89R11916 MZM-D

By: Shaheen H.B. No. 1510

A BILL TO BE ENTITLED

AN ACT

relating to the functions and duties of the Texas Ethics Commission.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 254.036(b), Election Code, is amended to read as follows:

(b) Except as provided by Subsection [(c) or] (e), each report filed under this chapter with the commission must be filed by computer diskette, modem, or other means of electronic transfer, using computer software provided by the commission or computer software that meets commission specifications for a standard file format.

SECTION 2. Section 254.038(c), Election Code, is amended to read as follows:

(c) A report under this section shall be filed electronically, by telephonic facsimile machine, or by hand, in the form required by Section 254.036. The commission must receive a report under this section filed by telephonic facsimile machine or hand not later than 5 p.m. of the first business day after the date the contribution is accepted. The commission must receive a report under this section filed electronically not later than midnight of the first business day after the date the contribution is accepted. A report under this section is not required to be accompanied by the affidavit required under Section 254.036(h) or to be submitted on a form prescribed by the commission. [A report under this section that complies with Section 254.036(a) must be accompanied by an affidavit under Section 254.036(c)(1) unless the candidate or committee has submitted an affidavit under Section 254.036(c)(1) with another report filed in connection with the election for which a report is required under this section.]

SECTION 3. Section 254.039(a-1), Election Code, is amended to read as follows:

(a-1) A report under this section shall be filed electronically, by telephonic facsimile machine, or by hand, in the form required by Section 254.036. The commission must receive a report under this section not later than 5 p.m. of the first business day after the date the contribution is accepted or the expenditure is made. A report under this section is not required to be accompanied by the affidavit required under Section 254.036(h) or to be submitted on a form prescribed by the commission. [A report under this section that complies with Section 254.036(a) must be accompanied by an affidavit under Section 254.036(c)(1) unless the committee has submitted an affidavit under Section 254.036(c)(1) with another report filed in connection with the election for which a report is required under this section.]

SECTION 4. Sections 254.042(a) and (b), Election Code, are amended to read as follows:

(a) The commission shall determine from any available evidence whether a report required to be filed with the commission under this chapter is late. On making that determination, the commission shall immediately provide [mail a notice of the determination] to the person required to file the report notice of the determination.

(b) If a report other than a report under Section 254.064(c), 254.124(c), or 254.154(c) [or the first report under Section 254.063 or 254.123] that is required to be filed following the primary or general election is determined to be late, the person required to file the report is liable to the state for a civil penalty of $500. If a report under Section 254.064(c), 254.124(c), or 254.154(c) [or the first report under Section 254.063 or 254.153] that is required to be filed following the primary or general election is determined to be late, the person required to file the report is liable to the state for a civil penalty of $500 for the first day the report is late and $100 for each day thereafter that the report is late and continuing only through the day of the election. If a report is more than 30 days late, the commission shall issue a warning of liability [by registered mail] to the person required to file the report. If the penalty is not paid before the 10th day after the date on which the warning is received, the person is liable for a civil penalty in an amount determined by commission rule, but not to exceed $10,000.

SECTION 5. Sections 254.157 and 254.158, Election Code, are amended to read as follows:

Sec. 254.157. MONTHLY REPORTING SCHEDULE. (a) The campaign treasurer of a general-purpose committee filing monthly reports shall file a report not later than the 10th [fifth] day of the month following the period covered by the report. A report covering the month preceding an election in which the committee is involved must be received by the authority with whom the report is required to be filed not later than the 10th [fifth] day of the month following the period covered by the report.

(b) A monthly report covers the period beginning the first [26th] day of each month and continuing through the last [25th] day of the [following] month[, except that the period covered by the first report begins January 1 and continues through January 25].

Sec. 254.158. EXCEPTION TO MONTHLY REPORTING SCHEDULE. If the campaign treasurer appointment of a general-purpose committee filing monthly reports is filed after January 1 of the year in which monthly reports are filed, the period covered by the first monthly report begins the day the appointment is filed and continues through the last [25th] day of the month in which the appointment is filed [unless the appointment is filed the 25th or a succeeding day of the month. In that case, the period continues through the 25th day of the month following the month in which the appointment is filed].

