By Wolens H.B. No. 2661
76R1612(1) ESH
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to ethics in government, including financial disclosure by
1-3 and standards of conduct applicable to holders of and candidates
1-4 for certain offices; providing criminal penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 571.069(b), Government Code, is amended
1-7 to read as follows:
1-8 (b) The commission may by an affirmative record vote of at
1-9 least five [six] commission members perform a complete audit only
1-10 at an informal or formal hearing.
1-11 SECTION 2. Section 571.121(a), Government Code, is amended
1-12 to read as follows:
1-13 (a) The commission may:
1-14 (1) hold hearings, on its own motion adopted by an
1-15 affirmative record vote of at least five [six] commission members
1-16 or on a sworn complaint, and render decisions on complaints or
1-17 reports of violations as provided by this chapter; and
1-18 (2) agree to the settlement of issues.
1-19 SECTION 3. Subchapter A, Chapter 572, Government Code, is
1-20 amended by adding Section 572.0041 to read as follows:
1-21 Sec. 572.0041. DEFINITION: SPECIAL ECONOMIC EFFECT. In this
1-22 chapter:
1-23 (1) "Special economic effect on a business entity"
1-24 means an effect on the value or profitability of a business entity
1-25 that is distinguishable from its effect on the public or on other
1-26 business entities involved in the same trade or profession. The
2-1 term includes a detrimental economic effect on a competitor of the
2-2 business entity.
2-3 (2) "Special economic effect on real property or
2-4 another asset" means an effect on the value or profitability of the
2-5 property or asset that is distinguishable from its effect on the
2-6 public or on other real property or assets.
2-7 SECTION 4. Section 572.005, Government Code, is amended to
2-8 read as follows:
2-9 Sec. 572.005. DETERMINATION OF SUBSTANTIAL INTEREST IN
2-10 BUSINESS ENTITY. An individual has a substantial interest in a
2-11 business entity if:
2-12 (1) the individual:
2-13 (A) [(1)] has a controlling interest in the
2-14 business entity;
2-15 (B) [(2)] owns more than 10 percent of the
2-16 voting interest in the business entity;
2-17 (C) [(3)] owns more than $25,000 of the fair
2-18 market value of the business entity;
2-19 (D) [(4)] has a direct or indirect participating
2-20 interest by shares, stock, or otherwise, regardless of whether
2-21 voting rights are included, in more than 10 percent of the profits,
2-22 proceeds, or capital gains of the business entity;
2-23 (E) [(5)] is a member of the board of directors
2-24 or other governing board of the business entity;
2-25 (F) [(6)] serves as an elected officer of the
2-26 business entity; or
2-27 (G) [(7)] is an employee of the business entity;
3-1 or
3-2 (2) money received by the individual from the business
3-3 entity exceeds 10 percent of the person's gross income for the
3-4 preceding calendar year.
3-5 SECTION 5. Subchapter A, Chapter 572, Government Code, is
3-6 amended by adding Sections 572.0051 and 572.0052 to read as
3-7 follows:
3-8 Sec. 572.0051. DETERMINATION OF SUBSTANTIAL INTEREST IN REAL
3-9 PROPERTY OR OTHER ASSET. An individual has a substantial interest
3-10 in real property or another asset if the interest is an equitable
3-11 or legal ownership interest that has a fair market value greater
3-12 than the lesser of:
3-13 (1) $25,000; or
3-14 (2) 10 percent of the total value of assets in which
3-15 the individual has an equitable or legal ownership interest.
3-16 Sec. 572.0052. SUBSTANTIAL INTEREST HELD BY SPOUSE. For
3-17 purposes of Sections 572.053 and 572.058, an elected or appointed
3-18 officer is considered to have a substantial interest in a business
3-19 entity or in real property or another asset if a person related to
3-20 the officer in the first degree by consanguinity or affinity, as
3-21 determined under Chapter 573, has a substantial interest in the
3-22 entity or real property or other asset.
3-23 SECTION 6. Section 572.021, Government Code, is amended to
3-24 read as follows:
3-25 Sec. 572.021. FINANCIAL STATEMENT REQUIRED. A state
3-26 officer, a partisan or independent candidate for an office as an
3-27 elected officer, and a party chairman shall file with the
4-1 commission a verified financial statement complying with Sections
4-2 572.022 through 572.024 [572.025].
