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.