SECTION 6. Sections 305.033(a) and (c), Government Code, are amended to read as follows:

(a) The commission shall determine from any available evidence whether a registration or report required to be filed with the commission under this chapter is late. A registration filed without the fee required by Section 305.005 is considered to be late. On making a determination that a required registration or report is late, the commission shall immediately provide [mail a notice of the determination] to the person responsible for the filing, [to] the commission, and [to] the appropriate attorney for the state notice of the determination.

(c) If a registration or report is more than 30 days late, the commission shall issue a warning of liability [by registered mail] to the person responsible for the filing. If the penalty is not paid before the 10th day after the date on which the warning is received, the person is liable for a penalty in an amount determined by commission rule, but not to exceed $10,000.

SECTION 7. Section 305.034(b), Government Code, is amended to read as follows:

(b) If [Whenever] the commission determines that a person has failed to file any required form, statement, or report as required by this chapter, the commission shall provide [send a written statement of this finding] to the person written notice of the determination [involved]. [Notice to the person involved must be sent by certified mail.]

SECTION 8. Section 571.022, Government Code, is amended to read as follows:

Sec. 571.022. SUNSET PROVISION. The commission is subject to review under Chapter 325 (Texas Sunset Act), but is not abolished under that chapter. The commission shall be reviewed during the periods in which state agencies abolished in 2037 [2013] and every 12th year after that year are reviewed.

SECTION 9. Section 571.0271, Government Code, is amended by amending Subsection (b) and adding Subsection (d) to read as follows:

(b) The training program must provide the person with information regarding:

(1) the law governing [legislation that created the] commission operations;

(2) the programs, functions, rules, and budget of [operated by] the commission;

(3) the scope of and limitations on the rulemaking authority [role and functions] of the commission;

(4) [the rules of the commission, with an emphasis on the rules that relate to disciplinary and investigatory authority;

[(5) the current budget for the commission;

[(6)] the results of the most recent formal audit of the commission;

(5) [(7)] the requirements of:

(A) laws relating to [the] open meetings [law], public information, administrative procedure, and disclosing conflicts-of-interest [Chapter 551]; and

(B) [the public information law, Chapter 552;

[(C) the administrative procedure law, Chapter 2001; and

[(D)] other laws applicable to members of a state policy-making body in performing their duties [relating to public officials, including conflict-of-interest laws]; and

(6) [(8)] any applicable ethics policies adopted by the commission.

(d) The executive director of the commission shall create a training manual that includes information required by Subsection (b). The executive director shall distribute a copy of the training manual annually to each member of the commission. Each member of the commission shall sign and submit to the executive director a statement acknowledging that the member received and has reviewed the training manual.

SECTION 10. Subchapter B, Chapter 571, Government Code, is amended by adding Section 571.033 to read as follows:

Sec. 571.033. METHOD OF PROVIDING NOTICE. (a) The commission by rule shall prescribe the method by which the commission will provide a notice required by:

(1) Chapter 305;

(2) this chapter;

(3) Chapter 572; or

(4) Title 15, Election Code.

(b) The method the commission prescribes under Subsection (a) for providing notice may include electronic mail.

SECTION 11. Section 571.064(b), Government Code, is amended to read as follows:

(b) If a law, other than Sections 305.005(g) and (g-1), administered and enforced by the commission sets dollar amounts or categories of amounts as reporting thresholds or if the commission sets those amounts, the commission [annually] shall decennially adjust those thresholds [upward to the nearest multiple of $10] in accordance with the percentage increase for the previous year in the Consumer Price Index for Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor to:

(1) the nearest multiple of $10 if the amount is less than $100;

(2) the nearest multiple of $100 if the amount is $100 or more but less than $10,000; or

(3) the nearest multiple of $1,000 if the amount is $10,000 or more.

SECTION 12. The heading to Subchapter E, Chapter 571, Government Code, is amended to read as follows:

SUBCHAPTER E. CATEGORIZATION OF VIOLATIONS; COMPLAINT PROCEDURES

AND HEARINGS

SECTION 13. Section 571.1211, Government Code, is amended by amending Subdivisions (2) and (3) and adding Subdivision (4) to read as follows:

(2) "Category One violation" means a technical, clerical, or de minimis violation of a law within jurisdiction of the commission [as to which it is generally not difficult to ascertain whether the violation occurred or did not occur, including:

[(A) the failure by a person required to file a statement or report to:

[(i) file the required statement or report in a manner that complies with applicable requirements; or

[(ii) timely file the required statement or report;

[(B) a violation of Section 255.001, Election Code;

[(C) a misrepresentation in political advertising or a campaign communication relating to the office held by a person in violation of Section 255.006, Election Code;

[(D) a failure to include in any written political advertising intended to be seen from a road the right-of-way notice in violation of Section 259.001, Election Code; or

[(E) a failure to timely respond to a written notice under Section 571.123(b)].

