BILL ANALYSIS

 

 

 

C.S.H.B. 2194

By: Ordaz

Business & Industry

Committee Report (Substituted)

 

 

 

BACKGROUND AND PURPOSE

 

In 2020, the Reshoring Institute surveyed Americans and found that nearly 70 percent of the respondents said they prefer American-made products. Slightly more than 83 percent said they would pay up to 20 percent more for products made domestically. Due to the "Made in USA" labeling program, Americans are easily able to identify these products. Texas does not have any such program, resulting in missed opportunities to boost sales of local businesses and deter misleading labels. Without a labeling standard, it is unclear what products are made in Texas, or what criteria were used by a business to come to that determination. Additionally, it is beneficial for businesses with goods primarily made in Texas to have a recognizable term identifying their Texas-made products. With a clear standard in place, Texans will recognize and support these products. C.S.H.B. 2194 seeks to address this need by requiring the Texas Economic Development and Tourism Office to establish and administer a "Made in Texas" labeling program that provides criteria to determine whether a person may sell, advertise, or offer for sale a product with "Made in Texas" or equivalent phrasing to represent that the product was made in whole or in substantial part in Texas and by providing for a civil penalty for a related violation.

 

CRIMINAL JUSTICE IMPACT

 

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that rulemaking authority is expressly granted to the Texas Economic Development and Tourism Office in SECTION 1 of this bill.

 

ANALYSIS

 

C.S.H.B. 2194 amends the Government Code to require the Texas Economic Development and Tourism Office (TEDTO) to establish and administer a "Made in Texas" labeling program and do the following by rule:

ˇ         establish criteria for determining whether a person may sell, advertise, or offer for sale in Texas a product that uses "Made in Texas" or equivalent phrasing to represent that the product was made in whole or in substantial part in Texas: and

ˇ          design and administer the use of a logo for products to be labeled as "Made in Texas" and adopt an application process for authorizing use of the logo.

The criteria must include a requirement that all or virtually all significant parts and processing of a product originated in Texas.

 

C.S.H.B. 2194 makes it a violation of its provisions for a person to use, reproduce, or distribute the logo designed by TEDTO without its consent or violate a rule adopted by TEDTO under the bill's provisions. The bill requires the attorney general to provide written notice to a person the attorney general has reason to believe has committed a violation that contains the following:

ˇ         a description of the violation;

ˇ         a statement that the person may be liable for a civil penalty if they do not cure the violation before the 30th day after receiving the notice; and

ˇ         the maximum potential civil penalty that may be imposed for the violation.

 

C.S.H.B. 2194 makes a person who commits a violation following the cure period liable to the state for a maximum $1,000 civil penalty for each violation. The bill authorizes the attorney general to bring an action in the name of the state in a Travis County district court or a district court in a county in which any part of the violation or threatened violation occurs to recover a civil penalty or to restrain or enjoin the person from committing a violation. The bill requires a collected civil penalty to be deposited in the state treasury to the credit of the general revenue fund. The bill establishes that each day that a violation continues may be considered a separate violation for purposes of the civil penalty and establishes the factors on which the amount of the civil penalty must be based. The bill's provisions expressly do not apply to or authorize TEDTO to adopt rules governing the labeling of wine.

 

EFFECTIVE DATE

 

September 1, 2023.

 

COMPARISON OF INTRODUCED AND SUBSTITUTE

 

While C.S.H.B. 2194 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

 

Whereas the introduced required the comptroller of public accounts by rule to establish criteria for determining whether a product may use "Made in Texas" or equivalent phrasing to represent that the product was made in whole or in substantial part in Texas and required the label of a product with such phrasing to be consistent with those rules to the extent a person sells, advertises or offers for sale in Texas a product using that phrasing for that purpose, the substitute requires TEDTO instead to establish and administer a "Made in Texas" labeling program and by rule to establish criteria for determining whether a person may sell, advertise, or offer for sale a product using that phrasing for that purpose. Additionally whereas the introduced provided for civil penalties for a person who violates that labeling consistency requirement, the substitute provides for such penalties instead for a person who, following a certain cure period, uses, reproduces, or distributes the logo designed by the TEDTO without TEDTO's consent or who violates a related rule adopted by TEDTO. The substitute raises the cap on the amount of a civil penalty for which a person who commits such a violation may be liable to the state from $500 for each violation, as in the introduced, to $1,000 for each violation.

 

The substitute includes provisions absent from the introduced that do the following:

ˇ         require TEDTO by rule to design and administer the use of a logo for products to be labeled as "Made in Texas" and adopt an application process for authorizing use of the logo;

ˇ         establish that its provisions do not apply to or authorize the adoption of rules governing the labeling of wine; and

ˇ         provide a person believed to be in violation of the bill's provisions an opportunity to cure a violation after written notice provided by the attorney general.