4-3 SECTION 7. Sections 572.022(b) and (c), Government Code, are
4-4 amended to read as follows:
4-5 (b) The individual filing the statement shall report an
4-6 amount of stock or the amount of an interest in a mutual fund by
4-7 category of number of shares instead of by category of dollar value
4-8 and shall report whether the amount is:
4-9 (1) less than 100 shares;
4-10 (2) at least 100 but less than 500 shares;
4-11 (3) at least 500 but less than 1,000 shares;
4-12 (4) at least 1,000 but less than 5,000 shares;
4-13 (5) at least 5,000 but less than 10,000 shares; or
4-14 (6) 10,000 shares or more.
4-15 (c) The individual filing the statement shall report a
4-16 description of real property by:
4-17 (1) if there is a recorded map or plat and survey of
4-18 the area in which the property is located, stating the street
4-19 address and the lot and block number of the property; or
4-20 (2) if there is not a recorded map or plat and survey
4-21 of the area in which the property is located:
4-22 (A) stating the street address, if any, and the
4-23 number of acres; and
4-24 (B) describing the property by reference to
4-25 roads, lakes, or waterways in a manner sufficient to permit a
4-26 person to identify the property with reasonable certainty.
4-27 (d) As to each parcel of real property, the individual
5-1 filing the statement shall include [the number of lots or number of
5-2 acres, as applicable, in each county, the name of the county, and]
5-3 the names of all persons retaining an interest in the property,
5-4 excluding an interest that is a severed mineral interest.
5-5 SECTION 8. Section 572.023(b), Government Code, is amended
5-6 to read as follows:
5-7 (b) The account of financial activity consists of:
5-8 (1) a list of all sources of occupational income,
5-9 identified by employer, or if self-employed, by the nature of the
5-10 occupation, including identification of a person or other
5-11 organization from which the individual or a business in which the
5-12 individual has a substantial interest received a fee as a retainer
5-13 for a claim on future services in case of need, as distinguished
5-14 from a fee for services on a matter specified at the time of
5-15 contracting for or receiving the fee, if professional or
5-16 occupational services are not actually performed during the
5-17 reporting period equal to or in excess of the amount of the
5-18 retainer, and the category of the amount of the fee;
5-19 (2) identification by name and the category of the
5-20 number of shares of stock of any business entity held or acquired,
5-21 and if sold, the category of the amount of net gain or loss
5-22 realized from the sale;
5-23 (3) a list of all bonds, notes, and other commercial
5-24 paper held or acquired, and if sold, the category of the amount of
5-25 net gain or loss realized from the sale;
5-26 (4) identification by name of and the categories of
5-27 shares in any mutual fund held or acquired and, if sold, the
6-1 category of the amount of net gain or loss realized from the sale;
6-2 (5) identification of each source and the category of
6-3 the amount of income in excess of $500 derived from each source
6-4 from interest, dividends, royalties, and rents;
6-5 (6) [(5)] identification of each guarantor of a loan
6-6 and identification of each person or financial institution to whom
6-7 a personal note or notes or lease agreement for a total financial
6-8 liability in excess of $1,000 existed at any time during the year
6-9 and the category of the amount of the liability;
6-10 (7) [(6)] identification by description of all
6-11 beneficial interests in real property and business entities held or
6-12 acquired, and if sold, the category of the amount of the net gain
6-13 or loss realized from the sale;
6-14 (8) [(7)] identification of a person or other
6-15 organization from which the individual or the individual's spouse
6-16 or dependent children received a gift of anything of value in
6-17 excess of $250 and a description of each gift, except:
6-18 (A) a gift received from an individual related
6-19 to the individual at any time within the second degree by
6-20 consanguinity or affinity, as determined under Subchapter A,
6-21 Chapter 573;
6-22 (B) a political contribution that was reported
6-23 as required by law; and
6-24 (C) an expenditure required to be reported by a
6-25 person required to be registered under Chapter 305;
6-26 (9) [(8)] identification of the source and the
6-27 category of the amount of all income received as beneficiary of a
7-1 trust and identification of each asset, if known to the
7-2 beneficiary, from which income was received by the beneficiary in
7-3 excess of $500;
7-4 (10) [(9)] identification by description and the
7-5 category of the amount of all assets and liabilities of a
7-6 corporation or partnership in which 50 percent or more of the
7-7 outstanding ownership was held, acquired, or sold;
7-8 (11) [(10)] a list of all boards of directors of which
7-9 the individual is a member and executive positions that the
7-10 individual holds in corporations, firms, partnerships, or
7-11 proprietorships, stating the name of each corporation, firm,
7-12 partnership, or proprietorship and the position held;
7-13 (12) [(11)] identification of any person providing
7-14 transportation, meals, or lodging expenses permitted under Section
7-15 36.07(b), Penal Code, and the amount of those expenses, other than
7-16 expenditures required to be reported under Chapter 305; [and]
7-17 (13) [(12)] any partnership, joint venture, or other
7-18 business association, excluding a publicly held corporation, in
7-19 which both the state officer and a person registered under Chapter
7-20 305 have an interest; and
7-21 (14) a description of real property held or acquired
7-22 by a real estate investment trust, excluding a publicly traded real
7-23 estate investment trust, in which the individual has a beneficial
7-24 interest and, if sold, the category of the amount of net gain or
7-25 loss realized from the sale.
