By Greenberg H.B. No. 826
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to alternative dispute resolution proceedings of
1-3 governmental bodies.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 2008, Government Code, as added by
1-6 Chapter 934, Acts of the 75th Legislature, Regular Session, 1997,
1-7 is redesignated as Chapter 2009, Government Code, and amended to
1-8 read as follows:
1-9 CHAPTER 2009 [2008]. ALTERNATIVE DISPUTE RESOLUTION FOR USE BY
1-10 GOVERNMENTAL BODIES [AT STATE AGENCIES]
1-11 SUBCHAPTER A. GENERAL PROVISIONS
1-12 Sec. 2009.001. [2008.001.] SHORT TITLE. This chapter may be
1-13 cited as the Governmental Dispute Resolution Act.
1-14 Sec. 2009.002. [2008.002.] POLICY. It is the policy of this
1-15 state that disputes before governmental bodies [state agencies] be
1-16 resolved as fairly and expeditiously as possible and that each
1-17 governmental body [state agency] support this policy by developing
1-18 and using alternative dispute resolution procedures in appropriate
1-19 aspects of the governmental body's [agency's] operations and
1-20 programs.
1-21 Sec. 2009.003. [2008.003.] DEFINITIONS. In this chapter:
1-22 (1) "Alternative dispute resolution procedure"
1-23 includes:
1-24 (A) a procedure described by Chapter 154, Civil
2-1 Practice and Remedies Code; and
2-2 (B) a combination of the procedures described by
2-3 Chapter 154, Civil Practice and Remedies Code.
2-4 (2) "Governmental body" has the meaning assigned by
2-5 Section 552.003.
2-6 (3) [(2)] "State agency" means an officer, board,
2-7 commission, department, or other agency in the executive branch of
2-8 state government with statewide jurisdiction that makes rules or
2-9 determines contested cases. The term includes:
2-10 (A) the attorney general;
2-11 (B) an institution of higher education as
2-12 defined by Section 61.003, Education Code; and
2-13 (C) the State Office of Administrative Hearings.
2-14 (4) [(3)] The following terms have the meanings
2-15 assigned by Section 2001.003:
2-16 (A) "contested case";
2-17 (B) "party";
2-18 (C) "person"; and
2-19 (D) "rule."
2-20 Sec. 2009.004. [2008.004. AGENCY] CONTRACTS; BUDGETING FOR
2-21 COSTS. (a) A governmental body [state agency] may pay for costs
2-22 necessary to meet the objectives of this chapter, including
2-23 reasonable fees for training, policy review, system design,
2-24 evaluation, and the use of impartial third parties.
2-25 (b) To the extent allowed by the General Appropriations Act,
2-26 a state [the] agency may use [for this purpose] money budgeted for
2-27 legal services, executive administration, or any other appropriate
3-1 aspect of the state agency's operations to pay for costs incurred
3-2 under Subsection (a).
3-3 (c) [(b)] A governmental body [state agency] may contract
3-4 with another governmental body [state agency], including the
3-5 Center for Public Policy Dispute Resolution at The University of
3-6 Texas School of Law, with an alternative dispute resolution system
3-7 created under Chapter 152, Civil Practice and Remedies Code, or
3-8 with a private entity for any service necessary to meet the
3-9 objectives of this chapter.
3-10 Sec. 2009.005. [2008.005.] SOVEREIGN IMMUNITY. (a) This
3-11 chapter does not waive immunity from suit and does not affect a
3-12 waiver of immunity from suit contained in other law.
3-13 (b) The state's sovereign immunity under the Eleventh
3-14 Amendment to the United States Constitution is not waived by this
3-15 chapter.
3-16 (c) Nothing in this chapter authorizes binding arbitration
3-17 as a method of alternative dispute resolution.
3-18 SUBCHAPTER B. ALTERNATIVE DISPUTE RESOLUTION
3-19 Sec. 2009.051. [2008.051.] DEVELOPMENT AND USE OF
3-20 PROCEDURES. (a) Each governmental body [state agency] may develop
3-21 and use alternative dispute resolution procedures. Alternative
3-22 dispute resolution procedures developed and used by a governmental
3-23 body [state agency] must be consistent with Chapter 154, Civil
3-24 Practice and Remedies Code.
