayes, McCarty, Mullin, Muratsuchi, Nguyen, Patterson, Petrie-Norris, Quirk-Silva, Luz Rivas, Blanca Rubio, Santiago, Ting, Valladares, Voepel, Waldron, Akilah Weber, Wicks, and Wood)

February 18, 2022

An act to add and repeal Sections 7513.73 and 12327 of, and to add and repeal Chapter 8 (commencing with Section 16649.100) of Part 2 of Division 4 of Title 2 of, the Government Code, and to add and repeal Article 14 (commencing with Section 10495) of Chapter 2 of Part 2 of Division 2 of the Public Contract Code, relating to government, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


SB 1328, as amended, McGuire. Prohibited investments and contracts: Russia and Belarus.
(1) The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the retirement fund and system. These provisions qualify this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board.
Existing law prohibits the boards of administration of the Public Employees’ Retirement System and the State Teachers’ Retirement System from making investments in certain countries and in thermal coal companies, as specified, subject to the boards’ plenary authority and fiduciary responsibility for investment of moneys and administration of the systems.
This bill would prohibit the boards of specified state and local public retirement systems from investing public employee retirement funds in a company with business operations in Russia or Belarus or a company that supplies military equipment to Russia or Belarus, as defined. The bill would require those boards to contract with a research firm or firms to determine those companies with business operations in those countries, and to conduct their own review of companies with business operations in those countries, as specified. The bill would require the boards to determine whether a company has business operations in Russia or Belarus or supplies military equipment to Russia or Belarus. The bill, except as specified, would require the board to notify companies determined to have business operations with those countries, and request the company to take substantial action, as defined and specified. If the company fails to complete substantial action, the bill would prohibit the board boards of specified state and local public retirement systems from making additional or new investments in that company, prohibited companies, as defined, domiciled in Russia or Belarus, as defined, companies that the United States government has designated as complicit in the aggressor countries’, as defined, war in Ukraine, or companies that supply military equipment to the aggressor countries, and to liquidate the investments of the board in that company, those companies, as specified. The bill would also require the board, on or before January 1, 2023, and every year thereafter, to file a specified report with the Legislature. The bill would repeal these provisions on specified triggering events. By requiring the boards of local public retirement systems to take specified actions, this bill would impose a state-mandated local program.
(2) Existing law specifies the duties of the Treasurer, which include receiving and keeping in the vaults of the State Treasury or depositing in banks or credit unions all moneys belonging to the state, and, except as specified, receiving and keeping in the vaults of the State Treasury or depositing for safekeeping with any federal reserve bank or any branch thereof, or with any trust company or the trust department of any state or national bank located in a city designated as a reserve or central reserve city by the Board of Governors of the Federal Reserve System, bonds and other securities or investments belonging to the state.
This bill, except as specified, would prohibit the Treasurer from making additional or new investments or renewing existing investments of state moneys in any investment vehicle in the government of Russia or the government of Belarus that meets certain conditions, or in or from a Russian or Belarusian financial institution currently under sanctions imposed by the United States, as defined and specified. The bill would repeal these provisions on specified triggering events.
(3) Existing law specifies how money received into the treasury must be credited and how those state funds are to be used. Existing law prohibits state funds from being used to reimburse a state contractor for costs incurred to assist, promote, or deter union organizing, as defined and specified. Existing law also prohibits state trust moneys from being used to make additional or new investments or to renew existing investments in business firms that engage in discriminatory practices in further of or in compliance with the Arab League’s economic boycott of Israel, as defined and specified.
This bill, except as specified, would prohibit a state agency, as defined, from making additional or new investments or renewing existing investments of state moneys in any investment vehicle in the government of Russia or the government of Belarus that meets certain conditions, or in or from Russian or Belarusian financial institutions currently under sanctions imposed by the United States, and would require a state agency to liquidate those investments. The bill would also require a state agency to file a specified report with the Legislature and the Governor. The bill would urge companies operating in California and the Regents of the University of California to divest and separate themselves from the government of Russia, Russian financial institutions, Russian businesses, the government of Belarus, Belarusian financial institutions, and Belarusian businesses, and would request companies doing business in California to report their investments in and contracts with the government of Russia, Russian financial institutions, Russian businesses, the government of Belarus, Belarusian financial institutions, and Belarusian businesses, as specified. The bill would repeal these provisions on specified triggering events.
(4) Existing law authorizes state agencies to contract for goods, information technology, or services with certain suppliers, as specified. Existing law also makes companies in Sudan involved in certain activities ineligible to bid or submit a proposal for, and forbids them from bidding on or submitting a proposal for, a contract with a state agency for goods or services, as specified.
This bill, except as specified, would make a company that conducts business with the government of Russia or the government of Belarus ineligible to bid or submit a proposal for, and would forbid that company from bidding on or submitting a proposal for, a contract with a state agency for goods or services, as defined and specified. The bill would require a state agency to require a company that submits a bid or proposal with respect to a contract for goods or services to certify that the company is not a scrutinized company, as prescribed. The bill would, among other things, make a company that submits a false certification under these provisions liable for a civil penalty, and would require the Department of General Services to report the company to the Attorney General, who would be required to determine whether to bring a civil action against the company, as specified. The bill would repeal these provisions on specified triggering events.
(5) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
(6) This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 7513.73 is added to the Government Code, to read:

7513.73.
 (a) The Legislature finds and declares all of the following:
(1) On February 24, 2022, the President of Russia, Vladimir Vladimirovich Putin, initiated an unprovoked war against the sovereign and independent nation of Ukraine in violation of international law.
(2) At his direction, Russian military forces have inflicted death and destruction on the territory of Ukraine, killing its men, women, and children in their homes, their places of work, their places of worship, and anywhere they seek shelter.
(3) Through his irrational actions President Putin has additionally caused millions of innocent Ukrainians and nationals from all over the world to flee Ukraine and seek refuge in neighboring countries, disrupting their safety, livelihood, and economic activity and that of millions more in those neighboring countries.
(4) President Putin and members of his clique of oligarchs benefit enormously from economic activity with western economies, including with trade and economic investment from California, which facilitates Russian military and political aggression against Ukraine and against the world’s free and democratic nations.
(5) The government of Belarus facilitated Russia’s attack on Ukraine by allowing Russian military units to launch an attack from Belarus against Ukraine’s capital Kyiv and by preparing to join in the military attack against Ukraine.
(6) The President of Ukraine, Volodymyr Oleksandrovych Zelenskyy, and the Ukrainian people have demonstrated that courage and sacrifice in the face of overwhelming aggression can unite the world against that aggression and stop it in its tracks.
(7) The purpose of California’s public pension funds is to provide a secure retirement to the people who have dedicated their careers and their lives to serving the people of California. That security, and thus the funds’ purpose, is threatened when an authoritarian government can, with impunity, eliminate another sovereign nation and make extreme threats to the international political and economic order. The founders of our pension systems understood this as they witnessed two world wars within their lifetimes.
(8) The United States government has called on all allies and partners to impose extraordinary economic sanctions against the aggressor countries to pressure those countries to halt the war against Ukraine. California, as a constituent part of the United States, is both an ally and partner of the United States and has unparalleled international economic influence that can assist the United States government in achieving its foreign policy objectives toward the aggressor countries.
(9) In order to defend the democratic values of the people of California and ensure their security and the security of the state’s public pension systems, it is necessary to cut all economic investment in the aggressor countries and stand with President Zelenskyy, the people of Ukraine, and all people who support liberal democracy, peace, and freedom.
(b) As used in this section, the following definitions apply:

(1)“Active business operations” means a company engaged in business operations that provide revenue to the government of Russia or the government of Belarus.

(2)

(1) “Aggressor countries” means Russia and Belarus.

(3)

(2) “Belarus” means the Republic of Belarus.

(4)

(3) “Board” means the board of any public retirement system subject to Section 7522.02.

(5)“Business operations” means maintaining, selling, or leasing equipment, facilities, personnel, or any other apparatus of business or commerce in the aggressor countries, including the ownership or possession of real or personal property located in Russia or Belarus.