(3) "Category Two violation" means a violation of a law within the jurisdiction of the commission that is not a Category One violation or a Category Three violation.

(4) "Category Three violation" means a serious violation of a law within the jurisdiction of the commission.

SECTION 14. Subchapter E, Chapter 571, Government Code, is amended by adding Sections 571.1213, 571.1232, and 571.1233 to read as follows:

Sec. 571.1213. CATEGORIZATION OF VIOLATIONS. (a) The commission shall categorize each violation of law within the commission's jurisdiction as a Category One violation, a Category Two violation, or a Category Three violation. A violation of law may by categorized as more than one category of violation. In determining the category of a violation, the commission shall consider, as applicable:

(1) the dollar amount at issue for a violation;

(2) the timing of the report relative to an election or legislative session;

(3) the penalty of any criminal offense associated with a violation;

(4) the potential a violation has to:

(A) conceal evidence of a person's influence over a public official; or

(B) distort a public disclosure; and

(5) any other consideration the commission determines necessary to prevent harm to the public.

(b) The commission shall publish on the commission's Internet website the violation categorizations described by Subsection (a).

(c) Before the commission adopts a new violation categorization or changes an existing violation categorization described by Subsection (a), the commission shall:

(1) publish the proposed violation categorization in the Texas Register for a period determined by commission rule; and

(2) hold an open meeting to obtain public comment on the proposed violation categorization.

Sec. 571.1232. POLICY ON PRIORITIZING COMPLAINTS. (a) The commission shall adopt a written policy on prioritizing the investigation of sworn complaints in accordance with this subchapter based on the risk the commission determines the violation alleged in the complaint poses to public disclosure integrity.

(b) In adopting the policy, the commission shall ensure a sworn complaint is prioritized based on:

(1) the category of the violation alleged in the complaint;

(2) whether evidence exists demonstrating an intent in connection with the violation alleged in the complaint to conceal a person's influence over a public official or distort a public disclosure;

(3) the compliance record of the respondent with laws within the commission's jurisdiction based on:

(A) previous sworn complaints filed against the respondent;

(B) repeat violations committed by the respondent; and

(C) any reviews the commission conducted under Section 571.069 of a statement or report filed by the respondent;

(4) negative media attention of the matter that is the subject of the complaint; and

(5) any other risk-based factors the commission identifies.

(c) The policy the commission adopts under this section must include a process for the commission to reprioritize the investigation of a sworn complaint as the commission determines necessary.

(d) The commission shall:

(1) publish on the commission's Internet website the policy the commission adopts under this section; and

(2) train commission staff on using the policy in processing sworn complaints.

(e) Before the commission adopts or changes the policy required by this section, the commission shall:

(1) publish the proposed policy in the Texas Register for a period determined by commission rule; and

(2) hold an open meeting to obtain public comment on the proposed policy.

Sec. 571.1233. DISCOVERY REQUIREMENTS. The commission shall adopt rules that prescribe the procedure required of commission staff and respondents to agree to a discovery control plan to conduct discovery in connection with a sworn complaint. The rules must:

(1) outline a period during which all discovery must be completed and set appropriate limits to the amount of discovery that may be requested; and

(2) comply with the Texas Rules of Civil Procedure, except that the commission shall determine the level of discovery under Rule 190, Texas Rules of Civil Procedure, appropriate for the category of the violation alleged in a complaint and the policies the commission adopts under Section 571.1232 on prioritizing the investigation of complaints.