7-26 SECTION 9. Section 572.052(a), Government Code, is amended
7-27 to read as follows:
8-1 (a) A member of the legislature may not, for compensation,
8-2 represent another person before a state agency in the executive
8-3 branch of state government unless[:]
8-4 [(1)] the representation[:]
8-5 [(A) is made in a proceeding that is adversary
8-6 in nature or in another public hearing that is a matter of record;
8-7 or]
8-8 [(B)] involves the filing of documents, contacts
8-9 with the agency for informational purposes, or other relations,
8-10 that involve only ministerial acts on the part of the commission,
8-11 agency, board, department, or officer[; and]
8-12 [(2) the member discloses to the agency that the
8-13 member is being compensated for the representation].
8-14 SECTION 10. Section 572.053, Government Code, is amended to
8-15 read as follows:
8-16 Sec. 572.053. ACTION [VOTING] BY LEGISLATORS ON CERTAIN
8-17 MEASURES OR BILLS; CRIMINAL OFFENSE. (a) A member of the
8-18 legislature who has a substantial interest in a business entity or
8-19 in real property or another asset may not vote or take other action
8-20 on a measure or a bill if it is reasonably foreseeable that the
8-21 measure or bill will have a special economic effect on the business
8-22 entity or the real property or other asset.
8-23 (b) For purposes of this section, "other action" includes
8-24 any action permitted by the rules of the senate or house of
8-25 representatives, as applicable, that has the effect of delaying or
8-26 preventing a vote on a bill or measure.
8-27 (c) A member of the legislature who has a substantial
9-1 interest in a business entity or real property or another asset to
9-2 which the member believes this section may apply shall notify the
9-3 chair of the standing committee with jurisdiction over the matter,
9-4 as determined by the rules of the senate or house of
9-5 representatives, as appropriate, or, if the rules are silent, as
9-6 determined by the presiding officer. A notification under this
9-7 subsection must be in writing and describe the member's interest
9-8 and the bill or measure with sufficient detail to permit the
9-9 committee to determine whether the member is prohibited from voting
9-10 on the bill or measure. Unless the member states in writing that
9-11 the member has determined that the member is prohibited from voting
9-12 on the bill or measure, the committee shall make a written
9-13 determination as to whether the member is prohibited from voting
9-14 under this section. If the committee determines that the member is
9-15 prohibited from voting under this section, the member may not vote
9-16 on the bill or measure. If the committee determines that the
9-17 member is not prohibited from voting under this section, the member
9-18 may vote on the bill or measure, and it is a defense to prosecution
9-19 or to imposition of a civil penalty that the member reasonably
9-20 relied on the committee's determination.
9-21 (d) [, other than a measure that will affect an entire class
9-22 of business entities, that will directly benefit a specific
9-23 business transaction of a business entity in which the member has a
9-24 controlling interest.]
9-25 [(b) In this section, "controlling interest" includes:]
9-26 [(1) an ownership interest or participating interest
9-27 by virtue of shares, stock, or otherwise that exceeds 10 percent;]
10-1 [(2) membership on the board of directors or other
10-2 governing body of the business entity; or]
10-3 [(3) service as an officer of the business entity.]