3-25 (b) Alternative dispute resolution procedures developed and
3-26 used by a state agency also must be consistent[, and] with the
3-27 administrative procedure law, Chapter 2001. The State Office of
4-1 Administrative Hearings may issue model guidelines for the use of
4-2 alternative dispute resolution procedures by state agencies.
4-3 (c) [(b)] If a state agency that is subject to Chapter 2001
4-4 adopts an alternative dispute resolution procedure, it may do so by
4-5 rule.
4-6 Sec. 2009.052. [2008.052.] SUPPLEMENTAL NATURE OF
4-7 PROCEDURES. (a) Alternative dispute resolution procedures
4-8 developed and used under this chapter supplement and do not limit
4-9 other dispute resolution procedures available for use by [at] a
4-10 governmental body [state agency].
4-11 (b) This chapter may not be applied in a manner that denies
4-12 a person a right granted under other state or federal law or under
4-13 a local charter, ordinance, or other similar provision, including a
4-14 right to an administrative or judicial hearing.
4-15 Sec. 2009.053. [2008.053.] IMPARTIAL THIRD PARTIES. (a) A
4-16 governmental body [state agency] may appoint a governmental officer
4-17 or employee or a private individual to serve as an impartial third
4-18 party in an alternative dispute resolution procedure. The
4-19 governmental body's [agency's] appointment of the impartial third
4-20 party is subject to the approval of the parties, except that when a
4-21 State Office of Administrative Hearings administrative law judge
4-22 has issued an order referring a case involving a state agency to an
4-23 alternative dispute resolution procedure under Section
4-24 2003.042(a)(5) [2003.042(5)], the administrative law judge may
4-25 appoint the impartial third party for the parties if they cannot
4-26 agree on an impartial third party within a reasonable period.
4-27 (b) [The impartial third party must possess the
5-1 qualifications required under Section 154.052, Civil Practice and
5-2 Remedies Code.]
5-3 [(c)] A governmental body [state agency] also may obtain the
5-4 services of a qualified impartial third party through an agreement
5-5 with [the State Office of Administrative Hearings,] the Center for
5-6 Public Policy Dispute Resolution at The University of Texas School
5-7 of Law, an alternative dispute resolution system created under
5-8 Chapter 152, Civil Practice and Remedies Code, [or] another
5-9 governmental body, [state] or a federal agency or through a pooling
5-10 agreement with several governmental bodies [state agencies]. The
5-11 agreements may provide that the using governmental body [agency] or
5-12 the parties will reimburse the furnishing entity [agency], in kind
5-13 or monetarily, for the full or partial cost of providing the
5-14 qualified impartial third party.
5-15 (c) A state agency may also obtain the services of a
5-16 qualified third party through an agreement with the State Office of
5-17 Administrative Hearings.
5-18 (d) The impartial third party must possess the
5-19 qualifications required under Section 154.052, Civil Practice and
5-20 Remedies Code. The impartial third party is subject to the
5-21 standards and duties prescribed by Section 154.053, Civil Practice
5-22 and Remedies Code, and has the qualified immunity prescribed by
5-23 Section 154.055, Civil Practice and Remedies Code, if applicable.
5-24 Sec. 2009.054. [2008.054.] CONFIDENTIALITY OF CERTAIN
5-25 RECORDS AND COMMUNICATIONS. (a) Sections 154.053 and 154.073,
5-26 Civil Practice and Remedies Code, apply to the communications,
5-27 records, conduct, and demeanor of the impartial third party and the
6-1 parties.
6-2 (b) Notwithstanding Section 154.073(d), Civil Practice and
6-3 Remedies Code:
6-4 (1) a communication relevant to the dispute, and a
6-5 record of the communication, made between an impartial third party
6-6 and the parties to the dispute or between the parties to the
6-7 dispute during the course of an alternative dispute resolution
6-8 procedure are confidential and may not be disclosed unless all
6-9 parties to the dispute consent to the disclosure; and
6-10 (2) the notes of an impartial third party are
6-11 confidential except to the extent that the notes consist of a
6-12 record of a communication with a party and all parties have
6-13 consented to disclosure in accordance with Subdivision (1).