SECTION 15. Section 571.124(e), Government Code, is amended to read as follows:

(e) If the executive director determines that the commission has jurisdiction, the notice under Section 571.123(b) must include:

(1) a statement that the commission has jurisdiction over the violation of law alleged in the complaint;

(2) a statement of whether the complaint will be processed as a Category One violation, [or] a Category Two violation, or a Category Three violation [, subject to reconsideration as provided for by Section 571.1212];

(3) the date by which the respondent is required to respond to the notice;

(4) a copy of the complaint and the rules of procedure of the commission;

(5) a statement of the rights of the respondent;

(6) a statement inviting the respondent to provide to the commission any information relevant to the complaint; and

(7) a statement that a failure to timely respond to the notice will be treated as a separate violation.

SECTION 16. Section 571.1244, Government Code, is amended to read as follows:

Sec. 571.1244. PRELIMINARY REVIEW AND PRELIMINARY REVIEW PROCEDURES. The commission shall adopt procedures for the conduct of preliminary reviews and preliminary review hearings. The procedures must include:

(1) a reasonable time for responding to questions submitted by the commission and commission staff and subpoenas issued by the commission; [and]

(2) the tolling or extension of otherwise applicable deadlines where:

(A) the commission issues a subpoena and the commission's meeting schedule makes it impossible both to provide a reasonable time for response and to comply with the otherwise applicable deadlines; or

(B) the commission determines that, despite commission staff's diligence and the reasonable cooperation of the respondent, a matter is too complex to resolve within the otherwise applicable deadlines without compromising either the commission staff's investigation or the rights of the respondent; and

(3) a deadline on the convening of a panel to conduct a preliminary review hearing.

SECTION 17. Sections 571.125(a), (b), (d), and (e), Government Code, are amended to read as follows:

(a) A panel of two [The] commission members selected in accordance with Section 571.1251 shall conduct a preliminary review hearing if:

(1) following the preliminary review, the [commission and the] respondent rejects [cannot agree to] the resolution proposed by commission staff of the complaint or motion [disposition of the complaint or motion]; or

(2) the respondent in writing requests a hearing.

(b) The commission shall provide [written notice] to the complainant, if any, and the respondent written notice that includes:

(1) [of] the date, time, and place the panel [commission] will conduct the preliminary review hearing; and

(2) a statement that if the commission orders a formal hearing because the complaint could not be resolved and settled as a result of the preliminary review hearing, the formal hearing may result in a higher sanction than the one the panel proposes for the preliminary review hearing.

(d) During a preliminary review hearing, the panel [commission]:

(1) may consider all submitted evidence related to the complaint or to the subject matter of a motion under Section 571.124(b);

(2) may review any documents or material related to the complaint or to the motion; and

(3) shall determine whether there is credible evidence that provides cause for the panel [commission] to conclude that a violation within the jurisdiction of the commission has occurred.

(e) During a preliminary review hearing, the respondent may appear before the panel [commission] with the assistance of counsel, if desired by the respondent, and present any relevant evidence, including a written statement.

SECTION 18. Subchapter E, Chapter 571, Government Code, is amended by adding Section 571.1251 to read as follows:

Sec. 571.1251. SELECTION OF PANEL TO CONDUCT PRELIMINARY REVIEW HEARING. The commission shall adopt rules for the selection of commission members to serve on panels to conduct preliminary review hearings. The rules must ensure that:

(1) a panel is composed of two commission members selected on a rotating basis; and

(2) each member of the panel is a member of a different political party.

SECTION 19. Section 571.126, Government Code, is amended to read as follows:

Sec. 571.126. PRELIMINARY REVIEW HEARING: RESOLUTION. (a) Except as provided by Subsection (e), as [As] soon as practicable after the completion of a preliminary review hearing, the panel [commission] by vote shall issue a decision stating:

(1) whether there is credible evidence for the panel [commission] to determine that a violation within the jurisdiction of the commission has occurred and whether the violation is a Category One violation [technical or de minimis]; or

(2) that there is insufficient evidence for the panel [commission] to determine whether a violation within the jurisdiction of the commission has occurred.

