H.B. No. 4
 
 
 
 
AN ACT
  relating to the regulation of the collection, use, processing, and
  treatment of consumers' personal data by certain business entities;
  imposing a civil penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  This Act may be cited as the Texas Data Privacy
  and Security Act.
         SECTION 2.  Title 11, Business & Commerce Code, is amended by
  adding Subtitle C to read as follows:
  SUBTITLE C. CONSUMER DATA PROTECTION
  CHAPTER 541. CONSUMER DATA PROTECTION
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 541.001.  DEFINITIONS. In this chapter, unless a
  different meaning is required by the context:
               (1)  "Affiliate" means a legal entity that controls, is
  controlled by, or is under common control with another legal entity
  or shares common branding with another legal entity. For purposes
  of this subdivision, "control" or "controlled" means:
                     (A)  the ownership of, or power to vote, more than
  50 percent of the outstanding shares of any class of voting security
  of a company;
                     (B)  the control in any manner over the election
  of a majority of the directors or of individuals exercising similar
  functions; or
                     (C)  the power to exercise controlling influence
  over the management of a company.
               (2)  "Authenticate" means to verify through reasonable
  means that the consumer who is entitled to exercise the consumer's
  rights under Subchapter B is the same consumer exercising those
  consumer rights with respect to the personal data at issue.
               (3)  "Biometric data" means data generated by automatic
  measurements of an individual's biological characteristics. The
  term includes a fingerprint, voiceprint, eye retina or iris, or
  other unique biological pattern or characteristic that is used to
  identify a specific individual. The term does not include a
  physical or digital photograph or data generated from a physical or
  digital photograph, a video or audio recording or data generated
  from a video or audio recording, or information collected, used, or
  stored for health care treatment, payment, or operations under the
  Health Insurance Portability and Accountability Act of 1996 (42
  U.S.C. Section 1320d et seq.).
               (4)  "Business associate" has the meaning assigned to
  the term by the Health Insurance Portability and Accountability Act
  of 1996 (42 U.S.C. Section 1320d et seq.).
               (5)  "Child" means an individual younger than 13 years
  of age.
               (6)  "Consent," when referring to a consumer, means a
  clear affirmative act signifying a consumer's freely given,
  specific, informed, and unambiguous agreement to process personal
  data relating to the consumer. The term includes a written
  statement, including a statement written by electronic means, or
  any other unambiguous affirmative action.  The term does not
  include:
                     (A)  acceptance of a general or broad terms of use
  or similar document that contains descriptions of personal data
  processing along with other, unrelated information;
                     (B)  hovering over, muting, pausing, or closing a
  given piece of content; or
                     (C)  agreement obtained through the use of dark
  patterns.
               (7)  "Consumer" means an individual who is a resident
  of this state acting only in an individual or household context. The
  term does not include an individual acting in a commercial or
  employment context.
               (8)  "Controller" means an individual or other person
  that, alone or jointly with others, determines the purpose and
  means of processing personal data.
               (9)  "Covered entity" has the meaning assigned to the
  term by the Health Insurance Portability and Accountability Act of
  1996 (42 U.S.C. Section 1320d et seq.).
               (10)  "Dark pattern" means a user interface designed or
  manipulated with the effect of substantially subverting or
  impairing user autonomy, decision-making, or choice, and includes
  any practice the Federal Trade Commission refers to as a dark
  pattern.
               (11)  "Decision that produces a legal or similarly
  significant effect concerning a consumer" means a decision made by
  the controller that results in the provision or denial by the
  controller of:
                     (A)  financial and lending services;
                     (B)  housing, insurance, or health care services;
                     (C)  education enrollment;
                     (D)  employment opportunities;
                     (E)  criminal justice; or
                     (F)  access to basic necessities, such as food and
  water.
               (12)  "Deidentified data" means data that cannot
  reasonably be linked to an identified or identifiable individual,
  or a device linked to that individual.
               (13)  "Health care provider" has the meaning assigned
  to the term by the Health Insurance Portability and Accountability
  Act of 1996 (42 U.S.C. Section 1320d et seq.).
               (14)  "Health record" means any written, printed, or
  electronically recorded material maintained by a health care
  provider in the course of providing health care services to an
  individual that concerns the individual and the services provided.
  The term includes:
                     (A)  the substance of any communication made by an
  individual to a health care provider in confidence during or in
  connection with the provision of health care services; or
                     (B)  information otherwise acquired by the health
  care provider about an individual in confidence and in connection
  with health care services provided to the individual.
               (15)  "Identified or identifiable individual" means a
  consumer who can be readily identified, directly or indirectly.
               (16)  "Institution of higher education" means:
                     (A)  an institution of higher education as defined
  by Section 61.003, Education Code; or
                     (B)  a private or independent institution of
  higher education as defined by Section 61.003, Education Code.
               (17)  "Known child" means a child under circumstances
  where a controller has actual knowledge of, or wilfully disregards,
  the child's age.
               (18)  "Nonprofit organization" means:
                     (A)  a corporation organized under Chapters 20 and
  22, Business Organizations Code, and the provisions of Title 1,
  Business Organizations Code, to the extent applicable to nonprofit
  corporations;
                     (B)  an organization exempt from federal taxation
  under Section 501(a), Internal Revenue Code of 1986, by being
  listed as an exempt organization under Section 501(c)(3),
  501(c)(6), 501(c)(12), or 501(c)(19) of that code;
                     (C)  a political organization; or
                     (D)  an organization that:
                           (i)  is exempt from federal taxation under
  Section 501(a), Internal Revenue Code of 1986, by being listed as an
  exempt organization under Section 501(c)(4) of that code; and
                           (ii)  is described by Section 701.052(a),
  Insurance Code.
