ZEM S.B. 911 75(R)    BILL ANALYSIS


CIVIL PRACTICES
S.B. 911
By: Cain (Goodman)
4-25-97
Committee Report (Amended)



BACKGROUND 

In 1996 the federal government enacted legislation that extended
protection from certain environmental claims to fiduciaries in the Asset
Conservation, Lender Liability and Deposit Insurance Act, 42 U.S.C.
Section 9607(n).  This move was in response to the growing number of
environmentally burdened properties ending up in the hands of fiduciaries,
thus exposing them to liability under CERCLA.  Prior to federal relief, if
the trust could not cover the cost of damages, the corporate veil could be
pierced, affecting not only the corporate trustee (bank/trust company),
but also the individual trustee/trustees administering the trust account.
Under current federal law, in order for a fiduciary to be liable, there
must be a showing that the fiduciary acted as an operator or manager. 


PURPOSE

This bill brings the state statute in line with federal law in terms of
fiduciary liability for an environmentally burdened property.  The trust
is still accountable for cleanup costs and reclamation. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 114.001, Property Code, by adding Subsection (e)
as follows: 
 
  (e) Gives fiduciaries the same protection under state law as they
   currently are entitled to under federal law.

SECTION 2. Effective Date: September 1, 1997.

SECTION 3. Emergency Clause.

EXPLANATION OF AMENDMENTS

Committee Amendment #1 removes SECTION 2 from the original bill which
provided for the release from liability of a trustee for investments made
on the advice of a third party.