Cain’s China EV Ban Has A One-Word Loophole

The text as introduced · 710 words

89R10594 LRM-F

By: Cain
H.B. No. 2244

A BILL TO BE ENTITLED

AN ACT

relating to a prohibition on state contracts to purchase electric

vehicles and related components produced in scrutinized countries;

authorizing a civil penalty.

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

SECTION 1. Subtitle F, Title 10, Government Code, is

amended by adding Chapter 2278 to read as follows:

CHAPTER 2278. PROHIBITION ON STATE CONTRACTS FOR ELECTRIC VEHICLES

AND RELATED COMPONENTS PRODUCED IN SCRUTINIZED COUNTRIES

Sec. 2278.001. DEFINITIONS. In this chapter:

(1) "Company" means a sole proprietorship,

organization, association, corporation, partnership, joint

venture, limited partnership, limited liability partnership, or

limited liability company, including a wholly owned subsidiary,

majority-owned subsidiary, parent company, or affiliate of those

entities or business associations, that exists to make a profit.

(2) "Electric vehicle" means a motor vehicle that

draws propulsion energy only from a rechargeable energy storage

system.

(3) "Forced labor or services" has the meaning

assigned by Section 20A.01, Penal Code.

(4) "Nonprofit organization" means an entity that is

exempt from federal income tax under Section 501(a), Internal

Revenue Code of 1986, by being listed as an exempt entity under

Section 501(c) of that code, has submitted an application with the

Internal Revenue Service for recognition of an exemption under

Section 501(c) of that code, or is a nonprofit corporation or

association organized or formed under the laws of this state or

another state.

(5) "Scrutinized country" means the People's Republic

of China.

Sec. 2278.002. PROVISION REQUIRED IN STATE CONTRACTS. (a)

A state agency may not enter into a contract with a vendor to

purchase an electric vehicle or any component of an electric

vehicle unless the contract contains a written verification from

the vendor that:

(1) the vendor is not:

(A) a company organized under the laws of or

headquartered in a scrutinized country;

(B) a company owned, operated, or directly

controlled by the government of a scrutinized country;

(C) a nonprofit organization or

government-organized nongovernmental organization organized under

the laws of or headquartered in a scrutinized country; or

(D) a company or nonprofit organization that

subcontracts with a company or organization described by Paragraphs

(A)-(C) for production of any component of an electric vehicle;

(2) the electric vehicle or component of an electric

vehicle was not mined, produced, or manufactured wholly or partly

in a scrutinized country; or

(3) the vendor or any subcontractor of the vendor has

not used forced labor or services in the production of the electric

vehicle or component.

(b) The prohibitions described by Subsection (a) apply

regardless of whether:

(1) the company's or its parent company's securities

are publicly traded; or

(2) the company or its parent company is listed on a

public stock exchange as a company of a scrutinized country.

Sec. 2278.003. CONTRACT TERMINATION FOR FALSE

VERIFICATION; BARRING FROM STATE CONTRACTS. (a) If a state agency

determines that a vendor holding a contract with the state agency

was ineligible for the contract awarded under Section 2278.002

because the vendor's written verification was false, the state

agency shall immediately terminate the contract without further

obligation to the vendor.

(b) A vendor described by Subsection (a) is barred from

responding to a solicitation for or contracting for goods or

services procured by any state agency.

Sec. 2278.004. ATTORNEY GENERAL ENFORCEMENT; CIVIL

PENALTY; INJUNCTION. (a) A vendor that is in violation of this

chapter is liable for a civil penalty not to exceed $250,000 for

each violation.

(b) The attorney general may bring an action in the name of

this state to:

(1) recover a civil penalty under this section;

(2) restrain or enjoin the vendor from violating this

chapter; or

(3) recover the civil penalty and seek injunctive

relief.

(c) The attorney general may recover reasonable attorney's

fees and court costs in bringing an action under this section.

SECTION 2. Section 2278.002, Government Code, as added by

this Act, applies only to a contract entered into on or after the

effective date of this Act. A contract entered into before the

effective date of this Act is governed by the law in effect on the

date the contract was entered into, and the former law is continued

in effect for that purpose.

SECTION 3. This Act takes effect September 1, 2025.