6-14 (c) Subsection (b)(1) does not apply to a final written
6-15 agreement to which a governmental body [entity] is a signatory that
6-16 is reached as a result of a dispute resolution procedure conducted
6-17 under this chapter. Information in the final written agreement is
6-18 subject to required disclosure, is excepted from required
6-19 disclosure, or is confidential in accordance with Chapter 552 and
6-20 other law.
6-21 (d) An impartial third party may not be required to testify
6-22 in any proceedings relating to or arising out of the matter in
6-23 dispute.
6-24 Sec. 2009.055. [2008.055. INTERAGENCY] SHARING OF
6-25 INFORMATION; CONSISTENCY OF PROCEDURES. (a) A governmental body
6-26 [state agency] may share the results of its alternative dispute
6-27 resolution program with other governmental bodies [agencies] and
7-1 with the Center for Public Policy Dispute Resolution at The
7-2 University of Texas School of Law. The center may collect and
7-3 analyze the information and report its conclusions and useful
7-4 information to governmental bodies [state agencies] and the
7-5 legislature.
7-6 (b) Governmental bodies [State agencies] should, to the
7-7 extent feasible given [the] differences in their [agency] purpose,
7-8 jurisdiction, and constituency, adopt policies and procedures for
7-9 alternative dispute resolution that are consistent with the
7-10 policies and procedures of other governmental bodies [state
7-11 agencies].
7-12 SECTION 2. Section 154.073, Civil Practice and Remedies
7-13 Code, is amended to read as follows:
7-14 Sec. 154.073. CONFIDENTIALITY OF CERTAIN RECORDS AND
7-15 COMMUNICATIONS [IN DISPUTE RESOLUTION PROCEDURES]. (a) Except as
7-16 provided by Subsections (c), [and] (d), and (e), a communication
7-17 relating to the subject matter of any civil or criminal dispute
7-18 made by a participant in an alternative dispute resolution
7-19 procedure, whether before or after the institution of formal
7-20 judicial proceedings, is confidential, is not subject to
7-21 disclosure, and may not be used as evidence against the participant
7-22 in any judicial or administrative proceeding.
7-23 (b) Any record made at an alternative dispute resolution
7-24 procedure is confidential, and the participants or the third party
7-25 facilitating the procedure may not be required to testify in any
7-26 proceedings relating to or arising out of the matter in dispute or
7-27 be subject to process requiring disclosure of confidential
8-1 information or data relating to or arising out of the matter in
8-2 dispute.
8-3 (c) An oral communication or written material used in or
8-4 made a part of an alternative dispute resolution procedure is
8-5 admissible or discoverable if it is admissible or discoverable
8-6 independent of the procedure.
8-7 (d) A final written agreement to which a governmental body,
8-8 as defined by Section 552.003, Government Code, is a signatory that
8-9 is reached as a result of a dispute resolution procedure conducted
8-10 under this chapter is subject to or excepted from required
8-11 disclosure in accordance with Chapter 552, Government Code.
8-12 (e) If this section conflicts with other legal requirements
8-13 for disclosure of communications, records, or materials, the issue
8-14 of confidentiality may be presented to the court having
8-15 jurisdiction of the proceedings to determine, in camera, whether
8-16 the facts, circumstances, and context of the communications or
8-17 materials sought to be disclosed warrant a protective order of the
8-18 court or whether the communications or materials are subject to
8-19 disclosure.
8-20 SECTION 3. Section 2003.001(2), Government Code, is amended
8-21 to read as follows:
8-22 (2) "Alternative dispute resolution procedure" has the
8-23 meaning assigned by Section 2009.003 [2008.003].
8-24 SECTION 4. Section 2003.042(a), Government Code, is amended
8-25 to read as follows:
8-26 (a) An administrative law judge employed by the office or a
8-27 temporary administrative law judge may:
9-1 (1) administer an oath;
9-2 (2) take testimony;
9-3 (3) rule on a question of evidence;
9-4 (4) issue an order relating to discovery or another
9-5 hearing or prehearing matter, including an order imposing a
9-6 sanction;
9-7 (5) issue an order that refers a case to an
9-8 alternative dispute resolution procedure, determines how the costs
9-9 of the procedure will be apportioned, and appoints an impartial
9-10 third party as described by Section 2009.053 [2008.053] to
9-11 facilitate that procedure;
9-12 (6) issue a proposal for decision that includes
9-13 findings of fact and conclusions of law; [and]
9-14 (7) [(6)] if expressly authorized by a state agency
9-15 rule adopted under Section 2001.058(f), make the final decision in
9-16 a contested case;[.]
