Senate OKs bill barring boycotts by contractors

LITTLE ROCK — The Arkansas Senate on Thursday handily approved legislation aimed at barring state and local governments from contracting with a company that boycotts energy, fossil fuel, firearms and ammunition industries.

The Senate voted 26-6 to send Senate Bill 62 by Sen. Ricky Hill, R-Cabot, to the House for further consideration.

Hill said the bill is designed to make sure state and local governments don’t contract with companies that discriminate against energy, fossil fuel, firearms and ammunition industries. But Sen. Clarke Tucker, D-Little Rock, said the bill won’t help anyone in Arkansas and is “a chest-thumping exercise.”

Under the bill, state and local governments would be prohibited from entering 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 person or company is not currently engaged in and agrees for the duration of the contract not to engage in, a boycott of energy, fossil fuel, firearms and ammunition industries. State and local governments also would be barred from engaging in a boycott of these industries.

SB62 would not apply to a company that fails to meet these requirements, but offers to provide the goods and services for at least 20% less than the lowest certifying business, or contracts with a total potential value of less than $1,000. Financial service providers would be exempt under the bill.

A company’s statement that it’s participating in boycotts of these industries or that it has taken boycott action at the request, in compliance with or in furtherance of calls for a boycott could be considered by the Office of State Procurement as a type of evidence, among others, that a company is participating in a boycott of these industries under the bill.

In a related action, the Senate on Thursday approved an amendment to a bill that would require the state treasurer and public entities to divest certain investments with financial services providers on a list maintained by the state treasurer because of the use of environmental, social justice or governance-related metrics.

State government’s retirement systems have estimated HB1307 by Rep. Jeff Wardlaw, R-Hermitage, could potentially cost them millions of dollars. Wardlaw has countered that the bill has been amended to minimize its impact on state government’s retirement systems.

Under HB1307, an ESG oversight committee would be created to determine a list of financial service providers that discriminate against energy, fossil fuel, firearms or ammunition companies or otherwise refuse to deal based on environmental, social justice and other governance-related factors.

The committee would comprise four citizens of the state with the governor, attorney general, House speaker and Senate president pro tempore each appointing one citizen, and the state treasurer or his designee under the bill.

The state treasurer would be required to maintain a list of financial service providers as determined by the ESG oversight committee on the state treasurer’s website under the bill. In determining whether to list a financial services provider on the list, the state treasurer, under the direction of the attorney general, would be required to consider and may rely upon specified information under the bill.

The state treasurer would be required under the bill to divest the state of all direct or indirect holdings with a financial services provider included on the list published on the state treasurer’s website, and a public entity would be required to divest itself of all direct or indirect holdings with a financial services provider included on the list published on the state treasurer’s website.

If an investment is subject to divestment under the bill but is locked into a maturity date and an early divestment would result in a financial penalty to the state and cause a negative financial impact to the state, then the investment is exempt from divestiture under the bill in order to prevent financial harm to the state and ensure that the fiduciary duty for the state treasurer is met.