Two-State Solution Act
This bill addresses U.S. policy and related activities to preserve conditions for a two-state solution to resolve territorial disputes between Israel and Palestine.
The bill prohibits the United States from providing support for projects in geographic regions that came under Israeli control after June 5, 1967. It also prohibits the use of any U.S. security assistance, defense articles, or defense services provided to Israel for efforts to annex or exercise permanent control over any part of the West Bank or Gaza.
Current law designates the Palestine Liberation Organization (PLO) as a terrorist organization and restricts its activities (e.g., prohibiting it from maintaining an office in the United States). The President may waive for up to six months some of these restrictions to serve U.S. national security or diplomatic interests. If the President certifies that the PLO has ceased supporting terrorist actions and met other conditions, the bill automatically terminates the terrorist organization designation.
Goods produced in the West Bank or Gaza that are imported into the United States must indicate those areas as the country of origin on their labels.
The bill expands the scope of certain foreign and development assistance to foster initiatives, including shared educational opportunities and youth activities, that connect Israelis and Palestinians. Additionally, the Department of State and the U.S. Agency for International Development may jointly award grants to private, nonprofit organizations to promote human rights and democracy, strengthen civil society, and otherwise address the needs of the Palestinian people.
To preserve conditions for, and improve the likelihood of, a two-state 
   solution that secures Israel's future as a democratic state and a 
 national home for the Jewish people, a viable, democratic Palestinian 
 state, an end to Israel's occupation of the Palestinian territories, 
   and peaceful relations between the two states, and to direct the 
   Department of State and other relevant agencies to take steps to 
                         accomplish these ends.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Two-State Solution Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In May 2021, President Joseph R. Biden stated, ``the 
        Palestinians and Israelis equally deserve to live safely and 
        securely, and enjoy equal measures of freedom, prosperity and 
        democracy''.
            (2) The United States has, under Democratic and Republican 
        administrations since 2002, supported a two-state solution.
            (3) On December 6, 2019, the House of Representatives 
        passed House Resolution 326 on a bipartisan basis, expressing 
        the sense of the House of Representatives that ``only the 
        outcome of a two-state solution that enhances stability and 
        security for Israel, Palestinians, and their neighbors can both 
        ensure the state of Israel's survival as a Jewish and 
        democratic state and fulfill the legitimate aspirations of the 
        Palestinian people for a state of their own'' and that ``a 
        United States proposal to achieve a just, stable, and lasting 
        solution to the Israeli-Palestinian conflict should expressly 
        endorse a two-state solution as its objective and discourage 
        steps by either side that would put a peaceful end to the 
        conflict further out of reach''.
            (4) Democratic and Republican presidents have identified 
        Israeli settlements as an obstacle to peace. President Ronald 
        Reagan said, ``further settlement activity is in no way 
        necessary for the security of Israel and only diminishes the 
        confidence of the Arabs that a final outcome can be freely and 
        fairly negotiated''. In 2003, President George W. Bush stated, 
        ``As progress is made towards peace, settlement activity in the 
        occupied territories must end.''.
            (5) On April 21, 1978, State Department Legal Adviser 
        Herbert J. Hansell issued a legal opinion concluding that ``the 
        establishment of the Israeli civilian settlements in the 
        territories occupied by Israel is inconsistent with 
        international law''. Secretary of State Mike Pompeo repudiated 
        the 1978 legal opinion on November 18, 2019.
            (6) During the Trump Administration, Israel accelerated its 
        advancement of settlement plans by more than 154 percent, as 
        compared to the prior administration.
            (7) During the final year of the Trump Administration, the 
        Israeli Government demolished 273 homes belonging to 
        Palestinian families in the West Bank, the highest number of 
        demolitions since 2016. As a result, 1,006 Palestinians, 519 of 
        them minors, were displaced.
            (8) The Arms Export Control Act places numerous conditions 
        and restrictions on the assistance it authorizes, including a 
        prohibition on the use of such assistance ``for purposes other 
        than those for which [it has been] furnished'' without prior 
        presidential consent and a requirement that sales agreements 
        entered into after November 29, 1999 allow the United States to 
        verify ``credible reports'' that assistance has been used for 
        unauthorized purposes. The Foreign Assistance Act of 1961 also 
        places conditions and restrictions on the aid it authorizes and 
        mandates that international security assistance programs 
        ``promote and advance human rights and avoid identification of 
        the United States, through such programs, with governments 
        which deny to their people internationally recognized human 
        rights and fundamental freedoms, in violation of international 
        law or in contravention of the policy of the United States''.
            (9) Dating back to the administration of President Dwight 
        D. Eisenhower, the United States has delineated explicitly 
        authorized uses of the aid it provides to Israel.
            (10) Congress passed and President George W. Bush signed 
        into law the Fiscal Year 2003 Emergency Wartime Supplemental 
        Appropriations Act (Public Law 108-11), which authorized 
        $9,000,000,000 in loan guarantees for Israel over 3 years and 
        $1,000,000,000 in military grants. Public Law 108-11 stated, 
        ``guarantees may be issued under this section only to support 
        activities in the geographic areas which were subject to the 
        administration of the Government of Israel before June 5, 
        1967''.
            (11) House Report 117-84, in explanation of the 
        accompanying bill making appropriations for the Department of 
        State, foreign operations, and related programs, for the fiscal 
        year ending September 30, 2022, which passed in the House of 
        Representatives on July 28, 2021, states, ``the Committee urges 
        the Secretary of State to address in bilateral consultations 
        with Israel the importance of ensuring that MOU-supported 
        equipment is not used in any way that undermines the prospects 
        of a negotiated two-state solution''.

