Meeting Packet — Commerce Committee (March 8, 2023)

Summary

Meeting packet for the Florida House of Representatives Commerce Committee, Wednesday, March 8, 2023, 11:00 AM – 12:30 PM, Webster Hall (212 Knott). The agenda lists HB 3 Government and Corporate Activism by Rommel, CS/HB 179 Florida Kratom Consumer Protection Act, and CS/HB 327 Fire Sprinkler System Projects. The staff analysis of HB 3 says the Governor, Attorney General, and Chief Financial Officer, as trustees of the State Board of Administration, directed the SBA in August to invest Florida Retirement System Defined Benefit Plan funds to prioritize the highest return on investment, and that the bill expands that directive to funds invested by state and local governments.

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Commerce Committee
Wednesday, March 8, 2023
11:00 AM – 12:30 PM
Webster Hall (212 Knott)

Meeting Packet

Paul Renner Bob Rommel
Speaker Chair
The Florida House of Representatives
Commerce Committee

Paul Renner Bob Rommel
Speaker Chair

Meeting Agenda
Wednesday, March 8, 2023
11:00 AM – 12:30 PM
Webster Hall (212 Knott)

I. Call to Order

II. Roll Call

III. Welcome and Opening Remarks

IV. Consideration of the following bill(s):

• HB 3 Government and Corporate Activism by Rommel

• CS/HB 179 Florida Kratom Consumer Protection Act by Regulatory
Reform & Economic Development Subcommittee, Andrade

• CS/HB 327 Fire Sprinkler System Projects by Regulatory Reform &
Economic Development Subcommittee, Bell

V. Closing Remarks

VI. Adjournment

303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
HB 3
HOUSE OF REPRESENTATIVES STAFF ANALYSIS

BILL #: HB 3 Government and Corporate Activism
SPONSOR(S): Rommel and others
TIED BILLS: IDEN./SIM. BILLS: SB 302

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

1) Commerce Committee Lloyd Hamon

2) State Affairs Committee

SUMMARY ANALYSIS
The Governor, Attorney General, and Chief Financial Officer – as trustees of the State Board of Administration
(SBA) – directed the SBA in August to invest funds of the Florida Retirement System Defined Benefit Plan in a
manner that prioritizes the highest return on investment, without consideration of environmental, social, and
corporate governance (ESG) factors that have been the subject of debate among investors in recent years.

This bill expands the directive to cover all funds invested by state and local governments, including general
revenue, trusts dedicated to specific purposes, money held by retirement plans, and surplus funds. Investment
decisions, including written policies and the exercise of shareholder rights, must be driven solely by pecuniary
factors, and may not sacrifice investment return to promote non-pecuniary factors. The Attorney General is
authorized to bring civil or administrative actions to enforce provisions of the bill.

The term “pecuniary factor” is defined as a factor that is expected “to have a material effect on the risk or return
of an investment based on appropriate investment horizons consistent with applicable investment objectives
and funding policy. The term does not include the consideration of social, political, or ideological interests.”

Additionally, the bill prohibits both the state Division of Bond Finance and specified public bond issuers from
issuing an ESG bond, paying for the services of another to verify or certify a public bond as an ESG bond, or
contracting with rating agencies that use ESG scores in a manner that directly impacts the issuer’s bond ratings.

For government contracting, the bill prohibits all units of state and local government from: 1) considering social,
political, or ideological beliefs when evaluating prospective vendors, or 2) giving any preference to a vendor
based on social, political, or ideological beliefs.

State and local governments may only deposit funds in banks and savings associations that have been
designated as a Qualified Public Depository (QPD). The bill prohibits certification as a QPD if a bank has
engaged in an “unsafe and unsound business practice” by denying or canceling services based on political
beliefs or affiliations, religious beliefs or affiliations, business sector, or any other factor that is not a
quantitative, impartial, risk-based standard, or applying social credit scores. QPDs will be required to certify
compliance with this requirement.

Other financial institutions – banks, trust companies, credit unions, consumer finance lenders, and money
services businesses – may be subject to administrative sanctions if they engage in an “unsafe and unsound
business practice” by denying or canceling services based on political beliefs or affiliations, religious beliefs or
affiliations, business sector, any other factor that is not a quantitative, impartial, risk-based standard, or
applying social credit scores.

The bill imposes indeterminate costs on state and local governments and on financial institutions operating in
Florida.

The bill provides an effective date of July 1, 2023.

This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Investments

State Board of Administration

The State Board of Administration (SBA) was created by the Florida Constitution and serves as the state’s
independent investment management organization, with authority over 30 funds collectively valued at about
$228 billion as of June 30, 2022, including the state’s pension and investment plans for public employees, which
accounts for 79 percent of assets under management. 1 Other funds under management include the: Florida
Hurricane Catastrophe Fund, Department of the Lottery Fund, Florida Prepaid College and Florida College
Investment Plan, FSU Research Foundation; Florida PRIME (surplus funds of local governments) and the Police
and Firefighters’ Premium Tax Trust Fund.2 The Governor, Chief Financial Officer, and Attorney General serve
as the SBA’s Board of Trustees (Trustees), and delegate operational authority to an executive director and chief
investment officer, who oversee about 200 employees. 3 A 9-member Investment Advisory Council provides
guidance on investment policy and strategy.4

In August 2022, the Trustees directed the SBA to invest funds in a manner that prioritizes the highest return on
investment, without consideration of environmental, social, and corporate governance (often referred to as ESG)
factors.5 A resolution adopted by the Trustees directed the SBA to amend the Investment Policy Statement (IPS)
for the Florida Retirement System Defined Benefit Plan to require that investment decisions be based solely on
pecuniary factors.6 By law, the IPS must clearly state its investment objectives, identify the types of securities
the plan may invest in, and the evaluation criteria that will be used to measure fund performance. 7 Investment
managers who invest public funds on behalf of the board certify compliance with the IPS annually. 8 The resolution
further states that the Trustees, when exercising shareholder rights, including the voting of proxies, “[m]ay not
subordinate the interests of the participants and beneficiaries to other objectives and may not sacrifice
investment return or take on additional investment risk to promote non-pecuniary factors.”9

In December 2021, the Trustees directed the SBA to reclaim proxy voting authority that had been given to large
financial firms and provide additional guidance to employees who are responsible for proxy voting and
investment decisions.10 During fiscal year 2021, SBA staff cast votes at 10,174 companies in 76 countries, voting
on ballot items including director elections, audit firm ratification, executive compensation plans, mergers and

1 Art. IV, s. 4(e) Fla. Const. (1968);State Board of Administration, Summary Overview of the State Board of Administration
of Florida, https://www.sbafla.com/fsb/Portals/FSB/Content/Topics/SBAOverview_20211025.pdf?ver=2021 -10-28-
120954-217 (last visited Feb. 13, 2023); State Board of Administration, Performance Report Month Ending June 30, 2022,
https://www.sbafla.com/fsb/Portals/FSB/Content/Trustees/2022/June%202022%20Monthly%20Trustee% 20Report.pdf?ve
r=2022-08-24-133206-397 (last visited Feb. 13, 2023).
2 A full list of SBA-managed investment funds is available at https://www.sbafla.com/fsb/FundsWeManage.aspx (last

visited (last visited Feb. 13, 2023).
3 S. 215.44, F.S.; Summary Overview of the State Board of Administration of Florida, supra footnote 1.
4 S. 215.444(2), F.S.
5 Office of the Governor, Governor DeSantis Eliminates ESG Considerations from State Pension Investments (August 23,

2022) https://www.flgov.com/2022/08/ 23/governor-ron-desantis-eliminates-esg-considerations -from-state-pension-
investments/ (last visited Feb. 13, 2023).
6 Id.
7 S. 215.475, F.S.
8 S. 215.4755, F.S.
9 Officer of the Governor, Governor DeSantis Eliminates ESG Considerations from State Pension Investments , supra

footnote 5.
10 Office of the Governor, Governor Ron DeSantis Tak es Action Against Communist China and Wok e Corporations , Dec.

20, 2021, https://www.flgov.com/2021/ 12/20/governor-ron-desantis-takes -action-against-communist-china-and-woke-
corporations/ (last visited Feb. 13, 2023).
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acquisitions, and a variety of other management and shareowner proposals. 11 Of all votes cast, 17.5 percent
were “against” the recommendation of company management. 12

State General Revenue and Trust Funds

The Chief Financial Officer (CFO) is responsible for the investment of state general revenue and trust funds. 13
Interest earnings are allocated to the general revenue fund, trust funds, and Special Purpose Investment
accounts.14 A 5-member Treasury Investment Council provides guidance on investment policy and strategy. 15

Local Government Retirement Plans

The Department of Management Services monitors and oversees 485 retirement plans of municipalities,
special districts, and school boards, to ensure that they are actuarially sound.16 Local governments must adopt
a written investment policy that is structured to maximize the financial return on investments and complies with
the investment limitations that apply to funds managed by the SBA.17 State law includes special requirements
for police and firefighter retirement plans; investments for these trust funds are directly managed by the SBA
and are subject to the investment policies applicable to the SBA. 18

Local Government Surplus Funds

There are several investment vehicles for surplus funds of local governments. 19

The SBA manages Florida PRIME (the Local Government Surplus Funds Trust), which invests surplus funds of
755 units of local government in accordance with the investment restrictions that apply to the investment of
state funds.20

Two other investment pools were created by interlocal agreements. 21 The Florida Association of Counties and
the Florida Court Clerks & Comptrollers created the Florida Local Government Investment Trust, which offers
public entities the choice of two professionally managed investment funds. 22 The cities of Bradenton,
Lauderhill, and Palatka created The Florida Municipal Investment Trust, which offers local governments the
choice of six fixed income portfolios, three equity portfolios and a real estate portfolio. 23

In general, investments of local government surplus funds are subject to the written investment plan adopted
by a governing board or principal officer of the local government entity. If there is no written investment policy,
the local government entity may only invest surplus public funds in Florida PRIME, registered money market

11 State Board of Administration, 2022 Corporate Governance Summary Report, 2022 CG Annual Summary v4.pdf
(sbafla.com) (last visited Feb. 13, 2023).
12 Id.
13 S. 17.61, F.S. This includes funds of each state agency and of the judicial branch; and funds of all boards, associations,

and entities created by the Florida Constitution or by law.
14 Florida Department of Financial Services, Treasury Investment Pool,

https://www.myfloridacfo.com/division/treasury/treasury -investment-pool (last visited Feb. 13, 2023).
15 Id.
16 Florida Department of Management Services, Florida Local Government Retirement Systems 2022 Annual Report ,

2022_Local_Report.pdf (fl.gov) (last visited Feb. 13, 2023).
17 S. 112.661, F.S.
18 Ss. 175.341 and 185.23, F.S.
19 S. 218.403(11), F.S., states: “ ‘Unit of local government’ means any governmental entity within the state not part of state

government and shall include, but not be limited to, the following and the officers thereof: any county, municipality, school
district, special district, clerk of the circuit court, sheriff, property appraiser, tax collector, supervisor of elections, authority,
board, public corporations, or any other political subdivision of the state.”
20 S. 218.405(16)(a), F.S. Also see, State Board of Administration, Florida PRIME, https://www.sbafla.com/prime/ (last

visited Feb. 13, 2023).
21 Ss. 163.01, F.S. and 218.415, F.S.
22 Florida Local Government Investment Trust, About, https://www.floridatrustonline.com/funds-reports/ (last visited Feb.

13, 2023).
23 Florida League of Cities, Florida Municipal Investment Trust,

https://www.floridaleagueofcities.com/services/investments -(fmivt) (last visited Feb. 13, 2023).
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funds, interest bearing time deposits or savings accounts in qualified public depositories designated by the
CFO, or direct obligations of the US Treasury.24

Citizen Support and Direct-Support Organizations

Citizen support organizations (like Friends of Biscayne Bay or the North Florida Springs Alliance) and direct-
support organizations (like the University Athletic Association associated with the University of Florida) raise
funds to support causes that are in the public interest and often enter into a contract with a government entity
to define the terms of the organizations’ support to that government entity. Such organizations must submit
annual reports describing their activities to the appropriate government agency. Reports are forwarded to the
Governor, the Legislature, and the Office of Program Policy Analysis and Government Accountability by Aug.
15 each year.25

Effect of the Bill

The bill codifies and extends the policy adopted by the Trustees – requiring that all investment decisions
relating to the state retirement system be based solely on pecuniary factors – to all funds managed by the
SBA, all funds of the state Treasury, all local government retirement plans, investments of local government
surplus funds, and investments of funds raised by citizen support and direct-support organizations. Investment
managers who invest public funds on behalf of any of these entities may not sacrifice investment return or take
additional investment risk to promote any non-pecuniary factor.

The bill amends the IPS accordingly.

To address funds of the state Treasury managed by the CFO, the bill requires that investments and deposits in
qualified public depositories (discussed below) be based solely on pecuniary factors, as defined above.

To address funds of local government retirement systems, the bill requires that written investment policies and
investment decisions be based solely on pecuniary factors, as defined above.

State and local retirement systems must report compliance with the law on a biennial basis, beginning
December 15, 2023. Local government retirement plans must report to the Department of Management
Services (DMS); the SBA, on behalf of the Florida Retirement System, must report to the Legislature. Reports
must describe governance policies and standards for the exercise of shareholder rights. DMS is directed to
report incidents of noncompliance to the Attorney General, who may seek an injunction against any agency
violating the reporting provisions and recover attorney fees and costs when an enforcement action is
successful.

The bill requires investment managers who invest public funds on behalf of a state or local government entity
to include a disclaimer in an external communication, if the communication is to a company in which the
investment manager has invested public funds and discusses social, political, or ideological interests;
subordinates the interests of the company’s shareholders to the interests of another entity; or advocates for an
entity other than the company’s shareholders. This applies to the investment of general revenue, surplus
funds, trust funds, and retirement plans.

The required disclaimer must state: “The views and opinions expressed in this communication are those of the
sender and do not necessarily reflect the views and opinions of the people of the state of Florida.”

24 S. 218.415(16), F.S.
25 S. 20.058, F.S.
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All contracts with investment managers executed, amended, or renewed on or after July 1, 2023 may be
unilaterally terminated if certain communications of an investment manager include discussion of social,
political, or ideological interests and omit the required disclaimer described above.

Additionally, investment managers, who are required to certify compliance with the fiduciary standards set forth
in the state’s investment policy annually, would be subject to sanction if they fail to timely file the required
certification or submit a certification that is materially false. The Attorney General may bring a civil or
administrative action against such persons and recover attorney fees and costs when an enforcement action is
successful.

Bond Financing

Entities of state and local government issue bonds to finance public projects. Investors are paid tax-exempt
interest during the lifetime of the bond and are repaid the face value of the bond upon maturity.

The Division of Bond Finance (which is administratively housed within the SBA) issues bonds on behalf of local
governments and state agencies. General Obligation Bonds are secured by the taxing power of the bond
issuer. The investor relies on the full faith and credit of the issuer, and the issuer can impose a tax on the
public to repay the bond. Revenue Bonds are backed by revenues that come from a specific source or revenue
stream, like a local stadium or highway tolls. Interest rates are higher because these bonds depend on the
success of the specific venture that is financed. Appropriation-based bonds are secured by a commitment of
the state to pay the debt service on the bonds via annual appropriations of the Legislature. 26 The Governor, the
Chief Financial Officer, and the Attorney General serve as the governing board of the Division of Bond
Finance.27

Local governments may also issue bonds through the Florida League of Cities, investment banks or other
financial firms.28 In such cases, the local government must provide notice of proposed bond sales and detailed
information about bonds that have been issued to the Division of Bond Finance, which serves as a
clearinghouse for government bonds issued in Florida.29 The local government also must provide adequate
notice to the public about the cost of bond financing and the terms under which bonds are issued. 30

There is about $93.6 billion in outstanding state and local long-term debt:
 $17.1 billion - state31
 $76.5 billion - local32

Effect of the Bill

The bill prohibits bond issuers from issuing an ESG bond or paying for a third-party verifier that certifies or
verifies that a bond33 may be designated or labeled as an ESG bond, renders opinions or produces a report on
ESG compliance, among other ESG-related services. Issuers are also prohibited from contracting with a rating
agency whose ESG scores for the issuer will have a direct, negative impact on the issuer’s bond ratings.

The following bond issuers are affected by the bill:

26 Division of Bond Finance, Bond Program Overview, https://www.sbafla.com/bondfinance/Bond-P rograms (last visited
Feb. 13, 2023).
27 S. 215.62, F.S.
28 See, e.g., Florida League of Cities, Bond Issue Program, https://www.floridaleagueofcities.com/services/loans/bond-

issue-program (last visited Feb. 13, 2023).
29 Ss. 218.37 and 218.38, F.S.
30 S. 218.385, F.S.
31 State of Board of Administration, Division of Bond Finance, State of Florida Debt Report 2022 (Dec. 2022).

https://www.sbafla.com/bond/Portals/0/Content/Debt Report/DAR%202022% 20Report%20FINA L.pdf?ver=2022 -12-15-
121017-743 (last visited Mar. 4, 2023).
32 Local Government Financial Reporting, Create Reports, https://apps.fldfs.com/localgov/reports/adhoc.aspx (last visited

Mar. 4, 2023).
33 The bill defines “bond” as any note, general obligation bond, revenue bond, special assessment bond, special obligation

bond, private activity bond, certificate of participation, or other evidence of indebtedness or obligation, in either temporary
or definitive form.
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 The Division of Bond Finance, acting on behalf of any entity;
 Any local government, educational entity, or entity of higher education, 34 or other political subdivision
granted the power to issue bonds;
 Any public body corporate and politic authorized or created by general or special law and granted the
power to issue bonds, including, but not limited to:
o Water and sewer districts created under ch. 153, F.S.,
o Health facilities authorities,35
o Industrial development authorities created under ch. 159, F.S.,
o Housing financing authorities,36
o Research and development authorities,37
o Legal or administrative entities created by interlocal agreement pursuant to s. 163.01(7), F.S.,
o Community redevelopment agencies,38
o Regional transportation authorities created under chapter 163, F.S.,
o Community development districts,39
o Educational facilities authorities,40
o The Higher Educational Facilities Financing Authority created pursuant to s. 243.53, F.S.,
o The Florida Development Finance Corporation created pursuant to s. 288.9604, F.S.,
o Port district or port authorities,41
o The South Florida Regional Transportation Authority created pursuant to s. 343.53, F.S.,
o The Central Florida Regional Transportation Authority created pursuant to s. 343.63, F.S.,
o The Tampa Bay Area Regional Transit Authority created pursuant to s. 343.92, F.S.,
o The Greater Miami Expressway Agency created pursuant to s. 348.0304, F.S.,
o The Tampa-Hillsborough County Expressway Authority created pursuant to s. 348.52, F.S.,
o The Central Florida Expressway Authority created pursuant to s. 348.753, F.S.,
o The Jacksonville Transportation Authority created pursuant to s. 349.03, F.S., and
o The Florida Housing Finance Corporation created pursuant to s. 420.504, F.S.

An ESG bond is any bond that has been designated or labeled as a bond that will be used to finance a project
with an ESG purpose, including, but not limited to, green bonds, Certified Climate Bonds, GreenStar
designated bonds, and other environmental bonds marketed as promoting an environmental objective; social
bonds marketed as promoting a social objective; and sustainability bonds and sustainable development goal
bonds marketed as promoting both environmental and social objectives. It includes bonds self-designated by
the issuer as ESG-labeled bonds and those designated as ESG-labeled bonds by a third-party verifier.

The bill expressly applies to bonds issued and agreements made and contracts executed on or after July 1,
2023.

Government Contracts

Ch. 287, F.S., sets forth the procurement and contracting procedures for most state agencies.42

In general, the law requires a competitive solicitation process when state agencies wish to procure
commodities or contractual services that cost more than $35,000. 43 An agency may use an invitation to bid,
issue a request for proposals from vendors who are able to provide the desired service(s), or issue an
invitation to negotiate when one or more responsive vendors may be able to provide the desired service(s). 44 A

34 As defined in s. 215.89(2)(c), (d), and (e), F.S.
35 As defined in s. 154.205, F.S.
36 As defined in s. 159.603(3), F.S.
37 As defined in s. 159.702(1)(c), F.S.
38 As defined in s. 163.340(1), F.S.
39 As defined in s. 190.003, F.S.
40 As defined in s. 243.52(1), F.S.
41 As defined in s. 315.02(1) and (2), F.S.
42 Chapters 255, 283, and 337 provide requirements for building construction, printing services, and road/bridge

construction, respectively.
43 S. 287.017, F.S.
44 S. 287.057(1), F.S. Certain commodities (including but not limited to artistic services, lectures by individuals, legal

services, healthcare) are exempt from the competitive solicitation process.
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competitive solicitation is the process of requesting and receiving two or more sealed bids, proposals, or
replies submitted by responsive vendors.45

For contracts that cost more than $195,000, at least three people who have experience and knowledge in the
program area and service requirements must independently evaluate proposals and replies.46 If the value of
the contract exceeds $1 million in any fiscal year, at least one of the persons conducting negotiations must be
a certified contract negotiator.47

Contracts for commodities or services may be renewed for the term of the original contract or for up to three
years, whichever is longer. Renewals must be in writing, are contingent upon satisfactory performance
evaluations by the agency and the availability of funds, and may not include compensation for costs associated
with the renewal.48

The Department of Management Services (DMS) oversees state purchasing activity and registers vendors that
wish to provide goods or services to the state.49 DMS also maintains lists of vendors who may not submit bids,
proposals, or reply to agency requests for proposals. These include companies identified on the:

 Suspended vendor list – Vendors who are in default on a contract or have repeatedly failed to fulfill the
terms of state contracts. Contracts cannot be awarded to such vendors until the vendor reimburses the
agency for the costs of re-procurement and the agency is satisfied the further default will not occur. 50
 Convicted vendor list – Vendors who have been disqualified due to conviction of a public entity crime,
which includes fraud, theft, bribery, collusion, racketeering, conspiracy, or material misrepresentation
related to a contract for services to be provided to a public entity. 51
 Discriminatory vendor list – Vendors who have been disqualified for violating any state or federal law
prohibiting discrimination based on race, gender, national origin, disability, or religion. 52

Effect of the Bill

The bill prohibits consideration of social, political, or ideological beliefs in state and local government
contracting, and explicitly notes that this includes all political subdivisions of the state. To do this, the bill
creates a new section within ch. 287, F.S., which currently addresses contracting only at the state level.

An awarding body may not: 1) request documentation or consider a vendor’s social, political, or ideological
beliefs when determining if the vendor is a responsible vendor; or 2) give a preference to a vendor based on
the vendor’s social, political, or ideological beliefs.

Beginning July 1, 2023, all solicitations for commodities or contractual services must include notice of these
requirements.

Financial Institutions

Dual Oversight of Depository Institutions

To accept deposits, an institution must have a federal or state charter. Banks are chartered and regulated as
national banks under the authority of the Office of the Comptroller of the Currency within the U.S. Department of
the Treasury or as state banks under the authority of a state regulator. 53

45 S. 287.012(6), F.S.
46 S. 287.057(17)(a)1., F.S.
47 S. 287.057(17)(b)1., F.S.
48 S. 287.057(14), F.S.
49 Ss. 287.032 and 287.042, F.S. Also see, Department of Management Services, Vendor Registration and Vendor Lists,
Vendor Registration and Vendor Lists / State Agency Resources / State Purchasing / Business Operations / Florida
Department of Management Services - DMS (myflorida.com) (last visited Feb. 13, 2023).
50 S. 287.1351, F.S.
51 S. 287.133, F.S.
52 S. 287.134, F.S.
53 Congressional Research Service, Introduction to Financial Services: Bank ing, January 5, 2023,

https://crsreports.congress.gov/product/pdf/IF/ IF10035 (last visited Feb. 13, 2023).
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The Florida Financial Institutions Codes 54 apply to all state-authorized or state-chartered financial banks, trust
companies, credit unions and related entities.55 The Office of Financial Regulation (OFR) licenses and
regulates 197 financial entities, including 69 state-chartered banks and 66 state-chartered credit unions.56
There are also 33 federally-chartered banks and 63 federally chartered credit unions operating in Florida. 57

Due to federal preemptions, a state’s regulatory powers in relation to federally chartered institutions is limited.
However, the state may exercise powers within their exceptions to exclusive federal visitorial authority. Such
exceptions are those recognized by federal law and courts of law or created by the U.S. Congress. 58

Once a financial institution obtains a charter, the regulator’s primary task is to ensure solvency; the regulator
does this by conducting financial exams of its licensed entities. Financial institutions also need approval from
their regulator to make changes in their upper management, merge with another com pany, pay dividends to
shareholders, engage in material transactions with subsidiaries and affiliates, or make significant changes to
their business operations.59

Banks chartered by OFR must become a member of the Federal Reserve or obtain insurance from the Federal
Deposit Insurance Corporation.60 Credit Unions chartered by OFR must insure their accounts by becoming a
member of the National Credit Union Administration.61 Thus, state-chartered banks and credit unions are
subject to a dual-regulatory system.

