Bill penalizes companies for not investing in Israel based on political beliefs
Legislation to forbid the state’s investment in companies that boycott Israel would raise serious constitutional problems by harming free speech and using government resources to build political blacklists, the ACLU-NJ said in a letter (PDF) expressing its strong opposition to the proposed law.
The bill, S1923/A925, prohibits the state’s pension and annuities funds from investing in any company that supports boycotts of Israel or Israeli businesses. The legislation mandates government investigations into people’s beliefs to determine if their reasons for not doing business with Israel are political and punishes people for holding unpopular opinions, stifling constitutionally protected speech.
“This bill singles people out for punishment based on their political opinions and beliefs, and that raises significant First Amendment concerns,” said ACLU-NJ Executive Director Udi Ofer. “This legislation requires that decisions about state investment be based on an ideological litmus test of companies. New Jersey should stay out of the business of building political blacklists and punishing unpopular opinions, regardless of what the controversy of the day may be. Government investigators shouldn’t be spying on New Jerseyans’ political beliefs to check if they match the political opinions of lawmakers.”
The ACLU-NJ sent the letter to the sponsors of the Senate and Assembly versions of the bill: Senator James Beach, Senate Majority Leader Loretta Weinberg, Assemblywoman Valerie Vainieri Huttle, and Assemblyman Gary Schaer.
By requiring the state to examine the political statements of companies and individuals, the state would chill free speech and freedom of association, the ACLU-NJ said in its letter. The U.S. Supreme Court has long recognized boycotts as a First Amendment-protected activity and has ruled that the government cannot institute regulations designed to punish speech intended to influence public opinion or policy.
In order to determine which companies would be subject to divestment from the state pension fund, the bill calls on the State Investment Council to hire a research firm to identify companies that boycott Israel, among other mechanisms.
“The last thing we need is government investigators attempting to sniff out New Jerseyans’ political beliefs to ensure they conform to lawmakers’ preferred political opinions,” the letter reads. “Such investigations would chill people from exercising their core First Amendment right to speak on political issues, especially where their opinions are unpopular.”
"If two similar companies do not invest in Israel, only the outspoken one will be punished," said ACLU-NJ Public Policy Director Ari Rosmarin. "This bill would set a terrible precedent for New Jersey and place us back into an era when engaging in First Amendment-protected activity earns you a spot on a government blacklist. The Legislature is free to pick sides in matters of international concern, but lawmakers cannot unilaterally punish New Jerseyans who feel differently."
The bill marks a departure from previous efforts to divest state funds from socially controversial companies, the ACLU-NJ’s letter emphasized. When the pension fund divested from apartheid-era South Africa, Sudan, or Iran, the state chose to penalize all firms that did business with those countries, placing the focus on their actions. In stark contrast, this legislation differentiates between companies that do not conduct business with Israel for political reasons and those that do not conduct business for all other reasons, punishing political speech and opinions specifically.
“This legislation creates penalties for unpopular opinions and opens investigations into companies’ viewpoints, and that sets a dangerous precedent for New Jerseyans,” said ACLU-NJ Legal Director Ed Barocas.”
The bill passed the New Jersey Senate unanimously in May, but has not yet been voted on in the Assembly.