               (19)  "Personal data" means any information, including
  sensitive data, that is linked or reasonably linkable to an
  identified or identifiable individual.  The term includes
  pseudonymous data when the data is used by a controller or processor
  in conjunction with additional information that reasonably links
  the data to an identified or identifiable individual.  The term does
  not include deidentified data or publicly available information.
               (20)  "Political organization" means a party,
  committee, association, fund, or other organization, regardless of
  whether incorporated, that is organized and operated primarily for
  the purpose of influencing or attempting to influence:
                     (A)  the selection, nomination, election, or
  appointment of an individual to a federal, state, or local public
  office or an office in a political organization, regardless of
  whether the individual is selected, nominated, elected, or
  appointed; or
                     (B)  the election of a
  presidential/vice-presidential elector, regardless of whether the
  elector is selected, nominated, elected, or appointed.
               (21)  "Precise geolocation data" means information
  derived from technology, including global positioning system level
  latitude and longitude coordinates or other mechanisms, that
  directly identifies the specific location of an individual with
  precision and accuracy within a radius of 1,750 feet. The term does
  not include the content of communications or any data generated by
  or connected to an advanced utility metering infrastructure system
  or to equipment for use by a utility.
               (22)  "Process" or "processing" means an operation or
  set of operations performed, whether by manual or automated means,
  on personal data or on sets of personal data, such as the
  collection, use, storage, disclosure, analysis, deletion, or
  modification of personal data.
               (23)  "Processor" means a person that processes
  personal data on behalf of a controller.
               (24)  "Profiling" means any form of solely automated
  processing performed on personal data to evaluate, analyze, or
  predict personal aspects related to an identified or identifiable
  individual's economic situation, health, personal preferences,
  interests, reliability, behavior, location, or movements.
               (25)  "Protected health information" has the meaning
  assigned to the term by the Health Insurance Portability and
  Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.).
               (26)  "Pseudonymous data" means any information that
  cannot be attributed to a specific individual without the use of
  additional information, provided that the additional information
  is kept separately and is subject to appropriate technical and
  organizational measures to ensure that the personal data is not
  attributed to an identified or identifiable individual.
               (27)  "Publicly available information" means
  information that is lawfully made available through government
  records, or information that a business has a reasonable basis to
  believe is lawfully made available to the general public through
  widely distributed media, by a consumer, or by a person to whom a
  consumer has disclosed the information, unless the consumer has
  restricted the information to a specific audience.
               (28)  "Sale of personal data" means the sharing,
  disclosing, or transferring of personal data for monetary or other
  valuable consideration by the controller to a third party. The term
  does not include:
                     (A)  the  disclosure of personal data to a
  processor that processes the personal data on the controller's
  behalf;
                     (B)  the  disclosure of personal data to a third
  party for purposes of providing a product or service requested by
  the consumer;
                     (C)  the disclosure or transfer of personal data
  to an affiliate of the controller;
                     (D)  the disclosure of information that the
  consumer:
                           (i)  intentionally made available to the
  general public through a mass media channel; and
                           (ii)  did not restrict to a specific
  audience; or
                     (E)  the disclosure or transfer of personal data
  to a third party as an asset that is part of a merger or acquisition.
               (29)  "Sensitive data" means a category of personal
  data. The term includes:
                     (A)  personal data revealing racial or ethnic
  origin, religious beliefs, mental or physical health diagnosis,
  sexuality, or citizenship or immigration status;
                     (B)  genetic or biometric data that is processed
  for the purpose of uniquely identifying an individual;
                     (C)  personal data collected from a known child;
  or
                     (D)  precise geolocation data.
               (30)  "State agency" means a department, commission,
  board, office, council, authority, or other agency in any branch of
  state government that is created by the constitution or a statute of
  this state, including a university system or institution of higher
  education as defined by Section 61.003, Education Code.
               (31)  "Targeted advertising" means displaying to a
  consumer an advertisement that is selected based on personal data
  obtained from that consumer's activities over time and across
  nonaffiliated websites or online applications to predict the
  consumer's preferences or interests. The term does not include:
                     (A)  an advertisement that:
                           (i)  is based on activities within a
  controller's own websites or online applications;
                           (ii)  is based on the context of a consumer's
  current search query, visit to a website, or online application; or
                           (iii)  is directed to a consumer in response
  to the consumer's request for information or feedback; or
                     (B)  the processing of personal data solely for
  measuring or reporting advertising performance, reach, or
  frequency.
               (32)  "Third party" means a person, other than the
  consumer, the controller, the processor, or an affiliate of the
  controller or processor.
               (33)  "Trade secret" means all forms and types of
  information, including business, scientific, technical, economic,
  or engineering information, and any formula, design, prototype,
  pattern, plan, compilation, program device, program, code, device,
  method, technique, process, procedure, financial data, or list of
  actual or potential customers or suppliers, whether tangible or
  intangible and whether or how stored, compiled, or memorialized
  physically, electronically, graphically, photographically, or in
  writing if:
                     (A)  the owner of the trade secret has taken
  reasonable measures under the circumstances to keep the information
  secret; and
                     (B)  the information derives independent economic
  value, actual or potential, from not being generally known to, and
  not being readily ascertainable through proper means by, another
  person who can obtain economic value from the disclosure or use of
  the information.
         Sec. 541.002.  APPLICABILITY OF CHAPTER. (a) This chapter
  applies only to a person that:
               (1)  conducts business in this state or produces a
  product or service consumed by residents of this state;
               (2)  processes or engages in the sale of personal data;
  and
               (3)  is not a small business as defined by the United
  States Small Business Administration, except to the extent that
  Section 541.107 applies to a person described by this subdivision.
