87R25597 AJA-F
 
  By: Hughes S.B. No. 219
 
  (Leach, Gervin-Hawkins, Lucio III, Holland, et al.)
 
  Substitute the following for S.B. No. 219:  No.
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to civil liability and responsibility for the consequences
  of defects in the plans, specifications, or related documents for
  the construction or repair of an improvement to real property.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 4, Business & Commerce Code, is amended by
  adding Chapter 59 to read as follows:
  CHAPTER 59. RESPONSIBILITY FOR DEFECTS IN PLANS AND SPECIFICATIONS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 59.001.  DEFINITIONS. In this chapter:
               (1)  "Construction" includes:
                     (A)  the initial construction of an improvement to
  real property;
                     (B)  the construction of an addition to an
  improvement to real property; or
                     (C)  the repair, alteration, or remodeling of an
  improvement to real property.
               (2)  "Contractor" means a person engaged in the
  business of developing, constructing, fabricating, repairing,
  altering, or remodeling improvements to real property.
               (3)  "Critical infrastructure facility" includes:
                     (A)  a petroleum or alumina refinery;
                     (B)  an electrical power generating facility,
  substation, switching station, or control center;
                     (C)  a chemical, polymer, or rubber manufacturing
  facility;
                     (D)  a water intake structure, water treatment
  facility, wastewater treatment plant, or pump station;
                     (E)  a natural gas compressor station;
                     (F)  a liquid natural gas terminal or storage
  facility;
                     (G)  a telecommunications central switching
  office or any structure used as part of a system to provide wired or
  wireless telecommunications services;
                     (H)  a port, railroad switching yard, trucking
  terminal, or other freight transportation facility;
                     (I)  a gas processing plant, including a plant
  used in the processing, treatment, or fractionation of natural gas;
                     (J)  a transmission facility used by a federally
  licensed radio or television station;
                     (K)  a steelmaking facility that uses an electric
  arc furnace to make steel;
                     (L)  a dam that is classified as a high hazard by
  the Texas Commission on Environmental Quality;
                     (M)  a concentrated animal feeding operation, as
  defined by Section 26.048, Water Code;
                     (N)  any portion of an aboveground oil, gas, or
  chemical pipeline;
                     (O)  an oil or gas drilling site;
                     (P)  a group of tanks used to store crude oil, such
  as a tank battery;
                     (Q)  an oil, gas, or chemical production facility;
                     (R)  an oil or gas wellhead;
                     (S)  any oil and gas facility that has an active
  flare;
                     (T)  pipelines and pipeline appurtenances or
  facilities, including pipes, valves, meters, pumps, compressors,
  treating and processing facilities, cathodic protection
  facilities, and any other equipment, facilities, devices,
  structures, and buildings used or intended for use in the
  gathering, transportation, treating, storage, or processing of
  CO2, oil, gas, or other minerals, and the liquefied or gaseous
  substances, constituents, products, or mixtures derived from those
  minerals through refining, processing, or other methods;
                     (U)  utility-scale equipment or facilities to
  transmit or distribute electricity;
                     (V)  utility-scale water or wastewater storage,
  treatment, or transmission facilities;
                     (W)  facilities used to manufacture or produce
  transportation fuels and similar products, including gasoline,
  kerosene, distillate fuel oils, residual fuel oils, lubricants,
  asphalt, propane, ethanol, biodiesel, and renewable diesel; and
                     (X)  commercial airport facilities used for the
  landing, parking, refueling, shelter, or takeoff of aircraft,
  maintenance or servicing of aircraft, aircraft equipment storage,
  or navigation of aircraft.
               (4)  "Design" means work that is required under Title
  6, Occupations Code, to be performed by or under the supervision of
  a person licensed or registered under the statute.
               (5)  "Design-build contract" means a contract in which
  a contractor agrees to:
                     (A)  construct, repair, alter, or remodel an
  improvement to real property; and
                     (B)  be responsible for the development of plans,
  specifications, or other design documents used by the contractor to
  construct, repair, alter, or remodel the improvement.
               (6)  "Engineering, procurement, and construction
  contract" means a construction contract where the contractor is
  responsible for all of the engineering, procurement, and
  construction activities to deliver the completed project.
         Sec. 59.002.  APPLICABILITY OF CHAPTER. (a) This chapter
  applies only to a contract for the construction or repair of an
  improvement to real property.
         (b)  This chapter does not apply to a contract entered into
  by a person for the construction or repair of a critical
  infrastructure facility owned or operated by the person or any
  building, structure, improvement, appurtenance, or other facility
  owned by the person that is necessary to the operation of and
  directly related to the critical infrastructure facility.  For
  purposes of this subsection, "person" has the meaning assigned by
  Section 311.005, Government Code, and includes a parent,
  subsidiary, affiliated entity, joint venture partner, or owner of
  the person.
         (c)  Except as provided by Section 59.052, this chapter does
  not apply to the construction, repair, alteration, or remodeling of
  an improvement to real property if:
               (1)  the construction, repair, alteration, or
  remodeling is performed under a design-build contract and the part
  of the plans, specifications, or other design documents for which
  the contractor is responsible under the contract is the part
