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A BILL TO BE ENTITLED
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AN ACT
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relating to state contracts with Chinese companies and investments |
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in Chinese companies and certain companies doing business with |
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China; authorizing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2270.0001, Government Code, is amended |
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by adding Subdivision (1-a) and amending Subdivision (9) to read as |
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follows: |
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(1-a) "Chinese company" means a company that is |
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headquartered in China, regardless of whether: |
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(A) the company's or its parent company's |
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securities are publicly traded; or |
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(B) the company or its parent company is listed |
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as a Chinese company on a public stock exchange. |
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(9) "Scrutinized company" means: |
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(A) a company that: |
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(i) engages in scrutinized business |
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operations described by Section 2270.0052; or |
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(ii) has been complicit in the Darfur |
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genocide during any preceding 20-month period; |
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(B) a company that engages in scrutinized |
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business operations described by Section 2270.0102; [and] |
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(C) a company that engages in scrutinized |
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business operations described by Section 2270.0152; and |
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(D) a company that engages in scrutinized |
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business operations described by Section 2270.0162 or that is a |
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Chinese company. |
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SECTION 2. Subchapter A, Chapter 2270, Government Code, is |
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amended by adding Section 2270.00015 to read as follows: |
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Sec. 2270.00015. APPLICABILITY. (a) In this section: |
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(1) "Institution of higher education" has the meaning |
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assigned by Section 61.003, Education Code. |
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(2) "Trust company" means the Texas Treasury |
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Safekeeping Trust Company. |
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(b) This subchapter applies to an institution of higher |
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education and the trust company in the same manner as this |
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subchapter applies to an investing entity. |
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(c) Subchapter E, except Section 2270.0205, applies to an |
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institution of higher education and the trust company in the same |
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manner that the subchapter applies to an investing entity, but only |
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to the extent the institution of higher education or trust company |
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owns direct or indirect holdings of a company described by Section |
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2270.0001(9)(D). |
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SECTION 3. Section 2270.0002, Government Code, is amended |
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to read as follows: |
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Sec. 2270.0002. EXCEPTION. Notwithstanding any other law, |
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a company that the United States government affirmatively declares |
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to be excluded from its federal sanctions regime relating to Sudan, |
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its federal sanctions regime relating to Iran, [or] any federal |
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sanctions regime relating to a designated foreign terrorist |
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organization, or its federal sanctions regime relating to China is |
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not subject to divestment or investment prohibition under this |
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chapter. |
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SECTION 4. Chapter 2270, Government Code, is amended by |
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adding Subchapter D-1 to read as follows: |
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SUBCHAPTER D-1. GENERAL PROVISIONS RELATING TO INVESTMENTS IN CHINA |
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Sec. 2270.0161. DEFINITIONS. In this subchapter: |
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(1) "Business operations" means engaging in commerce |
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in any form in China, including by acquiring, developing, |
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maintaining, owning, selling, possessing, leasing, or operating |
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equipment, facilities, personnel, products, services, personal |
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property, real property, or any other apparatus of business or |
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commerce. |
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(2) "Military equipment" means weapons, arms, |
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military supplies, and equipment that readily may be used for |
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military purposes, including radar systems and military-grade |
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transport vehicles. |
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Sec. 2270.0162. SCRUTINIZED BUSINESS OPERATIONS IN CHINA. |
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A company engages in scrutinized business operations in China if: |
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(1) the company has business operations that involve |
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contracts with or providing supplies or services to the government |
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of China, a company in which the government of China has any direct |
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or indirect equity share, a consortium or project commissioned by |
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the government of China, or a company involved in a consortium or |
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project commissioned by the government of China; or |
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(2) the company supplies military equipment to China. |
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SECTION 5. Sections 2270.0201(a) and (b), Government Code, |
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are amended to read as follows: |
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(a) The comptroller shall prepare and maintain a list of all |
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scrutinized companies. The list must be categorized according to: |
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(1) companies that are scrutinized companies under |
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Section 2270.0001(9)(A); |
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(2) companies that are scrutinized companies under |
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Section 2270.0001(9)(B); [and] |
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(3) companies that are scrutinized companies under |
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Section 2270.0001(9)(C); and |
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(4) companies that are scrutinized companies under |
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Section 2270.0001(9)(D). |
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(b) In maintaining the list of scrutinized companies under |
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Subsection (a), the comptroller may review and rely, as appropriate |
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in the comptroller's judgment, on publicly available information |
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regarding companies with business operations in Sudan, in Iran, |
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[or] with designated foreign terrorist organizations, or in China, |
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as applicable, including information provided by the state, |
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nonprofit organizations, research firms, international |