9-17 (8) [(7)] serve as an impartial third party as
9-18 described by Section 2009.053 [2008.053] for a dispute referred by
9-19 an administrative law judge, unless one of the parties objects to
9-20 the appointment; and
9-21 (9) [(8)] serve as an impartial third party as
9-22 described by Section 2009.053 [2008.053] for a dispute referred by
9-23 a government agency under a contract.
9-24 SECTION 5. Subtitle F, Title 10, Government Code, is amended
9-25 by adding Chapter 2260 to read as follows:
9-26 CHAPTER 2260. RESOLUTION OF CERTAIN CONTRACT CLAIMS
9-27 AGAINST THE STATE
10-1 SUBCHAPTER A. GENERAL PROVISIONS
10-2 Sec. 2260.001. DEFINITIONS. In this chapter:
10-3 (1) "Contract" means a written contract between a unit
10-4 of state government and a contractor for goods or services, or for
10-5 a project as defined by Section 2166.001. The term does not
10-6 include a contract subject to Section 201.112, Transportation Code.
10-7 (2) "Contractor" means an independent contractor who
10-8 has entered into a contract directly with a unit of state
10-9 government. The term does not include:
10-10 (A) a contractor's subcontractor, officer,
10-11 employee, agent, or other person furnishing goods or services to a
10-12 contractor;
10-13 (B) an employee of a unit of state government;
10-14 or
10-15 (C) a student at an institution of higher
10-16 education.
10-17 (3) "Institution of higher education" has the meaning
10-18 assigned by Section 61.003, Education Code.
10-19 (4) "Unit of state government" means the state or an
10-20 agency, department, commission, bureau, board, office, council,
10-21 court, or other entity that is in any branch of state government
10-22 and that is created by the constitution or a statute of this state,
10-23 including a university system or institution of higher education.
10-24 The term does not include a county, municipality, court of a county
10-25 or municipality, special purpose district, or other political
10-26 subdivision of this state.
10-27 Sec. 2260.002. APPLICABILITY. This chapter does not apply
11-1 to a claim for personal injury or wrongful death arising from the
11-2 breach of a contract.
11-3 Sec. 2260.003. DAMAGES. (a) The total amount of money
11-4 recoverable on a claim for breach of contract under this chapter
11-5 may not, after deducting the amount specified in Subsection (b),
11-6 exceed the balance due and owing on the contract price, including
11-7 orders for additional work.
11-8 (b) Any amount owed the unit of state government for work
11-9 not performed under a contract or in substantial compliance with
11-10 its terms shall be deducted from the amount in Subsection (a).
11-11 Sec. 2260.004. REQUIRED CONTRACT PROVISION. (a) Each unit
11-12 of state government that enters into a contract to which this
11-13 chapter applies shall include as a term of the contract a provision
11-14 stating that the dispute resolution process used by the unit of
11-15 state government under this chapter must be used to attempt to
11-16 resolve a dispute arising under the contract.
11-17 (b) The attorney general shall provide assistance to a unit
11-18 of state government in developing the contract provision required
11-19 by this section.
11-20 Sec. 2260.005. EXCLUSIVE PROCEDURE. The procedures
11-21 contained in this chapter are exclusive and required prerequisites
11-22 to suit in accordance with Chapter 107, Civil Practice and Remedies
11-23 Code.
11-24 Sec. 2260.006. SOVEREIGN IMMUNITY. This chapter does not
11-25 waive sovereign immunity to suit or liability.
11-26 (Sections 2260.007-2260.050 reserved for expansion
11-27 SUBCHAPTER B. NEGOTIATION OF CLAIM
12-1 Sec. 2260.051. CLAIM FOR BREACH OF CONTRACT; NOTICE. (a) A
12-2 contractor may make a claim against a unit of state government for
12-3 breach of a contract between the unit of state government and the
12-4 contractor. The unit of state government may assert a counterclaim
12-5 against the contractor.