SEC. 3. PURPOSE.

    The purpose of this Act is to preserve conditions for, and improve 
the likelihood of a two-state solution that secures Israel's future as 
a democratic state and a national home for the Jewish people, a viable, 
democratic Palestinian state, an end to Israel's occupation of the 
Palestinian territories, and peaceful relations between the two states, 
and to direct the Department of State and other relevant agencies to 
take steps to accomplish these ends.

SEC. 4. STATEMENT OF POLICY.

    It is the policy of the United States--
            (1) that only the outcome of a two-state solution can both 
        ensure the state of Israel's survival as a democratic state and 
        a national home for the Jewish people and fulfill the 
        legitimate aspirations of the Palestinian people for a state of 
        their own;
            (2) to discourage steps by either party to the conflict 
        that would put a peaceful end to the conflict further out of 
        reach;
            (3) that the establishment of Israeli settlements in the 
        occupied Palestinian territories is inconsistent with 
        international law;
            (4) that settlement expansion, demolitions of Palestinian 
        homes, revocations of residency permits, and forced evictions 
        of Palestinian civilians by Israel impede the establishment of 
        a Palestinian state and violate the human rights of the 
        Palestinian people;
            (5) to continue to implement fully the Memorandum of 
        Understanding between the United States and Israel signed in 
        2016 and to help Israel address the myriad challenges it faces, 
        including terrorism, and threats posed by actors in the region, 
        such as Iran;
            (6) that the use of United States funding provided through 
        the 2016 Memorandum of Understanding by the Government of 
        Israel for activities that put a two-state solution further out 
        of reach, including those that expand settlements, would be 
        detrimental to Israel's security and inconsistent with section 
        2754 of title 22, United States Code, under which ``Defense 
        articles and defense services shall be sold or leased by the 
        United States Government under this chapter to friendly 
        countries solely for internal security, for legitimate self-
        defense'' and other limited purposes;
            (7) to support programming that bolsters Palestinian civil 
        society organizations and Palestinian government reforms, with 
        the goal of fostering a Palestinian government that is 
        democratic and enjoys credibility among the Palestinian people;
            (8) to oppose restrictions on civil liberties in the 
        occupied Palestinian territories, including the arrest of 
        activists, journalists, and peaceful protesters, and to support 
        an end to the torture or abuse of individuals in detention; and
            (9) that a Palestinian government that respects civil and 
        human rights and enjoys legitimacy among the Palestinian people 
        is both necessary in its own right and important for productive 
        negotiations on a two-state solution.

SEC. 5. UNITED STATES POLICY RELATING TO THE OCCUPIED PALESTINIAN 
              TERRITORIES.