OFR must examine the condition of each state-chartered financial institution at least every 18 months, and
may conduct more frequent examinations as needed, based on risks associated with a licensee, like prior
examination results or significant operational changes.62 When a state-chartered financial institution also has a
federal regulator, OFR may accept an examination performed by the federal regulator or the regulators may
conduct a joint examination.63

Financial institutions that become insolvent are liquidated by their primary regulator.64

Authority of OFR

OFR may impose administrative sanctions on financial institutions subject to the Florida Financial Institutions
Codes that engage in an “unsafe or unsound practice.” This term is defined at s. 655.005(1)(y), F.S., which
states:

54 Under s. 655.005(1)(k), F.S., the Financial Institutions Codes are:
1. Chapter 655, relating to financial institutions generally;
2. Chapter 657, relating to credit unions;
3. Chapter 658, relating to banks and trust companies;
4. Chapter 660, relating to trust business;
5. Chapter 662, relating to family trust companies;
6. Chapter 663, relating to international banking;
7. Chapter 665, relating to associations; and
8. Chapter 667, relating to savings banks.
55 S. 655.005(1)(k), F.S., states that the Financial Institutions Codes includes: Ch. 655, financial institutions generally; Ch.

657, credit unions; Ch. 658, banks and trust companies; Ch. 660, trust business; Ch. 662, family trust companies; Ch.
663, international banking; Ch. 665, relating to associations; and Ch. 667, savings banks.
56 Office of Financial Regulation, Fast Facts (2021 ed.), FastFacts.pdf (flofr.gov) (last visited Feb. 13, 2023).
57 Id.
58 12 C.F.R. § 7.4000 (2011).
59
For a detailed discussion of the regulatory framework, see, Congressional Research Service, Who Regulates Whom?
An Overview of the U.S. Financial Regulatory Framework , March 10, 2020,
https://crsreports.congress.gov/product/pdf/R/ R44918/7 (last visited Feb. 13, 2023). Also see ss. 655.037, 655.0385,
655.0386, 655.03855, and 655.412, F.S.
60 Ss. 658.22 and 658.38, F.S.
61 Ss. 657.005, 657.008, F.S.
62 S. 655.045(1), F.S.
63 S. 655.045(1)(a), F.S.
64 Ss. 657.063, 657.064, 658.83, 660.48, F.S.
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“Unsafe or unsound practice” means any practice or conduct found by the office to be contrary to
generally accepted standards applicable to a financial institution, or a violation of any prior
agreement in writing or order of a state or federal regulatory agency, which practice, conduct, or
violation creates the likelihood of loss, insolvency, or dissipation of assets or otherwise prejudices
the interest of the financial institution or its depositors or members. In making this determination,
the office must consider the size and condition of the financial institution, the gravity of the
violation, and the prior conduct of the person or institution involved.

Possible penalties include: issuance of a Cease and Desist Order, 65 removal of an Institution-Affiliated Party,66
administrative fines,67 and a court-ordered injunction to restrain conduct that violates a formal enforcement
action.68 When imposing a sanction or requiring a remedy, OFR must consider “the appropriateness of the
penalty with respect to the size of the financial resources and good faith of the person charged, the gravity of the
violation, the history of previous violations, and such other matters as justice may require.”69

OFR may impose monetary fines if a licensee violates a provision of the financial institutions codes or
associated rules, an order of the office, or a written agreement with the office. 70 In general, administrative fines
may not exceed $2,500 per day for each violation.71 Larger fines are allowed in the following circumstances:

 Up to $10,000 per day for each violation for reckless violations that result in more than a minimal loss to
a financial institution or pecuniary benefit to the person liable for the violation;72
 Up to the lesser of $500,000 per day or 1 percent of the total assets in the case of a financial institution,
or $50,000 per day in any other case, for knowing violations that result in more than a minimal loss to a
financial institution or pecuniary benefit to the person liable for the violation; 73 and
 Up to $10,000 per day for any financial institution that refuses to permit an examination. 74

Criminal violations – like embezzlement and fraud – may be prosecuted under the penal code.75

OFR has authority to monitor state-chartered banks, to ensure compliance with state and federal laws, and
may enforce state consumer protection laws on federally chartered banks operating within their boundaries so
long as the state law is not pre-empted by federal law.76 Federal pre-emption permits federally chartered banks
and savings associations to operate under a uniform set of rules when they operate across state lines. 77

When a state chartered financial institution encounters a competitive disadvantage caused by state law in
relation to the capacities and powers allowed to federally chartered institutions, OFR may issue an order or a
rule waiving the state law causing the competitive imbalance. 78

Non-Depository Financial Institutions

OFR also has regulatory authority over consumer finance lenders that help consumers finance products or
services, and money services businesses that assist consumers in transacting instruments or transmitting
money. Non-depository lenders profit from fees charged on such loans or transactions.

65 S. 655.033, F.S.
66 S. 655.037, F.S.
67 S. 655.041, F.S.
68 S. 655.034, F.S.
69 S. 655.031(1), F.S.
70 S. 655.041, F.S.
71 S. 655.041(2), F.S.
72 S. 655.041(2)(a), F.S.
73 S. 655.041(2)(b), F.S.
74 S. 655.041(2)(c), F.S. Rule 69U-100.0451, F.A.C, discusses fees that may be assessed to cover the costs of

examinations.
75 S. 655.0322, F.S.
76 12 U.S.C. 25b.
77 U.S. Department of the Treasury, Office of the Comptroller of the Currency , OCC Chief Counsel’s Interpretation: 12

U.S.S. §25b, Dec. 18, 2020, https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-176a.pdf (last visited
Feb. 13, 2023).
78 S. 655.061, F.S.
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Consumer finance lenders may make secured or unsecured loans of up to $25,000 at interest rates between
18 and 30 percent per year.79 Each location of a consumer finance company must be licensed by OFR, even if
the separate locations are part of the same business entity. 80 OFR investigates consumer complaints to ensure
that consumer finance lenders are licensed to purchase or hold retail installment contracts and comply with fair
lending laws.81 Administrative sanctions for consumer finance lenders may include suspension or revocation of
a license, a written reprimand, or a fine of up to $1,000 for each violation. 82 Certain violations, such as violating
fair lending laws or operating without a license, may be prosecuted as a first-degree misdemeanor.83

Money services businesses provide services such as cashing checks, transmitting money, and exchanging
foreign currency. Examples include check cashers like Amscot, money transmitters like PayPal, and
exchangers like Currency Exchange International. Money services businesses also include “payday lenders”
who offer short-term, high-interest loans that are due on the consumer’s next pay day. Two types of payday
loans are allowed in Florida:

 The lender provides cash in exchange for the borrower’s check (up to $500) and agrees to hold the
check for 7 to 31 days before cashing the check. Fees may not exceed 10 percent of the payment to
the borrower plus a $5 verification fee.
 The lender provides cash in exchange for the borrower’s check (up to $1,000) and the borrower repays
the loan in installments. The term of the loan is 60-90 days. The lender may charge a $5 verification fee
and 8 percent of the balance on a biweekly basis.84

In addition to licensing and ongoing solvency monitoring, OFR requires that money service businesses
maintain accounts – in permissible investments that can be liquidated to satisfy business obligations – that are
at least equal to the amount of all outstanding money transmissions and payment instruments sold by the
licensee or an authorized vendor.85 OFR also monitors the check cashing practices of money services
businesses to verify corporate records and determine compliance with workers’ compensation laws, 86 and to
ensure compliance with fair debt collection laws.87 Administrative sanctions for money services businesses
may include issuance of a Cease and Desist Order, removal of an Institution-Affiliated Party, suspension or
revocation of a license, or a fine of at least $1,000 but not more than $10,000 for each violation.88 Money
laundering may be prosecuted under state or federal law. 89

Effect of the Bill

The bill adds the term “unsafe and unsound practice” to the section of the Florida Financial Institutions Codes
that defines “unsafe or unsound practice (excerpted above) for banks, trust companies, and credit unions. The
term “unsafe and unsound practice” is also added to laws governing consumer finance loans and money
services businesses. The definition echoes references found to “unsafe or unsound practice” in sections of the
bill relating to bond finance and qualified public depositories, and states:

It is an unsafe and unsound practice for a licensee to deny or cancel its services to a person, or to
otherwise discriminate against a person, on the basis of:
 The person's political opinions, speech, or affiliations;
 The person's religious beliefs, exercise, or affiliations;
 Any other factor that is not a quantitative, impartial, and risk-based standard; or

79 S. 516.02, F.S.
80 S. 516.05, F.S.
81 Ss. 516.11, 516.15, 516.26, 516.31 and 516.35, F.S.
82 S. 516.07(2), F.S.
83 S. 516.19, F.S.
84 S. 560.404, F.S.
85 S. 560.210, F.S.
86 S. 560.310, F.S.
87 S. 560.309, F.S.
88 S. 560.114, F.S.
89 Ss. 560.111 and 560.123, F.S
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 A social credit score.90

The bill states that financial institutions operating in Florida – banks, trust companies, credit unions, consumer
finance lenders and money service businesses – must make determinations about the provision or denial of
services “based on an analysis of risk factors unique to each individual customer or member.”

Upon application for a license or license renewal, financial institutions regulated by Florida must provide an
attestation stating that the financial institution’s practices comply with the applicable requirements and
limitations created by the bill.

If a financial institution licensed by OFR engages in an “unsafe or unsound practice,” OFR may impose
administrative penalties, including an order requiring corrective action, a financial penalty, and suspension or
revocation of a license.

Additionally, the bill states that a financial institution licensed by OFR that engages in an “unsafe or unsound
practice,” has also violated the Florida Deceptive and Unfair Trade Practices Act. This makes banks, trust
companies, credit unions, consumer finance lenders, and money service businesses subject to the
enforcement actions identified in part II of chapter 501, F.S., which include civil actions brought by the Attorney
General and criminal prosecution by a State Attorney in the appropriate judicial circuit. Civil actions may
include an injunction, an action seeking damages, or a civil penalty up to $10,000 per violation.

The bill prohibits the waiver of state laws under by OFR and the Financial Services Commission in relation to
unsafe and unsound business practices by financial institutions.91

Qualified Public Depositories

Unless a specific exemption applies, state and local governments must deposit public funds in a bank or
savings association that has been designated as a qualified public depository (QPD) under the Florida Security
for Public Deposits Act.92

To be designated as a QPD by the CFO, a bank, savings bank, or savings association must:

 Have authority to accept deposits because it has been chartered and regulated by the state or federal
government;
 Have its principal place of business in Florida, or a branch office in Florida;
 Have deposit insurance pursuant to the Federal Deposit Insurance Act;

90 The bill provides that a social credit score includes, but is not limited to, using any rating, scoring, analysis, tabulation,
or action that considers a social credit score based on factors including, but not limited to: the person's political opinions,
speech, or affiliations; the person's religious beliefs, religious exercise, or religious affiliations; the person's lawful
ownership of a firearm; the person's engagement in the lawful manufacture, distribution, sale, purchase, or use of fir earms
or ammunition; the person's engagement in the exploration, production, utilization, transportation, sale, or manufacture of
fossil fuel-based energy, timber, mining, or agriculture; the person's support of the state or federal government in
combatting illegal immigration, drug trafficking, or human trafficking; the person's engagement with, facilitation of,
employment by, support of, business relationship with, representation of, or advocacy for any person described in this
paragraph; the person's failure to meet or commit to meet, or expected failure to meet, any of the following as long as
such person is in compliance with applicable state or federal law:
 Environmental standards, including emissions standards, benchmarks, requirements, or disclosures ;
 Social governance standards, benchmarks, or requirements, including, but not limited to, environmental or social
justice;
 Corporate board or company employment composition standards, benchmarks, requirements, or disclosures based
on characteristics protected under the Florida Civil Rights Act of 1992; or
 Policies or procedures requiring or encouraging employee participation in social justice programming, including, but
not limited to, diversity, equity, or inclusion training.
91 The Financial Services Commission is the Governor, Attorney General, Commissioner of Agriculture, and Chief

Financial Officer. The Commission is the agency head over OFR. S. 20.121(3), F.S.
92 S. 280.01, F.S. Certain public deposits, including those that are fully collateralized under other laws and moneys

contributions to the state retirement system that are held in the System Trust Fund, are exempt pursuant to s. 280.03(3),
F.S.
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 Have procedures and practices for accurate identification, classification, reporting, and collateralization
of public deposits; and
 Meet all the requirements of ch. 280, F.S., relating to security for public deposits. 93

QPDs must secure public deposits with a pledge of eligible collateral, to protect the deposit against losses that
could occur in the event of insolvency or default.94 The amount collateral required is based on statutory
guidelines and the QPD’s overall financial condition. 95

Public deposits include, but are not limited to, time deposit accounts, demand deposit accounts, and
nonnegotiable certificates of deposits; they do not include moneys in deposit notes, securities, mutual funds,
and similar investments.96

To be qualified as a QPD, a bank or savings association must guaranty public depositors against losses
caused by the default or insolvency of other QPDs. 97 Any shortfall that is not covered by the maximum federal
deposit insurance of $250,000, the CFO’s demand for payment under letters of credit or the sale of pledged
collateral becomes the responsibility of solvent QPDs, who would be required to pay assessments imposed by
the CFO.98

As of May 20, 2022, Florida had 118 authorized QPDs.99 These QPDs include 23 of the 28 federally chartered
banks and trusts that operate in Florida.100

Effect of the Bill

The bill amends the definition of a QPD to prohibit the CFO from qualifying a bank or savings association that
engages in an “unsafe and unsound practice” of denying or canceling its services based on political beliefs or
affiliations, religious beliefs or affiliations, business sector, or any other factor that is not a quantitative,
impartial, risk-based standard.

Beginning July 1, 2023, banks and savings associations must certify compliance with this requirement when
filing an application to be designated or re-designated as a QPD. Failure to file the required attestation is
grounds for suspension or disqualification of a QPD, and failure to timely file the attestation is deemed a
knowing and willful violation of the law.

The bill gives the CFO authority to verify the attestation and impose penalties if a QPD fails to timely file the
attestation. The CFO can impose an administrative penalty, issue a Cease and Desist Order to require
compliance with the law, and suspend or revoke a QPD’s qualification.

93 S. 280.02(26), F.S.
94 S. 280.041(6), F.S.
95 S. 280.04, F.S., and Rule 69C-2.024, F.A.C.
96 S. 280.02(23), F.S.
97 S. 280.07, F.S.
98 S. 280.08, F.S.
99Florida Department of Financial Services, Division of the Treasury, List of Active QPDs, May 20, 2022, List of Active

QPDs.xlsx (myfloridacfo.com) (last visited Feb. 13, 2023).
100 U.S. Department of the Treasury, Office of the Comptroller of the Currency, Financial Institution Lists,

https://www.occ.treas.gov/topics/charters-and-licensing/ financial -institution-lists/index-financial-institution-lists.html (last visited
Feb. 13, 2023).
101 Supra, note 90.
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Additionally, if the CFO determines that an affidavit is materially false, the CFO must report the finding to the
Attorney General, who may bring a civil or administrative action against the QPD, and recover attorney fees
and costs if the enforcement action is successful.

The bill does not give the CFO “visitorial powers” to inspect, examine, supervise, or regulate the affairs of
federally-chartered banks or savings associations. Only the federal regulator has visitorial powers. 102 DFS
reports that there are 37 federally chartered institutions active as a QPD, as of March 1, 2023.103

The bill’s QPD-related provisions are not preempted by federal law because the QPD program is a creature of
Florida law, in which the federally chartered institutions voluntarily participate. To participate in the program, they
must accept the conditions of QPD eligibility.

B. SECTION DIRECTORY:

Section 1. Amends s. 17.57, F.S., relating to deposits and investments of state money.
Section 2. Amends s. 20.058, F.S., relating to citizen support and direct-support organizations.
Section 3. Amends s. 112.656, F.S., relating to fiduciary duties; certain officials included as fiduciaries.
Section 4. Amends s. 112.661, F.S., relating to investment policies.
Section 5. Creates s. 112.662, F.S., relating to investments; exercising shareholder rights.
Section 6. Amends s. 175.071, F.S., relating to general powers and duties of board of trustees.
Section 7. Amends s. 185.06, F.S., relating to general powers and duties of board of trustees.
Section 8. Amends s. 215.47, relating to investments; authorized securities; loan of securities.
Section 9. Amends s. 215.475, F.S., relating to investment policy statement.
Section 10. Amends s. 215.4755, F.S., relating to certification and disclosure requirements for investment
advisers and managers.
Section 11. Creates s. 215.681, F.S., relating to ESG bonds; prohibitions.
Section 12. Creates s. 215.855, F.S., relating to investment manager external communication.
Section 13. Amends s. 218.415, F.S., relating to Local government investment policies.
Section 14. Amends s. 280.02, F.S., relating to definitions
Section 15. Creates s. 280.025, relating to attestation required.
Section 16. Amends s. 280.05, F.S., relating to powers and duties of the Chief Financial Officer.
Section 17. Amends s. 280.051, F.S., relating to grounds for suspension or disqualification of a qualified
public depository.
Section 18. Amends s. 280.054, F.S., relating to administrative penalty in lieu of suspension or
disqualification.
Section 19. Amends s. 280.055, F.S., , relating to cease and desist order; corrective order; administrative
penalty.
Section 20. Creates s. 287.05701, F.S., relating to prohibition against considering social, political, or
ideological interests in government contracting.
Section 21. Creates s. 516.037, F.S., relating to unsafe and unsound practices.
Section 22. Creates s. 560.1115, F.S., relating to unsafe and unsound practices.
Section 23. Amends s. 655.005, F.S., relating to definitions.
Section 24. Creates s. 655.0323, F.S., relating to unsafe and unsound practices.
Section 25. Amends s. 1010.04, F.S., relating to purchasing.
Section 26. Re-enacts s. 17.61, F.S., relating to Chief Financial Officer; powers and duties in the investment
of certain funds.
Section 27. Re-enacts s. 245.44, F.S., relating to Board of Administration; powers and duties in relation to
investment of trust funds.
Section 28. Effective date July 1, 2023.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:

102 12 U.S.C. 484 and 12 CFR § 7.400.
103 Florida Department of Financial Services, Agency Analysis of HB 3, p. 2, (Mar. 2, 2023).
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None.

2. Expenditures:
The bill may increase administrative costs of state agencies that must revise policies or practices
relating to investments, bond financing, contracts, QPDs, and banking and train staff accordingly.
Enforcement costs of state agencies are recoverable through the imposition of administrative fines.
Enforcement costs of the Attorney General may be recovered through awards of attorney fees and
costs, so long as an enforcement action is successful.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
The bill may increase administrative costs of local governments that must revise policies relating to
investments, bond financing, and contracts, and train staff accordingly. Such costs could be
absorbed within ongoing operating budgets.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may:
 Limit the ability of some financial firms to provide services to units of state and local
government,
 Limit the ability of some banks to be certified as QPDs and accept deposits from units of state
and local government,
 Ensure that financial entities focus on pecuniary factors and safe and sound practices that will
protect their businesses,
 Expand who can receive government procurement awards,
 Impose administrative costs on banks, trusts, and credit unions operating in Florida if they must
revise investment policies and train staff to comply with the fiduciary standards set forth in the
bill, and
 Increase access to financial products and services that would otherwise be limited by ESG-
related discrimination.

D. FISCAL COMMENTS:
None.

III. COMMENTS

A. CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:
The county/municipality mandates provision of Art. VII, section 18, of the Florida Constitution may apply
because this bill requires local governments make investments, issue bonds, conduct procurements,
and provide reports in compliance with the provisions of the bill, which may be at some expense;
however, an exemption may apply. The expenditures required to comply with the bill are estimated to
be insignificant.

2. Other:
The provisions of the bill relating to contracts with investment managers and vendors are prospective.
The bill refers to contracts that are solicited or awarded on or after July 1, 2023. The bill does not
modify or render unenforceable any contract that exists prior to July 1, 2023.

B. RULE-MAKING AUTHORITY:
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DMS is provided authority to adopt rules implementing reporting requirements related to state and local
retirement plans.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES

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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S

HB 3 2023

1 A bill to be entitled
2 An act relating to government and corporate activism;
3 amending s. 17.57, F.S.; providing a definition;
4 requiring certain parties to make investment decisions
5 based on specified factors; amending s. 20.058, F.S.;
6 requiring a specified attestation, under penalty of
7 perjury, from certain organizations; providing a
8 definition; requiring certain organizations to make
9 investment decisions based on specified factors;
10 amending s. 112.656, F.S.; requiring investment
11 decisions to comply with certain requirements;
12 amending s. 112.661, F.S.; providing an exception to
13 current investment and fiduciary standards; creating
14 s. 112.662, F.S.; providing a definition; requiring
15 certain assets to be invested based on specified
16 factors; requiring shareholder rights to be exercised
17 based on specified factors; requiring specified
18 reports; providing requirements for such reports;
19 requiring the Department of Management Services to
20 report certain noncompliance to the Attorney General;
21 authorizing certain proceedings to be brought by th e
22 Attorney General; authorizing attorney fees and costs;
23 requiring the department to adopt rules; amending ss.
24 175.071 and 185.06, F.S.; specifying that certain
25 boards of trustees are subject to certain changes made

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26 by the act; amending s. 215.47, F.S.; providing a
27 definition; requiring the State Board of
28 Administration to make investment decisions based on
29 specified factors; providing an exception to current
30 investment and fiduciary standards; amending s.
31 215.475, F.S.; requiring the Florida Retirement Sys tem
32 Defined Benefit Plan Investment Policy Statement to
33 comply with certain requirements; amending s.
34 215.4755, F.S.; requiring certain parties to make
35 investment decisions based on specified factors;
36 providing applicability; providing that a certain
37 failure is grounds for termination of a contract;
38 providing that a certain false submission is deemed a
39 specified violation; requiring certain noncompliance
40 to be reported to the Attorney General; authorizing
41 certain proceedings to be brought by the Attorney
42 General; authorizing attorney fees and costs; creating
43 s. 215.681, F.S.; providing definitions; prohibiting a
44 bond issuer from taking certain actions; authorizing
45 certain financial institutions to purchase and
46 underwrite specified bonds; providing applicability;
47 creating s. 215.855, F.S.; providing definitions;
48 requiring contracts between certain entities to
49 contain certain provisions and a specified disclaimer;
50 authorizing such contracts to be terminated in

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51 specified circumstances; providing applicability;
52 amending s. 218.415, F.S.; providing a definition;
53 requiring units of local government to make investment
54 decisions based on specified factors; amending s.
55 280.02, F.S.; revising a definition; creating s.
56 280.025, F.S.; requiring a specified attestation,
57 under penalty of perjury, from certain entities;
58 amending s. 280.05, F.S.; requiring the Chief
59 Financial Officer to verify specified attestations;
60 requiring certain determinations to be reported to the
61 Attorney General; authorizing certain proceedings to
62 be brought by the Attorney General; authorizing
63 attorney fees and costs; providing construction;
64 authorizing the Chief Financial Officer to issue
65 certain sanctions in specified circumstances; amending
66 s. 280.051, F.S.; authorizing the Chief Financial
67 Officer to issue certain sanctions in specified
68 circumstances; amending s. 280.054, F.S.; providing
69 that a certain failure is a specified violation;
70 amending s. 280.055, F.S.; authorizing the Chief
71 Financial Officer to issue certain sanctions in a
72 specified circumstance; creating s. 287.05701, F.S.;
73 providing a definition; prohibiting an awarding body
74 from taking certain actions when making certain
75 determinations; requiring a specified notification to

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76 include a certain provision beginning on a specified
77 date; creating s. 516.037, F.S.; requiring licensees
78 to make certain determinations based on specified
79 factors; providing construction; providing that
80 certain actions are an unsafe and unsound practice;
81 providing a definition; requiring a specified
82 attestation, under penalty of perjury, from applicants
83 and licensees beginning on a specified date; providing
84 that a certain action is a specified violation;
85 providing for enforcement; authorizing attorney fees
86 and costs; creating s. 560.1115, F.S.; requiring
87 licensees to make certain determinations based on
88 specified factors; providing construction; providing
89 that certain actions are an unsafe and unsound
90 practice; providing a definition; requiring a
91 specified attestation, under penalty of perjury, from
92 applicants and licensees beginning on a specified
93 date; providing that a certain action is a specified
94 violation; providing for enforcement; authorizing
95 attorney fees and costs; amending s. 655.005, F.S.;
96 revising a definition; creating s. 655.0323, F.S.;
97 requiring financial institutions to make certain
98 determinations based on specified factors; providing
99 construction; providing that certain actions are an
100 unsafe and unsound practice; providing a definition;

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101 requiring a specified attestation, under penalty of
102 perjury, from financial institutions annually
103 beginning on a specified date; providing that a
104 certain action is a specified violation; providing for
105 enforcement; authorizing attorney fees and costs;
106 prohibiting certain entities from exercising specified
107 authority; amending s. 1010.04, F.S.; prohibiting
108 certain entities from taking certain actions beginning
109 on a specified date; requiring certain solicitations
110 to include a specified provision; reenacting s.
111 17.61(1), F.S., relating to powers and duties of the
112 Chief Financial Officer in the investment of certain
113 funds, to incorporate the amendment made to s. 17.57,
114 F.S., in references thereto; reenacting s. 215.44(3),
115 F.S., relating to the powers and duties of the Board
116 of Administration in the investment of trust funds, to
117 incorporate the amendment made to s. 215.47, F.S., in
118 references thereto; providing an effective date.
119
120 Be It Enacted by the Legislature of the State of Florida:
121
122 Section 1. Subsection (1) of section 17.57, Florida
123 Statutes, is amended to read:
124 17.57 Deposits and investments of state money.—
125 (1)(a) As used in this subsection, the term "pecuniary