(6)“Company” means a sole proprietorship, organization, association, corporation, partnership, venture, or other entity, its subsidiary or affiliate that exists for profitmaking purposes, or to secure economic advantage. “Company” also means a company owned or controlled, directly or indirectly, by the government of Russia or Belarus, or by a sanctioned person.

(7)

(4) “Government of Belarus” means the government of Belarus or its instrumentalities.

(8)

(5) “Government of Russia” means the government of Russia or its instrumentalities.

(9)

(6) “Invest” or “investment” means the purchase, ownership, or control of stock stock, a partnership interest, or a membership interest of a prohibited company, association, or corporation, bonds issued by the government or a political subdivision of Russia or by the government or a political subdivision of Belarus, corporate bonds or other debt instruments issued by a company, company domiciled in Russia or Belarus, or the commitment of funds or other assets to a company, company domiciled in Russia or Belarus, including a loan or extension of credit to that company. company, unless the investment is authorized by the United States Department of the Treasury, Office of Foreign Assets Control.
(7) “Prohibited company” means either of the following:
(A) A sole proprietorship, organization, association, corporation, partnership, venture, or other entity, or its subsidiary or affiliate that exists for profitmaking purposes or to secure economic advantage, that is domiciled in Russia or Belarus.
(B) A sole proprietorship, organization, association, corporation, partnership, venture, or other entity, or its subsidiary or affiliate that exists for profitmaking purposes or to secure economic advantage, that is owned or controlled, directly or indirectly, by the government of Russia or Belarus or by a sanctioned person.

(10)

(8) “Public employee retirement funds” means any funds controlled by a retirement board subject to Section 7522.02.

(11)“Research firm” means a reputable, neutral third-party research firm.

(12)

(9) “Russia” means the Russian Federation.

(13)

(10) “Sanctioned person” means any individual or entity subject to sanctions imposed by the United States government arising out of Russia’s invasion of Ukraine as initiated on or after February 24, 2022.

(14)“Substantial action” means a boycott of the aggressor countries, curtailing business in those countries until that time described in subdivision (n), selling company assets, equipment, or real and personal property located in the aggressor countries, or undertaking significant humanitarian efforts in Ukraine.

(c)The board shall not invest public employee retirement funds in a company with business operations in the aggressor countries that meets any of the following criteria:

(1)The company is engaged in active business operations in Russia or Belarus.

(2)The company is engaged in oil-related activities or energy or power-related operations, or contracts with another company with business operations in the oil, energy, and power sectors of Russia or Belarus, and the company failed to take substantial action related to the aggressor countries’ invasion of Ukraine.

(3)The company has demonstrated complicity in the Russian invasion of Ukraine.

(d)Notwithstanding subdivision (c), the board shall not invest public employee retirement funds in a company that supplies military equipment to Russia or to Belarus.

(e)(1)The board shall contract, without regard to the provisions regarding competitive bidding, with a research firm or firms to determine those companies that have business operations in the aggressor countries. Those research firms shall obtain, in the aggregate, data on a majority of companies with business operations in the aggressor countries. Within one month of this section being chaptered, those research firms shall report any findings to the board and those research firms shall submit further findings to the board if there is a change of circumstances in Ukraine.

(2)In addition to the reports described in paragraph (1), the board shall take all of the following actions no later than one month after this section is chaptered:

(A)Review publicly available information regarding companies with business operations in the aggressor countries.

(B)Contact other institutional investors that invest in companies with business operations in the aggressor countries.

(C)Send written notice to a company with business operations in the aggressor countries that the company may be subject to this section.

(f)(1)The board shall determine, by the next applicable board meeting and based on the information and reports described in subdivision (e), if a company meets the criteria described in subdivision (c) or (d). If the board plans to invest or has investments in a company that meets the criteria described in subdivision (c), that planned or existing investment shall be subject to subdivisions (h) and (i).

(2)If the board plans to invest or has investments in a company that meets the criteria described in subdivision (d), then subdivisions (h) and (i) shall not apply and the board shall take the following actions:

(A)The board shall not make additional or new investments or renew existing investments in that company.