    (a) Statement of Policy.--It is the policy of the United States 
that the West Bank, including East Jerusalem, and Gaza are occupied 
territories and should be referred to as such consistently in official 
United States policies, communications, and documents.
    (b) Marking of Imported Articles.--
            (1) In general.--Section 304 of the Tariff Act of 1930 (19 
        U.S.C. 1304) is amended--
                    (A) by redesignating subsection (l) as subsection 
                (m); and
                    (B) by inserting after subsection (k) the 
                following:
    ``(l) Articles Produced in the Occupied Palestinian Territories.--
Articles imported into the United States that are produced in the 
occupied Palestinian territories (as such term is defined in section 
10(2) of the Two-State Solution Act) shall have their place of 
production marked as `West Bank/Gaza', `West Bank/Gaza Strip', or `West 
Bank and Gaza' and shall not contain the words `Israel', `Made in 
Israel', `Occupied Territories-Israel', or words of similar meaning.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        take effect on the date of the enactment of this Act and apply 
        with respect to any article described in subsection (l) of 
        section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), as 
        added by paragraph (1), that is imported into the customs 
        territory of the United States on or after the date that is 30 
        days after such date of enactment.
    (c) Geographic Restrictions Relating to U.S.-Israel Binational 
Foundations.--Notwithstanding any other provision of law, the United 
States may not provide support for projects conducted in geographic 
areas which came under the administration of the Government of Israel 
after June 5, 1967, and may not relate to subjects primarily pertinent 
to such areas, pursuant to agreements relating to the Binational 
Industrial Research and Development Foundation (BIRD), the Binational 
Science Foundation (BSF), and the Binational Agricultural Research and 
Development Foundation (BARD).

SEC. 6. SECURITY ASSISTANCE RELATING TO THE OCCUPIED PALESTINIAN 
              TERRITORIES.

    (a) Sense of Congress.--It is the sense of Congress that--
            (1) the United States should ensure the aid it provides to 
        Israel does not facilitate unilateral actions by the Israeli 
        Government that impede the achievement of a two-state solution, 
        including through unilateral efforts to annex or exercise 
        permanent control by Israel over any part of the occupied 
        Palestinian territories, is not used in a manner that violates 
        internationally recognized human rights, and is used 
        exclusively for the purposes authorized by law; and
            (2) there should be robust oversight of United States 
        funding provided though the Memorandum of Understanding between 
        the United States and Israel signed in 2016, in accordance with 
        the Foreign Assistance Act of 1961 and the Arms Export Control 
        Act.
    (b) Restriction Under Security Assistance Act of 2000.--Section 
513(c) of the Security Assistance Act of 2000 (Public Law 106-280; 114 
Stat. 856) is amended by adding at the end the following:
            ``(5) Rules of construction.--Nothing in this section may 
        be construed--
                    ``(A) to provide authorization for the use of funds 
                for programs, projects, activities, any type of 
                materiel assistance, or other operations that further, 
                aid, or support unilateral efforts to annex or exercise 
                permanent control by Israel over any part of the 
                occupied Palestinian territories (as such term is 
                defined in section 10(2) of the Two-State Solution 
                Act), including by expansion of Israeli settlements, 
                demolitions in Palestinian communities or evictions of 
                Palestinian residents from their homes; or
                    ``(B) to provide authorization for the use of funds 
                for programs, projects, activities, any type of 
                materiel assistance, or other operations that further, 
                aid, or support unilateral efforts in contravention of 
                section 620M of the Foreign Assistance Act of 1961 (22 
                U.S.C. 2378d) or section 362 of title 10, United States 
                Code.''.
    (c) Restriction Under Arms Export Control Act.--Section 4 of the 
Arms Export Control Act (22 U.S.C. 2754) is amended by adding at the 
end before the period the following: ``: Provided further, That no 
defense articles or defense services may be sold or leased by the 
United States Government under this Act to further, aid, or support 
unilateral efforts to annex or exercise permanent control by Israel 
over any part of the occupied Palestinian territories (as such term is 
defined in section 10(2) of the Two-State Solution Act), including by 
expansion of Israeli settlements, demolitions in Palestinian 
communities or evictions of Palestinian residents from their homes''.

SEC. 7. ASSISTANCE TO ADDRESS THE IMMEDIATE AND LONG-TERM NEEDS OF THE 
              PALESTINIAN PEOPLE.