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126 factor" means a factor that the Chief Financial Officer, or
127 other party authorized to invest on his or her behalf, prudently
128 determines is expected to have a material effect on the risk or
129 returns of an investment based on appropriate investment
130 horizons consistent with applicable investment objectives and
131 funding policy. The term does not include the consideration or
132 furtherance of any social, political, or ideological interests.
133 (b) The Chief Financial Officer, or other parties with the
134 permission of the Chief Financial Officer, shall deposit the
135 money of the state or any money in the State Treasury in such
136 qualified public depositories of the state as will offer
137 satisfactory collateral security for such deposits, pursuant to
138 chapter 280. It is the duty of the Chief Financial Officer,
139 consistent with the cash requirements of the state, to keep such
140 money fully invested or deposited as provided herein in or der
141 that the state may realize maximum earnings and benefits.
142 (c) Notwithstanding any other law, when deciding whether
143 to invest and when investing, the Chief Financial Officer, or
144 other party authorized to invest on his or her behalf, must make
145 decisions based solely on pecuniary factors and may not
146 subordinate the interests of the people of this state to other
147 objectives, including sacrificing investment return or
148 undertaking additional investment risk to promote any non-
149 pecuniary factor. The weight given to any pecuniary factor must
150 appropriately reflect a prudent assessment of its impact on risk

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151 or returns.
152 Section 2. Subsections (4) and (5) of section 20.058,
153 Florida Statutes, are renumbered as subsections (5) and (6),
154 respectively, paragraph (g) is added to subsection (1), and a
155 new subsection (4) is added to that section, to read:
156 20.058 Citizen support and direct-support organizations.—
157 (1) By August 1 of each year, a citizen support
158 organization or direct-support organization created or
159 authorized pursuant to law or executive order and created,
160 approved, or administered by an agency, shall submit the
161 following information to the appropriate agency:
162 (g) An attestation, under penalty of perjury, stating that
163 the organization has complied with subsection (4).
164 (4)(a) As used in this section, the term "pecuniary
165 factor" means a factor that the citizen support organization or
166 direct-support organization prudently determines is expected to
167 have a material effect on the risk or returns of an inve stment
168 based on appropriate investment horizons consistent with
169 applicable investment objectives and funding policy. The term
170 does not include the consideration or furtherance of any social,
171 political, or ideological interests.
172 (b) Notwithstanding any other law, when deciding whether
173 to invest and when investing funds on behalf of an agency, the
174 citizen support organization or direct-support organization must
175 make decisions based solely on pecuniary factors and may not

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176 subordinate the interests of the people of this state to other
177 objectives, including sacrificing investment return or
178 undertaking additional investment risk to promote any non-
179 pecuniary factor. The weight given to any pecuniary factor must
180 appropriately reflect a prudent assessment of its i mpact on risk
181 or returns.
182 Section 3. Subsection (1) of section 112.656, Florida
183 Statutes, is amended to read:
184 112.656 Fiduciary duties; certain officials included as
185 fiduciaries.—
186 (1) A fiduciary shall discharge his or her duties with
187 respect to a plan solely in the interest of the participants and
188 beneficiaries for the exclusive purpose of providing benefits to
189 participants and their beneficiaries and defraying reasonable
190 expenses of administering the plan. Investment decisions must
191 comply with s. 112.662.
192 Section 4. Subsection (4) of section 112.661, Florida
193 Statutes, is amended to read:
194 112.661 Investment policies.—Investment of the assets of
195 any local retirement system or plan must be consistent with a
196 written investment policy adopted by the board. Such policies
197 shall be structured to maximize the financial return to the
198 retirement system or plan consistent with the risks incumbent in
199 each investment and shall be structured to establish and
200 maintain an appropriate diversification of the retirement system

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201 or plan's assets.
202 (4) INVESTMENT AND FIDUCIARY STANDARDS.—The investment
203 policy shall describe the level of prudence and ethical
204 standards to be followed by the board in carrying out its
205 investment activities with respect to funds described in this
206 section. The board in performing its investment duties shall
207 comply with the fiduciary standards set forth in the Employee
208 Retirement Income Security Act of 1974 at 29 U.S.C. s.
209 1104(a)(1)(A)-(C). Except as provided in s. 112.662, in case of
210 conflict with other provisions of law authorizing investments,
211 the investment and fiduciary standards set forth in this section
212 shall prevail.
213 Section 5. Section 112.662, Florida Statutes, is created
214 to read:
215 112.662 Investments; exercising shareholder rights.—
216 (1) As used in this section, the term "pecuniary factor"
217 means a factor that the plan administrator, named fiduciary,
218 board, or board of trustees prudently determines is expected to
219 have a material effect on the risk or returns of an investment
220 based on appropriate investment horizons consistent with the
221 investment objectives and funding policy of the retirement
222 system or plan. The term does not include the consideration or
223 furtherance of any social, political, or ideological interests.
224 (2) Notwithstanding any other law, when deciding whether
225 to invest and when investing the assets of any retirement system

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226 or plan, only pecuniary factors may be considered and the
227 interests of the participants and beneficiaries of the system or
228 plan may not be subordinated to other objectives, including
229 sacrificing investment return or undertaking additional
230 investment risk to promote any non-pecuniary factor. The weight
231 given to any pecuniary factor must appropriately reflect a
232 prudent assessment of its impact on risk or returns.
233 (3) Notwithstanding any other law, when deciding whether
234 to exercise shareholder rights or when exercising such rights on
235 behalf of a retirement system or plan, including the voting of
236 proxies, only pecuniary factors may be considered and the
237 interests of the participants and beneficiaries of the system or
238 plan may not be subordinated to other objectives, including
239 sacrificing investment return or undertaking additional
240 investment risk to promote any non-pecuniary factor.
241 (4)(a) By December 15, 2023, and by December 15 of each
242 odd-numbered year thereafter, each retirement system or plan
243 shall file a comprehensive report detailing and reviewing the
244 governance policies concerning decisionmaking in vote decisions
245 and adherence to the fiduciary standards required of such
246 retirement system or plan under this section, including the
247 exercise of shareholder rights.
248 1. The State Board of Administration, on behalf of the
249 Florida Retirement System, shall submit its report to the
250 Governor, the Attorney General, the Chief Financial Officer, the

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251 President of the Senate, and the Speaker of the House of
252 Representatives.
253 2. All other retirement systems or plans shall submit
254 their reports to the Department of Management Services.
255 (b) By January 15, 2024, and by January 15 of each even -
256 numbered year thereafter, the Department of Management Services
257 shall submit a summary report to the Governor, the Attorney
258 General, the Chief Financial Officer, the President of the
259 Senate, and the Speaker of the House of Representatives that
260 includes a summary of the reports submitted under paragraph (a)
261 and identifies any relevant trends among such systems and plans.
262 (c) The Department of Management Services shall report
263 incidents of noncompliance to the Attorney General, who may
264 institute proceedings to enjoin any person found violating this
265 section. If such action is successful, the Attorney General is
266 entitled to reasonable attorney fees and costs.
267 (d) The Department of Management Services shall adopt
268 rules to implement this subsection.
269 Section 6. Subsection (1) of section 175.071, Florida
270 Statutes, is amended to read:
271 175.071 General powers and duties of board of trustees. —
272 For any municipality, special fire control district, chapter
273 plan, local law municipality, local law special fire control
274 district, or local law plan under this chapter:
275 (1) The board of trustees, subject to the fiduciary

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276 standards in ss. 112.656, 112.661, and 518.11, and the Code of
277 Ethics in ss. 112.311-112.3187, and the requirements in s.
278 112.662, may:
279 (a) Invest and reinvest the assets of the firefighters'
280 pension trust fund in annuity and life insurance contracts of
281 life insurance companies in amounts sufficient to provide, in
282 whole or in part, the benefits to which all of the participants
283 in the firefighters' pension trust fund are entitled under this
284 chapter and pay the initial and subsequent premiums thereon.
285 (b) Invest and reinvest the assets of the firefigh ters'
286 pension trust fund in:
287 1. Time or savings accounts of a national bank, a state
288 bank insured by the Bank Insurance Fund, or a savings, building,
289 and loan association insured by the Savings Association
290 Insurance Fund administered by the Federal Deposit Insurance
291 Corporation or a state or federal chartered credit union whose
292 share accounts are insured by the National Credit Union Share
293 Insurance Fund.
294 2. Obligations of the United States or obligations
295 guaranteed as to principal and interest by the government of the
296 United States.
297 3. Bonds issued by the State of Israel.
298 4. Bonds, stocks, or other evidences of indebtedness
299 issued or guaranteed by a corporation organized under the laws
300 of the United States, any state or organized territory of the

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301 United States, or the District of Columbia, if:
302 a. The corporation is listed on any one or more of the
303 recognized national stock exchanges or on the National Market
304 System of the NASDAQ Stock Market and, in the case of bonds
305 only, holds a rating in one of the three highest classifications
306 by a major rating service; and
307 b. The board of trustees may not invest more than 5
308 percent of its assets in the common stock or capital stock of
309 any one issuing company, nor may the aggregate investment in any
310 one issuing company exceed 5 percent of the outstanding capital
311 stock of that company or the aggregate of its investments under
312 this subparagraph at cost exceed 50 percent of the assets of the
313 fund.
314
315 This paragraph applies to all boards of trustees and
316 participants. However, if a municipality or special fire control
317 district has a duly enacted pension plan pursuant to, and in
318 compliance with, s. 175.351, and the trustees desire to vary the
319 investment procedures, the trustees of such plan must request a
320 variance of the investment procedures as outlined herein only
321 through a municipal ordinance, special act of the Legislature,
322 or resolution by the governing body of the special fire control
323 district; if a special act, or a municipality by ordinance
324 adopted before July 1, 1998, permits a greater than 50-percent
325 equity investment, such municipality is not required to comply

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326 with the aggregate equity investment provisions of this
327 paragraph. Notwithstanding any other provision of law, this
328 section may not be construed to take away any preexisting legal
329 authority to make equity investments that exceed the
330 requirements of this paragraph. Notwithstanding any other
331 provision of law, the board of trustees may invest up to 25
332 percent of plan assets in foreign securities on a market -value
333 basis. The investment cap on foreign securities may not be
334 revised, amended, increased, or repealed except as provided by
335 general law.
336 (c) Issue drafts upon the firefighters' pension trust fund
337 pursuant to this act and rules prescribed by the board of
338 trustees. All such drafts must be consecutively numbered, be
339 signed by the chair and secretary, or by two individuals
340 designated by the board who are subject to the same fiduciary
341 standards as the board of trustees under this subsection, and
342 state upon their faces the purpose for which the drafts are
343 drawn. The treasurer or depository of each municipality or
344 special fire control district shall retain such drafts when
345 paid, as permanent vouchers for disbursements made, and no money
346 may be otherwise drawn from the fund.
347 (d) Convert into cash any securities of the fund.
348 (e) Keep a complete record of all receipts and
349 disbursements and the board's acts and proceedings.
350 Section 7. Subsection (1) of section 185.06, Florida

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351 Statutes, is amended to read:
352 185.06 General powers and duties of board of trustees. —For
353 any municipality, chapter plan, local law municipality, or local
354 law plan under this chapter:
355 (1) The board of trustees, subject to the fiduciary
356 standards in ss. 112.656, 112.661, and 518.11, and the Code of
357 Ethics in ss. 112.311-112.3187, and the requirements in s.
358 112.662, may:
359 (a) Invest and reinvest the assets of the retirement trust
360 fund in annuity and life insurance contracts of life insurance
361 companies in amounts sufficient to provide, in whole or in part,
362 the benefits to which all of the participants in the municipal
363 police officers' retirement trust fund are entitled under this
364 chapter, and pay the initial and subsequent premiums thereon.
365 (b) Invest and reinvest the assets of the retirement trust
366 fund in:
367 1. Time or savings accounts of a national bank, a state
368 bank insured by the Bank Insurance Fund, or a savings and loan
369 association insured by the Savings Association Insurance Fund
370 administered by the Federal Deposit Insurance Corporation or a
371 state or federal chartered credit union whose share accounts are
372 insured by the National Credit Union Share Insurance Fund.
373 2. Obligations of the United States or obligations
374 guaranteed as to principal and interest by the United States.
375 3. Bonds issued by the State of Israel.

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376 4. Bonds, stocks, or other evidences of indebtedness
377 issued or guaranteed by a corporation organized under the laws
378 of the United States, any state or organized territory of the
379 United States, or the District of Columbia, provided:
380 a. The corporation is listed on any one or more of the
381 recognized national stock exchanges or on the National Market
382 System of the NASDAQ Stock Market and, in the case of bonds
383 only, holds a rating in one of the three highest classificati ons
384 by a major rating service; and
385 b. The board of trustees may not invest more than 5
386 percent of its assets in the common stock or capital stock of
387 any one issuing company, nor shall the aggregate investment in
388 any one issuing company exceed 5 percent of the outstanding
389 capital stock of the company or the aggregate of its investments
390 under this subparagraph at cost exceed 50 percent of the fund's
391 assets.
392
393 This paragraph applies to all boards of trustees and
394 participants. However, if a municipality has a duly enacted
395 pension plan pursuant to, and in compliance with, s. 185.35 and
396 the trustees desire to vary the investment procedures, the
397 trustees of such plan shall request a variance of the investment
398 procedures as outlined herein only through a municipal ordinance
399 or special act of the Legislature; if a special act, or a
400 municipality by ordinance adopted before July 1, 1998, permits a

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401 greater than 50-percent equity investment, such municipality is
402 not required to comply with the aggregate equity investment
403 provisions of this paragraph. Notwithstanding any other
404 provision of law, this section may not be construed to take away
405 any preexisting legal authority to make equity investments that
406 exceed the requirements of this paragraph. Notwithstanding any
407 other provision of law, the board of trustees may invest up to
408 25 percent of plan assets in foreign securities on a market-
409 value basis. The investment cap on foreign securities may not be
410 revised, amended, repealed, or increased except as provided by
411 general law.
412 (c) Issue drafts upon the municipal police officers'
413 retirement trust fund pursuant to this act and rules prescribed
414 by the board of trustees. All such drafts shall be consecutively
415 numbered, be signed by the chair and secretary or by two
416 individuals designated by the board who are subject to the same
417 fiduciary standards as the board of trustees under this
418 subsection, and state upon their faces the purposes for which
419 the drafts are drawn. The city treasurer or other depository
420 shall retain such drafts when paid, as permanent vouchers for
421 disbursements made, and no money may otherwise be drawn from the
422 fund.
423 (d) Finally decide all claims to relief under the board's
424 rules and regulations and pursuant to the provisions of this
425 act.

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426 (e) Convert into cash any securities of the fund.
427 (f) Keep a complete record of all receipts and
428 disbursements and of the board's acts and proceedings.
429 Section 8. Subsection (10) of section 215.47, Florida
430 Statutes, is amended to read:
431 215.47 Investments; authorized securities; loan of
432 securities.—Subject to the limitations and conditions of the
433 State Constitution or of the trust agreement relating to a trust
434 fund, moneys available for investments under ss. 215.44 -215.53
435 may be invested as follows:
436 (10)(a) As used in this subsection, the term "pecuniary
437 factor" means a factor that the State Board of Administration
438 prudently determines is expected to have a material effect on
439 the risk or return of an investment based on appropriate
440 investment horizons consistent with applicable investment
441 objectives and funding policy. The term does not include the
442 consideration or furtherance of any social, political, or
443 ideological interests.
444 (b) Notwithstanding any other law, when deciding whether
445 to invest and when investing the assets of any fund, the State
446 Board of Administration must make decisions based solely on
447 pecuniary factors and may not subordinate the interests of the
448 participants and beneficiaries of the fund to other objectives,
449 including sacrificing investment return or undertaking
450 additional investment risk to promote any non-pecuniary factor.

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451 The weight given to any pecuniary factor must appropriately
452 reflect a prudent assessment of its impact on risk or returns.
453 (c) Investments made by the State Board of Administrat ion
454 shall be designed to maximize the financial return to the fund
455 consistent with the risks incumbent in each investment and shall
456 be designed to preserve an appropriate diversification of the
457 portfolio. The board shall discharge its duties with respect to
458 a plan solely in the interest of its participants and
459 beneficiaries. The board in performing the above investment
460 duties shall comply with the fiduciary standards set forth in
461 the Employee Retirement Income Security Act of 1974 at 29 U.S.C.
462 s. 1104(a)(1)(A) through (C). Except as provided in paragraph
463 (b), in case of conflict with other provisions of law
464 authorizing investments, the investment and fiduciary standards
465 set forth in this paragraph subsection shall prevail.
466 Section 9. Subsection (1) of section 215.475, Florida
467 Statutes, is amended to read:
468 215.475 Investment policy statement.—
469 (1) In making investments for the System Trust Fund
470 pursuant to ss. 215.44-215.53, the board shall make no
471 investment which is not in conformance with the Florida
472 Retirement System Defined Benefit Plan Investment Policy
473 Statement, hereinafter referred to as "the IPS," as developed by
474 the executive director and approved by the board. The IPS must
475 comply with s. 215.47(10) and include, among other items, the

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476 investment objectives of the System Trust Fund; permitted types
477 of securities in which the board may invest; and evaluation
478 criteria necessary to measure the investment performance of the
479 fund. As required from time to time, the executive director of
480 the board may present recommended changes in the IPS to the
481 board for approval.
482 Section 10. Paragraphs (b), (c), and (d) of subsection (1)
483 of section 215.4755, Florida Statutes, are redesignated as
484 paragraphs (c), (d), and (e), respectively, subsection (3) is
485 amended, and paragraph (b) is added to subsection (1) of that
486 section, to read:
487 215.4755 Certification and disclosure requirements for
488 investment advisers and managers.—
489 (1) An investment adviser or manager who has discretionary
490 investment authority for direct holdings and who is retained as
491 provided in s. 215.44(2)(b) shall agree pursuant to contract to
492 annually certify in writing to the board that:
493 (b) All investment decisions made on behalf of the trust
494 funds and the board are made based solely on pecuniary factors
495 as defined in s. 215.47(10)(a) and do not subordinate the
496 interests of the participants and beneficiaries of the funds to
497 other objectives, including sacrificing investment return or
498 undertaking additional investment risk to promote any non-
499 pecuniary factor. This paragraph applies to any contract
500 executed, amended, or renewed on or after July 1, 2023.

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501 (3)(a) An investment adviser or manager certification
502 required under subsection (1) shall be provided annually, no
503 later than January 31, for the reporting period of the previous
504 calendar year on a form prescribed by the board.
505 (b) Failure to timely file the certification required
506 under subsection (1) shall be grounds for termination of any
507 contract between the board and the investment advisor or
508 manager.
509 (c) Submission of a materially false certification shall
510 be deemed a willful refusal to comply with the fiduciary
511 standards set forth in paragraph (1)(b).
512 (d) If an investment advisor or manager fails to comply
513 with the fiduciary standards described in (1)(b) while providing
514 services to the board, the board shall report such noncompliance
515 to the Attorney General, who may bring a civil or administrative
516 action for damages, injunctive relief, and such other relief as
517 may be appropriate. If such action is successful, the Attorney
518 General is entitled to reasonable attorney fees and costs.
519 Section 11. Section 215.681, Florida Statutes, is created
520 to read:
521 215.681 ESG bonds; prohibitions.—
522 (1) As used in this section, the term:
523 (a) "Bonds" means any note, general obligation bond,
524 revenue bond, special assessment bond, special obligation bond,
525 private activity bond, certificate of participation, or other

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526 evidence of indebtedness or obligation, in either temporary or
527 definitive form.
528 (b) "ESG" means environmental, social, and governance.
529 (c) "ESG bonds" means any bonds that have been designated
530 or labeled as bonds that will be used to finance a project with
531 an ESG purpose, including, but not limited to, green bonds,
532 Certified Climate Bonds, GreenStar designated bonds, and other
533 environmental bonds marketed as promoting an environmental
534 objective; social bonds marketed as promoting a social
535 objective; and sustainability bonds and sustainable development
536 goal bonds marketed as promoting both environmental and social
537 objectives. The term includes those bonds self-designated by the
538 issuer as ESG-labeled bonds and those designated as ESG-labeled
539 bonds by a third-party verifier.
540 (d) "Issuer" means the division, acting on behalf of any
541 entity; any local government, educational entity, or entity of
542 higher education as defined in s. 215.89(2)(c), (d), and (e),
543 respectively, or other political subdivision granted the power
544 to issue bonds; any public body corporate and politic authorized
545 or created by general or special law and granted the power to
546 issue bonds, including, but not limited to, a water and sewer
547 district created under chapter 153, a health facilities
548 authority as defined in s. 154.205, an industrial development
549 authority created under chapter 159, a housing financing
550 authority as defined in s. 159.603(3), a research and

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551 development authority as defined in s. 159.702(1)(c), a legal or
552 administrative entity created by interlocal agreement pursuant
553 to s. 163.01(7), a community redevelopment agency as defined in
554 s. 163.340(1), a regional transportation authority created under
555 chapter 163, a community development district as defined in s.
556 190.003, an educational facilities authority as defined in s.
557 243.52(1), the Higher Educational Facilities Financing Authority
558 created pursuant to s. 243.53, the Florida Development Finance
559 Corporation created pursuant to s. 288.9604, a port district or
560 port authority as defined in s. 315.02(1) and (2), respectively,
561 the South Florida Regional Transportation Authority created
562 pursuant to s. 343.53, the Central Florida Regional
563 Transportation Authority created pursuant to s. 343.63, the
564 Tampa Bay Area Regional Transit Authority created pursuant to s.
565 343.92, the Greater Miami Expressway Agency created pursuant to
566 s. 348.0304, the Tampa-Hillsborough County Expressway Authority
567 created pursuant to s. 348.52, the Central Florida Ex pressway
568 Authority created pursuant to s. 348.753, the Jacksonville
569 Transportation Authority created pursuant to s. 349.03, and the
570 Florida Housing Finance Corporation created pursuant to s.
571 420.504.
572 (e) "Rating agency" means any nationally recognized ra ting
573 service or nationally recognized statistical rating
574 organization.

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575 (f) "Third-party verifier" means any entity that contracts
576 with an issuer to conduct an external review and independent
577 assessment of proposed ESG bonds to ensure that such bonds may
578 be designated or labeled as ESG bonds or will be used to finance
579 a project that will comply with applicable ESG standards.
580 (2) Notwithstanding any other provision of law relating to
581 the issuance of bonds, it is a violation of this section and it
582 is prohibited for any issuer to:
583 (a) Issue ESG bonds.
584 (b) Expend public funds as defined in s. 215.85(3) or use
585 moneys derived from the issuance of bonds to pay for the
586 services of a third-party verifier, including, but not limited
587 to, certifying or verifying that bonds may be designated or
588 labeled as ESG bonds, rendering a second-party opinion or
589 producing a verifier's report as to the compliance of proposed
590 ESG bonds with applicable ESG standards and metrics, complying
591 with post-issuance reporting obligations, or other services that
592 are only provided due to the designation or labeling of bonds as
593 ESG bonds.
594 (c) Enter into a contract with any rating agency whose ESG
595 scores for such issuer will have a direct, negative impact on
596 the issuer's bond ratings.
597 (3) Notwithstanding s. 655.0323, a financial institution
598 as defined in s. 655.005(1) may purchase and underwrite bonds
599 issued by a governmental entity.

