Last December, we previewed the 87th Regular Session of the Texas Legislature in Texas Banking magazine and there were many unanswered questions about how the session would work during the pandemic. Would the session be consumed by COVID-19-related bills? Would Texas legislators be limited on the number of bills they could file as legislators in other states had been? Would legislators meet at the Austin Convention Center to enable socially distant committee meetings and floor action? Would advocates be allowed in the Capitol? When the gavels finally came down in the House and Senate on sine die, it is amazing how normal the 87th Regular Session of the Texas Legislature turned out to be.
Legislators filed a total of 7,025 bills and constitutional amendments for consideration this session. This is only a 7% reduction from the number of bills filed two years ago and is actually an increase in the number of bills that were filed in 2017. The majority of bills were not COVID-19-related. In fact, even with Winter Storm Uri bringing the work of the legislature to an unplanned halt for a week in February, the majority of bills weren’t winter storm-related either. It was a “normal” session in that respect.
The Legislature met in the Capitol just as they always do. While many legislative offices were closed to visitors in the early days of session, legislators and staff were willing to meet via Zoom and by the end of session, most offices were unlocked and welcomed visitors. The most noticeable difference from sessions’ past was the marked decline in the number of visitors — the halls of the Capitol were emptier this session.
How the Texas banking industry fared
With this background information out of the way, you are likely wondering how the Texas banking industry fared this session. From TBA’s perspective, thanks to the efforts of bankers across the state, we had a very successful session. Our Government Relations Council and Board of Directors set a three-item proactive legislative agenda:
- pandemic liability protections,
- increased penalties for ATM smash and grab criminals, and
- extending the state’s Rule Against Perpetuities.
We are happy to report each of these bills passed and have been signed by the governor.
Pandemic Liability Protection Act applies these liability protections retroactively to March 13, 2020, the date of the emergency declaration.
1. Pandemic Liability Protection Act
SB 6, the Pandemic Liability Protection Act, was introduced by Chairman Kelly Hancock and extends significant liability protections to those individuals and entities who have in good faith attempted to implement and comply with health and safety protocols during the pandemic. It provides a liability shield from frivolous lawsuits for businesses and individuals who took necessary steps to protect their employees and customers from the spread of COVID-19. It does not, however, shield bad actors for intentional misconduct or negligence.
TBA joined the Texas Civil Justice League’s Pandemic Liability Task force over a year ago when we saw a rash of COVID-19-related lawsuits being filed across the country. We worked collaboratively with other stakeholders to ensure that businesses are protected from liability if they in good faith substantially complied with an applicable rule, order or declaration of the governor, legislature, state agency or a local governmental entity. The bill applies these liability protections retroactively to March 13, 2020, the date of the emergency declaration. SB 6 was signed by Gov. Abbott on June 14 and immediately took effect. Count this as a legislative win for TBA.
2. ATM smash and grab
The second proactive item on our 2021 State Legislative Agenda was SB 516, legislation enhancing penalties for ATM smash and grab criminals. Carried by Chairwoman Joan Huffman in the Senate and Chairman Andrew Murr in the House, SB 516 was borne out of the work of TBA’s ATM Crime Task Force, which met last November to discuss the alarming spike in ATM smash and grab crimes in Texas. Task Force members included ATM manufacturers, insurers, federal and state law enforcement officers and rural and urban bankers. One issue that became clear to the Task Force was that the state needed to enhance penalties for ATM smash and grab criminals. While federal criminal bank robbery charges could be pursued, the reality of the situation is that ATM crimes are often treated as low-level crimes that do not warrant federal prosecution.
SB 516 amends the Penal Code to provide that the intentional whole or partial impairment or interruption of access to an ATM is a third-degree felony regardless of the amount of loss suffered. In testimony in both the House and Senate, TBA argued that SB 516 targets the organized criminals committing ATM smash and grabs and explained that this is not the work of teenagers armed with cans of spray paint; rather, criminal gangs are targeting ATMs to help fund their trafficking operations.
There have been over 500 of these crimes in Texas since Jan. 1, 2020, and the losses are in the tens of millions. More important than the financial losses, though, is the danger to bank employees and vendors who service and stock these machines. Enhanced criminal penalties for these crimes sends a very clear message to would-be ATM criminals — Don’t Mess with Texas ATMs. Gov. Abbott signed SB 516 into law on June 7 and the bill will become effective on Sept. 1. Count this as another legislative win for TBA.
3. Rule Against Perpetuities
The third issue on our 2021 State Legislative Agenda is related to the laws governing Texas trusts. Reaching back to feudal England, current Texas law provides that an interest in a trust must vest, if at all, within 21 years of some life in being at the time of the creation of the trust. This is known as the Rule Against Perpetuities and was designed to prevent dynastic trusts. In 21st century Texas, though, the effect of Texas’ 21-year Rule Against Perpetuities is not that Texans aren’t designing dynastic trusts. Texans are developing dynastic trusts; they’re just moving their assets to more favorable jurisdictions to do so. Once this wealth leaves the state, it is gone for generations.