12-6 (b) A contractor must provide written notice to the unit of
12-7 state government of a claim for breach of contract not later than
12-8 the 180th day after the date of the event giving rise to the claim.
12-9 (c) The notice must state with particularity:
12-10 (1) the nature of the alleged breach;
12-11 (2) the amount the contractor seeks as damages; and
12-12 (3) the legal theory of recovery.
12-13 (d) A unit of state government must assert, in a writing
12-14 delivered to the contractor, any counterclaim not later than the
12-15 90th day after the date of notice under Subsection (b). A unit of
12-16 state government that does not comply with this subsection waives
12-17 the right to assert the counterclaim.
12-18 Sec. 2260.052. NEGOTIATION. (a) The chief administrative
12-19 officer or, if designated in the contract, another officer of the
12-20 unit of state government shall examine the claim and any
12-21 counterclaim and negotiate with the contractor in an effort to
12-22 resolve them. Except as provided by Subsection (b), the
12-23 negotiation must begin not later than the 60th day after the later
12-24 of:
12-25 (1) the date of termination of the contract;
12-26 (2) the completion date in the original contract; or
12-27 (3) the date the claim is received.
13-1 (b) A unit of state government against which a claim is
13-2 filed is entitled to delay the beginning of negotiation until after
13-3 the 180th day after the date of the event giving rise to the claim.
13-4 (c) Each unit of state government with rulemaking authority
13-5 shall develop rules to govern the negotiation of a claim under this
13-6 section. If a unit of state government does not have rulemaking
13-7 authority, that unit shall follow the rules adopted by the attorney
13-8 general.
13-9 Sec. 2260.053. PARTIAL RESOLUTION OF CLAIM. (a) If the
13-10 negotiation under Section 2260.052 results in the resolution of
13-11 some disputed issues by agreement or in a settlement, the parties
13-12 shall reduce the agreement or settlement to writing and each party
13-13 shall sign the agreement or settlement.
13-14 (b) A partial settlement or resolution of a claim does not
13-15 waive a party's rights under this chapter as to the parts of the
13-16 claim that are not resolved.
13-17 Sec. 2260.054. PAYMENT OF CLAIM FROM APPROPRIATED FUNDS. A
13-18 unit of state government may pay a claim resolved in accordance
13-19 with this subchapter only from money appropriated to it for payment
13-20 of contract claims or for payment of the contract that is the
13-21 subject of the claim. If money previously appropriated for payment
13-22 of contract claims or payment of the contract is insufficient to
13-23 pay the claim or settlement, the balance of the claim may be paid
13-24 only from money appropriated by the legislature for payment of the
13-25 claim.
13-26 Sec. 2260.055. INCOMPLETE RESOLUTION. If a claim is not
13-27 entirely resolved under Section 2260.052 on or before the 270th day
14-1 after the date the claim is filed with the unit of state
14-2 government, unless the parties agree in writing to an extension of
14-3 time, the contractor may file a request for a hearing under
14-4 Subchapter C.
14-5 (Sections 2260.056-2260.100 reserved for expansion
14-6 SUBCHAPTER C. CONTESTED CASE HEARING
14-7 Sec. 2260.101. DEFINITION. In this subchapter, "office"
14-8 means the State Office of Administrative Hearings.
14-9 Sec. 2260.102. REQUEST FOR HEARING. (a) If a contractor is
14-10 not satisfied with the results of negotiation with a unit of state
14-11 government under Section 2260.052, the contractor may file a
14-12 request for a hearing with the unit of state government.
14-13 (b) The request must:
14-14 (1) state the factual and legal basis for the claim;
14-15 and
14-16 (2) request that the claim be referred to the State
14-17 Office of Administrative Hearings for a contested case hearing.
14-18 (c) On receipt of a request under Subsection (a), the unit
14-19 of state government shall refer the claim to the State Office of
14-20 Administrative Hearings for a contested case hearing under Chapter
14-21 2001, Government Code, as to the issues raised in the request.
14-22 Sec. 2260.103. HEARING FEE. (a) The chief administrative
14-23 law judge of the office may set a fee for a hearing before the
14-24 office under this subchapter.