         (b)  This chapter does not apply to:
               (1)  a state agency or a political subdivision of this
  state;
               (2)  a financial institution or data subject to Title
  V, Gramm-Leach-Bliley Act (15 U.S.C. Section 6801 et seq.);
               (3)  a covered entity or business associate governed by
  the privacy, security, and breach notification rules issued by the
  United States Department of Health and Human Services, 45 C.F.R.
  Parts 160 and 164, established under the Health Insurance
  Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d
  et seq.), and the Health Information Technology for Economic and
  Clinical Health Act (Division A, Title XIII, and Division B, Title
  IV, Pub. L. No. 111-5);
               (4)  a nonprofit organization;
               (5)  an institution of higher education; or
               (6)  an electric utility, a power generation company,
  or a retail electric provider, as those terms are defined by Section
  31.002, Utilities Code.
         Sec. 541.003.  CERTAIN INFORMATION EXEMPT FROM CHAPTER. The
  following information is exempt from this chapter:
               (1)  protected health information under the Health
  Insurance Portability and Accountability Act of 1996 (42 U.S.C.
  Section 1320d et seq.);
               (2)  health records;
               (3)  patient identifying information for purposes of 42
  U.S.C. Section 290dd-2;
               (4)  identifiable private information:
                     (A)  for purposes of the federal policy for the
  protection of human subjects under 45 C.F.R. Part 46;
                     (B)  collected as part of human subjects research
  under the good clinical practice guidelines issued by The
  International Council for Harmonisation of Technical Requirements
  for Pharmaceuticals for Human Use (ICH) or of the protection of
  human subjects under 21 C.F.R. Parts 50 and 56; or
                     (C)  that is personal data used or shared in
  research conducted in accordance with the requirements set forth in
  this chapter or other research conducted in accordance with
  applicable law;
               (5)  information and documents created for purposes of
  the Health Care Quality Improvement Act of 1986 (42 U.S.C. Section
  11101 et seq.);
               (6)  patient safety work product for purposes of the
  Patient Safety and Quality Improvement Act of 2005 (42 U.S.C.
  Section 299b-21 et seq.);
               (7)  information derived from any of the health
  care-related information listed in this section that is
  deidentified in accordance with the requirements for
  deidentification under the Health Insurance Portability and
  Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.);
               (8)  information originating from, and intermingled to
  be indistinguishable with, or information treated in the same
  manner as, information exempt under this section that is maintained
  by a covered entity or business associate as defined by the Health
  Insurance Portability and Accountability Act of 1996 (42 U.S.C.
  Section 1320d et seq.) or by a program or a qualified service
  organization as defined by 42 U.S.C. Section 290dd-2;
               (9)  information that is included in a limited data set
  as described by 45 C.F.R. Section 164.514(e), to the extent that the
  information is used, disclosed, and maintained in the manner
  specified by 45 C.F.R. Section 164.514(e);
               (10)  information collected or used only for public
  health activities and purposes as authorized by the Health
  Insurance Portability and Accountability Act of 1996 (42 U.S.C.
  Section 1320d et seq.);
               (11)  the collection, maintenance, disclosure, sale,
  communication, or use of any personal information bearing on a
  consumer's creditworthiness, credit standing, credit capacity,
  character, general reputation, personal characteristics, or mode
  of living by a consumer reporting agency or furnisher that provides
  information for use in a consumer report, and by a user of a
  consumer report, but only to the extent that the activity is
  regulated by and authorized under the Fair Credit Reporting Act (15
  U.S.C. Section 1681 et seq.);
               (12)  personal data collected, processed, sold, or
  disclosed in compliance with the Driver's Privacy Protection Act of
  1994 (18 U.S.C. Section 2721 et seq.);
               (13)  personal data regulated by the Family Educational
  Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g);
               (14)  personal data collected, processed, sold, or
  disclosed in compliance with the Farm Credit Act of 1971 (12 U.S.C.
  Section 2001 et seq.);
               (15)  data processed or maintained in the course of an
  individual applying to, being employed by, or acting as an agent or
  independent contractor of a controller, processor, or third party,
  to the extent that the data is collected and used within the context
  of that role;
               (16)  data processed or maintained  as the emergency
  contact information of an individual under this chapter that is
  used for emergency contact purposes; or
               (17)  data that is processed or maintained and is
  necessary to retain to administer benefits for another individual
  that relates to an individual described by Subdivision (15) and
  used for the purposes of administering those benefits.
         Sec. 541.004.  INAPPLICABILITY OF CHAPTER. This chapter
  does not apply to the processing of personal data by a person in the
  course of a purely personal or household activity.
         Sec. 541.005.  EFFECT OF COMPLIANCE WITH PARENTAL CONSENT
  REQUIREMENTS UNDER CERTAIN FEDERAL LAW. A controller or processor
  that complies with the verifiable parental consent requirements of
  the Children's Online Privacy Protection Act of 1998 (15 U.S.C.
  Section 6501 et seq.) with respect to data collected online is
  considered to be in compliance with any requirement to obtain
  parental consent under this chapter.
  SUBCHAPTER B. CONSUMER'S RIGHTS
         Sec. 541.051.  CONSUMER'S PERSONAL DATA RIGHTS; REQUEST TO
  EXERCISE RIGHTS. (a) A consumer is entitled to exercise the
  consumer rights authorized by this section at any time by
  submitting a request to a controller specifying the consumer rights
  the consumer wishes to exercise. With respect to the processing of
  personal data belonging to a known child, a parent or legal guardian
  of the child may exercise the consumer rights on behalf of the
  child.