(b) If the panel [commission] determines that there is credible evidence for the panel [commission] to determine that a violation within the commission's jurisdiction has occurred, the panel [commission] shall propose to the respondent a resolution to resolve and settle the complaint or motion to the extent possible. If the panel [commission] successfully resolves and settles the complaint or motion, not later than the fifth business day after the date the respondent accepts the proposed resolution [of the final resolution of the complaint or motion], the commission shall provide [send] to the complainant, if any, and the respondent a copy of the decision stating the panel's [commission's] determination and written notice of the resolution and the terms of the resolution. If the panel [commission] is unsuccessful in resolving and settling the complaint or motion, the panel [commission] shall:

(1) order a formal hearing to be held in accordance with Sections 571.127 [571.129] through 571.132; and

(2) not later than the fifth business day after the date the panel determines that there is credible evidence to determine that a violation has occurred or the date the respondent rejects the panel's proposed resolution [of the decision], send to the complainant, if any, and the respondent:

(A) a copy of the decision;

(B) written notice of the date, time, and place of the formal hearing;

(C) a statement of the nature of the alleged violation;

(D) a description of the evidence of the alleged violation;

(E) a copy of the complaint or motion;

(F) a copy of the commission's rules of procedure; and

(G) a statement of the rights of the respondent.

(c) If the panel [commission] determines that there is credible evidence [for the commission] to determine that a violation within the jurisdiction of the commission has not occurred [, the commission shall]:

(1) the panel shall dismiss the complaint or motion; and

(2) the commission shall not later than the fifth business day after the date of the dismissal, send to the complainant, if any, and the respondent a copy of the decision stating the panel's [commission's] determination and written notice of the dismissal and the grounds for dismissal.

(d) If the panel [commission] determines that there is insufficient credible evidence [for the commission] to determine that a violation within the jurisdiction of the commission has occurred, the panel [commission] may dismiss the complaint or motion or promptly order [conduct] a formal hearing to be held under Sections 571.127 [571.129] through 571.132. Not later than the fifth business day after the date of the panel's [commission's] determination under this subsection, the commission shall send to the complainant, if any, and the respondent a copy of the decision stating the panel's [commission's] determination and written notice of the grounds for the determination.

(e) If, because of a tie vote, the panel cannot issue a decision under Subsection (a), the panel shall order a formal hearing to be held under Sections 571.127 through 571.132. Not later than the fifth business day after the date of the vote, the commission shall notify the complainant, if any, and the respondent of the date, time, and place of the hearing.

(f) Except as provided by other law or commission rule, if the respondent accepts the proposed resolution under Subsection (b), the panel shall submit the proposed resolution to the commission for approval.

(g) A commission member that serves on a preliminary review hearing panel is not required to be recused from a formal hearing held under Sections 571.127 through 571.132.

SECTION 20. Subchapter E, Chapter 571, Government Code, is amended by adding Section 571.127 to read as follows:

Sec. 571.127. FORMAL HEARING: CONDUCT. (a) The commission may conduct a formal hearing under this subchapter or may delegate to the State Office of Administrative Hearings the responsibility of conducting a formal hearing under this subchapter.

(b) The commission shall adopt rules of practice regarding a formal hearing referred to the State Office of Administrative Hearings, including rules:

(1) on which party bears the burden of proof;

(2) on what standard of evidence is required;

(3) of evidence that may be applicable;

(4) on subpoena power; and

(5) on contempt power.

(c) Proceedings for a formal hearing conducted by the State Office of Administrative Hearings are governed by Chapter 2001. Notwithstanding Section 571.1233, the commission shall ensure rules of practice the commission adopts under Section 2001.004 applicable to the proceedings for a formal hearing do not conflict with rules the State Office of Administrative Hearings adopts.

SECTION 21. Section 571.1731, Government Code, is amended by adding Subsection (d) to read as follows:

(d) The commission shall waive a civil penalty imposed under Section 305.033(b) or 572.033(b) of this code or Section 254.042(a), Election Code, if the commission has no record of providing the late filing notice required by those sections.

SECTION 22. Section 571.177, Government Code, is amended to read as follows:

Sec. 571.177. [FACTORS CONSIDERED FOR] ASSESSMENT AND SCHEDULE OF SANCTION OR PENALTIES. (a) The commission shall consider the following factors in assessing a sanction or civil penalty for a violation of a law within the commission's jurisdiction:

(1) the seriousness of the violation, including the nature, circumstances, consequences, extent, and gravity of the violation;

(2) the history and extent of previous violations;

(3) the demonstrated good faith of the violator, including actions taken to rectify the consequences of the violation;

(4) the penalty necessary to deter future violations; and

(5) any other matters that justice may require.