(B)The board shall liquidate the investments of the board in that company no later than one month after this subdivision applies to that company. The board shall liquidate those investments in a manner consistent with the board’s fiduciary responsibilities as described in Section 17 of Article XVI of the California Constitution.

(3)Any investment of the board in a company that does not meet the criteria described in subdivision (c) or (d) or does not have active business operations in Russia or Belarus is not subject to subdivision (i), provided that the company does not subsequently meet the criteria described in subdivision (c) or (d) or engage in active business operations. The board shall identify the reasons why that company does not satisfy the criteria described in subdivision (c) or (d) or does not engage in active business operations in the report to the Legislature described in subdivision (j).

(g)(1)Notwithstanding subdivision (f), if the board’s investment in a company described in subdivision (c) or (d) is limited to investment via an externally and actively managed commingled fund, the board shall contact that fund manager in writing and request that the fund manager remove that company from the fund as described in subdivision (i). Within two months after this section is chaptered, if the fund or account manager creates a fund or account devoid of companies described in subdivision (c) or (d), the transfer of board investments from the prior fund or account to the fund or account devoid of companies with business operations in Russia or Belarus shall be deemed to satisfy the provisions set forth in subdivision (i).

(2)If the board’s investment in a company described in subdivision (c) is limited to an alternative fund or account, the alternative fund or account manager creates an actively managed commingled fund that excludes companies described in subdivisions (c) and (d), and the new fund or account is deemed to be financially equivalent to the existing fund or account, the transfer of board investments from the existing fund or account to the new fund or account shall be deemed to satisfy the provisions set forth in subdivision (i). If the board determines that the new fund or account is not financially equivalent to the existing fund, the board shall include the reasons for that determination in the report described in subdivision (j).

(3)The board shall make a good faith effort to identify any private equity investments that involve companies described in subdivision (c) or are linked to the government of Russia or Belarus or any sanctioned person. If the board determines that a private equity investment clearly involves a company described in subdivision (c) or is linked to the government of Russia, the government of Belarus, or a sanctioned person, the board shall consider, at its discretion, if those private equity investments shall be subject to subdivision (i). If the board determines that a private equity investment clearly involves a company described in subdivision (c) or is linked to the government of Russia or Belarus or a sanctioned person and the board does not take action as described in subdivision (i), the board shall include the reasons for its decision in the report described in subdivision (j).

(4)If the board determines that an investment is held in an alternative fund or account or through a private equity investment and that investment clearly involves a company described in subdivision (d), the provisions in paragraph (2) of subdivision (f) shall apply.

(h)Except as described in subdivision (g) or paragraph (3) of subdivision (f), the board shall notify, in the board’s capacity of shareholder or investor, any company described in paragraph (1) of subdivision (f) that the company is subject to subdivision (i) and authorize that company to respond to the information and reports described in subdivision (e). The board shall request that the company take substantial action no later than 30 days from the date the board notified the company under this subdivision. If the board determines that a company has taken substantial action or has made sufficient progress towards substantial action before the expiration of that 30-day period, that company shall not be subject to subdivision (i). The board shall continue to monitor and review, at intervals not to exceed 30 days, the progress of the company until that company has taken substantial action. A company that fails to complete substantial action or continue to make sufficient progress towards substantial action by the next time interval shall be subject to subdivision (i).

(i)If a company described in paragraph (1) of subdivision (f) fails to complete substantial action by the time described in subdivision (h), the board shall comply with the following:

(1)The board shall not make additional or new investments or renew existing investments in that company.

(2)The board shall liquidate the investments of the board in that company no later than six months after this subdivision applies to that company. The board shall liquidate those investments in a manner to address the need for companies to take substantial action in the aggressor countries and consistent with the board’s fiduciary responsibilities as described in Section 17 of Article XVI of the California Constitution.

(c) A board shall not make additional or new investments or renew existing investments in any of the following:
(1) A prohibited company.
(2) A company that the United States government has designated as complicit in the aggressor countries’ war against Ukraine.
(3) A company that supplies military equipment to the aggressor countries.
(d) A board shall liquidate any existing investments in a company described in subdivision (c) in a manner consistent with the board’s fiduciary responsibilities as described in Section 17 of Article XVI of the California Constitution.