HB 654 was filed in the House by Representative Eddie Lucio, III and in the Senate by Senator Nathan Johnson and extends Texas’ trust vesting period to up to 300 years if the grantor so chooses. Under a floor amendment added in the Senate, real property assets cannot be held in trust for longer than 100 years. TBA’s Wealth Management & Trust Division has sought this change in law for years and under the direction and management of the Division’s volunteer leadership, 2021 was the year it finally happened. The enactment of HB 654 will foster trust asset growth in Texas and create jobs and opportunities for the Texans who support these new and growing accounts. Gov. Abbott signed HB 654 into law on June 16 and the law will take effect on Sept. 1, 2021. Note: the new vesting period for Texas trusts will only apply to trusts created on or after Sept. 1, 2021. Another legislative victory for TBA!
Additional legislation
While the above bills were the foundation of our 2021 State Legislative Agenda, there were hundreds of other bills that we tracked and weighed in on.
HB 1927
HB 1927 legislation allows Texans over the age of 21 to carry firearms without permits. Without taking a position on the underlying bill, TBA worked with legislators to ensure the language was included in the new statute that clearly provides a property owner with a way to notify customers that firearms are prohibited on the property. Sec. 30.05, Penal Code, is the state’s criminal trespass statute and as a result of diligent work by TBA and other stakeholders, the statute now includes the following language: “Pursuant to Section 30.05, Penal Code (criminal trespass), a person may not enter this property with a firearm.”
Based on the plain language of the statute, it could be argued that this notice, which must be in English and Spanish, in contrasting colored block letters at least 1-inch in height and displayed in a conspicuous manner clearly visible to the public could supersede the existing Sec. 30.06 (concealed handgun) and 30.07 (openly carried handgun) notices businesses can choose to post. Before replacing these signs with the new Sec. 30.05 sign, though, TBA recommends waiting for the Attorney General or the Texas Department of Public Safety to weigh in on whether the new Sec. 30.05 notice includes the existing notices provided under Secs. 30.06 and 30.07, Penal Code.
As previously mentioned, TBA did not take a position on HB 1927; we simply wanted to be sure our member banks have clear statutory guidance if they choose to prohibit firearms on their premises. Gov. Abbott signed HB 1927 on June 16 and the statute takes effect Sept. 1.
HB 2106
TBA was also very pleased to support HB 2106 by Perez, legislation that puts more teeth into the card skimming statute enacted in 2019.
As a refresher, two years ago, Texas created a card skimming reporting regime for food and fuel station owners finding card skimmers on their fuel pumps. Instead of quietly removing the skimmers and letting banks absorb the losses, the 2019 law required merchants to report the existence of the skimmers to the Department of Licensing and Regulation (TDLR) and provided the Attorney General with regulatory oversight of the program. Unfortunately, the successful rollout of 2019’s 86R HB 2945 was derailed by the pandemic.
This session’s HB 2106 moves the administration and enforcement of the card skimming program from the Attorney General’s office to the Texas Department of Licensing and Regulation. The bill also creates a civil penalty for a person who violates the reporting requirements of the card skimming program. This is in addition to the existing Class C misdemeanor offense for reporting violations that is already on the books. Finally, HB 2106 renames the Payment Card Fusion Center created by the 2019 statute as the Financial Crimes Intelligence Center and provides that the Center may serve as a centralized collection point for information related to card fraud, provide training and education to law enforcement, provide outreach to the public and importantly, release information to financial institutions, credit and debit card issuers, payment card networks, institutions of higher education and merchants if the Center does not consider the information to be sensitive to law enforcement.
The statutory improvements made with HB 2106 provide Texas with an exciting opportunity in its fight against card skimmers. Gov. Abbott signed the bill on June 7 and it takes effect Sept. 1, 2021. TBA looks forward to working with stakeholders to see the successful launch of this program so that Texas fuel customers will be better protected at the pump.
Additional work to be done
While the 87th Regular Session of the Texas Legislature is now in the record books, legislators expect to return to Austin for at least one — though likely more — special session.
Because of pandemic-related delays, legislators still do not have the census data they need to redraw Texas’ Congressional, House, Senate, State Board of Education and judicial districts. These numbers are expected in August and legislators expect to be called back in late-September or October to redraw our maps.
Additionally, Gov. Abbott has indicated he will call a special session on election integrity, an issue he deemed as an emergency item that died in the last days of session. Many Capitol watchers believe this issue will be on the call of a special session before the end of August; however, only the governor has the power to call a special session, so he is the only person who truly knows when this will happen.
Texas Tour
As we do after every session, TBA will travel the state this summer updating our members on legislative actions that will require policy and procedure changes for Texas banks. Visit www.texasbankers.com/tour to register for a location near you. We are also adding additional stops to our journey, so if your city isn’t on the list, be sure to let us know you’d like to host a Tour stop or a legislative pop-up at your bank. Until we see you in our travels, please know how much we appreciate your engagement this session. Our legislative successes are attributed to the hard work you put in with your elected officials, so thank you!