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600 (4) This section does not apply to any bonds issued before
601 July 1, 2023, or to any agreement entered into or any contract
602 executed before July 1, 2023.
603 Section 12. Section 215.855, Florida Statutes, is created
604 to read:
605 215.855 Investment manager external communication. —
606 (1) As used in this section, the term:
607 (a) "Governmental entity" means a state, regional, county,
608 municipal, special district, or other political subdivision
609 whether executive, judicial, or legislative, including, but not
610 limited to, a department, division, board, bureau, commission,
611 authority, district, or agency thereof, or public school,
612 Florida College System institution, state university, or
613 associated board.
614 (b) "Investment manager" means a private sector company
615 that offers one or more investment products or services to a
616 governmental entity and that has the discretionary investment
617 authority for direct holdings.
618 (c) "Public funds" means all moneys under the jurisdiction
619 of a governmental entity and includes all manner of pension and
620 retirement funds and all other funds held, as trust funds or
621 otherwise, for any public purpose, subject to investment.
622 (2) Any contract between a governmental entity and an
623 investment manager must contain the following provisions:
624 (a) Any written communication made by the investment

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625 manager to a company in which such manager invests public funds
626 on behalf of a governmental entity must include the following
627 disclaimer in a conspicuous location if such communication
628 discusses social, political, or ideological interests;
629 subordinates the interests of the company's shareholders to the
630 interest of another entity; or advocates for the interest of an
631 entity other than the company's shareholders:
632
633 The views and opinions expressed in this communication are
634 those of the sender and do not reflect the views and
635 opinions of the people of the State of Florida.
636
637 (b) The contract may be unilaterally terminated at the
638 option of the governmental entity if the investment manager does
639 not include the disclaimer required in paragraph (a).
640 (3) This section applies to contracts between a
641 governmental entity and an investment manager executed, amended,
642 or renewed on or after July 1, 2023.
643 Section 13. Subsection (24) is added to section 218.415,
644 Florida Statutes, to read:
645 218.415 Local government investment policies.—Investment
646 activity by a unit of local government must be consistent with a
647 written investment plan adopted by the governing body, or in the
648 absence of the existence of a governing body, the respective
649 principal officer of the unit of local government and maintained

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650 by the unit of local government or, in the alternative, such
651 activity must be conducted in accordance with subsection (17).
652 Any such unit of local government shall have an investment
653 policy for any public funds in excess of the amounts needed to
654 meet current expenses as provided in subsections (1)-(16), or
655 shall meet the alternative investment guidelines contained in
656 subsection (17). Such policies shall be structured to place the
657 highest priority on the safety of principal and liquidity of
658 funds. The optimization of investment returns shall be secondary
659 to the requirements for safety and liquidity. Each unit of local
660 government shall adopt policies that are commensurate with the
661 nature and size of the public funds within its custody.
662 (24) INVESTMENT DECISIONS.—
663 (a) As used in this subsection, the term "pecuniary
664 factor" means a factor that the governing body of the unit of
665 local government, or in the absence of the existence of a
666 governing body, the respective principal officer of the unit of
667 local government, prudently determines is expected to have a
668 material effect on the risk or returns of an investment based on
669 appropriate investment horizons consistent with applicable
670 investment objectives and funding policy. The term does not
671 include the consideration or furtherance of any social,
672 political, or ideological interests.
673 (b) Notwithstanding any other law, when deciding whether
674 to invest and when investing public funds pursuant to this

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675 section, the unit of local government must make decisions based
676 solely on pecuniary factors and may not subordinate the
677 interests of the people of this state to other objectives,
678 including sacrificing investment return or undertaking
679 additional investment risk to promote any non-pecuniary factor.
680 The weight given to any pecuniary factor must appropriately
681 reflect a prudent assessment of its impact on risk or returns.
682 Section 14. Paragraphs (e) and (f) of subsection (26) of
683 section 280.02, Florida Statutes, are redesignated as paragraphs
684 (g) and (h), respectively, and new paragraphs (e) and (f) are
685 added to that subsection to read:
686 280.02 Definitions.—As used in this chapter, the term:
687 (26) "Qualified public depository" means a bank, savings
688 bank, or savings association that:
689 (e) Makes determinations about the provision of services
690 or the denial of services based on an analysis of risk factors
691 unique to each individual customer or member. This paragraph
692 does not restrict a qualified public depository that claims a
693 religious purpose from making such determinations based on the
694 religious beliefs, religious exercise, or religious affiliations
695 of a customer or member.
696 (f)1. Does not engage in the unsafe and unsound practice
697 of denying or canceling its services to a person, or otherwise
698 discriminating against a person, on the basis of:
699 a. The person's political opinions, speech, or

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700 affiliations;
701 b. Except as provided in paragraph (e), the person's
702 religious beliefs, religious exercise, or religious
703 affiliations; or
704 c. Any factor if it is not a quantitative, impartial, and
705 risk-based standard, including any factor related to the
706 person's business sector.
707 2. As used in this paragraph, the term "unsafe and unsound
708 practice" includes, but is not limited to, using any rating,
709 scoring, analysis, tabulation, or action that considers a social
710 credit score based on factors including, but not limited to:
711 a. The person's political opinions, speech, or
712 affiliations.
713 b. The person's religious beliefs, religious exercise, or
714 religious affiliations.
715 c. The person's lawful ownership of a firearm.
716 d. The person's engagement in the lawful manufacture,
717 distribution, sale, purchase, or use of firearms or ammunition.
718 e. The person's engagement in the exploration, production,
719 utilization, transportation, sale, or manufacture of fossil
720 fuel-based energy, timber, mining, or agriculture.
721 f. The person's support of the state or federal government
722 in combatting illegal immigration, drug trafficking, or human
723 trafficking.
724 g. The person's engagement with, facilitation of,

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725 employment by, support of, business relationship with,
726 representation of, or advocacy for any person described in this
727 subparagraph.
728 h. The person's failure to meet or commit to meet, or
729 expected failure to meet, any of the following as long as such
730 person is in compliance with applicable state or federal law:
731 I. Environmental standards, including emissions standards,
732 benchmarks, requirements, or disclosures;
733 II. Social governance standards, benchmarks, or
734 requirements, including, but not limited to, environmental or
735 social justice;
736 III. Corporate board or company employment composition
737 standards, benchmarks, requirements, or disclosures based on
738 characteristics protected under the Florida Civil Rights Act of
739 1992; or
740 IV. Policies or procedures requiring or encouraging
741 employee participation in social justice programming, including,
742 but not limited to, diversity, equity, or inclusion training.
743 Section 15. Section 280.025, Florida Statutes, is created
744 to read:
745 280.025 Attestation required.—
746 (1) Beginning July 1, 2023, the following entities must
747 attest, under penalty of perjury, on a form prescribed by the
748 Chief Financial Officer, whether the entity is in compliance
749 with s. 280.02(26)(e) and (f):

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750 (a) A bank, savings bank, or savings association, upon
751 application or reapplication for designation as a qualified
752 public depository.
753 (b) A qualified public depository, upon filing the report
754 required by s. 280.16(1)(d).
755 (2) If an application or reapplication for designation as
756 a qualified public depository is pending on July 1, 2023, the
757 bank, savings bank, or savings association must file the
758 attestation under subsection (1) before being designated or
759 redesignated a qualified public depository.
760 Section 16. Paragraph (d) of subsection (13) and
761 subsection (17) of section 280.05, Florida Statutes, are amended
762 to read:
763 280.05 Powers and duties of the Chief Financial Officer.—
764 In fulfilling the requirements of this act, the Chief Financial
765 Officer has the power to take the following actions he or she
766 deems necessary to protect the integrity of the public deposits
767 program:
768 (13) Require the filing of the following reports, which
769 the Chief Financial Officer shall process as provided:
770 (d)1. Any related documents, reports, records, or other
771 information deemed necessary by the Chief Financial Officer in
772 order to ascertain compliance with this chapter, including, but
773 not limited to, verifying the attestation required under s.
774 280.025.

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775 2. If the Chief Financial Officer determines that the
776 attestation required under s. 280.025 is materially false, he or
777 she shall report such determination to the Attorney General, who
778 may bring a civil or administrative action for damages,
779 injunctive relief, and such other relief as may be appropriat e.
780 If such action is successful, the Attorney General is entitled
781 to reasonable attorney fees and costs.
782 3. In relation to federally chartered financial
783 institutions, this paragraph may not be construed to create a
784 power exceeding the visitorial powers of the Chief Financial
785 Officer allowed under federal law.
786 (17) Suspend or disqualify or disqualify after suspension
787 any qualified public depository that has violated any of the
788 provisions of this chapter or of rules adopted hereunder or that
789 no longer meets the definition of a qualified public depository
790 under s. 280.02.
791 (a) Any qualified public depository that is suspended or
792 disqualified pursuant to this subsection is subject to the
793 provisions of s. 280.11(2) governing withdrawal from the public
794 deposits program and return of pledged collateral. Any
795 suspension shall not exceed a period of 6 months. Any qualified
796 public depository which has been disqualified may not reapply
797 for qualification until after the expiration of 1 year from the
798 date of the final order of disqualification or the final
799 disposition of any appeal taken therefrom.

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800 (b) In lieu of suspension or disqualification, impose an
801 administrative penalty upon the qualified public depository as
802 provided in s. 280.054.
803 (c) If the Chief Financial Officer has reason to believe
804 that any qualified public depository or any other financial
805 institution holding public deposits is or has been violating any
806 of the provisions of this chapter, is or has been violating any
807 provisions of rules adopted hereunder, or no longer meets the
808 definition of a qualified public depository under s. 280.02, he
809 or she may issue to the qualified public depository or other
810 financial institution an order to cease and desist from the
811 violation or to correct the condition giving rise to or
812 resulting from the violation. If any qualified public depository
813 or other financial institution violates a cease-and-desist or
814 corrective order, the Chief Financial Officer may impose an
815 administrative penalty upon the qualified public depository or
816 other financial institution as provided in s. 280.054 or s.
817 280.055. In addition to the administrative penalty, the Chief
818 Financial Officer may suspend or disqualify any qualified public
819 depository for violation of any order issued pursuant to this
820 paragraph.
821 Section 17. Subsections (14) and (15) are added to section
822 280.051, Florida Statutes, to read:
823 280.051 Grounds for suspension or disqualification of a
824 qualified public depository.—A qualified public depository may

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825 be suspended or disqualified or both if the Chief Financial
826 Officer determines that the qualified public depository has:
827 (14) Failed to file the attestation required under s.
828 280.025.
829 (15) No longer meets the definition of a qualified public
830 depository under s. 280.02.
831 Section 18. Paragraph (b) of subsection (1) of section
832 280.054, Florida Statutes, is amended to read:
833 280.054 Administrative penalty in lieu of suspension or
834 disqualification.—
835 (1) If the Chief Financial Officer finds that one or more
836 grounds exist for the suspension or disqualification of a
837 qualified public depository, the Chief Financial Officer may, in
838 lieu of suspension or disqualification, impose an administrative
839 penalty upon the qualified public depository.
840 (b) With respect to any knowing and willful violation of a
841 lawful order or rule, the Chief Financial Officer may impose a
842 penalty upon the qualified public depository in an amount not
843 exceeding $1,000 for each violation. If restitution is due, the
844 qualified public depository shall make restitution upon the
845 order of the Chief Financial Officer and shall pay interest on
846 such amount at the legal rate. Each day a violation continues
847 constitutes a separate violation. Failure to timely file the
848 attestation required under s. 280.025 is deemed a knowing and
849 willful violation.

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850 Section 19. Paragraphs (e) and (f) of subsection (1) of
851 section 280.055, Florida Statutes, are amended, and paragraph
852 (g) is added to that subsection, to read:
853 280.055 Cease and desist order; corrective order;
854 administrative penalty.—
855 (1) The Chief Financial Officer may issue a cease and
856 desist order and a corrective order upon determining that:
857 (e) A qualified public depository or a custodian has not
858 furnished to the Chief Financial Officer, when the Chief
859 Financial Officer requested, a power of attorney or bond power
860 or bond assignment form required by the bond agent or bond
861 trustee for each issue of registered certificated securities
862 pledged and registered in the name, or nominee name, of the
863 qualified public depository or custodian; or
864 (f) A qualified public depository; a bank, savings
865 association, or other financial institution; or a custodian has
866 committed any other violation of this chapter or any rule
867 adopted pursuant to this chapter that the Chief Financial
868 Officer determines may be remedied by a cease and desist order
869 or corrective order; or
870 (g) A qualified public depository no longer meets the
871 definition of a qualified public depository under s. 280.02.
872 Section 20. Section 287.05701, Florida Statutes, is
873 created to read:
874 287.05701 Prohibition against considering social,

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875 political, or ideological interests in government contracting.—
876 (1) As used in this section, the term "awarding body"
877 means:
878 (a) For state contracts, an agency or the department.
879 (b) For local government contracts, the governing body of
880 a county, a municipality, a special district, or any other
881 political subdivision of the state.
882 (2)(a) An awarding body may not request documentation of
883 or consider a vendor's social, political, or ideological
884 interests when determining if the vendor is a responsible
885 vendor.
886 (b) An awarding body may not give preference to a vendor
887 based on the vendor's social, political, or ideological
888 interests.
889 (3) Beginning July 1, 2023, any solicitation for the
890 procurement of commodities or contractual services by an
891 awarding body must include a provision notifying vendors of the
892 provisions of this section.
893 Section 21. Section 516.037, Florida Statutes, is created
894 to read:
895 516.037 Unsafe and unsound practices.—
896 (1) Licensees must make determinations about the provision
897 or denial of services based on an analysis of risk factors
898 unique to each individual current or prospective customer. This
899 subsection does not restrict a licensee that claims a religious

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900 purpose from making such determinations based on the current or
901 prospective customer's religious beliefs, religious exercise, or
902 religious affiliations.
903 (2)(a) It is an unsafe and unsound practice for a licensee
904 to deny or cancel its services to a person, or to otherwise
905 discriminate against a person, on the basis of:
906 1. The person's political opinions, speech, or
907 affiliations;
908 2. Except as provided in subsection (1), the person's
909 religious beliefs, religious exercise, or religious
910 affiliations; or
911 3. Any factor if it is not a quantitative, impartial, and
912 risk-based standard, including any factor related to the
913 person's business sector.
914 (b) As used in this subsection, the term "unsafe and
915 unsound practice" includes, but is not limited to, using any
916 rating, scoring, analysis, tabulation, or action that considers
917 a social credit score based on factors including, but not
918 limited to:
919 1. The person's political opinions, speech, or
920 affiliations.
921 2. The person's religious beliefs, religious exercise, or
922 religious affiliations.
923 3. The person's lawful ownership of a firearm.
924 4. The person's engagement in the lawful manufacture,

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925 distribution, sale, purchase, or use of firearms or ammunition.
926 5. The person's engagement in the exploration, production,
927 utilization, transportation, sale, or manufacture of fossil
928 fuel-based energy, timber, mining, or agriculture.
929 6. The person's support of the state or federal government
930 in combatting illegal immigration, drug trafficking, or human
931 trafficking.
932 7. The person's engagement with, facilitation of,
933 employment by, support of, business relationship with,
934 representation of, or advocacy for any person described in this
935 paragraph.
936 8. The person's failure to meet or commit to meet, or
937 expected failure to meet, any of the following as long as such
938 person is in compliance with applicable state or federal law:
939 a. Environmental standards, including emissions standards,
940 benchmarks, requirements, or disclosures;
941 b. Social governance standards, benchmarks, or
942 requirements, including, but not limited to, environmental or
943 social justice;
944 c. Corporate board or company employment composition
945 standards, benchmarks, requirements, or disclosures based on
946 characteristics protected under the Florida Civil Rights Act of
947 1992; or
948 d. Policies or procedures requiring or encouraging
949 employee participation in social justice programming, including,

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950 but not limited to, diversity, equity, or inclusion training.
951 (3) Beginning July 1, 2023, and upon application for a
952 license or license renewal, applicants and licensees must
953 attest, under penalty of perjury, on a form prescribed by the
954 commission whether the applicant or licensee is acting in
955 compliance with subsection (2).
956 (4) A practice described in subsection (2) is a fail ure to
957 comply with this chapter, constitutes a violation of this
958 chapter, and is subject to the applicable sanctions and
959 penalties provided for in this chapter.
960 (5) A practice described in subsection (2) constitutes a
961 violation of the Florida Deceptive and Unfair Trade Practices
962 Act under part II of chapter 501. Violations shall be enforced
963 by the enforcing authority, as defined in s. 501.203(2), and
964 shall subject the violator to any and all sanctions and
965 penalties provided for in that part. If such action is
966 successful, the enforcing authority is entitled to reasonable
967 attorney fees and costs.
968 Section 22. Section 560.1115, Florida Statutes, is created
969 to read:
970 560.1115 Unsafe and unsound practices.—
971 (1) Licensees must make determinations about the provision
972 or denial of services based on an analysis of risk factors
973 unique to each individual current or prospective customer. This
974 subsection does not restrict a licensee that claims a religious

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975 purpose from making such determinations based on the curre nt or
976 prospective customer's religious beliefs, religious exercise, or
977 religious affiliations.
978 (2)(a) It is an unsafe and unsound practice for a licensee
979 to deny or cancel its services to a person, or to otherwise
980 discriminate against a person, on the basis of:
981 1. The person's political opinions, speech, or
982 affiliations;
983 2. Except as provided in subsection (1), the person's
984 religious beliefs, religious exercise, or religious
985 affiliations; or
986 3. Any factor if it is not a quantitative, impartial, and
987 risk-based standard, including any factor related to the
988 person's business sector.
989 (b) As used in this subsection, the term "unsafe and
990 unsound practice" includes, but is not limited to, using any
991 rating, scoring, analysis, tabulation, or action that considers
992 a social credit score based on factors including, but not
993 limited to:
994 1. The person's political opinions, speech, or
995 affiliations.
996 2. The person's religious beliefs, religious exercise, or
997 religious affiliations.
998 3. The person's lawful ownership of a firearm.
999 4. The person's engagement in the lawful manufacture,

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1000 distribution, sale, purchase, or use of firearms or ammunition.
1001 5. The person's engagement in the exploration, production,
1002 utilization, transportation, sale, or manufacture of fossil
1003 fuel-based energy, timber, mining, or agriculture.
1004 6. The person's support of the state or federal government
1005 in combatting illegal immigration, drug trafficking, or human
1006 trafficking.
1007 7. The person's engagement with, facilitation of,
1008 employment by, support of, business relationship with,
1009 representation of, or advocacy for any person described in this
1010 paragraph.
1011 8. The person's failure to meet or commit to meet, or
1012 expected failure to meet, any of the following as long as such
1013 person is in compliance with applicable state or federal law:
1014 a. Environmental standards, including emissions standards,
1015 benchmarks, requirements, or disclosures;
1016 b. Social governance standards, benchmarks, or
1017 requirements, including, but not limited to, environmental or
1018 social justice;
1019 c. Corporate board or company employment composition
1020 standards, benchmarks, requirements, or disclosures based on
1021 characteristics protected under the Florida Civil Rights Act of
1022 1992; or
1023 d. Policies or procedures requiring or encouraging
1024 employee participation in social justice programming, including,

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1025 but not limited to, diversity, equity, or inclusion training.
1026 (3) Beginning July 1, 2023, and upon application for a
1027 license or license renewal, applicants and licensees, as
1028 applicable, must attest, under penalty of perjury, on a form
1029 prescribed by the commission whether the applicant or licensee
1030 is acting in compliance with subsection (2).
1031 (4) A practice described in subsection (2) is a failure to
1032 comply with this chapter, constitutes a violation of this
1033 chapter, and is subject to the applicable sanctions and
1034 penalties provided for in this chapter.
1035 (5) A practice described in subsection (2) constitutes a
1036 violation of the Florida Deceptive and Unfair Trade Practices
1037 Act under part II of chapter 501. Violations shall be enforced
1038 by the enforcing authority, as defined in s. 501.203(2), and
1039 shall subject the violator to any and all sanctions and
1040 penalties provided for in that part. If such action is
1041 successful, the enforcing authority is entitled to reasonable
1042 attorney fees and costs.
1043 Section 23. Paragraph (y) of subsection (1) of section
1044 655.005, Florida Statutes, is amended to read:
1045 655.005 Definitions.—
1046 (1) As used in the financial institutions codes, unless
1047 the context otherwise requires, the term:
1048 (y) "Unsafe or unsound practice" or "unsafe and unsound
1049 practice" means:

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1050 1. Any practice or conduct found by the office to be
1051 contrary to generally accepted standards applicable to a
1052 financial institution, or a violation of any prior agreement in
1053 writing or order of a state or federal regulatory agency, which
1054 practice, conduct, or violation creates the likelihood of loss,
1055 insolvency, or dissipation of assets or otherwise prejudices the
1056 interest of the financial institution or its depositors or
1057 members. In making this determination, the office must consider
1058 the size and condition of the financial institution, the gravity
1059 of the violation, and the prior conduct of the person or
1060 institution involved; or
1061 2. Any practice described in s. 655.0323.
1062 Section 24. Section 655.0323, Florida Statutes, is created
1063 to read:
1064 655.0323 Unsafe and unsound practices.—
1065 (1) Financial institutions must make determinations about
1066 the provision or denial of services based on an analysis of risk
1067 factors unique to each individual current or prospective
1068 customer or member. This subsection does not restrict a
1069 financial institution that claims a religious purpose from
1070 making such determinations based on the current or prospective
1071 customer's or member's religious beliefs, religious exercise, or
1072 religious affiliations.
1073 (2)(a) It is an unsafe and unsound practice for a
1074 financial institution to deny or cancel its services to a

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1075 person, or to otherwise discriminate against a person, on the
1076 basis of:
1077 1. The person's political opinions, speech, or
1078 affiliations;
1079 2. Except as provided in subsection (1), the person's
1080 religious beliefs, religious exercise, or religious
1081 affiliations;
1082 3. Any factor if it is not a quantitative, impartial, and
1083 risk-based standard, including any factor related to the
1084 person's business sector.
1085 (b) As used in this subsection, the term "unsafe and
1086 unsound practice" includes, but is not limited to, using any
1087 rating, scoring, analysis, tabulation, or action that considers
1088 a social credit score based on factors including, but not
1089 limited to:
1090 1. The person's political opinions, speech, or
1091 affiliations.
1092 2. The person's religious beliefs, religious exercise, or
1093 religious affiliations.
1094 3. The person's lawful ownership of a firearm.
1095 4. The person's engagement in the lawful manufacture,
1096 distribution, sale, purchase, or use of firearms or ammunition.
1097 5. The person's engagement in the exploration, production,
1098 utilization, transportation, sale, or manufacture of fossil
1099 fuel-based energy, timber, mining, or agriculture.

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1100 6. The person's support of the state or federal government
1101 in combatting illegal immigration, drug trafficking, or human
1102 trafficking.
1103 7. The person's engagement with, facilitation of,
1104 employment by, support of, business relationship with,
1105 representation of, or advocacy for any person described in this
1106 paragraph.
1107 8. The person's failure to meet or commit to meet, or
1108 expected failure to meet, any of the following as long as such
1109 person is in compliance with applicable state or federal law:
1110 a. Environmental standards, including emissions standards,
1111 benchmarks, requirements, or disclosures;
1112 b. Social governance standards, benchmarks, or
1113 requirements, including, but not limited to, environmental or
1114 social justice;
1115 c. Corporate board or company employment composition
1116 standards, benchmarks, requirements, or disclosures based on
1117 characteristics protected under the Florida Civil Rights Act of
1118 1992; or
1119 d. Policies or procedures requiring or encouraging
1120 employee participation in social justice programming, including,
1121 but not limited to, diversity, equity, or inclusion training.
1122 (3) Beginning July 1, 2023, and by July 1 of each year
1123 thereafter, financial institutions subject to the financial
1124 institutions codes must attest, under penalty of perjury, on a

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1125 form prescribed by the commission whether the entity is acting
1126 in compliance with subsection (2).
1127 (4) A practice described in subsection (2) is a failure to
1128 comply with this chapter, constitutes a violation of the
1129 financial institutions codes, and is subject to the applicable
1130 sanctions and penalties provided for in the financial
1131 institutions codes.
1132 (5) Notwithstanding s. 501.212, a practice described in
1133 subsection (2) constitutes a violation of the Florida Deceptive
1134 and Unfair Trade Practices Act under part II of chapter 501.
1135 Violations shall be enforced by the enforcing authority, as
1136 defined in s. 501.203(2), and shall subject the violator to any
1137 and all sanctions and penalties provided for in that part. If
1138 such action is successful, the enforcing authority is entitled
1139 to reasonable attorney fees and costs.
1140 (6) The office and the commission may not exercise
1141 authority pursuant to s. 655.061 in relation to this section.
1142 Section 25. Subsection (5) is added to section 1010.04,
1143 Florida Statutes, to read:
1144 1010.04 Purchasing.—
1145 (5) Beginning July 1, 2023, school districts, Florida
1146 College System institutions, and state universities may not:
1147 (a) Request documentation of or consider a vendor's
1148 social, political, or ideological interests.
1149 (b) Give preference to a vendor based on the vendor's

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HB 3 2023

1150 social, political, or ideological interests.
1151
1152 Any solicitation for purchases and leases must include a
1153 provision notifying vendors of the provisions of this
1154 subsection.
1155 Section 26. For the purpose of incorporating the amendment
1156 made by this act to section 17.57, Florida Statutes, in
1157 references thereto, subsection (1) of section 17.61, Florida
1158 Statutes, is reenacted to read:
1159 17.61 Chief Financial Officer; powers and duties in th e
1160 investment of certain funds.—
1161 (1) The Chief Financial Officer shall invest all general
1162 revenue funds and all the trust funds and all agency funds of
1163 each state agency, and of the judicial branch, as defined in s.
1164 216.011, and may, upon request, invest funds of any board,
1165 association, or entity created by the State Constitution or by
1166 law, except for the funds required to be invested pursuant to
1167 ss. 215.44-215.53, by the procedure and in the authorized
1168 securities prescribed in s. 17.57; for this purpose, the Chief
1169 Financial Officer may open and maintain one or more demand and
1170 safekeeping accounts in any bank or savings association for the
1171 investment and reinvestment and the purchase, sale, and exchange
1172 of funds and securities in the accounts. Funds in such accounts
1173 used solely for investments and reinvestments shall be
1174 considered investment funds and not funds on deposit, and such

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1175 funds shall be exempt from the provisions of chapter 280. In
1176 addition, the securities or investments purchased or held under
1177 the provisions of this section and s. 17.57 may be loaned to
1178 securities dealers and banks and may be registered by the Chief
1179 Financial Officer in the name of a third-party nominee in order
1180 to facilitate such loans, provided the loan is collateralized by
1181 cash or United States government securities having a market
1182 value of at least 100 percent of the market value of the
1183 securities loaned. The Chief Financial Officer shall keep a
1184 separate account, designated by name and number, of each fund.
1185 Individual transactions and totals of all investments, or the
1186 share belonging to each fund, shall be recorded in the accounts.
1187 Section 27. For the purpose of incorporating the amendment
1188 made by this act to section 215.47, Florida Statutes, in
1189 references thereto, subsection (3) of section 215.44, Florida
1190 Statutes, is reenacted to read:
1191 215.44 Board of Administration; powers and duties in
1192 relation to investment of trust funds.—
1193 (3) Notwithstanding any law to the contrary, all
1194 investments made by the State Board of Administration pursuant
1195 to ss. 215.44-215.53 shall be subject to the restrictions and
1196 limitations contained in s. 215.47, except that investments made
1197 by the State Board of Administration under a trust agreement
1198 pursuant to subsection (1) shall be subject only to the
1199 restrictions and limitations contained in the trust agreement.

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1200 Section 28. This act shall take effect July 1, 2023.

