BILL ANALYSIS

 

 

Senate Research Center

S.B. 2368

 

By: Campbell et al.

 

Business & Commerce

 

8/13/2025

 

Enrolled

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

The Lonestar Infrastructure Protection Act (LISPA) was first created in the 87th Legislature through passage of S.B. 2116. It was subsequently strengthened by the 88th Legislature through S.B. 2013. LISPA prevents certain foreign-owned companies from entering into contracts or agreements that would give them access to critical infrastructure in the state. Additionally, it prohibits critical grid equipment from being accessed or controlled by a company with ties to China, Russia, North Korea, or Iran, also known as a LISPA nation company. This bill seeks to strengthen LISPA by creating a penalty for providing false or inaccurate information to ERCOT, ensures ERCOT has the authority to verify a business entity's compliance and mitigation strategies, and allow the Office of the Texas Attorney General to conduct investigations into LISPA compliance violations. Finally, this bill would enhance ERCOT's employment screening practices for prospective employees applying to position critical to operations.  

 

(Original Author/Sponsor's Statement of Intent)

 

S.B. 2368 amends current law relating to critical infrastructure and utilities, including affiliation with certain foreign entities of certain persons working or participating in the electricity market and authorizes and increases administrative penalties.

 

RULEMAKING AUTHORITY

 

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Chapter 117, Business & Commerce Code, by adding Section 117.004, as follows:

 

Sec. 117.004. ENFORCEMENT BY PUBLIC UTILITY COMMISSION OF TEXAS. (a) Authorizes the Public Utility Commission of Texas (PUC) to impose an administrative penalty in the manner provided by Chapter 15 (Judicial Review, Enforcement, and Penalties), Utilities Code, on a business entity that is subject to the jurisdiction of the PUC under Title 2 (Public Utility Regulatory Act), Utilities Code, for a violation of Chapter 117 (Prohibition on Agreements With Certain Foreign-Owned Companies in Connection With Critical Infrastructure) in which the business entity enters into an agreement granting a company access to or control of the business entity's critical electric grid equipment or critical infrastructure.

 

(b) Authorizes the penalty for a violation described by Subsection (a) to be in an amount not to exceed $1 million for each violation.

 

SECTION 2. Amends Section 15.023, Utilities Code, by adding Subsection (b-2), as follows:

 

(b-2) Authorizes the penalty for a violation of Section 39.360 (Transactions With Certain Foreign-Owned Companies in Connection With Critical Infrastructure) in which a business entity fails to submit all required information to or knowingly submits false information to an independent organization certified under Section 39.151 (Essential Organizations), notwithstanding Subsection (b) (relating to prohibiting a certain administrative penalty imposed by the PUC from exceeding $25,000), to be in an amount not to exceed $1 million for each violation.

 

SECTION 3. Amends Subchapter B, Chapter 15, Utilities Code, by adding Sections 15.034 and 15.035, as follows:

 

Sec. 15.034. CONFIDENTIALITY OF ENFORCEMENT INFORMATION. (a) Provides that information and material in the possession of or obtained or compiled by the PUC that is related to a PUC enforcement proceeding under Subchapter B (Enforcement and Penalties) is confidential and not subject to disclosure under Chapter 552 (Public Information), Government Code.

 

(b) Provides that information and material in the possession of or obtained or compiled by the PUC that is related to a PUC enforcement proceeding under this subchapter is not subject to disclosure, discovery, subpoena, or any other means of legal compulsion for release, except to certain entities.

 

Sec. 15.035. APPLICABILITY. Defines "person."

 

SECTION 4. Redesignates Section 39.151(g-7), Utilities Code, as added by Chapter 464 (S.B. 2013), Acts of the 88th Legislature, Regular Session, 2023, as Section 39.151(g-8), Utilities Code, and amends it, as follows:

 

(g-8) Redesignates existing Subsection (g-7) as Subsection (g-8). Requires an organization, to maintain certification as an independent organization under Section 39.151 (Essential Organizations), to meet certain criteria, including, before hiring a person for a position described by Subdivision (1) (relating to requiring an organization, to maintain certification as an independent organization under this section, to identify all employee positions in the organization that are critical to the security of the electric grid), obtain certain information, including, from the prospective employee, an attestation regarding any former travel by the prospective employee to a country described by Section 117.002(a)(2)(A)(i) (relating to prohibiting a business entity from entering into an agreement relating to critical infrastructure in this state with a company if the business entity knows that the company holds certain affiliations with individuals who are citizens of certain countries), Business & Commerce Code, and any relationship between the prospective employee and a foreign governmental entity or foreign political organization. Makes nonsubstantive changes.

 

SECTION 5. Amends Section 39.360, Utilities Code, as added by Chapter 464 (S.B. 2013), Acts of the 88th Legislature, Regular Session, 2023, by amending Subsections (a), (b), (c), (d), and (e) and adding Subsections (d-1) and (j), as follows:

 

(a) Redefines "company" and "critical infrastructure."

 

(b) Prohibits an independent organization certified under Section 39.151 from registering a business entity as a market participant or maintaining the registration of a business entity to operate as a market participant in the power region for which the independent organization is certified unless the business identity attests that the entity complies with Chapter 117, Business & Commerce Code. Makes a nonsubstantive change.

 

(c)-(d) Makes conforming changes to these subsections.

 

(d-1) Authorizes an independent organization certified under Section 39.151 to:

 

(1) require as a condition of market participant registration that a business entity provide the independent organization with additional information to confirm the accuracy of an attestation or report required under Subsection (b), (c) (relating to requiring a certain business entity to report certain critical electric grid purchases to an independent organization), or (d) (relating to requiring a certain business entity to submit a certain attestation to an independent organization); and

 

(2) disclose information received under Subdivision (1) or any other relevant information to the attorney general or the PUC.

 

(e) Authorizes an independent organization certified under Section 39.151, notwithstanding any other law but subject to Section 39.151(d-4)(6) (relating to authorizing the PUC to resolve disputes between an affected person and an independent organization), to immediately suspend or terminate a business entity's, rather than company's, registration as a market participant or access to any of the independent organization's systems if the independent organization has a reasonable suspicion that the business entity is a company described by Section 2275.0102(a)(2) (relating to prohibiting a government entity from entering into certain contracts with a company if the company has certain affiliations), Government Code, rather than that the company meets any of the criteria described by Section 2274.0102(a)(2), Government Code, as added by Chapter 975 (S.B. 2116), Acts of the 87th Legislature, Regular Session, 2021. Makes nonsubstantive changes.

 

(j) Authorizes the attorney general, on request of an independent organization certified under Section 39.151, to investigate the accuracy or sufficiency of information provided under this section to the independent organization and disclose any new information obtained in relation to the investigation to the independent organization or the PUC.

 

SECTION 6. Makes application of Section 15.035, Utilities Code, as added by this Act, prospective.

 

SECTION 7. Provides that, to the extent of any conflict, this Act prevails over another Act of the 89th Legislature, Regular Session, 2025, Relating to nonsubstantive additions to and corrections in enacted codes.

 

SECTION 8. Effective date: September 1, 2025.