10-4 [(c)] A member of the legislature commits an offense if the
10-5 member knowingly violates this section. An offense under this
10-6 subsection is a Class A misdemeanor.
10-7 SECTION 11. Section 572.058, Government Code, is amended to
10-8 read as follows:
10-9 Sec. 572.058. PRIVATE INTEREST IN MEASURE OR DECISION;
10-10 DISCLOSURE; REMOVAL FROM OFFICE FOR VIOLATION; CRIMINAL OFFENSE.
10-11 (a) An elected or appointed officer[, other than an officer
10-12 subject to impeachment under Article XV, Section 2, of the Texas
10-13 Constitution,] who has policy direction over a state agency or who
10-14 is a member of a board or commission that has [having] policy
10-15 direction over a state agency and who has a substantial [personal
10-16 or private] interest in a business entity or real property or
10-17 another asset may not vote or otherwise participate in a decision
10-18 involving a measure or [,] proposal[, or decision] pending before
10-19 the officer, board, or commission if it is reasonably foreseeable
10-20 that the measure or proposal will have a special economic effect on
10-21 the business entity or the real property or other asset.
10-22 (b) An officer who has a substantial interest to which this
10-23 section applies and who is not, for purposes of the measure or
10-24 proposal, a member of a board or commission shall advise the
10-25 governor in writing of the officer's interest. The officer, with
10-26 the governor's written approval, shall designate a person in the
10-27 officer's agency to make the decision. The officer's written
11-1 statement and the governor's approval of the designated person must
11-2 be published in the Texas Register.
11-3 (c) An officer who has a substantial interest to which this
11-4 section applies and who is, for purposes of the measure or
11-5 proposal, a member of a board or commission shall publicly disclose
11-6 the fact to the board or commission in a meeting called and held in
11-7 compliance with Chapter 551. [The officer may not vote or
11-8 otherwise participate in the decision.] The disclosure shall be
11-9 entered in the minutes of the meeting.
11-10 (d) [(b)] An officer, other than an officer subject to
11-11 impeachment under Section 2, Article XV, Texas Constitution,
11-12 [individual] who violates this section is subject to removal from
11-13 office on the petition of the attorney general on the attorney
11-14 general's own initiative or on the relation of a resident or of any
11-15 other member of the board or commission. The suit must be brought
11-16 in a district court of Travis County or of the county where the
11-17 violation is alleged to have been committed.
11-18 (e) [(c)] If the court or jury finds from a preponderance of
11-19 the evidence that the defendant violated this section and that an
11-20 ordinary prudent person would have known the individual's conduct
11-21 to be a violation of this section, the court shall enter judgment
11-22 removing the defendant from office.
11-23 (f) [(d)] A suit under Subsection (d) [this section] must be
11-24 brought before the second anniversary of the date the violation is
11-25 alleged to have been committed, or the suit is barred.
11-26 (g) [(e)] The remedy provided by Subsection (d) [this
11-27 section] is cumulative of other methods of removal from office
12-1 provided by the Texas Constitution or a statute of this state.
12-2 (h) An elected or appointed officer commits an offense if
12-3 the officer knowingly violates this section. An offense under
12-4 this subsection is a Class A misdemeanor. [(f) In this section,
12-5 "personal or private interest" has the same meaning as is given to
12-6 it under Article III, Section 22, of the Texas Constitution,
12-7 governing the conduct of members of the legislature. For purposes
12-8 of this section, an individual does not have a "personal or private
12-9 interest" in a measure, proposal, or decision if the individual is
12-10 engaged in a profession, trade, or occupation and the individual's
12-11 interest is the same as all others similarly engaged in the
12-12 profession, trade, or occupation.]
12-13 SECTION 12. Subchapter C, Chapter 572, Government Code, is
12-14 amended by adding Sections 572.059-572.062 to read as follows:
12-15 Sec. 572.059. CERTAIN SUBCONTRACTS PROHIBITED; CRIMINAL
12-16 OFFENSE. (a) An elected or appointed officer or a business entity
12-17 in which an elected or appointed officer has a substantial interest
12-18 may not:
12-19 (1) be a subcontractor to a general contractor under a
12-20 state or local government contract; or
12-21 (2) supply materials to a subcontractor or to a
12-22 general contractor under a state or local government contract.
12-23 (b) A subcontract made in violation of Subsection (a) is
12-24 void.