         (b)  A controller shall comply with an authenticated
  consumer request to exercise the right to:
               (1)  confirm whether a controller is processing the
  consumer's personal data and to access the personal data;
               (2)  correct inaccuracies in the consumer's personal
  data, taking into account the nature of the personal data and the
  purposes of the processing of the consumer's personal data;
               (3)  delete personal data provided by or obtained about
  the consumer;
               (4)  if the data is available in a digital format,
  obtain a copy of the consumer's personal data that the consumer
  previously provided to the controller in a portable and, to the
  extent technically feasible, readily usable format that allows the
  consumer to transmit the data to another controller without
  hindrance; or
               (5)  opt out of the processing of the personal data for
  purposes of:
                     (A)  targeted advertising;
                     (B)  the sale of personal data; or
                     (C)  profiling in furtherance of a decision that
  produces a legal or similarly significant effect concerning the
  consumer.
         Sec. 541.052.  CONTROLLER RESPONSE TO CONSUMER REQUEST. (a)
  Except as otherwise provided by this chapter, a controller shall
  comply with a request submitted by a consumer to exercise the
  consumer's rights pursuant to Section 541.051 as provided by this
  section.
         (b)  A controller shall respond to the consumer request
  without undue delay, which may not be later than the 45th day after
  the date of receipt of the request. The controller may extend the
  response period once by an additional 45 days when reasonably
  necessary, taking into account the complexity and number of the
  consumer's requests, so long as the controller informs the consumer
  of the extension within the initial 45-day response period,
  together with the reason for the extension.
         (c)  If a controller declines to take action regarding the
  consumer's request, the controller shall inform the consumer
  without undue delay, which may not be later than the 45th day after
  the date of receipt of the request, of the justification for
  declining to take action and provide instructions on how to appeal
  the decision in accordance with Section 541.053.
         (d)  A controller shall provide information in response to a
  consumer request free of charge, at least twice annually per
  consumer. If a request from a consumer is manifestly unfounded,
  excessive, or repetitive, the controller may charge the consumer a
  reasonable fee to cover the administrative costs of complying with
  the request or may decline to act on the request. The controller
  bears the burden of demonstrating for purposes of this subsection
  that a request is manifestly unfounded, excessive, or repetitive.
         (e)  If a controller is unable to authenticate the request
  using commercially reasonable efforts, the controller is not
  required to comply with a consumer request submitted under Section
  541.051 and may request that the consumer provide additional
  information reasonably necessary to authenticate the consumer and
  the consumer's request.
         (f)  A controller that has obtained personal data about a
  consumer from a source other than the consumer is considered in
  compliance with a consumer's request to delete that personal data
  pursuant to Section 541.051(b)(3) by:
               (1)  retaining a record of the deletion request and the
  minimum data necessary for the purpose of ensuring the consumer's
  personal data remains deleted from the business's records and not
  using the retained data for any other purpose under this chapter; or
               (2)  opting the consumer out of the processing of that
  personal data for any purpose other than a purpose that is exempt
  under the provisions of this chapter.
         Sec. 541.053.  APPEAL. (a) A controller shall establish a
  process for a consumer to appeal the controller's refusal to take
  action on a request within a reasonable period of time after the
  consumer's receipt of the decision under Section 541.052(c).
         (b)  The appeal process must be conspicuously available and
  similar to the process for initiating action to exercise consumer
  rights by submitting a request under Section 541.051.
         (c)  A controller shall inform the consumer in writing of any
  action taken or not taken in response to an appeal under this
  section not later than the 60th day after the date of receipt of the
  appeal, including a written explanation of the reason or reasons
  for the decision.
         (d)  If the controller denies an appeal, the controller shall
  provide the consumer with the online mechanism described by Section
  541.152 through which the consumer may contact the attorney general
  to submit a complaint.
         Sec. 541.054.  WAIVER OR LIMITATION OF CONSUMER RIGHTS
  PROHIBITED. Any provision of a contract or agreement that waives or
  limits in any way a consumer right described by Sections 541.051,
  541.052, and 541.053 is contrary to public policy and is void and
  unenforceable.
         Sec. 541.055.  METHODS FOR SUBMITTING CONSUMER REQUESTS.
  (a) A controller shall establish two or more secure and reliable
  methods to enable consumers to submit a request to exercise their
  consumer rights under this chapter. The methods must take into
  account:
               (1)  the ways in which consumers normally interact with
  the controller;
               (2)  the necessity for secure and reliable
  communications of those requests; and
               (3)  the ability of the controller to authenticate the
  identity of the consumer making the request.
         (b)  A controller may not require a consumer to create a new
  account to exercise the consumer's rights under this subchapter but
  may require a consumer to use an existing account.
         (c)  Except as provided by Subsection (d), if the controller
  maintains an Internet website, the controller must provide a
  mechanism on the website for consumers to submit requests for
  information required to be disclosed under this chapter.
         (d)  A controller that operates exclusively online and has a
  direct relationship with a consumer from whom the controller
  collects personal information is only required to provide an e-mail
  address for the submission of requests described by Subsection (c).
         (e)  A consumer may designate another person to serve as the
  consumer's authorized agent and act on the consumer's behalf to opt
  out of the processing of the consumer's personal data under
  Sections 541.051(b)(5)(A) and (B). A consumer may designate an
  authorized agent using a technology, including a link to an
  Internet website, an Internet browser setting or extension, or a
  global setting on an electronic device, that allows the consumer to
  indicate the consumer's intent to opt out of the processing. A
  controller shall comply with an opt-out request received from an
  authorized agent under this subsection if the controller is able to
  verify, with commercially reasonable effort, the identity of the
  consumer and the authorized agent's authority to act on the
  consumer's behalf. A controller is not required to comply with an
  opt-out request received from an authorized agent under this
  subsection if:
               (1)  the authorized agent does not communicate the
  request to the controller in a clear and unambiguous manner;
               (2)  the controller is not able to verify, with
  commercially reasonable effort, that the consumer is a resident of
  this state;
               (3)  the controller does not possess the ability to
  process the request; or
               (4)  the controller does not process similar or
  identical requests the controller receives from consumers for the
  purpose of complying with similar or identical laws or regulations
  of another state.
