85R8600 YDB-F
By: Capriglione H.B. No. 1295
A BILL TO BE ENTITLED
AN ACT
relating to the disclosure of interested parties by business
entities contracting with governmental entities and state
agencies; authorizing a civil penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 2252.908, Government
Code, is amended to read as follows:
Sec. 2252.908. DISCLOSURE OF INTERESTED PARTIES; CIVIL
PENALTY.
SECTION 2. Section 2252.908(a), Government Code, is amended
by amending Subdivisions (1), (2), and (3) and adding Subdivisions
(1-a), (1-b), (3-a), (3-b), (3-c), and (5) to read as follows:
(1) "Business entity" means any entity recognized by
law through which business is conducted with a governmental entity
or state agency. The term includes [, including] a sole
proprietorship, partnership, or corporation. The term does not
include the United States, a federal agency, a state agency, or
another governmental entity.
(1-a) "Contract" means a binding agreement between a
governmental entity or state agency and a business entity effective
on the earlier of the date the governing body of the governmental
entity or state agency votes to approve the contract or the date the
governmental entity or state agency becomes bound under the
contract. The term includes an amendment to or an extension or
renewal of the contract.
(1-b) "Controlling interest" means:
(A) an ownership or participating interest in a
business entity represented by a unit, percentage, share, stock, or
other acknowledgment of ownership or participating interest in an
amount that exceeds five percent of the total ownership or
participating interest in the business entity;
(B) membership on the board of directors or other
governing body of a business entity, provided the composition of
the board or governing body does not exceed 10 members; or
(C) service as an officer of a business entity
that has not more than four officers or service as one of the four
highest ranking officers of a business entity with more than four
officers, excluding an officer of a publicly held business entity
or its wholly owned subsidiary.
(2) "Governmental entity" means a municipality,
county, public school district, open-enrollment charter school, or
special-purpose district or authority.
(3) "Interested party" means a person who has a
controlling interest in a business entity with whom a governmental
entity or state agency contracts or who is an [actively
participates in facilitating the contract or negotiating the terms
of the contract, including a broker,] intermediary[, adviser, or
attorney] for the business entity.
(3-a) "Intermediary" means a person who actively
participates in facilitating or negotiating a contract, including a
broker, adviser, attorney, or agent for or representative of a
business entity, and who:
(A) receives compensation from the business
entity for the person's participation;
(B) communicates directly regarding the contract
with the governmental entity or state agency for the business
entity; and
(C) is not:
(i) an employee of the business entity or of
a person with a controlling interest in the business entity; or
(ii) an interested party with a controlling
interest in the business entity.
(3-b) "Person" has the meaning assigned by Section
311.005.
(3-c) "Signed" includes the use of any symbol executed
or adopted by a person that is evidence of present intent to
authenticate a writing, including an electronic signature.
(5) "Value" means, with respect to a contract, the
amount of consideration received or to be received by a business
entity from a governmental entity or state agency under the
contract.
SECTION 3. Section 2252.908, Government Code, is amended by
amending Subsections (b), (c), (e), and (f) and adding Subsections
(d-1), (e-1), (h), and (i) to read as follows:
(b) This section applies only to a contract of a
governmental entity or state agency that requires the expenditure
of the governmental entity's or state agency's money and that:
(1) requires an action or vote by the governing body of
the entity or agency before the contract may be signed; or
(2) has a value of at least $1 million.