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COMMERCE COMMITTEE

HB 3 by Rep. Rommel
Government and Corporate Activism

AMENDMENT SUMMARY
March 8, 2023

Amendment 1 by Rep. Rommel (line 439):

The amendment makes clarifying and conforming changes, without changing the substance of
the bill. The amendment:

• Clarifies that the prohibitions on third-party verifier services applies to ESG bond labels.
• Clarifies the implementation of the prohibition of the use of any social credit score to
deny or cancel financial services.
• Adds certain cross references and conforms terminology.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 3 (2023)
Amendment No.1

COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER

1 Committee/Subcommittee hearing bill: Commerce Committee
2 Representative Rommel offered the following:
3
4 Amendment (with title amendment)
5 Remove lines 439-1139 and insert:
6 the risk or returns of an investment based on appropriate
7 investment horizons consistent with applicable investment
8 objectives and funding policy. The term does not include the
9 consideration or furtherance of any social, political, or
10 ideological interests.
11 (b) Notwithstanding any other law except for ss. 215.472,
12 215.4725, and 215.473, when deciding whether to invest and when
13 investing the assets of any fund, the State Board of
14 Administration must make decisions based solely on pecuniary
15 factors and may not subordinate the interests of the
16 participants and beneficiaries of the fund to other objectives,
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Amendment No.1

17 including sacrificing investment return or undertaking
18 additional investment risk to promote any nonpecuniary factor.
19 The weight given to any pecuniary factor must appropriately
20 reflect a prudent assessment of its impact on risk or returns.
21 (c) Investments made by the State Board of Administration
22 shall be designed to maximize the financial return to the fund
23 consistent with the risks incumbent in each investment and shall
24 be designed to preserve an appropriate diversification of the
25 portfolio. The board shall discharge its duties with respect to
26 a plan solely in the interest of its participants and
27 beneficiaries. The board in performing the above investment
28 duties shall comply with the fiduciary standards set forth in
29 the Employee Retirement Income Security Act of 1974 at 29 U.S.C.
30 s. 1104(a)(1)(A) through (C). Except as provided in paragraph
31 (b), in case of conflict with other provisions of law
32 authorizing investments, the investment and fiduciary standards
33 set forth in this paragraph subsection shall prevail.
34 Section 9. Subsection (1) of section 215.475, Florida
35 Statutes, is amended to read:
36 215.475 Investment policy statement.—
37 (1) In making investments for the System Trust Fund
38 pursuant to ss. 215.44-215.53, the board shall make no
39 investment which is not in conformance with the Florida
40 Retirement System Defined Benefit Plan Investment Policy
41 Statement, hereinafter referred to as "the IPS," as developed by
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Bill No. HB 3 (2023)
Amendment No.1

42 the executive director and approved by the board. The IPS must
43 comply with s. 215.47(10) and include, among other items, the
44 investment objectives of the System Trust Fund; permitted types
45 of securities in which the board may invest; and evaluation
46 criteria necessary to measure the investment performance of the
47 fund. As required from time to time, the executive director of
48 the board may present recommended changes in the IPS to the
49 board for approval.
50 Section 10. Present paragraphs (b), (c), and (d) of
51 subsection (1) of section 215.4755, Florida Statutes, are
52 redesignated as paragraphs (c), (d), and (e), respectively, a
53 new paragraph (b) is added to that subsection, and subsection
54 (3) of that section is amended, to read:
55 215.4755 Certification and disclosure requirements for
56 investment advisers and managers.—
57 (1) An investment adviser or manager who has discretionary
58 investment authority for direct holdings and who is retained as
59 provided in s. 215.44(2)(b) shall agree pursuant to contract to
60 annually certify in writing to the board that:
61 (b) All investment decisions made on behalf of the trust
62 funds and the board are made based solely on pecuniary factors
63 as defined in s. 215.47(10)(a) and do not subordinate the
64 interests of the participants and beneficiaries of the funds to
65 other objectives, including sacrificing investment return or
66 undertaking additional investment risk to promote any
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Bill No. HB 3 (2023)
Amendment No.1

67 nonpecuniary factor. This paragraph applies to any contract
68 executed, amended, or renewed on or after July 1, 2023.
69 (3)(a) An investment adviser or manager certification
70 required under subsection (1) must shall be provided by each
71 annually, no later than January 31, for the reporting period of
72 the previous calendar year on a form prescribed by the board.
73 (b) Failure to timely file the certification required
74 under subsection (1) is grounds for termination of any contract
75 between the board and the investment advisor or manager.
76 (c) Submission of a materially false certification is
77 deemed a willful refusal to comply with the fiduciary standard
78 described in paragraph (1)(b).
79 (d) If an investment advisor or manager fails to comply
80 with the fiduciary standard described in paragraph (1)(b) while
81 providing services to the board, the board must report such
82 noncompliance to the Attorney General, who may bring a civil or
83 administrative action for damages, injunctive relief, and such
84 other relief as may be appropriate. If such action is
85 successful, the Attorney General is entitled to reasonable
86 attorney fees and costs.
87 Section 11. Section 215.681, Florida Statutes, is created
88 to read:
89 215.681 ESG bonds; prohibitions.—
90 (1) As used in this section, the term:
91 (a) "Bonds" means any note, general obligation bond,
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Amendment No.1

92 revenue bond, special assessment bond, special obligation bond,
93 private activity bond, certificate of participation, or other
94 evidence of indebtedness or obligation, in either temporary or
95 definitive form.
96 (b) "ESG" means environmental, social, and governance.
97 (c) "ESG bonds" means any bonds that have been designated
98 or labeled as bonds that will be used to finance a project with
99 an ESG purpose, including, but not limited to, green bonds,
100 Certified Climate Bonds, GreenStar designated bonds, and other
101 environmental bonds marketed as promoting an environmental
102 objective; social bonds marketed as promoting a social
103 objective; and sustainability bonds and sustainable development
104 goal bonds marketed as promoting both environmental and social
105 objectives. The term includes those bonds self-designated by the
106 issuer as ESG-labeled bonds and those designated as ESG-labeled
107 bonds by a third-party verifier.
108 (d) "Issuer" means the division, acting on behalf of any
109 entity; any local government, educational entity, or entity of
110 higher education as defined in s. 215.89(2)(c), (d), and (e),
111 respectively, or other political subdivision granted the power
112 to issue bonds; any public body corporate and politic authorized
113 or created by general or special law and granted the power to
114 issue bonds, including, but not limited to, a water and sewer
115 district created under chapter 153, a health facilities
116 authority as defined in s. 154.205, an industrial development
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Bill No. HB 3 (2023)
Amendment No.1

117 authority created under chapter 159, a housing financing
118 authority as defined in s. 159.603(3), a research and
119 development authority as defined in s. 159.702(1)(c), a legal or
120 administrative entity created by interlocal agreement pursuant
121 to s. 163.01(7), a community redevelopment agency as defined in
122 s. 163.340(1), a regional transportation authority created under
123 chapter 163, a community development district as defined in s.
124 190.003, an educational facilities authority as defined in s.
125 243.52(1), the Higher Educational Facilities Financing Authority
126 created under s. 243.53, the Florida Development Finance
127 Corporation created under s. 288.9604, a port district or port
128 authority as defined in s. 315.02(1) and (2), respectively, the
129 South Florida Regional Transportation Authority created under s.
130 343.53, the Central Florida Regional Transportation Authority
131 created under s. 343.63, the Tampa Bay Area Regional Transit
132 Authority created under s. 343.92, the Greater Miami Expressway
133 Agency created under s. 348.0304, the Tampa-Hillsborough County
134 Expressway Authority created under s. 348.52, the Central
135 Florida Expressway Authority created under s. 348.753, the
136 Jacksonville Transportation Authority created under s. 349.03,
137 and the Florida Housing Finance Corporation created under s.
138 420.504.
139 (e) "Rating agency" means any nationally recognized rating
140 service or nationally recognized statistical rating
141 organization.
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Amendment No.1

142 (f) "Third-party verifier" means any entity that contracts
143 with an issuer to conduct an external review and independent
144 assessment of proposed ESG bonds to ensure that such bonds may
145 be designated or labeled as ESG bonds or will be used to finance
146 a project that will comply with applicable ESG standards.
147 (2) Notwithstanding any other provision of law relating to
148 the issuance of bonds, it is a violation of this section and it
149 is prohibited for any issuer to:
150 (a) Issue ESG bonds.
151 (b) Expend public funds as defined in s. 215.85(3) or use
152 moneys derived from the issuance of bonds to pay for the
153 services of a third-party verifier related to the designation or
154 labeling of bonds as ESG bonds, including, but not limited to,
155 certifying or verifying that bonds may be designated or labeled
156 as ESG bonds, rendering a second-party opinion or producing a
157 verifier's report as to the compliance of proposed ESG bonds
158 with applicable ESG standards and metrics, complying with post-
159 issuance reporting obligations, or other services that are only
160 provided due to the designation or labeling of bonds as ESG
161 bonds.
162 (c) Enter into a contract with any rating agency whose ESG
163 scores for such issuer will have a direct, negative impact on
164 the issuer's bond ratings.
165 (3) Notwithstanding s. 655.0323, a financial institution
166 as defined in s. 655.005(1) may purchase and underwrite bonds
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Bill No. HB 3 (2023)
Amendment No.1

167 issued by a governmental entity.
168 (4) This section does not apply to any bonds issued before
169 July 1, 2023, or to any agreement entered into or any contract
170 executed before July 1, 2023.
171 Section 12. Section 215.855, Florida Statutes, is created
172 to read:
173 215.855 Investment manager external communication.—
174 (1) As used in this section, the term:
175 (a) "Governmental entity" means a state, regional, county,
176 municipal, special district, or other political subdivision
177 whether executive, judicial, or legislative, including, but not
178 limited to, a department, division, board, bureau, commission,
179 authority, district, or agency thereof, or a public school,
180 Florida College System institution, state university, or
181 associated board.
182 (b) "Investment manager" means a private sector company
183 that offers one or more investment products or services to a
184 governmental entity and that has the discretionary investment
185 authority for direct holdings.
186 (c) "Public funds" means all moneys under the jurisdiction
187 of a governmental entity and includes all manner of pension and
188 retirement funds and all other funds held, as trust funds or
189 otherwise, for any public purpose, subject to investment.
190 (2) Any contract between a governmental entity and an
191 investment manager must contain the following provisions:
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Amendment No.1

192 (a) That any written communication made by the investment
193 manager to a company in which such manager invests public funds
194 on behalf of a governmental entity must include the following
195 disclaimer in a conspicuous location if such communication
196 discusses social, political, or ideological interests;
197 subordinates the interests of the company's shareholders to the
198 interest of another entity; or advocates for the interest of an
199 entity other than the company's shareholders:
200
201 The views and opinions expressed in this communication are those
202 of the sender and do not reflect the views and opinions of the
203 people of the State of Florida.
204
205 (b) That the contract may be unilaterally terminated at
206 the option of the governmental entity if the investment manager
207 does not include the disclaimer required in paragraph (a).
208 (3) This section applies to contracts between a
209 governmental entity and an investment manager executed, amended,
210 or renewed on or after July 1, 2023.
211 Section 13. Subsection (24) is added to section 218.415,
212 Florida Statutes, to read:
213 218.415 Local government investment policies.—Investment
214 activity by a unit of local government must be consistent with a
215 written investment plan adopted by the governing body, or in the
216 absence of the existence of a governing body, the respective
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Amendment No.1

217 principal officer of the unit of local government and maintained
218 by the unit of local government or, in the alternative, such
219 activity must be conducted in accordance with subsection (17).
220 Any such unit of local government shall have an investment
221 policy for any public funds in excess of the amounts needed to
222 meet current expenses as provided in subsections (1)-(16), or
223 shall meet the alternative investment guidelines contained in
224 subsection (17). Such policies shall be structured to place the
225 highest priority on the safety of principal and liquidity of
226 funds. The optimization of investment returns shall be secondary
227 to the requirements for safety and liquidity. Each unit of local
228 government shall adopt policies that are commensurate with the
229 nature and size of the public funds within its custody.
230 (24) INVESTMENT DECISIONS.—
231 (a) As used in this subsection, the term "pecuniary
232 factor" means a factor that the governing body of the unit of
233 local government, or in the absence of the existence of a
234 governing body, the respective principal officer of the unit of
235 local government, prudently determines is expected to have a
236 material effect on the risk or returns of an investment based on
237 appropriate investment horizons consistent with applicable
238 investment objectives and funding policy. The term does not
239 include the consideration or furtherance of any social,
240 political, or ideological interests.
241 (b) Notwithstanding any other law, when deciding whether
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Amendment No.1

242 to invest and when investing public funds pursuant to this
243 section, the unit of local government must make decisions based
244 solely on pecuniary factors and may not subordinate the
245 interests of the people of this state to other objectives,
246 including sacrificing investment return or undertaking
247 additional investment risk to promote any nonpecuniary factor.
248 The weight given to any pecuniary factor must appropriately
249 reflect a prudent assessment of its impact on risk or returns.
250 Section 14. Present paragraphs (e) and (f) of subsection
251 (26) of section 280.02, Florida Statutes, are redesignated as
252 paragraphs (g) and (h), respectively, and new paragraphs (e) and
253 (f) are added to that subsection, to read:
254 280.02 Definitions.—As used in this chapter, the term:
255 (26) "Qualified public depository" means a bank, savings
256 bank, or savings association that:
257 (e) Makes determinations about the provision of services
258 or the denial of services based on an analysis of risk factors
259 unique to each customer or member. This paragraph does not
260 restrict a qualified public depository that claims a religious
261 purpose from making such determinations based on the religious
262 beliefs, religious exercise, or religious affiliations of a
263 customer or member.
264 (f) Does not engage in the unsafe and unsound practice of
265 denying or canceling its services to a person, or otherwise
266 discriminating against a person in making available such
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Amendment No.1

267 services or in the terms or conditions of such services, on the
268 basis of:
269 1. The person's political opinions, speech, or
270 affiliations;
271 2. Except as provided in paragraph (e), the person's
272 religious beliefs, religious exercise, or religious
273 affiliations;
274 3. Any factor if it is not a quantitative, impartial, and
275 risk-based standard, including any such factor related to the
276 person's business sector; or
277 4. The use of any rating, scoring, analysis, tabulation,
278 or action that considers a social credit score based on factors
279 including, but not limited to:
280 a. The person's political opinions, speech, or
281 affiliations.
282 b. The person's religious beliefs, religious exercise, or
283 religious affiliations.
284 c. The person's lawful ownership of a firearm.
285 d. The person's engagement in the lawful manufacture,
286 distribution, sale, purchase, or use of firearms or ammunition.
287 e. The person's engagement in the exploration, production,
288 utilization, transportation, sale, or manufacture of fossil
289 fuel-based energy, timber, mining, or agriculture.
290 f. The person's support of the state or Federal Government
291 in combatting illegal immigration, drug trafficking, or human
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Amendment No.1

292 trafficking.
293 g. The person's engagement with, facilitation of,
294 employment by, support of, business relationship with,
295 representation of, or advocacy for any person described in this
296 subparagraph.
297 h. The person's failure to meet or commit to meet, or
298 expected failure to meet, any of the following as long as such
299 person is in compliance with applicable state or federal law:
300 (I) Environmental standards, including emissions
301 standards, benchmarks, requirements, or disclosures;
302 (II) Social governance standards, benchmarks, or
303 requirements, including, but not limited to, environmental or
304 social justice;
305 (III) Corporate board or company employment composition
306 standards, benchmarks, requirements, or disclosures based on
307 characteristics protected under the Florida Civil Rights Act of
308 1992; or
309 (IV) Policies or procedures requiring or encouraging
310 employee participation in social justice programming, including,
311 but not limited to, diversity, equity, or inclusion training.
312 Section 15. Section 280.025, Florida Statutes, is created
313 to read:
314 280.025 Attestation required.—
315 (1) Beginning July 1, 2023, the following entities must
316 attest, under penalty of perjury, on a form prescribed by the
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Amendment No.1

317 Chief Financial Officer, whether the entity is in compliance
318 with s. 280.02(26)(e) and (f):
319 (a) A bank, savings bank, or savings association, upon
320 application or reapplication for designation as a qualified
321 public depository.
322 (b) A qualified public depository, upon filing the report
323 required by s. 280.16(1)(d).
324 (2) If an application or reapplication for designation as
325 a qualified public depository is pending on July 1, 2023, the
326 bank, savings bank, or savings association must file the
327 attestation required under subsection (1) before being
328 designated or redesignated a qualified public depository.
329 Section 16. Paragraph (d) of subsection (13) and
330 subsection (17) of section 280.05, Florida Statutes, are amended
331 to read:
332 280.05 Powers and duties of the Chief Financial Officer.—
333 In fulfilling the requirements of this act, the Chief Financial
334 Officer has the power to take the following actions he or she
335 deems necessary to protect the integrity of the public deposits
336 program:
337 (13) Require the filing of the following reports, which
338 the Chief Financial Officer shall process as provided:
339 (d)1. Any related documents, reports, records, or other
340 information deemed necessary by the Chief Financial Officer in
341 order to ascertain compliance with this chapter, including, but
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Amendment No.1

342 not limited to, verifying the attestation required under s.
343 280.025.
344 2. If the Chief Financial Officer determines that the
345 attestation required under s. 280.025 is materially false, he or
346 she must report such determination to the Attorney General, who
347 may bring a civil or administrative action for damages,
348 injunctive relief, and such other relief as may be appropriate.
349 If such action is successful, the Attorney General is entitled
350 to reasonable attorney fees and costs.
351 3. As related to federally chartered financial
352 institutions, this paragraph may not be construed to create a
353 power exceeding the visitorial powers of the Chief Financial
354 Officer allowed under federal law.
355 (17) Suspend or disqualify or disqualify after suspension
356 any qualified public depository that has violated any of the
357 provisions of this chapter or of rules adopted hereunder or that
358 no longer meets the definition of a qualified public depository
359 under s. 280.02.
360 (a) Any qualified public depository that is suspended or
361 disqualified pursuant to this subsection is subject to the
362 provisions of s. 280.11(2) governing withdrawal from the public
363 deposits program and return of pledged collateral. Any
364 suspension shall not exceed a period of 6 months. Any qualified
365 public depository which has been disqualified may not reapply
366 for qualification until after the expiration of 1 year from the
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Amendment No.1

367 date of the final order of disqualification or the final
368 disposition of any appeal taken therefrom.
369 (b) In lieu of suspension or disqualification, impose an
370 administrative penalty upon the qualified public depository as
371 provided in s. 280.054.
372 (c) If the Chief Financial Officer has reason to believe
373 that any qualified public depository or any other financial
374 institution holding public deposits is or has been violating any
375 of the provisions of this chapter or of rules adopted hereunder
376 or no longer meets the definition of a qualified public
377 depository under s. 280.02, he or she may issue to the qualified
378 public depository or other financial institution an order to
379 cease and desist from the violation or to correct the condition
380 giving rise to or resulting from the violation. If any qualified
381 public depository or other financial institution violates a
382 cease-and-desist or corrective order, the Chief Financial
383 Officer may impose an administrative penalty upon the qualified
384 public depository or other financial institution as provided in
385 s. 280.054 or s. 280.055. In addition to the administrative
386 penalty, the Chief Financial Officer may suspend or disqualify
387 any qualified public depository for violation of any order
388 issued pursuant to this paragraph.
389 Section 17. Subsections (14) and (15) are added to section
390 280.051, Florida Statutes, to read:
391 280.051 Grounds for suspension or disqualification of a
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Amendment No.1

392 qualified public depository.—A qualified public depository may
393 be suspended or disqualified or both if the Chief Financial
394 Officer determines that the qualified public depository has:
395 (14) Failed to file the attestation required under s.
396 280.025.
397 (15) No longer meets the definition of a qualified public
398 depository under s. 280.02.
399 Section 18. Paragraph (b) of subsection (1) of section
400 280.054, Florida Statutes, is amended to read:
401 280.054 Administrative penalty in lieu of suspension or
402 disqualification.—
403 (1) If the Chief Financial Officer finds that one or more
404 grounds exist for the suspension or disqualification of a
405 qualified public depository, the Chief Financial Officer may, in
406 lieu of suspension or disqualification, impose an administrative
407 penalty upon the qualified public depository.
408 (b) With respect to any knowing and willful violation of a
409 lawful order or rule, the Chief Financial Officer may impose a
410 penalty upon the qualified public depository in an amount not
411 exceeding $1,000 for each violation. If restitution is due, the
412 qualified public depository shall make restitution upon the
413 order of the Chief Financial Officer and shall pay interest on
414 such amount at the legal rate. Each day a violation continues
415 constitutes a separate violation. Failure to timely file the
416 attestation required under s. 280.025 is deemed a knowing and
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417 willful violation.
418 Section 19. Paragraphs (e) and (f) of subsection (1) of
419 section 280.055, Florida Statutes, are amended, and paragraph
420 (g) is added to that subsection, to read:
421 280.055 Cease and desist order; corrective order;
422 administrative penalty.—
423 (1) The Chief Financial Officer may issue a cease and
424 desist order and a corrective order upon determining that:
425 (e) A qualified public depository or a custodian has not
426 furnished to the Chief Financial Officer, when the Chief
427 Financial Officer requested, a power of attorney or bond power
428 or bond assignment form required by the bond agent or bond
429 trustee for each issue of registered certificated securities
430 pledged and registered in the name, or nominee name, of the
431 qualified public depository or custodian; or
432 (f) A qualified public depository; a bank, savings
433 association, or other financial institution; or a custodian has
434 committed any other violation of this chapter or any rule
435 adopted pursuant to this chapter that the Chief Financial
436 Officer determines may be remedied by a cease and desist order
437 or corrective order; or
438 (g) A qualified public depository no longer meets the
439 definition of a qualified public depository under s. 280.02.
440 Section 20. Section 287.05701, Florida Statutes, is
441 created to read:
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Amendment No.1

442 287.05701 Prohibition against considering social,
443 political, or ideological interests in government contracting.—
444 (1) As used in this section, the term "awarding body"
445 means:
446 (a) For state contracts, an agency or the department.
447 (b) For local government contracts, the governing body of
448 a county, a municipality, a special district, or any other
449 political subdivision of the state.
450 (2)(a) An awarding body may not request documentation of
451 or consider a vendor's social, political, or ideological
452 interests when determining if the vendor is a responsible
453 vendor.
454 (b) An awarding body may not give preference to a vendor
455 based on the vendor's social, political, or ideological
456 interests.
457 (3) Beginning July 1, 2023, any solicitation for the
458 procurement of commodities or contractual services by an
459 awarding body must include a provision notifying vendors of the
460 provisions of this section.
461 Section 21. Section 516.037, Florida Statutes, is created
462 to read:
463 516.037 Unsafe and unsound practices.—
464 (1) Licensees must make determinations about the provision
465 or denial of services based on an analysis of risk factors
466 unique to each current or prospective customer and may not
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467 engage in an unsafe and unsound practice as provided in
468 subsection (2). This subsection does not restrict a licensee
469 that claims a religious purpose from making such determinations
470 based on the current or prospective customer's religious
471 beliefs, religious exercise, or religious affiliations.
472 (2) It is an unsafe and unsound practice for a licensee to
473 deny or cancel its services to a person, or to otherwise
474 discriminate against a person in making available such services
475 or in the terms or conditions of such services, on the basis of:
476 (a) The person's political opinions, speech, or
477 affiliations;
478 (b) Except as provided in subsection (1), the person's
479 religious beliefs, religious exercise, or religious
480 affiliations;
481 (c) Any factor if it is not a quantitative, impartial, and
482 risk-based standard, including any such factor related to the
483 person's business sector; or
484 (d) The use of any rating, scoring, analysis, tabulation,
485 or action that considers a social credit score based on factors
486 including, but not limited to:
487 1. The person's political opinions, speech, or
488 affiliations.
489 2. The person's religious beliefs, religious exercise, or
490 religious affiliations.
491 3. The person's lawful ownership of a firearm.
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492 4. The person's engagement in the lawful manufacture,
493 distribution, sale, purchase, or use of firearms or ammunition.
494 5. The person's engagement in the exploration, production,
495 utilization, transportation, sale, or manufacture of fossil
496 fuel-based energy, timber, mining, or agriculture.
497 6. The person's support of the state or Federal Government
498 in combatting illegal immigration, drug trafficking, or human
499 trafficking.
500 7. The person's engagement with, facilitation of,
501 employment by, support of, business relationship with,
502 representation of, or advocacy for any person described in this
503 paragraph.
504 8. The person's failure to meet or commit to meet, or
505 expected failure to meet, any of the following as long as such
506 person is in compliance with applicable state or federal law:
507 a. Environmental standards, including emissions standards,
508 benchmarks, requirements, or disclosures;
509 b. Social governance standards, benchmarks, or
510 requirements, including, but not limited to, environmental or
511 social justice;
512 c. Corporate board or company employment composition
513 standards, benchmarks, requirements, or disclosures based on
514 characteristics protected under the Florida Civil Rights Act of
515 1992; or
516 d. Policies or procedures requiring or encouraging
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517 employee participation in social justice programming, including,
518 but not limited to, diversity, equity, or inclusion training.
519 (3) Beginning July 1, 2023, and upon application for a
520 license or license renewal, applicants and licensees must
521 attest, under penalty of perjury, on a form prescribed by the
522 commission whether the applicant or licensee is acting in
523 compliance with subsections (1) and (2).
524 (4) In addition to any sanctions and penalties under this
525 chapter, a failure to comply with subsection (1) or engaging in
526 a practice described in subsection (2) constitutes a violation
527 of the Florida Deceptive and Unfair Trade Practices Act under
528 part II of chapter 501. Notwithstanding s. 501.211, violations
529 must be enforced only by the enforcing authority, as defined in
530 s. 501.203(2), and subject the violator to the sanctions and
531 penalties provided for in that part. If such action is
532 successful, the enforcing authority is entitled to reasonable
533 attorney fees and costs.
534 Section 22. Section 560.1115, Florida Statutes, is created
535 to read:
536 560.1115 Unsafe and unsound practices.—
537 (1) Licensees must make determinations about the provision
538 or denial of services based on an analysis of risk factors
539 unique to each current or prospective customer and may not
540 engage in an unsafe and unsound practice as provided in
541 subsection (2). This subsection does not restrict a licensee
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542 that claims a religious purpose from making such determinations
543 based on the current or prospective customer's religious
544 beliefs, religious exercise, or religious affiliations.
545 (2) It is an unsafe and unsound practice for a licensee to
546 deny or cancel its services to a person, or to otherwise
547 discriminate against a person in making available such services
548 or in the terms or conditions of such services, on the basis of:
549 (a) The person's political opinions, speech, or
550 affiliations;
551 (b) Except as provided in subsection (1), the person's
552 religious beliefs, religious exercise, or religious
553 affiliations;
554 (c) Any factor if it is not a quantitative, impartial, and
555 risk-based standard, including any such factor related to the
556 person's business sector; or
557 (d) The use of any rating, scoring, analysis, tabulation,
558 or action that considers a social credit score based on factors
559 including, but not limited to:
560 1. The person's political opinions, speech, or
561 affiliations.
562 2. The person's religious beliefs, religious exercise, or
563 religious affiliations.
564 3. The person's lawful ownership of a firearm.
565 4. The person's engagement in the lawful manufacture,
566 distribution, sale, purchase, or use of firearms or ammunition.
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567 5. The person's engagement in the exploration, production,
568 utilization, transportation, sale, or manufacture of fossil
569 fuel-based energy, timber, mining, or agriculture.
570 6. The person's support of the state or Federal Government
571 in combatting illegal immigration, drug trafficking, or human
572 trafficking.
573 7. The person's engagement with, facilitation of,
574 employment by, support of, business relationship with,
575 representation of, or advocacy for any person described in this
576 paragraph.
577 8. The person's failure to meet or commit to meet, or
578 expected failure to meet, any of the following as long as such
579 person is in compliance with applicable state or federal law:
580 a. Environmental standards, including emissions standards,
581 benchmarks, requirements, or disclosures;
582 b. Social governance standards, benchmarks, or
583 requirements, including, but not limited to, environmental or
584 social justice;
585 c. Corporate board or company employment composition
586 standards, benchmarks, requirements, or disclosures based on
587 characteristics protected under the Florida Civil Rights Act of
588 1992; or
589 d. Policies or procedures requiring or encouraging
590 employee participation in social justice programming, including,
591 but not limited to, diversity, equity, or inclusion training.
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592 (3) Beginning July 1, 2023, and upon application for a
593 license or license renewal, applicants and licensees, as
594 applicable, must attest, under penalty of perjury, on a form
595 prescribed by the commission whether the applicant or licensee
596 is acting in compliance with subsections (1) and (2).
597 (4) In addition to any sanctions and penalties under this
598 chapter, a failure to comply with subsection (1) or engaging in
599 a practice described in subsection (2) constitutes a violation
600 of the Florida Deceptive and Unfair Trade Practices Act under
601 part II of chapter 501. Notwithstanding s. 501.211, violations
602 must be enforced only by the enforcing authority, as defined in
603 s. 501.203(2), and subject the violator to the sanctions and
604 penalties provided for in that part. If such action is
605 successful, the enforcing authority is entitled to reasonable
606 attorney fees and costs.
607 Section 23. Paragraph (h) of subsection (1) of section
608 560.114, Florida Statutes, is amended to read:
609 560.114 Disciplinary actions; penalties.—
610 (1) The following actions by a money services business,
611 authorized vendor, or affiliated party constitute grounds for
612 the issuance of a cease and desist order; the issuance of a
613 removal order; the denial, suspension, or revocation of a
614 license; or taking any other action within the authority of the
615 office pursuant to this chapter:
616 (h) Engaging in an act prohibited under s. 560.111 or s.
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Amendment No.1

617 560.1115.
618 Section 24. Paragraph (y) of subsection (1) of section
619 655.005, Florida Statutes, is amended to read:
620 655.005 Definitions.—
621 (1) As used in the financial institutions codes, unless
622 the context otherwise requires, the term:
623 (y) "Unsafe or unsound practice" or "unsafe and unsound
624 practice" means:
625 1. Any practice or conduct found by the office to be
626 contrary to generally accepted standards applicable to a
627 financial institution, or a violation of any prior agreement in
628 writing or order of a state or federal regulatory agency, which
629 practice, conduct, or violation creates the likelihood of loss,
630 insolvency, or dissipation of assets or otherwise prejudices the
631 interest of the financial institution or its depositors or
632 members. In making this determination, the office must consider
633 the size and condition of the financial institution, the gravity
634 of the violation, and the prior conduct of the person or
635 institution involved; or
636 2. Failure to comply with s. 655.0323(1), or engaging in a
637 practice described in s. 655.0323(2).
638 Section 25. Section 655.0323, Florida Statutes, is created
639 to read:
640 655.0323 Unsafe and unsound practices.—
641 (1) Financial institutions must make determinations about
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Amendment No.1

642 the provision or denial of services based on an analysis of risk
643 factors unique to each current or prospective customer or member
644 and may not engage in an unsafe and unsound practice as provided
645 in subsection (2). This subsection does not restrict a financial
646 institution that claims a religious purpose from making such
647 determinations based on the current or prospective customer's or
648 member's religious beliefs, religious exercise, or religious
649 affiliations.
650 (2) It is an unsafe and unsound practice for a financial
651 institution to deny or cancel its services to a person, or to
652 otherwise discriminate against a person in making available such
653 services or in the terms or conditions of such services, on the
654 basis of:
655 (a) The person's political opinions, speech, or
656 affiliations;
657 (b) Except as provided in subsection (1), the person's
658 religious beliefs, religious exercise, or religious
659 affiliations;
660 (c) Any factor if it is not a quantitative, impartial, and
661 risk-based standard, including any such factor related to the
662 person's business sector; or
663 (d) The use of any rating, scoring, analysis, tabulation,
664 or action that considers a social credit score based on factors
665 including, but not limited to:
666 1. The person's political opinions, speech, or
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Amendment No.1

667 affiliations.
668 2. The person's religious beliefs, religious exercise, or
669 religious affiliations.
670 3. The person's lawful ownership of a firearm.
671 4. The person's engagement in the lawful manufacture,
672 distribution, sale, purchase, or use of firearms or ammunition.
673 5. The person's engagement in the exploration, production,
674 utilization, transportation, sale, or manufacture of fossil
675 fuel-based energy, timber, mining, or agriculture.
676 6. The person's support of the state or Federal Government
677 in combatting illegal immigration, drug trafficking, or human
678 trafficking.
679 7. The person's engagement with, facilitation of,
680 employment by, support of, business relationship with,
681 representation of, or advocacy for any person described in this
682 paragraph.
683 8. The person's failure to meet or commit to meet, or
684 expected failure to meet, any of the following as long as such
685 person is in compliance with applicable state or federal law:
686 a. Environmental standards, including emissions standards,
687 benchmarks, requirements, or disclosures;
688 b. Social governance standards, benchmarks, or
689 requirements, including, but not limited to, environmental or
690 social justice;
691 c. Corporate board or company employment composition
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692 standards, benchmarks, requirements, or disclosures based on
693 characteristics protected under the Florida Civil Rights Act of
694 1992; or
695 d. Policies or procedures requiring or encouraging
696 employee participation in social justice programming, including,
697 but not limited to, diversity, equity, or inclusion training.
698 (3) Beginning July 1, 2023, and by July 1 of each year
699 thereafter, financial institutions subject to the financial
700 institutions codes must attest, under penalty of perjury, on a
701 form prescribed by the commission whether the entity is acting
702 in compliance with subsections (1) and (2).
703 (4) Engaging in a practice described in subsection (2) is
704 a failure to comply with this chapter, constitutes a violation
705 of the financial institutions codes, and is subject to the
706 applicable sanctions and penalties provided for in the financial
707 institutions codes.
708 (5) Notwithstanding ss. 501.211 and 501.212, a failure to
709 comply with subsection (1) or a practice described in subsection
710 (2) constitutes a violation of the Florida Deceptive and Unfair
711 Trade Practices Act under part II of chapter 501. Violations
712 must be enforced only by the enforcing authority, as defined in
713 s. 501.203(2), and subject the violator to the sanctions and
714 penalties provided for in that part. If such action is
715 successful, the enforcing authority is entitled to reasonable
716 attorney fees and costs.
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Amendment No.1

717
718
719 -----------------------------------------------------
720 T I T L E A M E N D M E N T
721 Remove lines 26-107 and insert:
722 by the act; amending s. 215.47, F.S.; defining the term
723 "pecuniary factor"; requiring the State Board of Administration
724 to make investment decisions based solely on pecuniary factors;
725 providing an exception to current investment and fiduciary
726 standards in the event of a conflict; amending s. 215.475, F.S.;
727 requiring the Florida Retirement System Defined Benefit Plan
728 Investment Policy Statement to comply with the requirement that
729 only pecuniary interests be considered in investment decisions;
730 amending s. 215.4755, F.S.; requiring certain investment
731 advisors or managers to certify in writing that investment
732 decisions are based solely on pecuniary factors; providing
733 applicability; providing that failure to file a required
734 certification is grounds for termination of certain contracts;
735 providing that a submission of a materially false certification
736 is deemed a willful refusal to comply with a certain fiduciary
737 standard; requiring that certain noncompliance be reported to
738 the Attorney General, who is authorized to bring certain civil
739 or administrative actions; providing that if the Attorney
740 General is successful in those proceedings, he or she is
741 entitled to reasonable attorney fees and costs; creating s.
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742 215.681, F.S.; defining terms; prohibiting bond issuers from
743 issuing environmental, social, and governance bonds and taking
744 other related actions; authorizing certain financial
745 institutions to purchase and underwrite specified bonds;
746 providing applicability; creating s. 215.855, F.S.; defining
747 terms; requiring that contracts between governmental entities
748 and investment managers contain certain provisions and a
749 specified disclaimer; providing applicability; amending s.
750 218.415, F.S.; defining the term "pecuniary factor"; requiring
751 units of local government to make investment decisions based
752 solely on pecuniary factors; amending s. 280.02, F.S.; revising
753 the definition of the term "qualified public depository";
754 creating s. 280.025, F.S.; requiring a specified attestation,
755 under penalty of perjury, from certain entities; amending s.
756 280.05, F.S.; requiring the Chief Financial Officer to verify
757 such attestations; requiring the Chief Financial Officer to
758 report materially false attestations to the Attorney General,
759 who is authorized to bring certain civil and administrative
760 actions; providing that if the Attorney General is successful in
761 those proceedings, he or she is entitled to reasonable attorney
762 fees and costs; providing construction; authorizing the Chief
763 Financial Officer to suspend or disqualify a qualified public
764 depository that no longer meets the definition of that term;
765 amending s. 280.051, F.S.; adding grounds for suspension or
766 disqualification of a qualified public depository; amending s.
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Amendment No.1

767 280.054, F.S.; providing that failure to timely file a required
768 attestation is deemed a knowing and willful violation; amending
769 s. 280.055, F.S.; adding a circumstance under which the Chief
770 Financial Officer may issue certain orders against a qualified
771 public depository; creating s. 287.05701, F.S.; defining the
772 term "awarding body"; prohibiting an awarding body from
773 requesting certain documentation or giving preference to vendors
774 based on their social, political, or ideological interests;
775 requiring that solicitations for the procurement of commodities
776 or contractual services by an awarding body contain a specified
777 notification, beginning on a specified date; creating s.
778 516.037, F.S.; requiring licensees to make certain
779 determinations based on an analysis of certain risk factors;
780 prohibiting such licensees from engaging in unsafe and unsound
781 practices; providing construction; providing that certain
782 actions on the part of licensees are an unsafe and unsound
783 practice; requiring a specified attestation, under penalty of
784 perjury, from applicants and licensees beginning on a specified
785 date; providing that a failure to comply with specified
786 requirements or engaging in unsafe and unsound practices
787 constitutes a violation of the Florida Deceptive and Unfair
788 Trade Practices Act, subject to specified sanctions and
789 penalties; providing that only the enforcing authority can
790 enforce such violations; providing that an enforcing authority
791 that brings a successful action for violations is entitled to
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Amendment No.1

792 reasonable attorney fees and costs; creating s. 560.1115, F.S.;
793 requiring licensees to make determinations about the provision
794 or denial of services based on an analysis of certain risk
795 factors; prohibiting the licensees from engaging in unsafe and
796 unsound practices; providing construction; providing that
797 certain actions are an unsafe and unsound practice; requiring a
798 specified attestation, under penalty of perjury, from applicants
799 and licensees beginning on a specified date; providing that a
800 failure to comply with specified requirements or engaging in
801 unsafe and unsound practices constitutes a violation of the
802 Florida Deceptive and Unfair Trade Practices Act, subject to
803 specified sanctions and penalties; providing that only the
804 enforcing authority can enforce such violations; providing that
805 an enforcing authority that brings a successful action for
806 violations is entitled to reasonable attorney fees and costs;
807 amending s. 560.114, F.S.; revising the actions that constitute
808 grounds for specified disciplinary action of a money services
809 business, an authorized vendor, or an affiliated party; amending
810 s. 655.005, F.S.; revising a definition; creating s. 655.0323,
811 F.S.; requiring financial institutions to make determinations
812 about the provision or denial of services based on an analysis
813 of specified risk factors; prohibiting financial institutions
814 from engaging in unsafe and unsound practices; providing
815 construction; providing that certain actions are an unsafe and
816 unsound practice; requiring a specified attestation, under
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Amendment No.1

817 penalty of perjury, from financial institutions annually,
818 beginning on a specified date; providing that engaging in unsafe
819 and unsound practices constitutes a violation of the Florida
820 Deceptive and Unfair Trade Practices Act, subject to specified
821 sanctions and penalties; providing that only the enforcing
822 authority can enforce such violations; providing that an
823 enforcing authority that brings a successful action for
824 violations is entitled to reasonable attorney fees and costs;
825 prohibiting certain entities from exercising specified
826 authority; amending s. 1010.04, F.S.; prohibiting
827

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CS/HB 179
HOUSE OF REPRESENTATIVES STAFF ANALYSIS

BILL #: CS/HB 179 Florida Kratom Consumer Protection Act
SPONSOR(S): Regulatory Reform & Economic Development Subcommittee, Andrade
TIED BILLS: IDEN./SIM. BILLS: SB 136

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY
CHIEF

1) Regulatory Reform & Economic Development 11 Y, 0 N, As CS Wright Anstead
Subcommittee

2) Commerce Committee Wright Hamon

SUMMARY ANALYSIS
Kratom, Mitragyna speciosa, is a tropical tree native to Southeast Asia that contains psychoactive ingredients
in its leaves, which may be crushed and then smoked, brewed with tea, or placed into gel capsules.
Consumption of kratom leaves can produce stimulant and sedative effects, and addiction may lead to
psychotic symptoms. Currently, kratom is not listed as a controlled substance under federal law or Florida law,
and is generally regulated as a food. There are no specific state laws related to the regulation of kratom.

The bill places the regulation of kratom products within ch. 500, F.S., which is under the Department of
Agriculture and Consumer Services (DACS).

The bill defines "kratom product" to mean a food product, food ingredient, dietary ingredient, dietary
supplement, or beverage intended for human consumption which contains any part of the leaf of the plant
Mitragyna speciosa or an extract, synthetic alkaloid, or synthetically derived compound of such plant and is
manufactured as a powder, capsule, pill, beverage, or other edible form.

As a food product, kratom products are subject to regulation and inspection by DACS.

The bill provides that it is unlawful to sell, deliver, barter, furnish, or give, directly or indirectly, any kratom
product to any person who is under 21 years of age.

If any retail food store, food establishment, or cottage food operation sells kratom products to someone under
21, they are subject to an administrative fine of not more than $100 for the first offense, not more than $500 for
the second offense, and not more than $1,000 for the third or subsequent offense.

The bill provides an effective date of July 1, 2023.

The bill does not appear to have a fiscal impact on local governments and may have a negative fiscal impact
on state government. See Fiscal Analysis and Economic Impact Statement.

This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0179b.COM
DATE: 3/6/2023
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:

Kratom

Kratom, or Mitragyna speciosa, is a tropical tree native to Southeast Asia that contains the alkaloids
mitragynine and 7-hydroxymytragynine in its leaves, which are two major psychoactive ingredients. 1
The leaves are crushed and then smoked, brewed with tea, or placed into gel capsules .2

Some people consumer kratom to treat muscle ache, fatigue, and other conditions. 3 Low doses of
kratom are said to produce a stimulant effect, while higher doses may produce an opioid-like effect.4
Research finds that kratom can be used as a substitute for opiate users to combat withdrawal
symptoms,5 though kratom addiction may lead to psychotic symptoms.6

The U.S. Food and Drug Administration (FDA) has found that:7
Kratom is abused for its ability to produce opioid-like effects… Evidence suggests
that kratom is abused individually and with other psychoactive substances. Kratom
does not have an approved medical use in the United States and has not been
studied as a treatment agent in the United States. Kratom has a history of being
used as an opium substitute in Southeast Asia. In the United States, kratom is
misused to self-treat chronic pain and opioid withdrawal symptoms. Consumption
of kratom can lead to a number of health impacts, including, among others,
respiratory depression, vomiting, nervousness, weight loss, and constipation.
Kratom has been reported to have both narcotic and stimulant-like effects, and
withdrawal symptoms may include hostility, aggression, excessive tearing, aching
of muscles and bones, and jerky limb movements.

A Centers for Disease Control and Prevention study of approximately 27,000 overdoses that occurred
between 2016 and 2017 found that kratom was implicated in less than one percent of deaths.8 The
exact incidence of kratom dependency is not known and there is no U.S. reporting system.9 It is
estimated that there are between 10-16 million kratom users in the U.S.10 Users indicate self-
treatment of anxiety, depression, pain, fatigue, and substance use disorder symptoms.11

1 Drug Enforcement Administration, Kratom (April 2020), available at https://www.dea.gov/sites/default/files/2020-06/Kratom-
2020_0.pdf (last visited Feb. 15, 2023).
2 Id.
3 Id.
4 See Dimy Fluyau and Neelambika Revedigar, Biochemical Benefits, Diagnosis, and Clinical Risks Evaluation of Kratom, Frontiers

in Psychiatry Journal Volume 8 (April 24, 2017).
5 Id.
6 Id.
7 86 FR 39038.
8 Emily O’Malley Olsen, PhD; Julie O’Donnell, PhD; Christine L. Mattson, PhD; Joshua G. Schier, MD; Nana Wilson, PhD; Notes

from the Field: Unintentional Drug Overdose Deaths with Kratom Detected — 27 States, July 2016–December 2017; CDC Morbidity
and Mortality Weekly Report, Apr. 12, 2019; Notes from the Field: Unintentional Drug Overdose Deaths with Kratom Detected — 27
States, July 2016–December 2017 | MMWR (cdc.gov) (last visited Feb. 15, 2023); Maia Szalavitz, The FDA Shouldn’t Support a Ban
on Kratom, Scientific American, Aug. 12, 2021, The FDA Shouldn't Support a Ban on Kratom - Scientific American (last visited Jan.
30, 2022).
9 Charles Veltri and Oliver Grundmann, Current Perspectives on the Impact of Kratom Use. Substance Abuse and Rehabilitation

Journal Volume 10 23-31 (July 1, 2019).
10 Maia Szalavitz, supra note 8.
11 Jeffrey Rogers, Kirsten Smith, Justin Strickland, and David Epstein, Kratom Use in the US: Both a Regional Phenomenon and a

White Middle-Class Phenomenon? Evidence From NSDUH 2019 and an Online Convenience Sample , Frontiers on Pharmacology,
https://www.frontiersin.org/articles/10.3389/fphar.2021.789075/ full (last visited Feb. 19, 2023).
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Kratom is a $1.3 billion industry in the U.S. with sales generally occurring online and in smoke
shops.12 Hundreds of businesses around Florida sell the product.13

Public opinions in the U.S. range on the topic of kratom bans, either citing concerns of addiction or
praising perceived health benefits. Some point to kratom’s uses for opioid addicts to cease use and
aid in withdrawal symptoms.14 Other reports indicate that the use of kratom may lead to addiction. 15

State and Federal Prohibitions

Currently, kratom is not listed as a controlled substance under federal law or Florida law. In 2016, the
U.S. Drug Enforcement Administration (DEA) submitted a notice of intent to place kratom into Schedule
I of the Controlled Substances Act (CSA) based on abuse potential and risk to public health.16
However, the DEA withdrew the notice a few months later based on public comments. 17 In a letter
obtained by an industry group, U.S. Health and Human Services appeared to rescind their
recommendation to the DEA to place kratom on Schedule I of the CSA in 2018, stating that such action
should wait until it is supported by further research on kratom uses, abuse, and risks. 18 The DEA
continues to label kratom as a drug of concern.19

The FDA has stated that there is substantial concern regarding the safety of kratom and the risk it may
pose to public health, and indicated that there are currently no FDA-approved uses for kratom.20 The
FDA is actively evaluating all available scientific information on the safety and effects of kratom and
continues to warn consumers not to use any kratom products, but has made no official findings.21

In 2015, the FDA issued an import alert22 that labels kratom as an adulterating ingredient.23 As a result,
the FDA seized imports of kratom-containing dietary supplements and bulk dietary ingredients. In May
of 2021, the FDA announced the seizure of around 37,500 tons of adulterated kratom in Fort Myers,
Florida, worth an estimated $1.3 million.24 On October 26, 2021, a consent decree of condemnation
and destruction against the seized articles by the FDA was entered, which required the claimants to
pay a penal bond and destroy all seized articles. 25

Generally, the official federal legal and regulatory status of kratom or kratom included in food products
is still being decided.

12 Brody Ford, Opiate Alternative Kratom Spurs Investor Interest, Bloomberg News, Dec. 20, 2021,
https://www.bloomberg.com/news/newsletters/2021-12-20/ krato m-attracts-investor-attention-after-regulatory-win (last visited Jan. 30,
2022).
13 Kirby Wilson, Florida Kratom for customers under 21 to be banned if this bill passes, Tampa Bay Times, Jan. 18, 2022, Florida

Kratom for customers under 21 to be banned if this bill passes (tampabay.com) (last visited Jan. 30, 2022).
14 Jennifer Clopton, Regulations Are On Hold as Kratom Debate Rages, WebMD, Feb. 11, 2019, https://www.webmd.com/mental-

health/addiction/news/20190211/regulations -are-on-hold-as-kratom-debate-rages (last visited Feb. 15, 2023).
15 Mayo Clinic, Kratom for opioid withdrawal: Does it work?, https://www.mayoclinic.org/diseases -conditions/prescription-drug-

abuse/in-depth/kratom-opioid-withdrawal/art-20402170 (last visited Feb. 15, 2023).
16 81 FR 59929.
17 81 FR 70652
18 Josh Long, HHS in 2018 rescinded recommendation to schedule kratom as a drug , Jan. 28, 2021,

https://www.naturalproductsinsider.com/regulatory/hhs -2018-rescinded-recommendation-schedule-kratom-drug (last visited Feb. 15,
2023).
19 U.S. Drug Enforcement Administration, Kratom, https://www.dea.gov/factsheets/kratom (last visited Feb. 15, 2023).
20 U.S. Food and Drug Administration, FDA and Kratom, https://www.fda.gov/news -events/public-health-focus/fda-and-kratom (last

visited Feb. 15, 2023).
21 Id.
22 U.S. Food and Drug Administration, Import Alert 54-15, Import Alert 54-15 (fda.gov) (last visited Feb. 15, 2023).
23 Id. The FDA labeled kratom as adulterating based on the absence of a history of use or other evidence of safety establishing th at

kratom will reasonably be expected to be safe as a dietary ingredient, kratom and kratom-containing dietary supplements and bulk
dietary ingredients are adulterated because they contain a new dietary ingredient for which there is inadequate information t o provide
reasonable assurance that such ingredient does not present a significant or unreasonable risk of illness or injury.
24 U.S. Food and Drug Administration, FDA Announces Seizure of Adulterated Dietary Supplements Containing Kratom, May 21,

2021, https://www.fda.gov/news -events/press-announcements/fda-announces-seizure-adulterated-dietary-supplements-containing-
kratom (last visited Feb. 15, 2023).
25 Id.
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In 2014, Sarasota County banned kratom, labeling it as a designer drug. 26 With the exception of
Sarasota County, in Florida, all parts of the plant and its extracts are legal to cultivate, buy, possess,
and distribute without a license or prescription. Kratom is illegal in Alabama,27 Arkansas,28 Indiana,29
Vermont,30 and Wisconsin.31 Other states such as Arizona,32 Georgia,33 and Utah34 regulate kratom
under their state’s version of the Kratom Consumer Protection Act.

Federal Food, Drug, and Cosmetic Act

The Federal Food, Drug, and Cosmetic Act (FDCA) is a federal law which establishes the legal
framework within which the FDA operates.35 The FDA develops regulations under the FDCA for the
safety of foods, drugs, and cosmetics based on the laws set forth in the FDCA, including when a food is
adulterated.36 Instances where a food must be determined to be adulterated include when it: 37
 Bears or contains any poisonous or deleterious substance which may render it injurious to
health; such as consisting in whole or in part of any filthy, putrid, or decomposed substance;
 Is a dietary supplement or contains a dietary ingredient that presents a significant or
unreasonable risk of illness or injury under use pursuant to the label;
 Is a new dietary ingredient for which there is inadequate information to provide reasonable
assurance that such ingredient does not present a significant or unreasonable risk of illness or
injury.

When a food is determined to be adulterated, the FDA may take the following compliance measures:38
 Warning and untitled letters,
 Import alerts,
 Recalls,
 Debarment,
 Civil money penalties,
 Seizure of products,
 Injunctions, and
 Criminal prosecution.

Florida Department of Agriculture and Consumer Services, Division of Food Safety

The Department of Agriculture and Consumer Services (DACS) is the department in charge of
regulating agriculture in Florida.39 As such, DACS promotes Florida agriculture, protects the
environment, safeguards consumers, and ensures the safety and wholesomeness of food.40

26 See Sarasota, FL., Code of Ordinances, Sec. 62-351 (2014).
27 See Alabama Public Health, Controlled Substance List (Jan. 20, 2021), available at
https://www.alabamapublichealth.gov/blog/assets/controlledsubstanceslist.pdf (last visited Jan. 22, 2022).
28 See Arkansas Department of Health, List of Controlled Substances, available at

http://secureservercdn.net/166.62.109.105/e17.085.myftpupload.com/wp -content/uploads/2016/02/arkansas -
controlled_substances_list.pdf (last visited Jan. 22, 2022).
29 See IC 35-31.5-2-321.
30 See Vt. Admin. Code 12-5-23:4.0.
31 See W.S.A. 961.14.
32 See AZ Rev Stat § 36-795.02.
33 See GA Code § 16-13-121.
34 See UT Code § 4-45-101.
35 21 U.S.C. 301.
36 See 21 C.F.R. §§ 1-1299.
37 21 U.S.C. 342.
38 CRS Report R43609, Enforcement of the Food, Drug, and Cosmetic Act: Select Legal Issues, February 9, 2018,

https://www.everycrsreport.com/reports/R43609.html#fn 96 (last visited Feb. 15, 2023).
39 S. 20.14, F.S. DACS also regulates certain professions, unfair and deceptive business practices and provides consumer information.
40 Florida Department of Agriculture and Consumer Services, About Us, h https://www.fdacs.gov/About-Us (last visited Feb. 15,

2023).
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The Division of Food Safety (division), under DACS, is responsible for assuring a safe, wholesome, and
properly represented food supply in Florida. This is accomplished through the permitting and inspection
of food establishments, inspection of food products, and through specialized laboratory analyses on a
variety of food products sold or produced in the state. The division monitors food from the farm gate
through processing and distribution to the retail point of purchase. 41

The division is charged with administration and enforcement of food, poultry, and egg laws, and also
provides support in the enforcement of other food safety laws. In addition to regulatory surveillance and
enforcement, the division evaluates consumer complaints related to food.42

“Food” includes:43
 Articles used for food or drink for human consumption;
 Chewing gum;
 Articles used for components of any such article;
 Articles for which health claims are made, which claims are approved by the Secretary of the
United States Department of Health and Human Services and which claims are made in
accordance with s. 343(r) of the federal act, and which are not considered drugs solely because
their labels or labeling contain health claims; and
 Certain dietary supplements.

“Food establishment” means a factory, food outlet, or other facility manufacturing, processing, packing,
holding, or preparing food or selling food at wholesale or retail. A food permit is required of any person
who operates a food establishment.44

“Retail food store” means any establishment or section of an establishment where food and food
products are offered to the consumer and intended for off-premises consumption.45

A food permit from the department is required of any person who operates a food establishment or
retail food store, except:46
 Persons operating minor food outlets that sell food that is commercially prepackaged, not
potentially hazardous, and not time or temperature controlled for safety, if the shelf space for
those items does not exceed 12 total linear feet and no other food is sold by the minor food
outlet.
 Persons subject to continuous, onsite federal or state inspection.
 Persons selling only legumes in the shell, either parched, roasted, or boiled.
 Persons selling sugar cane or sorghum syrup that has been boiled and bottled on a premise
located within the state.

The division or its duly authorized agent has free access at all reasonable hours to any food
establishment to ensure food safety laws are followed. The inspectors: 47
 secure a sample or a specimen of any food after paying or offering to pay for such sample,
 see that all sanitary rules are complied with,
 facilitate tracing of food products in the event of a food-borne illness outbreak or identification of
an adulterated or misbranded food item, and
 enforce the special-occupancy provisions of the Florida Building Code which apply to food
establishments.

41 Florida Department of Agriculture and Consumer Services, Division of Food Safety, http://www.freshfromflorida.co m/Divisions -

Offices/Food-Safety (last visited Feb. 15, 2023).
42 Id.
43 S. 500.003(1)(n), F.S.
44 S. 500.03(1)(r), F.S.
45 S. 500.03(1)(bb), F.S.
46 S. 500.12(1)(a), F.S.
47 S, 500.147, F.S.
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If a food establishment or retail store violates the FFSA, the division may impose an administrative fine
not more than $5,000. The division may also revoke or suspend the permit of any such retail food store
or food establishment if the retail food store or food establishment has: 48
 Violated the FFSA.
 Violated or aided or abetted in the violation of any law of this state governing or applicable to
retail food stores or food establishments or any lawful rules of DACS.
 Knowingly committed, or been a party to, any material fraud, misrepresentation, conspiracy,
collusion, trick, scheme, or device whereby another person, lawfully relying upon the word,
representation, or conduct of a retail food store or food establishment, acts to her or his injury or
damage.
 Committed fraud or dishonest dealing.

DACS may determine that a food establishment requires immediate closure when the food
establishment fails to comply with the FFSA and presents an imminent threat to the public health,
safety, and welfare. DACS may accept inspection results from other state and local building officials
and other regulatory agencies as justification for such action.49

Many FDA regulations have been adopted as rules of the division. 50

Florida Food Safety Act

The division is responsible for the administration and enforcement of the Florida Food Safety Act
(FFSA).51 The division regulates food products under the FFSA, which include articles used for food or
drink for human consumption, as well as dietary supplements.52

The FFSA is designed to:
 Promote public welfare by protecting the consuming public from injury by product use and the
purchasing public from injury by merchandizing deceit, flowing from intrastate commerce in
food;
 Provide uniform legislation so far as practical with federal regulations; and
 Promote uniform administration and enforcement of federal and state food safety laws. 53

Adulterated and Misbranded Foods in Florida

Under the FFSA, individuals may not sell food that is adulterated, adulterate food, or receive food in
commerce that is adulterated or misbranded.54 These prohibitions are similar to federal law.55

The following are examples when food is deemed adulterated: 56
 Food that bears or contains any poisonous or deleterious substance which may render it
injurious to health;
 Food that bears or contains any added poisonous or added deleterious substance; a food
additive; or a color additive, which is unsafe;
 Food that is or bears or contains any food additive which is unsafe;
 Food whose container is composed, in whole or in part, of any poisonous or deleterious
substance;
 Food where any substance has been substituted wholly or in part therefor;
 Food where damage or inferiority has been concealed in any manner; and

48 S. 500.121(1), F.S.
49 S. 500.121(7), F.S.
50 R. 5K-4.002, F.A.C.
51 See ch. 500, F.S.
52 See ch. 500, F.S.
53 S. 500.02, F.S.
54 S. 500.04, F.S.
55 21 U.S.C. 331.
56 S. 500.10, F.S.
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 A dietary supplement or its ingredients that present a significant risk of illness or injury due to
certain labeling and ingredient requirements.

Misbranded food includes food offered for sale and its label or labeling does not comply with the
requirements of 21 U.S.C. s. 343(r) pertaining to nutritional content claims and health claims. Labels for
supplements may not claim to diagnose, mitigate, treat, cure, or prevent a specific disease or class of
diseases.57

DACS may inspect food that may be adulterated or misbranded; 58 seize food that is adulterated or
misbranded;59 suspend permits of those who sell food that is adulterated or misbranded, adulterate or
misbrand food, or receive food in commerce that is adulterated or misbranded;60 and impose a fine for
adulterated or misbranded food, not to exceed $5,00061 per violation.62

Food that contains kratom currently falls within in the definition of “food” 63 in the FFSA, and is
subject to all applicable permitting, labeling, sanitation, and other food safety requirements.
There are no existing age limits related to the sale of these products.

Regulation of Similar Products

Hemp64 is an agricultural commodity grown and used worldwide to produce a variety of industrial and
commercial products, including human food and nutritional supplements. 65 After hemp was removed
from Schedule I of the federal CSA, the state hemp program (program) within DACS to regulate the
cultivation of hemp in Florida was created in 2019.66

Any person seeking to cultivate hemp must apply for a hemp cultivation license with DACS67 and any
establishment that manufactures, processes, packs, holds, prepares or sells hemp extract intended for
human consumption is considered a hemp food establishment and must have a permit from the division
to operate in Florida.68

Violations of the hemp laws and rules 69 may result in the imposition of stop-sale/stop-use orders, an
administrative fine of up to $5,000 per violation, permit suspension, permit revocation, or any
combination thereof.70 Hemp extract intended for human consumption distributed or sold in violation of
hemp laws and rules are considered adulterated or misbranded.

Hemp extract products must be distributed or sold in a container that has certain batch and identifying
information71

Hemp extract products that are intended for inhalation may not be sold to a person who is under 21
years of age.72 There is no liability shield for retailers based on misrepresentations by a manufacturer.

57 S. 500.11(1)(n), F.S.; 21 U.S.C. s. 343 (r)(6)(C.
58 S. 500.147(1), F.S.
59 S. 500.173, F.S.
60 S. 500.12(4), F.S.
61 S. 570.971(1)(b), F.S.
62 S. 500.121, F.S.
63 S. 500.03(1)(n), F.S.
64 Hemp is defined as the plant Cannabis sativa L. and any part of that plant with a delta -9 tetrahydrocannabinol (THC) concentration

that does not exceed 0.3 percent on a dry weight basis. 7 U.S.C. s. 5940 (2014); 7 U.S.C. s. 1639o (2018); see also s. 581.217, F.S
65 Congressional Research Service (CRS), Hemp as an Agricultural Commodity, CRS Report 7-5700 (June 22, 2018), available at

https://fas.org/sgp/crs/misc/RL32725.pdf (last visited Feb. 15, 2023).
66 Ch. 2019-132, L.O.F.; codified as s. 581.217, F.S.
67 S. 581.217(5), F.S.
68 Department of Agriculture and Consumer Services, Hemp Food Establishment Permit Checklist,

https://www.fdacs.gov/content/download/93802/file/hemp-food-establishment-permit-checklist.pdf (last visited Feb. 15, 2023).
69 Id.; R. 5K-4.034, F.A.C.
70 R. 5K-4.034(9)(d)-(e), F.A.C.
71 S. 581.217(7)(a)2., F.S.
72 S. 581.217(7)(c), F.S.
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Effect of the Bill

The bill may be cited as the "Florida Kratom Consumer Protection Act."

The bill defines "kratom product" to mean a food product, food ingredient, dietary ingredient, dietary
supplement, or beverage intended for human consumption which contains any part of the leaf of the
plant Mitragyna speciosa or an extract, synthetic alkaloid, or synthetically derived compound of such
plant and is manufactured as a powder, capsule, pill, beverage, or other edible form.

The bill provides that it is unlawful to sell, deliver, barter, furnish, or give, directly or indirectly, to any
person who is under 21 years of age, any kratom product.

If any retail food store, food establishment, or cottage food operation sells kratom products to someone
under 21, they are subject to an administrative fine of not more than $100 for the first offense, not more
than $500 for the second offense, and not more than $1,000 for the third or subsequent offense.

The bill provides DACS with rulemaking authority.

The bill provides an effective date of July 1, 2023.

B. SECTION DIRECTORY:

Section 1: Creates s. 500.92, F.S.; providing age prohibitions for the sale of kratom products.
Section 2: Provides an effective date.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:

There may be an increase in administrative fines collected by DACS, but the amount is
indeterminate.

2. Expenditures:

Indeterminate. DACS will likely see an increase in regulatory actions and costs.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:

None.

2. Expenditures:

Unknown. Law enforcement may receive complaints about local businesses selling kratom to
underage buyers.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:

Food establishments will need to cover any associated costs of complying with new age verification
requirements, however such cost should be insignificant.

D. FISCAL COMMENTS:

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DATE: 3/6/2023
None.

III. COMMENTS

A. CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:

Not applicable. This bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditures of funds; reduce the authority that counties or municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.

2. Other:

None.

B. RULE-MAKING AUTHORITY:

The bill provides DACS with rulemaking authority to promulgate rules to enforce the bill.

C. DRAFTING ISSUES OR OTHER COMMENTS:

None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES

On February 23, 2023, the Regulatory Reform and Economic Development Subcom mittee adopted one
amendment and reported the bill favorably as a committee substitute. The committee substitute:
 Prohibits sales of kratom products to individuals under 21 years of age.
 Clarifies enforcement authority to the Department of Agriculture and Consumer Services and
applicability to certain food establishments.
 Removes the creation of specific new regulations from the bill in favor of uniformity such that kratom will
be subject to existing regulations related to food products.

This analysis is drafted to the committee substitute as passed by the Regulatory Reform and Economic
Development Subcommittee.

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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S

CS/HB 179 2023

1 A bill to be entitled
2 An act relating to the Florida Kratom Consumer
3 Protection Act; creating s. 500.92, F.S.; providing a
4 short title; defining the term "kratom product";
5 prohibiting the sale, delivery, bartering, furnishing,
6 or giving of any kratom product to a person under 21
7 years of age; providing civil penalties; requiring the
8 Department of Agriculture and Consumer Services to
9 adopt rules; providing an effective date.
10
11 Be It Enacted by the Legislature of the State of Florida:
12
13 Section 1. Section 500.92, Florida Statutes, is created to
14 read:
15 500.92 Florida Kratom Consumer Protection Act.—
16 (1) This section may be cited as the "Florida Kratom
17 Consumer Protection Act."
18 (2) As used in this section, the term "kratom product"
19 means a food product, food ingredient, dietary ingredient,
20 dietary supplement, or beverage intended for human consumption
21 which contains any part of the leaf of the plant Mitragyna
22 speciosa or an extract, synthetic alkaloid, or synthetically
23 derived compound of such plant and is manufactured as a powder,
24 capsule, pill, beverage, or other edible form.
25 (3) It is unlawful to sell, deliver, barter, furnish, or

Page 1 of 2

CODING: Words stricken are deletions; words underlined are additions.
hb0179-01-c1
F L O R I D A H O U S E O F R E P R E S E N T A T I V E S

CS/HB 179 2023

26 give, directly or indirectly, any kratom product to a person who
27 is under 21 years of age.
28 (4) Any retail food store, food establishment, or cottage
29 food operation who violates subsection (3) is subject to an
30 administrative fine of not more than $100 for a first offense,
31 not more than $500 for a second offense, and not more than
32 $1,000 for a third or subsequent offense.
33 (5) The department shall adopt rules to administer this
34 section.
35 Section 2. This act shall take effect July 1, 2023.

Page 2 of 2

CODING: Words stricken are deletions; words underlined are additions.
hb0179-01-c1
CS/HB 327
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 327 Fire Sprinkler System Projects
SPONSOR(S): Regulatory Reform & Economic Development Subcommittee, Bell
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

1) Regulatory Reform & Economic Development 11 Y, 0 N, As CS Thompson Anstead
Subcommittee

2) Commerce Committee Thompson Hamon

SUMMARY ANALYSIS
Florida’s fire prevention and control law, ch. 633, F.S., requires the State Fire Marshal to adopt the Florida Fire
Prevention Code (Fire Code). The Fire Code sets forth fire safety standards (including certain national codes)
for buildings and structures. The State Fire Marshall adopts a new edition of the Fire Code every three years.
All municipalities, counties, and special districts with fire safety responsibilities must enforce the Fire Code to
operate uniformly among local governments and in conjunction with the Florida Building Code.

The State Fire Marshal licenses and regulates fire protection system contractors in the state. Currently, a
Contractor I or II may design:
 New fire protection systems of 49 or fewer sprinklers;
 An alteration of existing fire sprinkler systems regardless of size if the alteration consists of the
relocation, addition, or deletion of no more than 49 sprinklers; or
 An alteration of an existing fire sprinkler system if the alteration consists of the relocation or deletion of
249 or fewer sprinklers.

The bill provides that a Contractor I or II may design the alteration of an existing fire sprinkler system if the
alteration consists of the relocation or deletion of 249 or fewer sprinklers, and the addition of 49 sprinklers, as
long as the cumulative total number of fire sprinklers being added, relocated, or deleted does not exceed 249.

Local building code enforcement agencies are responsible for permitting fire alarm system projects. An
electrical or alarm system contractor cannot install or replace a fire alarm until they obtain a Uniform Fire Alarm
Permit. Current law authorizes an expedited permitting process for certain fire alarm system projects that alter
a total of 20 or fewer initiating devices. However, the expedited permitting process does not include projects
that involve changes to fire sprinkler systems.

The bill creates an expedited permitting process for certain “fire sprinkler system projects,” similar to the
current process for fire alarm system projects, and prohibits local enforcement agencies from requiring a fire
protection system contractor to submit plans to obtain a building permit for a fire sprinkler system project, as
defined in the bill.

This expedited process would allow a fire protection system contractor to start work on such fire system
projects without first obtaining a standard permit, and instead obtain an expedited permit electronically.

The bill also requires such contractors to maintain a copy of plans and specifications at the worksite, similar to
the requirements for alarm system projects.

The bill does not appear to have a fiscal impact on state or local government.

The bill provides for an effective date of July 1, 2023.

This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 3/6/2023
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Current Situation

State Fire Marshal

Florida’s fire prevention and control law, ch. 633, F.S., designates the state’s Chief Financial Officer as
the State Fire Marshal. The State Fire Marshal, through the Division of State Fire Marshal (Division)
located within the Department of Financial Services (DFS), is charged with enforcing the provisions of
ch. 633, F.S., and all other applicable laws relating to fire safety. DFS has the responsibility to minimize
the loss of life and property in this state due to fire.1 Pursuant to this authority, the State Fire Marshal
regulates, trains, and certifies fire service personnel and fire safety inspectors; investigates the causes
of fires; enforces arson laws; regulates the installation of fire equipment; conducts fire safety
inspections of state property; and operates the Florida State Fire College.

The State Fire Marshal also adopts by rule the Florida Fire Prevention Code (Fire Prevention Code),
which contains all fire safety laws and rules that pertain to the design, construction, erection, alteration,
modification, repair, and demolition of public and private buildings, structures, and facilities, and the
enforcement of such fire safety laws and rules.2

The State Fire Marshall adopts a new edition of the Fire Prevention Code every three years. When
adopting a new edition of the Fire Prevention Code, the State Fire Marshal must adopt the most recent
version of the National Fire Protection Association (NFPA) Standard 1, Fire Prevention Code, and the
NFPA 101 Life Safety Code.3

State law requires all municipalities, counties, and special districts with fire safety responsibilities to
enforce the Fire Prevention Code as the minimum fire prevention code to operate uniformly among
local governments and in conjunction with the Florida Building Code. 4 Each county, municipality, and
special district with fire safety enforcement responsibilities must employ or contract with a fire safety
inspector (certified by the State Fire Marshal) to conduct all fire safety inspections required by law.

Florida Building Code

In 1974, Florida adopted legislation requiring all local governments to adopt and enforce a minimum
building code that would ensure that Florida’s minimum standards were met. Local governments could
choose from four separate model codes. The state’s role was limited to adopting all or relevant parts of
new editions of the four model codes. Local governments could amend and enforce their local codes,
as they desired.5

In 1992, Hurricane Andrew demonstrated that Florida’s system of local codes did not work. Hurricane
Andrew easily destroyed those structures that were allegedly built according to the strongest code. The
Governor eventually appointed a study commission to review the system of local codes and make
recommendations for modernizing the system. In 1998, the Legislature adopted the study commission’s
recommendations for a single state building code and enhanced the oversight role of the state over
local code enforcement. In 2000, the Legislature authorized implementation of the Florida Building

1 S. 633.104, F.S.
2 S. 633.202(1) and (2), F.S.
3 Id. The NFPA is the National Fire Protection Association. Founded in 1896, the NFPA delivers information and knowledge through

no more than 300 consensus codes and standards, research, training, education, outreach and advocacy. NFPA, About NFPA,
https://www.nfpa.org/about-nfpa (last visited Feb. 13, 2023).
4 The Florida Building Code is the statewide building code for all construction in the state. Every local government must enfor ce the

Florida Building Code and issue building permits. See generally ch. 553, F.S.
5 The Florida Building Commission Report to the 2006 Legislature, Florida Department of Community Affairs, p. 4,

http://www.floridabuilding.org/fbc/publications/2006_Legislature_ Rpt_rev2.pdf (last visited Feb. 13, 2023).
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DATE: 3/6/2023
Code (Building Code), and that first edition replaced all local codes on March 1, 2002. 6 The current
edition of the Building Code is the seventh edition, which is referred to as the 2020 Florida Building
Code.7

Chapter 553, part IV, F.S., is known as the “Florida Building Codes Act” (Act). The purpose and intent
of the Act is to provide a mechanism for the uniform adoption, updating, interpretation, and
enforcement of a single, unified state building code. The Building Code must be applied, administered,
and enforced uniformly and consistently from jurisdiction to jurisdiction. 8

The Florida Building Commission (Commission) was statutorily created to implement the Building
Code. The Commission, which is housed within the Department of Business and Professional
Regulation (DBPR), is a 19-member technical body made up of design professionals, contractors, and
government experts in various disciplines covered by the Building Code. The Commission reviews
several International Codes published by the International Code Council, 9 the National Electric Code,
and other nationally adopted model codes to determine if the Building Code needs to be updated and
adopts an updated Building Code every three years.10

Enforcement of the Florida Building Code

It is the intent of the Legislature that local governments have the power to inspect all buildings,
structures, and facilities within their jurisdiction in protection of the public’s health, safety, and welfare.11
Every local government must enforce the Building Code and issue building permits. 12

It is unlawful for a person, firm, or corporation to construct, erect, alter, repair, secure, or demolish any
building without first obtaining a building permit from the local government or from such persons as
may, by resolution or regulation, be directed to issue such permit, upon the payment of reasonable fees
as set forth in a schedule of fees adopted by the enforcing agency. 13

To obtain a building permit an applicant must complete an application for the proposed work on the
form furnished by the government entity.14 A local government that issues building permits must post
each type of building permit application on its website. 15

A building permit is an official document or certificate issued by the local building official that authorizes
performance of a specific activity.16 A building official is a local government employee or a person
contracted by a government entity who supervises building code activities, including plans review,
enforcement, and inspection.17

Any construction work that requires a building permit also requires building plans and inspections by
the building official to ensure the work complies with the Building Code. 18 Generally speaking, a
permitted project that passes the required inspections is considered completed or closed. 19

6 Id.
7 Florida Building Commission Homepage, https://floridabuilding.org/c/default.aspx (last visited Feb. 13, 2023).
8 See s. 553.72(1), F.S.
9 The International Code Council (ICC) is an association that develops model codes and standards used in the design, building, and

compliance process to “construct safe, sustainable, affordable and resilient structures.” International Code Council, About the ICC,
https://www.iccsafe.org/about/who-we-are/ (last visited Feb. 13, 2023).
10 Ss. 553.73, and 553.74, F.S.
11 S. 553.72, F.S.
12 Ss. 125.01(1)(bb), 125.56(1), and 553.80(1), F.S.
13 See ss. 125.56(4)(a) and 553.79(1), F.S.
14 S. 713.135(5) and (6), F.S.
15 Ss. 125.56(4)(b) and 553.79(1), F.S.
16 S. 468.603(2), F.S; S. 202, Seventh edition, Florida Building Code (Building).
17 Id.
18 Ss. 107, 110.1, and 110.3, Seventh edition, Florida Building Code (Building).
19 Doug Wise, Closing Inactive & Excluded Building Permits, Palm Beach County Planning, Zoning & Building Department,

Building Division, http://discover.pbcgov.org/pzb/building/BuildingCodes/PBO-
126%20%E2%80%93%20Closing%20Inactive%20and%20Excluded%20Building%20Permits.pdf (last visited Feb. 13, 2023).
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Uniform Fire Alarm Permit

Fire protection systems, including fire alarms, must be installed, repaired, operated, and maintained in
accordance with the Fire Prevention Code and the Building Code.20

An electrical or alarm system contractor must file a uniform fire alarm permit application with a local
government in order to obtain a fire alarm permit.21

The uniform fire alarm permit application must include the following information:22

 The name and address of the owner of the property;
 The name, address, and license number of the contractor;
 A description sufficient to identify the property to be improved, including the property’s address
and legal description;
 A description of the work being performed; and
 The owner and contractor’s signature.

An electrical or alarm system contractor cannot install or replace a fire alarm until they obtain a fire
alarm permit. However, an electrical or alarm system contractor may make repairs on a fire alarm
without a fire alarm permit, as long as they have applied for the permit.23

Time-Period to Review Building Permit Applications

Current law requires local governments to review the following building permit applications within a
specific time-period of receiving the applications:24

 Accessory structure;
 Alarm permit;
 Nonresidential buildings less than 25,000 square feet;
 Electric;
 Irrigation permit;
 Landscaping;
 Mechanical;
 Plumbing;
 Residential units other than a single family unit;
 Multifamily residential not exceeding 50 units;
 Roofing;
 Signs;
 Site-plan approvals and subdivision plats not requiring public hearings or public notice; and
 Lot grading and site alteration associated with a permit application.

When a local government receives an application for one of the above building permits, it must: 25

 Inform the applicant within 10 days of receiving the application, what information, if any, is
needed to complete the application.
o If the local government fails to provide written notice to the applicant within the 10-day
window, the application is deemed to be properly completed.
 Notify the applicant within 45 days of the application being deemed complete if additional
information is necessary to determine the sufficiency of the application;

20 Ss. 202 and 901.2, Seventh edition, Florida Building Code (Building).
21 S. 553.7921(1); Ch. 19-140, Laws of Fla.
22 S. 553.7921(3), F.S.
23 S. 553.7921(1) and (2), F.S.
24 S. 553.792(2), F.S.
25 S. 553.792(1)(a), F.S.
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oIf additional information is needed the local government must specify what additional
information is necessary.
o The applicant may submit the additional information to the local government or request
that the local government act on the application without the additional information.
 Approve, approve with conditions, or deny the application within 120 days following receipt of
the completed application.
o This period is tolled during the time an applicant is responding to a request for additional
information and may be extended by mutual consent of the parties.

If a local government fails to meet one of the deadlines, it must reduce the building permit fee by ten
percent for each business day that it fails to meet the deadline. Each ten percent reduction is based on
the original amount of the building permit fee, unless the parties agree to an extension of time. 26

Over-the-Counter Permits

Generally, over-the-counter permits are building permits that need minimal or no plans reviewed by the
local building official. However, an applicant must still fill out an application, and inspections are still
required to close or complete the permit. Local government officials typically determine what types of
permits qualify as over-the-counter permits for their jurisdictions. Over-the-counter permits can be
issued in person or online depending on the jurisdiction. 27

Typically, an application for a permit must include building plans. A local enforcing agency may not
issue a permit until the building official or plans examiner has reviewed the building plans and
determined that they comply with the Building Code, unless the project is not required to have plans
reviewed by the local building official.28

Permits for the following projects are not required to have plans reviewed by the local building official: 29

 Replacing existing equipment such as mechanical units, water heaters, etc.
 Reroofs.
 Minor electrical, plumbing and mechanical repairs.
 Annual maintenance permits.
 Prototype plans:
o Except for local site adaptions, siding, foundations and/or modifications, and structures
that require a waiver.
 Manufactured buildings except for foundations and modifications of buildings on site.

Fire Alarm System Projects

Current law provides an expedited permitting process for certain fire alarm system projects. The
process removes the time required to review plans prior to starting work. The law prohibits a local
enforcement agency from requiring a contractor to submit building plans or specifications in order to
obtain a permit for a fire alarm system project, but local enforcement is still authorized to require a
contractor to submit a completed application and a payment for such permit.30

26 S. 550.792(1)(b), F.S.
27 City of Boca Raton, Building Permits and Inspections, https://www.myboca.us/157/Building-Permits-and-Inspections (last visited
Feb. 13, 2023); Charlotte County, Permits, https://www.charlottecountyfl.gov/departments/community -development/building-
construction/permits/ (last visited Feb. 13, 2023); Nassau County, Over the Counter Building Permit Application,
https://www.nassaucountyfl.com/DocumentCenter/View/22517/Over -the-Counter-Building-Permit (last visited Feb. 13, 2023); City
of Sarasota, Building and Permitting Online Services, https://ftgportal.sarasotafl.gov/Permits/Home.aspx?microapp=c (last visited on
Feb. 13, 2023).
28 S. 553.79(2), F.S.
29 S. 107.3.5, Seventh edition, Florida Building Code (Building).
30 S. 553.7932(2), F.S.
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A “fire alarm system project” is defined as a fire alarm system alteration of a total of 20 or fewer
initiating devices and notification devices, or the installation or replacement of a fire communicator 31
connected to an existing fire alarm control panel32 in an existing commercial, residential, apartment,
cooperative, or condominium building.33

A local enforcement agency must:

 Issue a permit for a fire alarm system project in person or electronically. 34
 Require at least one inspection of a fire alarm system project to ensure the work complies with
the applicable codes and standards. If a fire alarm system project fails an inspection, the
contractor must take corrective action as necessary to pass inspection. 35

The contractor must keep a copy of the plans and specifications at the worksite, and make them
available to the inspector at each inspection.36

The expedited permitting process for fire alarm system projects does not include projects that involve
fire sprinkler systems.

Fire Protection Systems

A “fire protection system” is a system individually designed to protect the interior or exterior of a specific
building or buildings, structure, or other special hazard from fire. A fire protection system includes, but
is not limited to:37

 Water sprinkler systems;
 Water spray systems;
 Foam-water sprinkler systems;
 Foam-water spray systems;
 Carbon dioxide systems;
 Foam extinguishing systems;
 Dry chemical systems; and
 Halon and other chemical systems used for fire protection use.

Fire protection systems also include any tanks and pumps connected to fire sprinkler systems,
overhead and underground fire mains, fire hydrants and hydrant mains, standpipes and hoses
connected to sprinkler systems, sprinkler tank heaters, air lines, and thermal systems used in
connection with fire sprinkler systems.38

Fire protection systems must be installed in accordance with the Fire Code and the Building Code.
Current law requires local governments to enforce the Fire Code and the Building Code including the
permitting, inspecting, and approval of the installation of a fire protection system.39 Owners of fire

31 A “fire alarm communicator” is a device that automatically contacts first responders, if a fire is detected. Norris Inc.,

https://norrisinc.com/2016/08/12/alarm-system-communicators/ (last visited Feb. 13, 2023).
32 A “fire alarm control unit” serves as the brain of the fire alarm system. It is a component of a fire alarm system that receives signals

from initiating devices or other fire alarm control units, and processes these signals to determine part or all of the required fire alarm
system output. National Fire Protection Association, A Guide to Fire Alarm Basics, https://www.nfpa.org/News -and-
Research/Publications-and-media/Blogs-Landing-Page/NFPA-Today/Blog-Posts/2021/03/ 03/A-Guide-to-Fire-Alarm-Basics (last
visited Feb. 13, 2023).
33 S. 553.7932(1)(b ), F.S.
34 S. 553.7932(3), F.S.
35 S. 553.7932(4), F.S.
36 S. 553.7932(5), F.S.
37 S. 633.102(11), F.S.
38 Id.
39 See generally ch. 553 and 633, F.S.; ss. 10.1.2 and 10.1.3 of the 7th edition of the Florida Fire Prevention Code (NFPA Standard 1).
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protection systems are responsible for the maintenance of their fire protection systems, and must
contract with a certified fire protection system contractor to regularly inspect such systems. 40

Fire Protection System Contractors

In order to engage in the business of laying out, fabricating, installing, inspecting, altering, repairing, or
servicing a fire protection system in Florida, other than a pre-engineered system, a person must be
certified as a fire protection system contractor.41

Fire protection system contractors are regulated by ch. 633, F.S., which outlines the law pertaining to
fire protection system contractors in the state. The State Fire Marshal is responsible for licensing and
regulating fire system protection contractors in the state.42

Fire protection system contractors are divided into five categories. A contractor’s ability to practice is
limited to the category or categories that a contractor has obtained certification. The contractor
categories are:43

 Contractor I - means a contractor whose business includes the execution of contracts requiring
the ability to lay out, fabricate, install, inspect, alter, repair, and service all types of fire protection
systems, excluding preengineered systems.

 Contractor II - means a contractor whose business is limited to the execution of contracts
requiring the ability to lay out, fabricate, install, inspect, alter, repair, and service water sprinkler
systems, water spray systems, foam-water sprinkler systems, foam-water spray systems,
standpipes, combination standpipes and sprinkler risers, all piping that is an integral part of the
system beginning at the point of service, sprinkler tank heaters, air lines, thermal systems used
in connection with sprinklers, and tanks and pumps connected thereto, excluding preengineered
systems.

 Contractor III - means a contractor whose business is limited to the execution of contracts
requiring the ability to fabricate, install, inspect, alter, repair, and service carbon dioxide
systems, foam extinguishing systems, dry chemical systems, and Halon and other chemical
systems, excluding preengineered systems.

 Contractor IV - means a person who can lay out, fabricate, install, inspect, alter, repair, and
service automatic fire sprinkler systems for detached one- and two- family dwellings and mobile
homes.
o This does not include single-family dwellings in multi-dwelling buildings such as
apartments, condominiums, assisted living facilities, or buildings connected to other
dwellings.
o A Contractor IV is limited to the scope of practice specified in the NFPA 13D Standard
for the Installation of Sprinkler Systems in One- and Two- Family Dwellings and
Manufactured Homes.

 Contractor V - means a contractor whose business is limited to the execution of contracts
requiring the ability to fabricate, install, alter, repair, and service the underground piping for a
fire protection system using water as the extinguishing agent beginning at the point of service
and ending no more than 1 foot above the finished floor. A Contractor V may inspect
underground piping for a water-based fire protection system under the direction of a Contractor I
or Contractor II.44

40 S. 633.312, F.S.; S. 10.2.7 of the 7th edition of the Florida Fire Prevention Code (NFPA Standard 1).
41 S. 633.336(1), F.S.
42 Ss. 633.318 and 633.338, F.S.
43 S. 633.102(3), F.S.
44 S. 633.318(9), F.S.
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A fire protection system contractor must have insurance providing coverage for comprehensive general
liability for bodily injury and property damages, products liability, completed operations, and contractual
liability. A Contractor I, Contractor II, Contractor III, or Contractor V must have insurance of not less
than $500,000, and a Contractor IV must have insurance of not less than $250,000. 45

In order to obtain certification as a fire protection system contractor, a person must submit a written
application to the Division, pay a fee of $300, be at least 18 years of age, be of good moral character,
provide proof of insurance, and pass a written exam administered by the Division. 46

In order to sit for an exam for certification as a contractor, a person must provide evidence of the
following experience and/or education depending on the certification sought by the person: 47

 For certification as a Contractor I, a person must have 4 years of experience in the full time
employment with a Contractor I, or a combination of equivalent education and experience in
both water-based and chemical fire suppression systems.

 For certification as a Contractor II, a person must have 4 years of verifiable employment
experience with a fire protection system as a Contractor I or Contractor II, or a combination of
equivalent education and experience in water-based fire suppression systems.

 For certification as a Contractor III, a person must have 4 years of verifiable employment
experience with a fire protection system as a Contractor I or Contractor II, or a combination of
equivalent education and experience in chemical fire suppression systems.

 For certification as a Contractor IV, a person must be licensed as a certified plumbing contractor
and successfully complete a training program of not less than 40 contact hours about the
applicable installation standard described in NFPA 13D.

 For certification as a Contractor V, a person must be licensed as a certified underground utility
and excavation contractor or certified plumbing contractor, or provide 4 years of verifiable
experience in the full time employment of a certified underground utility and excavation
contractor or certified plumbing contractor, or a combination of equivalent education and
experience.

Design of Fire Protection Systems

The scope of practice for certified contractors does not include designing a fire protection system. In
order to design fire protection systems, a person must be licensed as a fire protection engineer 48 or
architect with fire protection design experience. A fire protection engineer or architect with fire
protection design may design any type of fire protection system and is not limited by type or size of the
fire protection system.49

Architects in the state are regulated by ch. 481, part I, F.S., and by the Board of Architecture and
Interior Design with the Department of Business and Professional Regulation (DBPR).

The practice of engineering is regulated by ch. 471, F.S., and by the Florida Board of Professional
Engineers (FBPE).50

Current law provides that a Contractor I or II may:51

45 S. 633.318(4), and (7), F.S.
46 The Division has an exam for each type of fire protection system certification. ss. 633.318(1), (2), and (4), and 633.132(1)(a), F.S.
47 S. 633.318(3), F.S.
48 There is no fire protection engineer license provided in current law. However, in order to practice engineering in Florida in cluding

fire protection engineering, a person must be licensed as a professional engineer. See ch. 471, F.S.
49 S. 633.102(3), F.S.
50 S. 471.038(3), F.S.
51 S. 633.102(3), F.S.
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 Design fire protection systems of 49 or fewer sprinklers;
 Design the alteration of an existing fire sprinkler system regardless of size as long as the
alteration consists of the relocation, addition, or deletion of no more than 49 sprinklers;

“or”

 Design the alteration of an existing fire sprinkler system if the alteration consists of the
relocation or deletion of 249 or fewer sprinklers, regardless of the size of the sprinkler system,
as long as:
o There is no change of occupancy of the affected areas, as defined in the Florida Building
Code and the Florida Fire Prevention Code;52
o There is no change in the water demand as defined in NFPA 13, "Standard 76 for the
Installation of Sprinkler Systems;” and
o The occupancy hazard classification as defined in NFPA 13 is not reduced or remains the
same.53

During the 2021 regular Session, the law was amended to allow a Contractor I or II to provide for the
third design option, which is to design the alteration of an existing fire sprinkler system if the alteration
consists of the relocation or deletion of 249 or fewer sprinklers, regardless of the size of the sprinkler
system. According to industry members, the wording of the law caused confusion with local
enforcement agencies as to whether a contractor is authorized to work on design projects with 49 or
249 sprinklers.54

Effect of Proposed Changes

The bill creates an expedited permitting process for fire sprinkler system projects. Specifically, the bill:

 Authorizes local enforcement agencies to require a contractor, as a condition of obtaining a
permit for a fire sprinkler system project, to submit a completed application and payment.
 Prohibits local enforcement agencies from requiring a contractor to submit plans or
specifications as a condition of obtaining a permit for a fire sprinkler system project.
 Requires local enforcement agencies to issue a permit for a fire sprinkler system project in
person or electronically.
 Requires local enforcement agencies to require at least one inspection of a fire sprinkler system
project to ensure compliance with applicable codes and standards.
 Provides that if a fire sprinkler system project fails an inspection, the contractor must take
corrective action as necessary to pass inspection.

The bill requires fire protection system contractors to keep a copy of the plans and specifications at the
fire sprinkler system project worksite and make such plans and specifications available to the inspector
at each inspection for a:

 Fire sprinkler system project to alter an existing fire protection system; and
 Fire alarm system project.

52 Every building must have an occupancy classification, which is the formal designation of the primary purpose of the building.
Different classifications of occupancy represent varying levels of hazard and risk to building occupants. A change of occupan cy is
when a building changes its primary purpose or occupancy classification. ss. 202 and 302 of the Seventh Edition of the Building Code.
53 The occupancy hazard classification is a rating system that is used to help determine the minimum water needed to fig ht a structural

fire. No hazard classification is assigned when a building has an automatic sprinkler system installed in accordance with app licable
standards. NFPA, Step 1 How Much Water is Needed?, https://www.nfpa.org/assets/gallery/firewise/operationWater/step1_3.htm (last
visited Feb. 13, 2023).
54 Email from Edwards Briggs, Vice President of Government Relations & Community Affairs RSA Consulting Group, LLC, RE: HB

327 Fire Sprinkler System Projects (Feb. 03, 2023).
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For a fire sprinkler system project to install or replace a component, the bill requires contractors to keep
the following documents at the fire sprinkler system project worksite and make them available to the
inspector at each inspection:

 A copy of the manufacturer's installation instructions; and
 Any pertinent testing instructions needed to certify or accept the component.

The bill defines a "fire sprinkler system project" to mean a fire protection system alteration of a total of
20 or fewer fire sprinklers, or the installation or replacement of a fire sprinkler system component in an
existing commercial, residential, apartment, cooperative, or condominium building. A component is
equivalent if the component has the same or better characteristics, including electrical, hydraulic,
pressure losses, and required listings and spacing as the component being replaced.

The bill defines “component” to mean valves, backflow preventers, switches, fire sprinklers,
escutcheons, hangers, pumps, pump motors and engines, compressors, hydrants, or any other item
deemed acceptable by the local enforcing agency.

The bill includes a contractor that is qualified to engage in the business of fire protection system
contracting pursuant to a license or certificate issued by the State Fire Marshal in the definition of
contractor.

The bill clarifies that a Contractor I or II is authorized to design new fire protection systems of up to 49
sprinklers; design the relocation, addition, or deletion of existing fire sprinkler systems of up to 49
sprinklers; “and” design the relocation or deletion of existing fire sprinkler systems of 249 or fewer
sprinklers and the addition of up to 49 or fewer sprinklers, as long as the cumulative total number of fire
sprinklers being added, relocated, or deleted does not exceed 249.

B. SECTION DIRECTORY:
Section 1: amends s. 553.7932, F.S.; revising and providing definitions; providing requirements for
a simplified permitting process for certain fire sprinkler system projects.

Section 2: amends s. 633.102, F.S.; revising the definition of the term "contractor" as it relates to
fire sprinkler systems.

Section 3: provides for an effective date of July 1, 2023.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:
None.

2. Expenditures:
None.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
None.
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DATE: 3/6/2023
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have a positive economic impact on consumers and contractors by allowing a fire
protection system contractor to work on fire sprinkler projects immediately without having to go through
the plans review process before repairing broken equipment or systems.

D. FISCAL COMMENTS:
None.

III. COMMENTS

A. CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditures of funds; reduce the authority that counties or municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.

2. Other:
None.

B. RULE-MAKING AUTHORITY:
None.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On February 23, 2023, the Regulatory Reform & Economic Development Subcommittee adopted one
amendment and reported the bill favorably as a committee substitute. The committee substitute clarifies the
definition of “fire sprinkler system project,” and the total number of sprinklers that Contractors I or II are
authorized to design.

This analysis is drafted to the committee substitute as passed by the Regulatory Reform & Economic
Development Subcommittee.

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DATE: 3/6/2023
F L O R I D A H O U S E O F R E P R E S E N T A T I V E S

CS/HB 327 2023

1 A bill to be entitled
2 An act relating to fire sprinkler system projects;
3 amending s. 553.7932, F.S.; revising and providing
4 definitions; providing requirements for a simplified
5 permitting process for certain fire sprinkler system
6 projects; amending s. 633.102, F.S.; revising the
7 definition of the term "contractor" as it relates to
8 fire sprinkler systems; providing an effective date.
9
10 Be It Enacted by the Legislature of the State of Florida:
11
12 Section 1. Section 553.7932, Florida Statutes, is amended
13 to read:
14 553.7932 Simplified permitting processes process for fire
15 alarm system projects.—
16 (1) As used in this section, the term:
17 (a) "Component" means valves, backflow preventers,
18 switches, fire sprinklers, escutcheons, hangers, pumps, pump
19 motors and engines, compressors, hydrants, or any other item
20 deemed acceptable by the local enforcing agency.
21 (b)(a) "Contractor" means a person who:
22 1. Is qualified to engage in the business of electrical or
23 alarm system contracting pursuant to a certificate or
24 registration issued by the department under part II of chapter
25 489; or

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26 2. Is qualified to engage in the business of fire
27 protection system contracting pursuant to a license or
28 certificate issued by the State Fire Marshal.
29 (c)(b) "Fire alarm system project" means a fire alarm
30 system alteration of a total of 20 or fewer initiating devices
31 and notification devices, or the installation or replacement of
32 a fire communicator connected to an existing fire alarm control
33 panel in an existing commercial, residential, apartment,
34 cooperative, or condominium building.
35 (d) "Fire sprinkler system project" means a fire
36 protection system alteration of a total of 20 or fewer fire
37 sprinklers, or the installation or replacement of a fire
38 sprinkler system component in an existing commercial,
39 residential, apartment, cooperative, or condominium building.
40 For purposes of this paragraph, a component is equivalent if the
41 component has the same or better characteristics, including
42 electrical, hydraulic, pressure losses, and required listings
43 and spacing as the component being replaced.
44 (2)(a) A local enforcement agency may require a
45 contractor, as a condition of obtaining a permit for a fire
46 alarm system project or fire sprinkler system project, to submit
47 a completed application and payment.
48 (b) A local enforcement agency may not require a
49 contractor to submit plans or specifications as a condition of
50 obtaining a permit for a fire alarm system project or fire

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51 sprinkler system project.
52 (3) A local enforcement agency must issue a permit for a
53 fire alarm system project or fire sprinkler system project in
54 person or electronically.
55 (4) A local enforcement agency must require at least one
56 inspection of a fire alarm system project or fire sprinkler
57 system project to ensure compliance with applicable codes and
58 standards. If a fire alarm system project or fire sprinkler
59 system project fails an inspection, the contractor must take
60 corrective action as necessary to pass inspection.
61 (5)(a) For a fire alarm system project, a contractor must
62 keep a copy of the plans and specifications at the a fire alarm
63 system project worksite and make such plans and specifications
64 available to the inspector at each inspection.
65 (b) For a fire sprinkler system project to alter an
66 existing fire protection system, a contractor must keep a copy
67 of the plans and specifications at the fire sprinkler system
68 project worksite and make such plans and specifications
69 available to the inspector at each inspection.
70 (c) For a fire sprinkler system project to install or
71 replace a component, a contractor must keep a copy of the
72 manufacturer's installation instructions and any pertinent
73 testing instructions needed to certify or accept the component
74 at the fire sprinkler system project worksite and make such
75 documents available to the inspector at each inspection.

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76 Section 2. Subsection (3) of section 633.102, Florida
77 Statutes, is amended to read:
78 633.102 Definitions.—As used in this chapter, the term:
79 (3)(a) "Contractor I" means a contractor whose business
80 includes the execution of contracts requiring the ability to lay
81 out, fabricate, install, inspect, alter, repair, and service all
82 types of fire protection systems, excluding preengineered
83 systems.
84 (b) "Contractor II" means a contractor whose business is
85 limited to the execution of contracts requiring the ability to
86 lay out, fabricate, install, inspect, alter, repair, and service
87 water sprinkler systems, water spray systems, foam-water
88 sprinkler systems, foam-water spray systems, standpipes,
89 combination standpipes and sprinkler risers, all piping that is
90 an integral part of the system beginning at the point of service
91 as defined in this section, sprinkler tank heaters, air lines,
92 thermal systems used in connection with sprinklers, and tanks
93 and pumps connected thereto, excluding preengineered systems.
94 (c) "Contractor III" means a contractor whose business is
95 limited to the execution of contracts requiring the ability to
96 fabricate, install, inspect, alter, repair, and service carbon
97 dioxide systems, foam extinguishing systems, dry chemical
98 systems, and Halon and other chemical systems, excluding
99 preengineered systems.
100 (d) "Contractor IV" means a contractor whose business is

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101 limited to the execution of contracts requiring the ability to
102 lay out, fabricate, install, inspect, alter, repair, and service
103 automatic fire sprinkler systems for detached one-family
104 dwellings, detached two-family dwellings, and mobile homes,
105 excluding preengineered systems and excluding single-family
106 homes in cluster units, such as apartments, condominiums, and
107 assisted living facilities or any building that is connected to
108 other dwellings. A Contractor IV is limited to the scope of
109 practice specified in NFPA 13D.
110 (e) "Contractor V" means a contractor whose business is
111 limited to the execution of contracts requiring the ability to
112 fabricate, install, alter, repair, and service the underground
113 piping for a fire protection system using water as the
114 extinguishing agent beginning at the point of service as defined
115 in this act and ending no more than 1 foot above the finished
116 floor. A Contractor V may inspect underground piping for a
117 water-based fire protection system under the direction of a
118 Contractor I or Contractor II.
119
120 This subsection may not be construed to include engineers or
121 architects within the defined terms and does not limit or
122 prohibit a licensed fire protection engineer or architect with
123 fire protection design experience from designing any type of
124 fire protection system. A distinction is made between system
125 design concepts prepared by the design professional and system

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126 layout as defined in this section and typically prepared by the
127 contractor. However, a person certified under this chapter as a
128 Contractor I or Contractor II may design new fire protection
129 systems of 49 or fewer sprinklers; may design the alteration of
130 an existing fire sprinkler system if the alteration consists of
131 the relocation, addition, or deletion of 49 or fewer sprinklers,
132 notwithstanding the size of the existing fire sprinkler system;
133 and or may design the alteration of an existing fire sprinkler
134 system if the alteration consists of the relocation or deletion
135 of 249 or fewer sprinklers and the addition of up to 49
136 sprinklers, as long as the cumulative total number of fire
137 sprinklers being added, relocated, or deleted does not exceed
138 249, notwithstanding the size of the existing fire sprinkler
139 system, if there is no change of occupancy of the affected
140 areas, as defined in the Florida Building Code and the Florida
141 Fire Prevention Code, and there is no change in the water demand
142 as defined in NFPA 13, "Standard for the Installation of
143 Sprinkler Systems," and if the occupancy hazard classification
144 as defined in NFPA 13 is reduced or remains the same as a result
145 of the alteration. Conflicts between the Florida Building Code
146 and the Florida Fire Prevention Code shall be resolved pursuant
147 to s. 553.73(1)(d). A person certified as a Contractor I,
148 Contractor II, or Contractor IV may design a new fire protection
149 system or design the alteration of an existing fire protection
150 system, the scope of which complies with NFPA 13D, "Standard for

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151 the Installation of Sprinkler Systems in One- and Two-Family
152 Dwellings and Manufactured Homes," as adopted by the State Fire
153 Marshal, notwithstanding the number of fire sprinklers.
154 Contractor-developed plans may not be required by any local
155 permitting authority to be sealed by a registered professional
156 engineer.
157 Section 3. This act shall take effect July 1, 2023.

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COMMERCE COMMITTEE

CS/HB 327 by Rep. Bell
Fire Sprinkler System Projects

AMENDMENT SUMMARY
March 8, 2023

Amendment 1 by Rep. Bell (line 37):
• Clarifies the definition of “fire sprinkler system project.”
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. CS/HB 327 (2023)
Amendment No. 1

COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER

1 Committee/Subcommittee hearing bill: Commerce Committee
2 Representative Bell offered the following:
3
4 Amendment
5 Remove line 37 and insert:
6 sprinklers, or the installation or replacement of an equivalent
7 fire

672137 - h0327-line 37 draft.docx
Published On: 3/7/2023 9:52:24 AM
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