(j)

(e) On or before January 1, 2023, and every year thereafter, the board shall file a report with the Legislature. The report shall describe all of the following:
(1) A list of the board’s investments the board has in companies with business operations in Russia or Belarus, described in subdivision (c), including, but not limited to, the issuer, by name, of the stock, bonds, securities, and other evidence of indebtedness.

(2)A detailed summary of the business operations a company described in paragraph (1) has in Russia or Belarus and whether that company satisfies all of the criteria in subdivision (c) or (d).

(3)Whether the board has reduced its investments in a company that satisfies the criteria in subdivision (c) or (d).

(4)If the board has not completely reduced its investments in a company that satisfies the criteria in subdivision (c) or (d), when the board anticipates that the board will reduce all investments in that company or the reasons why a sale or transfer of investments is inconsistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution.

(5)Any information described in subdivision (f).

(6)A detailed summary of investments that were transferred to funds or accounts devoid of companies with business operations in Russia or Belarus or with a sanctioned person as described in subdivision (g).

(k)If the board voluntarily sells or transfers all of its investments in a company with business operations in Russia or Belarus or with a sanctioned person, this section shall not apply except that the board shall file a report with the Legislature related to that company as described in subdivision (j).

(2) Whether the board has divested from its investments in a company included in the list required by paragraph (1).
(3) If the board has not divested from its investment in a company included in the list required by paragraph (1), a description of when the board anticipates that it will divest from those investments or the reasons why a sale or transfer of investments is inconsistent with its fiduciary responsibilities as described in Section 17 of Article XVI of the California Constitution.

(l)

(f) This section does not require the board to take action as described in this section unless the board determines, in good faith, that the action described in this section is consistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution.

(m)Subdivision (i)

(g) Subdivisions (c) and (d) shall not apply to any of the following:
(1) Investments in a company that is primarily engaged in supplying goods or services intended to relieve human suffering in Ukraine.
(2) Investments in a company that promotes health, education, journalistic, or religious activities in or welfare in Ukraine.

(n)

(h) This section shall remain in effect only until one of the following occurs, and as of the date of that action, is repealed:
(1) The aggressor countries halt the invasion and occupation of Ukraine as determined by the United States Department of State. government.
(2) The United States revokes all sanctions against the aggressor countries imposed because of their participation in the February 24, 2022, invasion of Ukraine.

(o)

(i) This section does not apply to products or activities listed in Ukraine General License Number 18 or Russia General License Number 6A issued by the United States Department of the Treasury, Office of Foreign Assets Control.

SEC. 2.

 Section 12327 is added to the Government Code, to read:

12327.
 (a) As used in this section, the following definitions apply:
(1) “Belarus” means the Republic of Belarus.
(2) “Government of Belarus” means the government of Belarus or its instrumentalities or political subdivisions.
(3) “Government of Russia” means the government of Russia or its instrumentalities or political subdivisions.
(4) “Russia” means the Russian Federation.
(5) “State moneys” means all money, bonds, and securities in possession of or collected by the Treasurer.
(b) (1) The Treasurer shall not make additional or new investments or renew existing investments of state moneys in any investment vehicle in the government of Russia or the government of Belarus that meets either of the following criteria:
(A) The investment vehicle is issued by the government of Russia or the government of Belarus.
(B) The investment vehicle is owned by the government of Russia or the government of Belarus.
(2) The Treasurer shall not make additional or new investments or renew existing investments of state moneys in any investment vehicle in or from a Russian or Belarusian financial institution currently under sanctions imposed by the United States.
(c) This section does not require the Treasurer to take action as described in this section unless the Treasurer determines in good faith that the action described in this section is consistent with the Treasurer’s fiduciary responsibilities.
(d) This section shall remain in effect only until one of the following occurs, and as of the date of that action, is repealed:
(1) Russia and Belarus halt the invasion and occupation of Ukraine as determined by the United States Department of State.
(2) The United States revokes all sanctions against Russia and Belarus imposed because of their participation in the February 24, 2022, invasion of Ukraine.

SEC. 3.