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organizations, and governmental entities. |
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SECTION 6. Section 2270.0203, Government Code, is amended |
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to read as follows: |
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Sec. 2270.0203. NOTICE TO LISTED COMPANY ENGAGED IN |
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INACTIVE BUSINESS OPERATIONS. For each listed company identified |
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under Section 2270.0202 that is engaged in only inactive |
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scrutinized business operations, the investing entity shall send a |
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written notice informing the company of this chapter and |
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encouraging the company to continue to refrain from initiating |
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active business operations in Sudan, in Iran, [and] with designated |
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foreign terrorist organizations, and in China until it is able to |
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avoid being considered a listed company. The investing entity |
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shall continue the correspondence as the entity considers |
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necessary, but is not required to initiate correspondence more |
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often than semiannually. |
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SECTION 7. Section 2270.0204(b), Government Code, is |
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amended to read as follows: |
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(b) The notice shall offer the company the opportunity to |
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clarify its Sudan-related, Iran-related, [or] designated foreign |
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terrorist organization-related, or China-related activities, as |
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applicable, and shall encourage the company, not later than the |
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90th day after the date the company receives notice under this |
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section, to either cease all scrutinized business operations as |
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described by Sections 2270.0052, 2270.0102, [and] 2270.0152, and |
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2270.0162, or convert such operations to inactive business |
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operations in order to avoid qualifying for divestment by investing |
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entities. |
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SECTION 8. Subtitle F, Title 10, Government Code, is |
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amended by adding Chapter 2279 to read as follows: |
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CHAPTER 2279. PROHIBITION ON CONTRACTS WITH CHINESE COMPANIES |
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Sec. 2279.001. DEFINITIONS. In this chapter: |
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(1) "Chinese company" means a company that is |
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headquartered in China, regardless of whether: |
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(A) the company's or its parent company's |
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securities are publicly traded; or |
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(B) the company or its parent company is listed |
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as a Chinese company on a public stock exchange. |
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(2) "Company" means a sole proprietorship, |
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organization, association, corporation, partnership, joint |
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venture, limited partnership, limited liability partnership, or |
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limited liability company, including a wholly owned subsidiary, |
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majority-owned subsidiary, parent company, or affiliate of those |
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entities or business associations, that exists to make a profit. |
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(3) "State agency" has the meaning assigned by Section |
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2151.002. |
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Sec. 2279.002. PROVISION REQUIRED IN CERTAIN CONTRACTS. A |
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state agency may not enter into a contract with a vendor for goods |
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or services unless the contract contains a written verification |
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from the vendor that it is not a Chinese company. |
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Sec. 2279.003. FALSE VERIFICATION; PENALTIES. (a) If a |
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state agency determines that a vendor holding a contract with the |
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agency was ineligible to have the contract awarded under Section |
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2279.002 because the vendor's written verification was false, the |
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state agency shall immediately terminate the contract without |
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further obligation to the vendor. |
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(b) A vendor described by Subsection (a): |
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(1) is barred from responding to a solicitation for or |
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being awarded a contract for goods or services by any state agency; |
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and |
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(2) is liable to this state for a civil penalty of |
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$10,000. |
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(c) The attorney general may bring an action to recover a |
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civil penalty imposed under Subsection (b)(2). The attorney |
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general may recover reasonable attorney's fees and court costs in |
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bringing an action under this subsection. |
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SECTION 9. (a) As soon as practicable after the effective |
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date of this Act, the comptroller of public accounts shall review |
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all contracts entered into under the comptroller's purchasing |
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authority and identify any contracts entered into between this |
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state and a Chinese company, as defined by Section 2270.0001, |
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Government Code, as amended by this Act. The comptroller of public |
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accounts shall prepare a list of all Chinese companies that are a |
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party to a contract identified under this section. |
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(b) Not later than September 1, 2024, the comptroller of |
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public accounts shall provide the list prepared under Subsection |
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(a) of this section to the governor, the lieutenant governor, the |
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speaker of the house of representatives, and each member of the |
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legislature. |
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SECTION 10. Not later than the 180th day after the effective |
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date of this Act, the comptroller of public accounts shall include |
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the companies described by Section 2270.0201(a)(4), Government |
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Code, as added by this Act, on the list under Section 2270.0201(a), |
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Government Code. |
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SECTION 11. Section 2279.002, Government Code, as added by |
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this Act, applies only to a contract entered into on or after the |
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effective date of this Act. A contract entered into before that |
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date is governed by the law in effect on the date the contract was |
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entered into, and the former law is continued in effect for that |
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purpose. |
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SECTION 12. This Act takes effect immediately if it |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2023. |