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A BILL TO BE ENTITLED
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AN ACT
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relating to the authority of the Texas Department of Insurance to |
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adopt rules that implement or are based on certain environmental, |
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social, and governance models, ratings, or standards. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 36.004, Insurance Code, is amended by |
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amending Subsection (b) and adding Subsection (d) to read as |
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follows: |
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(b) For purposes of Subsections [Subsection] (a) and (d) of |
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this section and Section 36.008, a version of a rule, regulation, |
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directive, or standard is expressly authorized by statute if: |
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(1) the statute explicitly authorizes the |
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commissioner to adopt rules consistent with the rule, regulation, |
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directive, or standard; or |
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(2) that version is the latest version of the rule, |
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regulation, directive, or standard on the date that the statute was |
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enacted. |
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(d) In this subsection, "environmental assessment," "social |
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assessment," and "governance assessment" have the meanings |
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assigned by Section 36.008. Notwithstanding Subsection (c) of this |
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section or any other law, the commissioner may not require an |
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insurer to comply with a rule, regulation, directive, or standard, |
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including an accounting standard, adopted by the National |
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Association of Insurance Commissioners if the rule, regulation, |
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directive, or standard is developed using a model, rating, or |
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standard that measures and considers environmental, social, and |
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governance assessments unless application of the rule, regulation, |
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directive, or standard is expressly authorized by statute. |
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SECTION 2. Subchapter A, Chapter 36, Insurance Code, is |
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amended by adding Section 36.008 to read as follows: |
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Sec. 36.008. RULES IMPLEMENTING CERTAIN ENVIRONMENTAL, |
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SOCIAL, AND GOVERNANCE MODELS, RATINGS, AND STANDARDS PROHIBITED. |
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(a) In this section: |
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(1) "Environmental assessment" means an assessment of |
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the response by or vulnerability of an entity to climate change, |
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including the extent of the entity's exposure to harm from |
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climate-related factors. |
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(2) "Governance assessment" means an assessment of the |
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ethical or moral principles that influence the corporate governance |
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of an entity, including the structure and composition of the |
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governing board, ownership structure, employee and officer pay |
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policy, and accounting methodology of the entity. |
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(3) "Social assessment" means an assessment of: |
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(A) the human capital management practices of an |
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entity, including employment practices, employee training and |
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development, employee safety, and the selection of suppliers and |
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vendors based on preferred labor standards; |
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(B) the potential for an entity's products to |
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directly or indirectly cause physical or financial harm to persons |
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or to identified groups of persons, including harm caused by |
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quality control or safety failures and the unintentional or |
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unauthorized release of personal identifying information held by |
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the entity; |
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(C) an entity's willingness to invest its |
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earnings or reserves to improve the quality and safety of the |
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entity's management practices and products and mitigate any |
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negative effect those practices and products may have on consumers |
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and the environment; or |
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(D) any other factor relating to the social |
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effect of the entity's practices or products, including opposition |
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to those practices and products and their effect on the supply |
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chain. |
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(b) This section applies only to a rule that: |
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(1) implements or is based on an interstate, national, |
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or international model, rating, or standard, including an |
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accounting standard, that measures and considers environmental, |
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social, and governance assessments; |
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(2) is intended to: |
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(A) protect the environment; |
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(B) evaluate the effect of a particular entity or |
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industry on the environment; or |
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(C) encourage an entity to engage in specific |
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activities or behaviors in response to environmental concerns; and |
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(3) may materially affect in an adverse manner the: |
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(A) economy of this state or a sector of the |
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economy of this state; |
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(B) productivity and competitiveness of an |
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entity doing business in this state; |
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(C) number of people employed in this state; or |
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(D) health and safety of the residents of this |
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state. |
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(c) The commissioner may not adopt or enforce a rule to |
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which this section applies: |
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(1) that was developed by an entity that is not |
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licensed or regulated by: |
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(A) the department; |
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(B) the National Association of Insurance |
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Commissioners; or |
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(C) an entity of this state or of the federal |
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government, other than an entity described by Paragraph (A) or (B), |
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that regulates the practice of insurance; |
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(2) that may affect the authority of this state to |
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regulate the practice of insurance in this state; and |
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(3) the adoption or enforcement of which is not |
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specifically authorized by statute. |
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(d) A person may file an action for declaratory judgment |
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challenging the adoption of a rule on the basis that the rule was |
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adopted in violation of this section. An action for declaratory |
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judgment under this section is governed by Section 2001.038, |
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Government Code. If the court determines that the rule was adopted |
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in violation of this section, the rule is invalid. |
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SECTION 3. The change in law made by this Act applies only |
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to a proposed rule for which notice is filed with the secretary of |
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state under Section 2001.023, Government Code, on or after the |
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effective date of this Act. |
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SECTION 4. This Act takes effect September 1, 2023. |