 Chapter 8 (commencing with Section 16649.100) is added to Part 2 of Division 4 of Title 2 of the Government Code, to read:
CHAPTER  8. Russia Divestment Act

16649.100.
 (a) As used in this section, the following definitions apply:
(1) “Belarus” means the Republic of Belarus.
(2) “Government of Belarus” means the government of Belarus or its instrumentalities or political subdivisions.
(3) “Government of Russia” means the government of Russia or its instrumentalities or political subdivisions.
(4) “Russia” means the Russian Federation.
(5) “State agency” means any agency, board, or commission of state government.
(6) “State moneys” means all money, bonds, and securities in possession of or collected by any state agency.
(b) (1) A state agency shall not make an additional or new investment or renew an existing investment of state moneys in any investment vehicle in the government of Russia or the government of Belarus that meets either of the following criteria:
(A) The investment vehicle is issued by the government of Russia or the government of Belarus.
(B) The investment vehicle is owned by the government of Russia or the government of Belarus.
(2) A state agency shall not make an additional or new investment or renew an existing investment of state moneys in any investment vehicle in or from a Russian or Belarusian financial institution currently under sanctions imposed by the United States.
(c) A state agency shall liquidate any investment described in subdivision (b) within six months of this section being chaptered unless the state agency determines in good faith that a sale or transfer of the investment is inconsistent with the fiduciary responsibilities of the state agency.
(d) Within one year of this section being chaptered, a state agency shall file a report with the Legislature, in compliance with Section 9795, and with the Governor, that shall include all of the following:
(1) A list of any investment vehicle of which the state agency has liquidated its investment pursuant to subdivision (c).
(2) A list of any investment vehicle in the government of Russia, the government of Belarus, or in or from a Russian or Belarusian financial institution of which the state agency has not liquidated its investment as a result of a determination made pursuant to subdivision (c) that a sale or transfer of that investment is inconsistent with the fiduciary responsibilities of the state agency.
(e) (1) Before an extension of the operation of this section, the state agency shall reevaluate, using methods or processes as determined by the state agency, the merit of continuing the prescribed divestment action, including, but not limited to, the financial effects of the divestment action on the fiduciary responsibilities of the state agency.
(2) Within three years of this section being chaptered, the state agency shall submit a report to the Legislature with the information described in paragraph (1) on the merit of continuing the prescribed divestment action.
(3) A report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795.
(f) (1) The Legislature hereby urges any company operating in California to divest and separate themselves from the government of Russia, Russian financial institutions, Russian businesses, the government of Belarus, Belarusian financial institutions, and Belarusian businesses.
(2) The Legislature hereby requests any company doing business in California to report their investments in and contracts with the government of Russia, Russian financial institutions, Russian businesses, the government of Belarus, Belarusian financial institutions, and Belarusian businesses to the Secretary of State within six months of this section being chaptered.
(3) The Legislature hereby urges the Regents of the University of California to divest and separate themselves and the University of California from the government of Russia, Russian financial institutions, Russian businesses, the government of Belarus, Belarusian financial institutions, and Belarusian businesses.
(g) This chapter shall remain in effect only until one of the following occurs, and as of the date of that action, is repealed:
(1) Russia and Belarus halt the invasion and occupation of Ukraine as determined by the United States Department of State.
(2) The United States revokes all sanctions against Russia and Belarus imposed because of their participation in the February 24, 2022, invasion of Ukraine.

SEC. 4.

 Article 14 (commencing with Section 10495) is added to Chapter 2 of Part 2 of Division 2 of the Public Contract Code, to read:
Article  14. Russia Contracting Act

10495.
 As used in this article, the following definitions apply:
(a) “Belarus” means the Republic of Belarus.
(b) “Government of Belarus” means the government of Belarus or its instrumentalities or political subdivisions.
(c) “Government of Russia” means the government of Russia or its instrumentalities or political subdivisions.
(d) “Russia” means the Russian Federation.
(e) “Scrutinized company” means a company that conducts business with the government of Russia or the government of Belarus, except a company that promotes journalistic activities in Russia or Belarus.
(f) “State agency” means any agency, board, or commission of state government, and includes the California State University and the California Community Colleges.

10495.1.
 (a) A scrutinized company is ineligible to, and shall not, bid on or submit a proposal for a contract with a state agency for goods or services.
(b) Notwithstanding subdivision (a), the Director of General Services may authorize a scrutinized company, on a case-by-case basis, to bid on or submit a proposal for a contract with a state agency for goods or services, if it is in the best interests of the state to permit the scrutinized company to bid on or submit a proposal for one or more contracts with a state agency for goods or services.

10495.2.
 (a) A state agency shall require a company that submits a bid or proposal with respect to a contract for goods or services, that currently or within the previous three years has had business activities or other operations outside of the United States, to certify that the company is not a scrutinized company.
(b) A state agency shall not require a company that submits a bid or proposal with respect to a contract for goods or services, and that currently or within the previous three years has had business activities or other operations outside of the United States, to certify that the company is not a scrutinized company, if the company has obtained permission to bid on or submit a proposal for a contract with a state agency for goods or services pursuant to subdivision (b) of Section 10495.1.

10495.3.
 (a) If the Department of General Services determines that a company has submitted a false certification under Section 10495.2, the company shall be subject to all of the following:
(1) The company is liable for a civil penalty in an amount that is equal to the greater of two hundred fifty thousand dollars ($250,000) or twice the amount of the contract for which a bid or proposal was submitted.
(2) The state agency or the Department of General Services may terminate the contract with the company.
(3) The company is ineligible to, and shall not, bid on a state contract for a period of not less than three years from the date the state agency determines that the company submitted the false certification.
(b) The Department of General Services shall report to the Attorney General the name of the company that the Department of General Services determined had submitted a false certification under Section 10495.2, together with its information as to the false certification, and the Attorney General shall determine whether to bring a civil action against the company. The company shall pay all costs and fees the plaintiff incurred in a civil action, including costs incurred by the state agency and the Department of General Services for investigations that led to the finding of the false certification and all costs and fees incurred by the Attorney General.

10495.4.
 This article shall remain in effect only until one of the following occurs, and as of the date of that action, is repealed:
(a) Russia and Belarus halt the invasion and occupation of Ukraine as determined by the United States Department of State.
(b) The United States revokes all sanctions against Russia and Belarus imposed because of their participation in the February 24, 2022, invasion of Ukraine.

10495.5.
 This article does not apply to products or activities listed in Ukraine General License Number 18 or Russia General License Number 6A issued by the United States Department of the Treasury, Office of Foreign Assets Control.

SEC. 5.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

SEC. 6.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
(a) On February 24, 2022, the President of Russia, Vladimir Vladimirovich Putin, initiated an unprovoked war against the sovereign and independent nation of Ukraine in violation of international law. At his direction, Russian military forces have inflicted death and destruction on the territory of Ukraine, killing its men, women, and children in their homes, their places of work, their places of worship, and anywhere they seek shelter. Through his irrational actions President Putin has caused hundreds of thousands of Ukrainians and nationals from all over the world to flee Ukraine and seek refuge in neighboring countries, disrupting the safety, livelihood, and economic activity of millions of innocent people. President Putin and members of his clique of oligarchs benefit enormously from economic activity with western economies, including with trade and economic investment from California, which facilitates Russian military and political aggression against Ukraine and against the world’s free and democratic nations. The government of Belarus facilitated Russia’s attack on Ukraine by allowing Russian military units to launch an attack from Belarus against Ukraine’s capital Kyiv and by preparing to join in the military attack against Ukraine.
(b) The purpose of California’s public pension funds, investment of state funds by state agencies, and contracts between the state and companies for goods and services is to promote the peace, health, and safety of the people of California. Those goals are threatened when an authoritarian government can, with impunity, eliminate another sovereign nation and make extreme threats to the international political and economic order.
(c) In order to defend the democratic values of the people of California and ensure their security, and to stand with the President of Ukraine, Volodymyr Oleksandrovych Zelenskyy, the people of Ukraine, and all people who support liberal democracy, peace, and freedom, it is necessary to cut all economic investment in Russia and Belarus as quickly as possible, and it is therefore necessary for this act to take effect immediately.