         (f)  A technology described by Subsection (e):
               (1)  may not unfairly disadvantage another controller;
               (2)  may not make use of a default setting, but must
  require the consumer to make an affirmative, freely given, and
  unambiguous choice to indicate the consumer's intent to opt out of
  any processing of a consumer's personal data; and
               (3)  must be consumer-friendly and easy to use by the
  average consumer.
  SUBCHAPTER C.  CONTROLLER AND PROCESSOR DATA-RELATED DUTIES AND
  PROHIBITIONS
         Sec. 541.101.  CONTROLLER DUTIES; TRANSPARENCY. (a) A
  controller:
               (1)  shall limit the collection of personal data to
  what is adequate, relevant, and reasonably necessary in relation to
  the purposes for which that personal data is processed, as
  disclosed to the consumer; and
               (2)  for purposes of protecting the confidentiality,
  integrity, and accessibility of personal data, shall establish,
  implement, and maintain reasonable administrative, technical, and
  physical data security practices that are appropriate to the volume
  and nature of the personal data at issue.
         (b)  A controller may not:
               (1)  except as otherwise provided by this chapter,
  process personal data for a purpose that is neither reasonably
  necessary to nor compatible with the disclosed purpose for which
  the personal data is processed, as disclosed to the consumer,
  unless the controller obtains the consumer's consent;
               (2)  process personal data in violation of state and
  federal laws that prohibit unlawful discrimination against
  consumers;
               (3)  discriminate against a consumer for exercising any
  of the consumer rights contained in this chapter, including by
  denying goods or services, charging different prices or rates for
  goods or services, or providing a different level of quality of
  goods or services to the consumer; or
               (4)  process the sensitive data of a consumer without
  obtaining the consumer's consent, or, in the case of processing the
  sensitive data of a known child, without processing that data in
  accordance with the Children's Online Privacy Protection Act of
  1998 (15 U.S.C. Section 6501 et seq.).
         (c)  Subsection (b)(3) may not be construed to require a
  controller to provide a product or service that requires the
  personal data of a consumer that the controller does not collect or
  maintain or to prohibit a controller from offering a different
  price, rate, level, quality, or selection of goods or services to a
  consumer, including offering goods or services for no fee, if the
  consumer has exercised the consumer's right to opt out under
  Section 541.051 or the offer is related to a consumer's voluntary
  participation in a bona fide loyalty, rewards, premium features,
  discounts, or club card program.
         Sec. 541.102.  PRIVACY NOTICE. (a)  A controller shall
  provide consumers with a reasonably accessible and clear privacy
  notice that includes:
               (1)  the categories of personal data processed by the
  controller, including, if applicable, any sensitive data processed
  by the controller;
               (2)  the purpose for processing personal data;
               (3)  how consumers may exercise their consumer rights
  under Subchapter B, including the process by which a consumer may
  appeal a controller's decision with regard to the consumer's
  request;
               (4)  if applicable, the categories of personal data
  that the controller shares with third parties;
               (5)  if applicable, the categories of third parties
  with whom the controller shares personal data; and
               (6)  a description of the methods required under
  Section 541.055 through which consumers can submit requests to
  exercise their consumer rights under this chapter.
         (b)  If a controller engages in the sale of personal data
  that is sensitive data, the controller shall include the following
  notice:
         "NOTICE: We may sell your sensitive personal data."  The
  notice must be posted in the same location and in the same manner as
  the privacy notice described by Subsection (a).
         (c)  If a controller engages in the sale of personal data
  that is biometric data, the controller shall include the following
  notice:
         "NOTICE: We may sell your biometric personal data."  The
  notice must be posted in the same location and in the same manner as
  the privacy notice described by Subsection (a).
         Sec. 541.103.  SALE OF DATA TO THIRD PARTIES AND PROCESSING
  DATA FOR TARGETED ADVERTISING; DISCLOSURE. If a controller sells
  personal data to third parties or processes personal data for
  targeted advertising, the controller shall clearly and
  conspicuously disclose that process and the manner in which a
  consumer may exercise the right to opt out of that process.
         Sec. 541.104.  DUTIES OF PROCESSOR. (a) A processor shall
  adhere to the instructions of a controller and shall assist the
  controller in meeting or complying with the controller's duties or
  requirements under this chapter, including:
               (1)  assisting the controller in responding to consumer
  rights requests submitted under Section 541.051 by using
  appropriate technical and organizational measures, as reasonably
  practicable, taking into account the nature of processing and the
  information available to the processor;
               (2)  assisting the controller with regard to complying
  with the requirement relating to the security of processing
  personal data and to the notification of a breach of security of the
  processor's system under Chapter 521, taking into account the
  nature of processing and the information available to the
  processor; and
               (3)  providing necessary information to enable the
  controller to conduct and document data protection assessments
  under Section 541.105.