14-25 (b) The chief administrative law judge of the office shall
14-26 set the fee in an amount that:
14-27 (1) is not less than $250; and
15-1 (2) allows the office to recover all or a substantial
15-2 part of its costs in holding hearings.
15-3 (c) The chief administrative law judge of the office by rule
15-4 may establish a graduated fee scale, increasing the fee in relation
15-5 to the amount in controversy.
15-6 (d) The office may:
15-7 (1) assess the fee against the party who does not
15-8 prevail in the hearing; or
15-9 (2) apportion the fee against the parties in an
15-10 equitable manner.
15-11 Sec. 2260.104. HEARING. (a) An administrative law judge of
15-12 the office shall conduct a hearing in accordance with the
15-13 procedures adopted by the chief administrative law judge of the
15-14 office.
15-15 (b) Within a reasonable time after the conclusion of the
15-16 hearing, the administrative law judge shall issue a written
15-17 decision containing the administrative law judge's findings and
15-18 recommendations.
15-19 (c) The administrative law judge shall base the decision on
15-20 the pleadings filed with the office and the evidence received.
15-21 (d) The decision must include:
15-22 (1) the findings of fact and conclusions of law on
15-23 which the administrative law judge's decision is based; and
15-24 (2) a summary of the evidence.
15-25 (e) A person may not appeal the decision.
15-26 Sec. 2260.105. PAYMENT OF CLAIM. (a) The unit of state
15-27 government shall pay the amount of the claim or part of the claim
16-1 if the administrative law judge finds, by a preponderance of the
16-2 evidence, that under the laws of this state the claim or part of
16-3 the claim is valid.
16-4 (b) A unit of state government shall pay a claim under this
16-5 subchapter from money appropriated to it for payment of contract
16-6 claims or for payment of the contract that is the subject of the
16-7 claim. If money previously appropriated for payment of contract
16-8 claims or payment of the contract is insufficient to pay the claim,
16-9 the balance of the claim may be paid only from money appropriated
16-10 by the legislature for payment of the claim.
16-11 Sec. 2260.106. PREJUDGMENT INTEREST. Chapter 304, Finance
16-12 Code, applies to a judgment awarded to a claimant under this
16-13 chapter, except that the applicable rate of interest may not exceed
16-14 six percent.
16-15 Sec. 2260.107. EXECUTION ON STATE PROPERTY NOT AUTHORIZED.
16-16 This chapter does not authorize execution on property owned by the
16-17 state or a unit of state government.
16-18 SECTION 6. (a) Except as provided by Subsection (b) of this
16-19 section, this Act takes effect immediately.
16-20 (b) Sections 1-4 of this Act take effect September 1, 1999.
16-21 SECTION 7. Chapter 2009, Government Code, as amended and
16-22 redesignated by this Act, and Section 154.073, Civil Practice and
16-23 Remedies Code, as amended by this Act, apply only to an alternative
16-24 dispute resolution proceeding that begins on or after September 1,
16-25 1999. An alternative dispute resolution proceeding that began
16-26 before September 1, 1999, is governed by the law applicable to the
16-27 proceeding immediately before the effective date of this Act, and
17-1 that law is continued in effect for that purpose.
17-2 SECTION 8. (a) Chapter 2260, Government Code, as added by
17-3 this Act, applies only to a claim pending or arising on or after
17-4 the effective date of this Act, without regard to whether the
17-5 contract was entered into before, on, or after that date.
17-6 (b) Notwithstanding Section 2260.051(b), Government Code, as
17-7 added by this Act, a claimant must provide written notice to the
17-8 unit of state government for a claim pending before the effective
17-9 date of this Act not later than the 180th day after that date.
17-10 SECTION 9. Chapter 2260, Government Code, as added by this
17-11 Act, does not apply to a claim or dispute with respect to which the
17-12 76th Legislature or a previous legislature has enacted a concurrent
17-13 resolution granting permission to the contractor to bring a suit
17-14 against the state or a unit of state government.
17-15 SECTION 10. The importance of this legislation and the
17-16 crowded condition of the calendars in both houses create an
17-17 emergency and an imperative public necessity that the
17-18 constitutional rule requiring bills to be read on three several
17-19 days in each house be suspended, and this rule is hereby suspended,
17-20 and that this Act take effect and be in force according to its
17-21 terms, and it is so enacted.