  alleged to be defective; or
               (2)  the construction, repair, alteration, or
  remodeling is performed under an engineering, procurement, and
  construction contract and the part of the plans, specifications, or
  other design documents for which the contractor is responsible
  under the contract is the part alleged to be defective.
         (d)  Except as provided by Section 59.052, this chapter does
  not apply to the portion of a contract between a person and a
  contractor under which the contractor agrees to provide input and
  guidance on plans, specifications, or other design documents to the
  extent that:
               (1)  the contractor's input and guidance are provided
  as the signed and sealed work product of a person licensed or
  registered under Title 6, Occupations Code; and 
               (2)  the work product is incorporated into the plans,
  specifications, or other design documents used in construction.
         Sec. 59.003.  WAIVER PROHIBITED. This chapter may not be
  waived. A purported waiver of this chapter in violation of this
  section is void.
  SUBCHAPTER B. CONTRACTOR RESPONSIBILITY
         Sec. 59.051.  LIMITATION ON CONTRACTOR'S LIABILITY AND
  RESPONSIBILITY FOR CERTAIN DEFECTS. (a) A contractor is not
  responsible for the consequences of design defects in and may not
  warranty the accuracy, adequacy, sufficiency, or suitability of
  plans, specifications, or other design documents provided to the
  contractor by a person other than the contractor's agents,
  contractors, fabricators, or suppliers, or its consultants, of any
  tier.
         (b)  A contractor must, within a reasonable time of learning
  of a defect, inaccuracy, inadequacy, or insufficiency in the plans,
  specifications, or other design documents, disclose in writing to
  the person with whom the contractor enters into a contract the
  existence of any known defect in the plans, specifications, or
  other design documents that is discovered by the contractor, or
  that reasonably should have been discovered by the contractor using
  ordinary diligence, before or during construction. In this
  subsection, ordinary diligence means the observations of the plans,
  specifications, or other design documents or the improvement to
  real property that a contractor would make in the reasonable
  preparation of a bid or fulfillment of its scope of work under
  normal circumstances. Ordinary diligence does not require that the
  contractor engage a person licensed or registered under Title 6,
  Occupations Code, or any other person with specialized skills. A
  disclosure under this subsection is made in the contractor's
  capacity as contractor and not as a licensed professional under
  Title 6, Occupations Code.
         (c)  A contractor who fails to disclose a defect as required
  by Subsection (b) may be liable for the consequences of defects that
  result from the failure to disclose.
         Sec. 59.052.  STANDARD OF CARE FOR CERTAIN DESIGNS. Design
  services provided under a contract described by Section 59.002(c)
  or (d) are subject to the same standard of care requirements
  provided in Section 130.0021, Civil Practice and Remedies Code.
         SECTION 2.  The heading to Chapter 130, Civil Practice and
  Remedies Code, is amended to read as follows:
  CHAPTER 130.  LIABILITY PROVISIONS [INDEMNIFICATION] IN CERTAIN
  CONSTRUCTION CONTRACTS
         SECTION 3.  Chapter 130, Civil Practice and Remedies Code,
  is amended by adding Section 130.0021 to read as follows:
         Sec. 130.0021.  ARCHITECT'S OR ENGINEER'S STANDARD OF CARE.  
  (a)  A construction contract for architectural or engineering
  services or a contract related to the construction or repair of an
  improvement to real property that contains architectural or
  engineering services as a component part must require that the
  architectural or engineering services be performed with the
  professional skill and care ordinarily provided by competent
  architects or engineers practicing under the same or similar
  circumstances and professional license. 
         (b)  If a contract described by Subsection (a) contains a
  provision establishing a different standard of care than the
  standard described by Subsection (a):
               (1)  the provision is void and unenforceable; and
               (2)  the standard of care described by Subsection (a)
  applies to the performance of the architectural or engineering
  services.
         (c)  Section 130.004 does not limit the applicability of this
  section.
         SECTION 4.  Section 130.004, Civil Practice and Remedies
  Code, is amended to read as follows:
         Sec. 130.004.  OWNER OF INTEREST IN REAL PROPERTY. (a)
  Except as provided by Section 130.002(b) or 130.0021, this chapter
  does not apply to an owner of an interest in real property or
  persons employed solely by that owner.
         (b)  Except as provided by Section 130.002(b) or 130.0021,
  this chapter does not prohibit or make void or unenforceable a
  covenant or promise to:
               (1)  indemnify or hold harmless an owner of an interest
  in real property and persons employed solely by that owner; or
               (2)  allocate, release, liquidate, limit, or exclude
  liability in connection with a construction contract between an
  owner or other person for whom a construction contract is being
  performed and a registered architect or licensed engineer.
         SECTION 5.  (a)  The changes in law made by this Act apply
  only to a contract entered into on or after the effective date of
  this Act. A contract entered into before the effective date of this
  Act is governed by the law in effect when the contract was entered
  into, and the former law is continued in effect for that purpose.
         (b)  An original contract for the construction or repair of
  an improvement to real property with the owner of an interest in
  real property that is entered into before the effective date of this
  Act, and a subcontract or purchase order for providing labor or
  materials associated with that original contract, whether the
  subcontract or purchase order is entered into before, on, or after
  the effective date of this Act, is governed by the law in effect
  when the original contract was entered into, and the former law is
  continued in effect for that purpose.
         SECTION 6.  This Act takes effect September 1, 2021.