         (b)  A contract between a controller and a processor shall
  govern the processor's data processing procedures with respect to
  processing performed on behalf of the controller. The contract must
  include:
               (1)  clear instructions for processing data;
               (2)  the nature and purpose of processing;
               (3)  the type of data subject to processing;
               (4)  the duration of processing;
               (5)  the rights and obligations of both parties; and
               (6)  a requirement that the processor shall:
                     (A)  ensure that each person processing personal
  data is subject to a duty of confidentiality with respect to the
  data;
                     (B)  at the controller's direction, delete or
  return all personal data to the controller as requested after the
  provision of the service is completed, unless retention of the
  personal data is required by law;
                     (C)  make available to the controller, on
  reasonable request, all information in the processor's possession
  necessary to demonstrate the processor's compliance with the
  requirements of this chapter;
                     (D)  allow, and cooperate with, reasonable
  assessments by the controller or the controller's designated
  assessor; and
                     (E)  engage any subcontractor pursuant to a
  written contract that requires the subcontractor to meet the
  requirements of the processor with respect to the personal data.
         (c)  Notwithstanding the requirement described by Subsection
  (b)(6)(D), a processor, in the alternative, may arrange for a
  qualified and independent assessor to conduct an assessment of the
  processor's policies and technical and organizational measures in
  support of the requirements under this chapter using an appropriate
  and accepted control standard or framework and assessment
  procedure. The processor shall provide a report of the assessment
  to the controller on request.
         (d)  This section may not be construed to relieve a
  controller or a processor from the liabilities imposed on the
  controller or processor by virtue of its role in the processing
  relationship as described by this chapter.
         (e)  A determination of whether a person is acting as a
  controller or processor with respect to a specific processing of
  data is a fact-based determination that depends on the context in
  which personal data is to be processed. A processor that continues
  to adhere to a controller's instructions with respect to a specific
  processing of personal data remains in the role of a processor.
         Sec. 541.105.  DATA PROTECTION ASSESSMENTS. (a) A
  controller shall conduct and document a data protection assessment
  of each of the following processing activities involving personal
  data:
               (1)  the processing of personal data for purposes of
  targeted advertising;
               (2)  the sale of personal data;
               (3)  the processing of personal data for purposes of
  profiling, if the profiling presents a reasonably foreseeable risk
  of:
                     (A)  unfair or deceptive treatment of or unlawful
  disparate impact on consumers;
                     (B)  financial, physical, or reputational injury
  to consumers;
                     (C)  a physical or other intrusion on the solitude
  or seclusion, or the private affairs or concerns, of consumers, if
  the intrusion would be offensive to a reasonable person; or
                     (D)  other substantial injury to consumers;
               (4)  the processing of sensitive data; and
               (5)  any processing activities involving personal data
  that present a heightened risk of harm to consumers.
         (b)  A data protection assessment conducted under Subsection
  (a) must:
               (1)  identify and weigh the direct or indirect benefits
  that may flow from the processing to the controller, the consumer,
  other stakeholders, and the public, against the potential risks to
  the rights of the consumer associated with that processing, as
  mitigated by safeguards that can be employed by the controller to
  reduce the risks; and
               (2)  factor into the assessment:
                     (A)  the use of deidentified data;
                     (B)  the reasonable expectations of consumers;
                     (C)  the context of the processing; and
                     (D)  the relationship between the controller and
  the consumer whose personal data will be processed.
         (c)  A controller shall make a data protection assessment
  requested under Section 541.153(b) available to the attorney
  general pursuant to a civil investigative demand under Section
  541.153.
         (d)  A data protection assessment is confidential and exempt
  from public inspection and copying under Chapter 552, Government
  Code. Disclosure of a data protection assessment in compliance with
  a request from the attorney general does not constitute a waiver of
  attorney-client privilege or work product protection with respect
  to the assessment and any information contained in the assessment.
         (e)  A single data protection assessment may address a
  comparable set of processing operations that include similar
  activities.
         (f)  A data protection assessment conducted by a controller
  for the purpose of compliance with other laws or regulations may
  constitute compliance with the requirements of this section if the
  assessment has a reasonably comparable scope and effect.
         Sec. 541.106.  DEIDENTIFIED OR PSEUDONYMOUS DATA. (a) A
  controller in possession of deidentified data shall:
               (1)  take reasonable measures to ensure that the data
  cannot be associated with an individual;
               (2)  publicly commit to maintaining and using
  deidentified data without attempting to reidentify the data; and
               (3)  contractually obligate any recipient of the
  deidentified data to comply with the provisions of this chapter.
         (b)  This chapter may not be construed to require a
  controller or processor to:
               (1)  reidentify deidentified data or pseudonymous
  data;
               (2)  maintain data in identifiable form or obtain,
  retain, or access any data or technology for the purpose of allowing
  the controller or processor to associate a consumer request with
  personal data; or
               (3)  comply with an authenticated consumer rights
  request under Section 541.051, if the controller:
                     (A)  is not reasonably capable of associating the
  request with the personal data or it would be unreasonably
  burdensome for the controller to associate the request with the
  personal data;
                     (B)  does not use the personal data to recognize
  or respond to the specific consumer who is the subject of the
  personal data or associate the personal data with other personal
  data about the same specific consumer; and
                     (C)  does not sell the personal data to any third
  party or otherwise voluntarily disclose the personal data to any
  third party other than a processor, except as otherwise permitted
  by this section.
         (c)  The consumer rights under Sections 541.051(b)(1)-(4)
  and controller duties under Section 541.101 do not apply to
  pseudonymous data in cases in which the controller is able to
  demonstrate any information necessary to identify the consumer is
  kept separately and is subject to effective technical and
  organizational controls that prevent the controller from accessing
  the information.
         (d)  A controller that discloses pseudonymous data or
  deidentified data shall exercise reasonable oversight to monitor
  compliance with any contractual commitments to which the
  pseudonymous data or deidentified data is subject and shall take
  appropriate steps to address any breach of the contractual
  commitments.