(c) Notwithstanding Subsection (b), this section does not
apply to:
(1) a sponsored research contract of an institution of
higher education;
(2) an interagency contract of a state agency or an
institution of higher education; [or]
(3) a contract related to health and human services
if:
(A) the value of the contract cannot be
determined at the time the contract is executed; and
(B) any qualified vendor is eligible for the
contract;
(4) a contract with a publicly traded business entity,
including a wholly owned subsidiary of the business entity;
(5) a contract related to a state of disaster declared
by the governor under Section 418.014 that requires an immediate
disbursement of state money to preserve or protect the public
health or safety, to preserve property, or for public necessity;
(6) a contract that is necessary to prevent
unforeseen, imminent damage to public machinery, equipment, or
other property;
(7) a contract related to a subsequent sale of a
municipal bond after the initial bond sale;
(8) a contract with a federally insured financial
institution;
(9) a contract with an electric utility as that term is
defined by Section 31.002, Utilities Code;
(10) a contract with a gas utility engaged in the
wholesale business of transporting or distributing gas for public
consumption;
(11) a contract for an insurance policy regulated by
the Texas Department of Insurance that is purchased by a
governmental entity or state agency;
(12) an interlocal contract of a local governmental
entity; or
(13) a contract related to a public security, as that
term is defined by Section 1201.002, that is not a debt.
(d-1) A business entity that submits a disclosure of
interested parties under Subsection (d) shall submit a modified
disclosure of interested parties for the contract if there is any
change from the interested parties previously disclosed. The
modified disclosure must be submitted on or before the next
anniversary of the date the signed contract was submitted to the
governmental entity or state agency under Subsection (d) that
occurs after the change in interested parties.
(e) The disclosure of interested parties or modified
disclosure of interested parties must be submitted on a form
prescribed by the Texas Ethics Commission that includes:
(1) a list of each interested party for the contract of
which the contracting business entity is aware; and
(2) a written, unsworn declaration subscribed by [the
signature of] the authorized agent of the contracting business
entity as true[, acknowledging that the disclosure is made under
oath and] under penalty of perjury that is in substantially the
following form:
"My name is ________________________________, my
date of birth is _________________, and my address is
_____________, ____________, _________, ____________,
(Street) (City) (State) (Zip Code)
__________________. I declare under penalty of
(Country)
perjury that the foregoing is true and correct.
Executed in _______ County, State of ________, on
the ________ day of ________, ________.
(Month) (Year)
____________________
Declarant".
(e-1) The written, unsworn declaration described by
Subsection (e)(2) may be executed using the electronic signature of
the authorized agent of the contracting business entity.
(f) Not later than the 30th day after the date the parties
become bound under a contract for which a disclosure of interested
parties is filed or the date a modified disclosure of interested
parties is filed [governmental entity or state agency receives a
disclosure of interested parties required under this section], the
governmental entity or state agency shall submit [a copy of the
disclosure] to the Texas Ethics Commission an acknowledgment that
the governmental entity or state agency has received the disclosure
or modified disclosure, as applicable.
(h) A business entity that fails to submit to a governmental
entity or state agency a disclosure of interested parties or
modified disclosure of interested parties required by this section
is liable for a civil penalty of $500 for the first day the
violation occurs and $100 for each additional day the violation
occurs, not to exceed the lesser of the total amount prescribed by
rule or $10,000. The governmental entity or state agency shall
immediately notify the Texas Ethics Commission if a business entity
fails to submit a disclosure or modified disclosure on or before the
30th day after the date the disclosure is due. The commission shall
immediately provide to the business entity written notice of the
violation and civil penalty. If the business entity fails to submit
the disclosure or modified disclosure on or before the 10th day
after the date the notice is provided, the business entity is liable
to this state for the civil penalty.
(i) The attorney general, at the request of the Texas Ethics
Commission, may sue to collect a civil penalty imposed under
Subsection (h). The attorney general and the commission may
recover reasonable expenses incurred in obtaining a civil penalty
under that subsection, including investigation and court costs,
reasonable attorney's fees, witness fees, and other expenses.
SECTION 4. Not later than December 1, 2017, the Texas Ethics
Commission shall adopt rules and modify the disclosure of
interested parties form as necessary to comply with the changes in
law made by this Act.
SECTION 5. The changes in law made by this Act apply only to
a contract entered into or amended on or after January 1, 2018.
SECTION 6. This Act takes effect September 1, 2017.