    (a) Findings.--Congress finds the following:
            (1) Palestinian Authority President Mahmoud Abbas postponed 
        elections planned for 2021, prompting significant criticism and 
        exacerbating popular Palestinian opposition stemming from the 
        absence of a Palestinian state, violations of human rights and 
        civil liberties, official corruption, and poor governance.
            (2) Since 2007, the militant organization Hamas, a United 
        States-designated terrorist organization, has maintained 
        control over Gaza, which faces a humanitarian crisis resulting 
        from poor governance, recurrent conflict, and the Israeli and 
        Egyptian blockade that restricts the movement of people and 
        goods. Hamas has fired rockets at Israeli population centers, 
        resulting in deaths of civilians in Israel, as well as 
        Palestinian civilians in Gaza due to misfires.
            (3) The Consolidated Appropriations Act, 2021, imposes on 
        assistance to the Palestinians certain restrictions and 
        conditions, with limited exemption authorities, regarding any 
        future Palestinian state and its governing entity, 
        certifications and vetting prior to the obligation of funds, 
        audit requirements, a general prohibition on assistance for the 
        Palestinian Authority, and a prohibition on assistance for the 
        Palestine Liberation Organization, Hamas, or ``any entity 
        effectively controlled by Hamas, any power-sharing government 
        of which Hamas is a member, or that results from an agreement 
        with Hamas and over which Hamas exercises undue influence''.
    (b) Sense of Congress.--It is the sense of Congress that 
investments in Palestinian democracy, civil society organizations, and 
economic development will promote better governance and community 
engagement and improve the likelihood of free and fair elections, in 
turn setting the stage for negotiations in which a Palestinian 
government genuinely speaks for the Palestinian people.
    (c) Grants Authorized.--Subject to subsection (d), the Secretary of 
State and the Administrator of the United States Agency for 
International Development are authorized to jointly provide grants on 
an open and competitive basis to private, nonprofit organizations to 
support programs that promote human rights, democracy, and the rule of 
law, and strengthen civil society organizations to address the 
immediate and long-term needs of the Palestinian people in the occupied 
Palestinian territories in a manner that supports the sustainability of 
such organizations in implementing Palestinian-led humanitarian and 
development programs.
    (d) Limitation on Use of Funds.--None of the funds made available 
to carry out this section, or any amendment made by this section, may 
be used to provide--
            (1) financial assistance to the national government of any 
        foreign country;
            (2) assistance for--
                    (A) any individual or group the Secretary of State 
                determines to be involved in, or advocating, terrorist 
                activity; or
                    (B) any individual who is a member of a foreign 
                terrorist organization (as designated pursuant to 
                section 219 of the Immigration and Nationality Act (8 
                U.S.C. 1189)); or
            (3) assistance for the Palestinian Authority or the 
        Palestine Liberation Organization.
    (e) Applicable Regulations.--Assistance made available under this 
Act, and any amendment made by this Act, shall adhere to the mission 
directives and vetting practices for assistance for the West Bank and 
Gaza, as set forth by the United States Agency for International 
Development.
    (f) Reports.--Not later than one year after the date of the 
enactment of this Act, and annually thereafter, the Secretary of State 
and the Administrator of the United States Agency for International 
Development shall jointly submit to the appropriate congressional 
committees a report on the implementation of grants authorized under 
this section and the progress and impact of such grants on the 
Palestinian people, including effects related to civic engagement, 
trust in civic institutions, and the long-term viability of Palestinian 
civil society organizations. Not later than 180 days after the date of 
the enactment of this Act, the Secretary of State and the Administrator 
of the United States Agency for International Development shall jointly 
submit to the appropriate congressional committees a report on the 
impact of past democracy and governance programming in the occupied 
Palestinian territories.
    (g) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        not less than $20,000,000 for each of the fiscal years 2022 
        through 2027 to carry out this section.
            (2) Availability.--Amounts appropriated pursuant to the 
        authorization of appropriations under paragraph (1) for a 
        fiscal year are authorized to remain available for 5 fiscal 
        years.

SEC. 8. AMENDMENT TO THE ANTI-TERRORISM ACT OF 1987.