(b) The commission may assess graduated penalties against a person who repeatedly files late statements or reports in violation of:

(1) Chapter 305;

(2) this chapter;

(3) Chapter 572; or

(4) Title 15, Election Code.

(c) The commission shall establish and publish on the commission's Internet website a penalty schedule that outlines the full range and scope of penalties the commission may assess under a law within the commission's jurisdiction. The commission shall ensure the penalty schedule:

(1) includes the specific statutes or commission rules under which the commission may assess a penalty; and

(2) takes into consideration aggravating and mitigating factors related to the assessment of a penalty, including the severity of a violation and graduated penalties for repeat violations.

SECTION 23. The heading to Section 572.030, Government Code, is amended to read as follows:

Sec. 572.030. PREPARATION [AND MAILING] OF FORMS; NOTICE OF FILING REQUIREMENTS.

SECTION 24. Sections 572.030(b), (c), and (d), Government Code, are amended to read as follows:

(b) The commission shall mail to each individual required to file under this subchapter a notice that:

(1) states that the individual is required to file a financial statement under this subchapter;

(2) identifies the filing dates for the financial statement as provided by Sections 572.026 and 572.027;

(3) describes the manner in which the individual may obtain the financial statement forms and instructions from the commission's Internet website;

(4) states that on request of the individual, the commission will provide [mail to] the individual with a copy of the financial statement forms and instructions; and

(5) states, if applicable, the fee for mailing the forms and instructions and the manner in which the individual may pay the fee.

(c) The commission shall provide the notice required by Subsection (b) [must be mailed]:

(1) before the 30th day before the deadline for filing the financial statement under Section 572.026(a) or (c), except as otherwise provided by this subsection;

(2) not later than the 15th day after the applicable deadline for filing an application for a place on the ballot or a declaration of write-in candidacy for candidates required to file under Section 572.027(a), (b), or (c);

(3) not later than the seventh day after the date of appointment for individuals required to file under Section 572.026(b), or if the legislature is in session, sooner if possible; and

(4) not later than the fifth day after the date the certificate of nomination is filed for candidates required to file under Section 572.027(d) [574.027(d)].

(d) The commission shall provide [mail] a copy of the financial statement forms and instructions to an individual on request of the individual not later than the third business day after the date the commission receives the individual's request for the forms and instructions.

SECTION 25. Sections 572.033(a) and (b), Government Code, are amended to read as follows:

(a) The commission shall determine from any available evidence whether a statement required to be filed under this subchapter is late. On making a determination that the statement is late, the commission shall immediately provide [mail a notice of the determination] to the individual responsible for filing the statement and [to] the appropriate attorney for the state notice of the determination.

(b) If a statement is determined to be late, the individual responsible for filing the statement is liable to the state for a civil penalty of $500. If a statement is more than 30 days late, the commission shall issue a warning of liability [by registered mail] to the individual responsible for the filing. If the penalty is not paid before the 10th day after the date on which the warning is received, the individual is liable for a civil penalty in an amount determined by commission rule, but not to exceed $10,000.

SECTION 26. The following provisions are repealed:

(1) Sections 254.036(c), (c-1), and (g), Election Code;

(2) Section 571.032, Government Code; and

(3) Section 571.1212, Government Code.

SECTION 27. Section 254.042, Election Code, as amended by this Act, applies only to a report that is required to be filed under Chapter 254, Election Code, on or after the effective date of this Act. A report under that chapter that is required to be filed before the effective date of this Act is governed by the law in effect on the date the report was required to be filed, and the former law is continued in effect for that purpose.

SECTION 28. (a) Except as provided by Subsection (b) of this section, Section 571.0271, Government Code, as amended by this Act, applies to a member of the Texas Ethics Commission appointed before, on, or after the effective date of this Act.

(b) A member of the Texas Ethics Commission who, before the effective date of this Act, completed the training program required by Section 571.0271, Government Code, as that law existed before the effective date of this Act, is only required to complete additional training on the subjects added by this Act to the training program required by Section 571.0271, Government Code. A member described by this subsection may not vote, deliberate, or be counted as a member in attendance at a meeting of the Texas Ethics Commission held on or after December 1, 2025, until the member completes the additional training.

SECTION 29. This Act takes effect September 1, 2025.