         Sec. 541.107.  REQUIREMENTS FOR SMALL BUSINESSES.  (a)  A
  person described by Section 541.002(a)(3) may not engage in the
  sale of personal data that is sensitive data without receiving
  prior consent from the consumer.
         (b)  A person who violates this section is subject to the
  penalty under Section 541.155.
  SUBCHAPTER D. ENFORCEMENT
         Sec. 541.151.  ENFORCEMENT AUTHORITY EXCLUSIVE. The
  attorney general has exclusive authority to enforce this chapter.
         Sec. 541.152.  INTERNET WEBSITE AND COMPLAINT MECHANISM.
  The attorney general shall post on the attorney general's Internet
  website:
               (1)  information relating to:
                     (A)  the responsibilities of a controller under
  Subchapters B and C;
                     (B)  the responsibilities of a processor under
  Subchapter C; and
                     (C)  a consumer's rights under Subchapter B; and
               (2)  an online mechanism through which a consumer may
  submit a complaint under this chapter to the attorney general.
         Sec. 541.153.  INVESTIGATIVE AUTHORITY. (a) If the
  attorney general has reasonable cause to believe that a person has
  engaged in or is engaging in a violation of this chapter, the
  attorney general may issue a civil investigative demand. The
  procedures established for the issuance of a civil investigative
  demand under Section 15.10 apply to the same extent and manner to
  the issuance of a civil investigative demand under this section.
         (b)  The attorney general may request, pursuant to a civil
  investigative demand issued under Subsection (a), that a controller
  disclose any data protection assessment that is relevant to an
  investigation conducted by the attorney general. The attorney
  general may evaluate the data protection assessment for compliance
  with the requirements set forth in Sections 541.101, 541.102, and
  541.103.
         Sec. 541.154.  NOTICE OF VIOLATION OF CHAPTER; OPPORTUNITY
  TO CURE. Before bringing an action under Section 541.155, the
  attorney general shall notify a person in writing, not later than
  the 30th day before bringing the action, identifying the specific
  provisions of this chapter the attorney general alleges have been
  or are being violated. The attorney general may not bring an action
  against the person if:
               (1)  within the 30-day period, the person cures the
  identified violation; and
               (2)  the person provides the attorney general a written
  statement that the person:
                     (A)  cured the alleged violation;
                     (B)  notified the consumer that the consumer's
  privacy violation was addressed, if the consumer's contact
  information has been made available to the person;
                     (C)  provided supportive documentation to show
  how the privacy violation was cured; and
                     (D)  made changes to internal policies, if
  necessary, to ensure that no such further violations will occur.
         Sec. 541.155.  CIVIL PENALTY; INJUNCTION. (a) A person who
  violates this chapter following the cure period described by
  Section 541.154 or who breaches a written statement provided to the
  attorney general under that section is liable for a civil penalty in
  an amount not to exceed $7,500 for each violation.
         (b)  The attorney general may bring an action in the name of
  this state to:
               (1)  recover a civil penalty under this section;
               (2)  restrain or enjoin the person from violating this
  chapter; or
               (3)  recover the civil penalty and seek injunctive
  relief.
         (c)  The attorney general may recover reasonable attorney's
  fees and other reasonable expenses incurred in investigating and
  bringing an action under this section.
         (d)  The attorney general shall deposit a civil penalty
  collected under this section in accordance with Section 402.007,
  Government Code.
         Sec. 541.156.  NO PRIVATE RIGHT OF ACTION. This chapter may
  not be construed as providing a basis for, or being subject to, a
  private right of action for a violation of this chapter or any other
  law.
  SUBCHAPTER E. CONSTRUCTION OF CHAPTER; EXEMPTIONS FOR CERTAIN USES
  OF CONSUMER PERSONAL DATA
         Sec. 541.201.  CONSTRUCTION OF CHAPTER. (a) This chapter
  may not be construed to restrict a controller's or processor's
  ability to:
               (1)  comply with federal, state, or local laws, rules,
  or regulations;
               (2)  comply with a civil, criminal, or regulatory
  inquiry, investigation, subpoena, or summons by federal, state,
  local, or other governmental authorities;
               (3)  investigate, establish, exercise, prepare for, or
  defend legal claims;
               (4)  provide a product or service specifically
  requested by a consumer or the parent or guardian of a child,
  perform a contract to which the consumer is a party, including
  fulfilling the terms of a written warranty, or take steps at the
  request of the consumer before entering into a contract;
               (5)  take immediate steps to protect an interest that
  is essential for the life or physical safety of the consumer or of
  another individual and in which the processing cannot be manifestly
  based on another legal basis;
               (6)  prevent, detect, protect against, or respond to
  security incidents, identity theft, fraud, harassment, malicious
  or deceptive activities, or any illegal activity;
               (7)  preserve the integrity or security of systems or
  investigate, report, or prosecute those responsible for breaches of
  system security;
               (8)  engage in public or peer-reviewed scientific or
  statistical research in the public interest that adheres to all
  other applicable ethics and privacy laws and is approved,
  monitored, and governed by an institutional review board or similar
  independent oversight entity that determines:
                     (A)  if the deletion of the information is likely
  to provide substantial benefits that do not exclusively accrue to
  the controller;
                     (B)  whether the expected benefits of the research
  outweigh the privacy risks; and
                     (C)  if the controller has implemented reasonable
  safeguards to mitigate privacy risks associated with research,
  including any risks associated with reidentification; or
               (9)  assist another controller, processor, or third
  party with any of the requirements under this subsection.
         (b)  This chapter may not be construed to prevent a
  controller or processor from providing personal data concerning a
  consumer to a person covered by an evidentiary privilege under the
  laws of this state as part of a privileged communication.
         (c)  This chapter may not be construed as imposing a
  requirement on controllers and processors that adversely affects
  the rights or freedoms of any person, including the right of free
  speech.