12-25 (c) A person commits an offense if the person knowingly
12-26 violates this section. An offense under this subsection is a Class
12-27 A misdemeanor.
13-1 Sec. 572.060. CERTAIN CONSULTING CONTRACTS WITH STATE OR
13-2 LOCAL GOVERNMENT BY ELECTED OR APPOINTED OFFICER PROHIBITED;
13-3 CRIMINAL OFFENSE. (a) An elected or appointed officer or a
13-4 business entity in which an elected or appointed officer has a
13-5 substantial interest may not enter into a contract for consulting
13-6 services with:
13-7 (1) a state or local government; or
13-8 (2) a third party who has a contract with a state or
13-9 local government, if the officer's contract involves the same
13-10 matter as that of the contract between the third party and the
13-11 state or local government.
13-12 (b) A contract made in violation of Subsection (a) is void.
13-13 (c) In this section, "consulting services" means the service
13-14 of studying or advising any entity on an issue or issues under a
13-15 contract that does not involve the traditional relationship of
13-16 employer and employee.
13-17 (d) A person commits an offense if the person knowingly
13-18 violates this section. An offense under this subsection is a Class
13-19 A misdemeanor.
13-20 Sec. 572.061. LOBBYING BY FORMER LEGISLATOR OR LIEUTENANT
13-21 GOVERNOR; CRIMINAL OFFENSE. (a) A former member of the
13-22 legislature or former lieutenant governor may not, before the
13-23 second anniversary of the date the person ceases to be a member or
13-24 the lieutenant governor, engage in activities that require
13-25 registration under Chapter 305.
13-26 (b) A person commits an offense if the person violates this
13-27 section. An offense under this subsection is a Class A
14-1 misdemeanor.
14-2 Sec. 572.062. EMPLOYMENT OF FORMER OFFICER OR EMPLOYEE;
14-3 CRIMINAL OFFENSE. (a) A former state officer or state employee
14-4 may not, before the second anniversary of the date the person
14-5 ceases to be an officer or employee, be employed by or receive
14-6 compensation from a person who entered into a contract with the
14-7 state agency in which the officer served or by which the employee
14-8 was employed if the officer or employee participated in awarding
14-9 the contract.
14-10 (b) In this section, "participated" has the meaning assigned
14-11 by Section 572.054.
14-12 (c) An individual commits an offense if the individual
14-13 violates this section. An offense under this subsection is a Class
14-14 A misdemeanor.
14-15 SECTION 13. Section 572.025, Government Code, is repealed.
14-16 SECTION 14. This Act takes effect September 1, 1999.
14-17 SECTION 15. (a) Subchapter B, Chapter 572, Government Code,
14-18 as amended by this Act, applies only to a financial statement filed
14-19 under Subchapter B, Chapter 572, Government Code, or Subchapter A
14-20 or C, Chapter 159, Local Government Code, that is required to be
14-21 filed on or after January 1, 2000. A financial statement required
14-22 to be filed under Subchapter B, Chapter 572, Government Code, or
14-23 Subchapter A or C, Chapter 159, Local Government Code, before
14-24 January 1, 2000, is governed by the law in effect on the date the
14-25 statement is required to be filed, and the former law is continued
14-26 in effect for that purpose.
14-27 (b) The changes in law made by this Act to Subchapter A,
15-1 Chapter 572, Government Code, and to Sections 572.052, 572.053, and
15-2 572.058, Government Code, apply only to an offense committed on or
15-3 after September 1, 1999. For the purposes of this section, an
15-4 offense is committed before September 1, 1999, if any element of
15-5 the offense occurs before the effective date. An offense committed
15-6 before September 1, 1999, is covered by the law in effect when the
15-7 offense was committed, and the former law is continued in effect
15-8 for that purpose.
15-9 (c) Section 572.061, Government Code, as added by this Act,
15-10 applies only to a member of the legislature or a lieutenant
15-11 governor who ceases to be a member or the lieutenant governor on or
15-12 after September 1, 1999.
15-13 SECTION 16. The importance of this legislation and the
15-14 crowded condition of the calendars in both houses create an
15-15 emergency and an imperative public necessity that the
15-16 constitutional rule requiring bills to be read on three several
15-17 days in each house be suspended, and this rule is hereby suspended.