    (a) Finding.--Congress finds that according to the 2020 State 
Department Country Reports on Human Rights Practices, the Palestinian 
Authority continues to ``make payments to Palestinians connected to 
terrorism, including persons convicted of terrorism in Israeli courts 
serving prison sentences, former prisoners, and the families of those 
who died committing terrorist attacks''.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) the Palestinian Authority should reform its payments 
        program in a manner that would allow the Secretary of State to 
        issue the certification specified in section 1004(a) of the 
        Taylor Force Act (22 U.S.C. 2378c-1); and
            (2) the United States should maintain diplomatic relations 
        with the Palestinians, including by reopening a United States 
        consulate in Jerusalem and allowing for the reopening of the 
        Palestine Liberation Organization foreign mission in the 
        District of Columbia.
    (c) Amendment to the Anti-Terrorism Act of 1987.--Section 1005 of 
the Anti-Terrorism Act of 1987 (22 U.S.C. 5201 note) is amended by 
striking subsection (b) and inserting the following:
    ``(b) Waiver.--
            ``(1) In general.--The President may waive the provisions 
        of paragraphs (1), (2), and (3) of section 1003 if the 
        President determines and certifies in writing to the Speaker of 
        the House of Representatives, the President pro tempore of the 
        Senate, and the Committees on Appropriations that it is 
        important to the national security interests of the United 
        States or the conduct of diplomacy.
            ``(2) Period of application.--Any waiver issued pursuant to 
        this subsection shall be effective for not more than a period 
        of 6 months at a time.
    ``(c) Termination.--The provisions of this title shall cease to 
have effect on the earlier of--
            ``(1) the date on which--
                    ``(A) the President has certified in writing to the 
                President pro tempore of the Senate and the Speaker of 
                the House of Representatives that the Palestine 
                Liberation Organization--
                            ``(i) is not objecting to any convening of 
                        the Trilateral Anti-Incitement Committee; and
                            ``(ii) is not obstructing security 
                        coordination and cooperation between the 
                        Palestinian Authority and Israel; and
                    ``(B) the Secretary of State has issued the 
                certification specified in section 1004(a) of the 
                Taylor Force Act (22 U.S.C. 2378c-1); or
            ``(2) the date on which the President has certified in 
        writing to the President pro tempore of the Senate and the 
        Speaker of the House of Representatives that the Palestine 
        Liberation Organization, its agents, or constituent groups 
        thereof no longer practice or support terrorist actions 
        anywhere in the world.''.

SEC. 9. AMENDMENTS TO FOREIGN ASSISTANCE ACT OF 1961.

    (a) Sense of Congress.--It is the sense of Congress that the 
administration should work urgently to implement the Nita M. Lowey 
Middle East Partnership for Peace Act (Public Law 116-260), which 
authorized $250,000,000 over 5 years to fund Palestinian economic 
development and people-to-people initiatives that connect Israelis and 
Palestinians.
    (b) In General.--The Foreign Assistance Act of 1961 is amended--
            (1) in section 105(c)(2) (22 U.S.C. 2151c(c)(2))--
                    (A) in subparagraph (D), by striking ``and'' at the 
                end;
                    (B) in subparagraph (E), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(F) in the case of programs and activities for 
                Israelis and Palestinians, allow for shared educational 
                opportunities between such Israelis and such 
                Palestinians.''; and
            (2) in section 535 (22 U.S.C. 2346d)--
                    (A) in subsection (b), by adding at the end before 
                the period the following: ``, including organizations 
                that seek to foster connections between Israelis and 
                Palestinians''; and
                    (B) in subsection (c), by inserting after 
                ``dialogue'' the following: ``, shared educational 
                opportunities and youth activities''.
    (c) Effective Date.--The amendments made subsection (b)(2) take 
effect on the date of the enactment of this Act and apply with respect 
to funding for projects described in section 535 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2346d), as amended by subsection (b), 
provided on or after such date of enactment.

SEC. 10. DEFINITIONS.

    In this Act:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on Foreign Affairs and the 
                Committee on Appropriations of the House of 
                Representatives; and
                    (B) the Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate.
            (2) Occupied palestinian territories.--The term ``occupied 
        Palestinian territories'' means the West Bank, including East 
        Jerusalem, and Gaza.
                                 <all>
Two-State Solution Act
To preserve conditions for, and improve the likelihood of, a two-state solution that secures Israel's future as a democratic state and a national home for the Jewish people, a viable, democratic Palestinian state, an end to Israel's occupation of the Palestinian territories, and peaceful relations between the two states, and to direct the Department of State and other relevant agencies to take steps to accomplish these ends.
Two-State Solution Act
Rep. Levin, Andy