         (d)  This chapter may not be construed as requiring a
  controller, processor, third party, or consumer to disclose a trade
  secret.
         Sec. 541.202.  COLLECTION, USE, OR RETENTION OF DATA FOR
  CERTAIN PURPOSES. (a) The requirements imposed on controllers and
  processors under this chapter may not restrict a controller's or
  processor's ability to collect, use, or retain data to:
               (1)  conduct internal research to develop, improve, or
  repair products, services, or technology;
               (2)  effect a product recall;
               (3)  identify and repair technical errors that impair
  existing or intended functionality; or
               (4)  perform internal operations that:
                     (A)  are reasonably aligned with the expectations
  of the consumer;
                     (B)  are reasonably anticipated based on the
  consumer's existing relationship with the controller; or
                     (C)  are otherwise compatible with processing
  data in furtherance of the provision of a product or service
  specifically requested by a consumer or the performance of a
  contract to which the consumer is a party.
         (b)  A requirement imposed on a controller or processor under
  this chapter does not apply if compliance with the requirement by
  the controller or processor, as applicable, would violate an
  evidentiary privilege under the laws of this state.
         Sec. 541.203.  DISCLOSURE OF PERSONAL DATA TO THIRD-PARTY
  CONTROLLER OR PROCESSOR. (a) A controller or processor that
  discloses personal data to a third-party controller or processor,
  in compliance with the requirements of this chapter, does not
  violate this chapter if the third-party controller or processor
  that receives and processes that personal data is in violation of
  this chapter, provided that, at the time of the data's disclosure,
  the disclosing controller or processor did not have actual
  knowledge that the recipient intended to commit a violation.
         (b)  A third-party controller or processor receiving
  personal data from a controller or processor in compliance with the
  requirements of this chapter does not violate this chapter for the
  transgressions of the controller or processor from which the
  third-party controller or processor receives the personal data.
         Sec. 541.204.  PROCESSING OF CERTAIN PERSONAL DATA BY
  CONTROLLER OR OTHER PERSON. (a) Personal data processed by a
  controller under this subchapter may not be processed for any
  purpose other than a purpose listed in this subchapter unless
  otherwise allowed by this chapter. Personal data processed by a
  controller under this subchapter may be processed to the extent
  that the processing of the data is:
               (1)  reasonably necessary and proportionate to the
  purposes listed in this subchapter; and
               (2)  adequate, relevant, and limited to what is
  necessary in relation to the specific purposes listed in this
  subchapter.
         (b)  Personal data collected, used, or retained under
  Section 541.202(a) must, where applicable, take into account the
  nature and purpose of such collection, use, or retention. The
  personal data described by this subsection is subject to reasonable
  administrative, technical, and physical measures to protect the
  confidentiality, integrity, and accessibility of the personal data
  and to reduce reasonably foreseeable risks of harm to consumers
  relating to the collection, use, or retention of personal data.
         (c)  A controller that processes personal data under an
  exemption in this subchapter bears the burden of demonstrating that
  the processing of the personal data qualifies for the exemption and
  complies with the requirements of Subsections (a) and (b).
         (d)  The processing of personal data by an entity for the
  purposes described by Section 541.201 does not solely make the
  entity a controller with respect to the processing of the data.
         Sec. 541.205.  LOCAL PREEMPTION.  This chapter supersedes
  and preempts any ordinance, resolution, rule, or other regulation
  adopted by a political subdivision regarding the processing of
  personal data by a controller or processor.
         SECTION 3.  (a) The Department of Information Resources,
  under the management of the chief privacy officer, shall review the
  implementation of the requirements of Chapter 541, Business &
  Commerce Code, as added by this Act.
         (b)  Not later than September 1, 2024, the Department of
  Information Resources shall create an online portal available on
  the department's Internet website for members of the public to
  provide feedback and recommend changes to Chapter 541, Business &
  Commerce Code, as added by this Act. The online portal must remain
  open for receiving feedback from the public for at least 90 days.
         (c)  Not later than January 1, 2025, the Department of
  Information Resources shall make available to the public a report
  detailing the status of the implementation of the requirements of
  Chapter 541, Business & Commerce Code, as added by this Act, and any
  recommendations to the legislature regarding changes to that law.
         (d)  This section expires September 1, 2025.
         SECTION 4.  Data protection assessments required to be
  conducted under Section 541.105, Business & Commerce Code, as added
  by this Act, apply only to processing activities generated after
  the effective date of this Act and are not retroactive.
         SECTION 5.  Not later than July 1, 2024, the attorney general
  shall post the information and online mechanism required by Section
  541.152, Business & Commerce Code, as added by this Act.
         SECTION 6.  The provisions of this Act are hereby declared
  severable, and if any provision of this Act or the application of
  such provision to any person or circumstance is declared invalid
  for any reason, such declaration shall not affect the validity of
  the remaining portions of this Act.
         SECTION 7.  (a) Except as provided by Subsection (b) of this
  section, this Act takes effect July 1, 2024.
         (b)  Section 541.055(e), Business & Commerce Code, as added
  by this Act, takes effect January 1, 2025.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 4 was passed by the House on April 5,
  2023, by the following vote:  Yeas 146, Nays 0, 1 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 4 on May 15, 2023, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; and that the House adopted the conference committee report
  on H.B. No. 4 on May 28, 2023, by the following vote:  Yeas 144,
  Nays 0, 1 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 4 was passed by the Senate, with
  amendments, on May 10, 2023, by the following vote:  Yeas 30, Nays
  0; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; and
  that the Senate adopted the conference committee report on H.B. No.
  4 on May 27, 2023, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor