Combating BDS Act of 2016 This bill authorizes a state or local government to adopt and enforce measures to divest its assets from, or prohibit investment of its assets in: (1) an entity that such government determines, using credible information available to the public, engages in a commerce or investment-related boycott, divestment, or sanctions activity targeting Israel; or (2) an entity that owns or controls, is owned or controlled by, or is under common ownership or control with, such an entity. Such government shall provide written notice to such an entity before applying such a measure. Such a measure by a state or local government is not preempted by any federal law or regulation. The bill applies to measures adopted by a state or local government before, on, or after the date of this Act's enactment. The bill amends the Investment Company Act of 1940 to prohibit any person from bringing any civil, criminal, or administrative action against any registered investment company, or any officer or employee thereof, based solely upon such company divesting from, or avoiding investing in, securities issued by persons that such company determines, using credible information available to the public, engage in commerce or investment-related boycotts, divestments, or sanctions activities targeting Israel.
Editorial Explainer
This bill allows state and local governments to divest public assets from companies that boycott Israel or own companies that do so. It also protects investment firms from lawsuits if they divest from Israel-related securities based on BDS activities. Governments must notify affected companies before enforcing divestment measures.
Why it matters
This shields state and local governments from legal challenges if they use public pension funds or investment accounts to penalize BDS supporters—a practice that has been contested as potentially violating free speech rights. The bill effectively enables governments to use fiscal policy against the Palestinian rights movement.