Lambert Foreign Investment Bill Leaves The Exemptions To The Governor

The text as introduced · 1,451 words

89R10974 RDS-F

By: Lambert
H.B. No. 5007

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of the Texas Committee on Foreign

Investment to review certain transactions involving certain

foreign entities; creating a civil penalty.

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

SECTION 1. Subtitle B, Title 4, Government Code, is amended

by adding Chapter 426 to read as follows:

CHAPTER 426. TEXAS COMMITTEE ON FOREIGN INVESTMENT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 426.001. DEFINITIONS. In this chapter:

(1) "Committee" means the Texas Committee on Foreign

Investment.

(2) "Covered transaction" means a foreign transaction

that is subject to this chapter in accordance with rules adopted

under Section 426.101.

(3) "Critical infrastructure" means infrastructure in

one of the following categories:

(A) chemical;

(B) commercial facilities;

(C) communications;

(D) critical manufacturing;

(E) dams;

(F) defense industrial bases;

(G) emergency services;

(H) energy;

(I) financial services;

(J) food and agriculture;

(K) government facilities;

(L) health care and public health;

(M) information technology;

(N) nuclear reactors, materials, and waste;

(O) transportation systems; or

(P) water and wastewater systems.

(4) "Foreign entity" means:

(A) a person who is not:

(i) a citizen or national of the United

States; or

(ii) an alien who is lawfully admitted for

permanent residence in the United States under the federal

Immigration and Nationality Act (8 U.S.C. Section 1101 et seq.);

(B) a foreign government; or

(C) a business entity:

(i) organized in a foreign country or under

the laws of a foreign government;

(ii) that has its principal place of

business in a foreign country; or

(iii) controlled by an entity described by

this subdivision.

(5) "Foreign transaction" means a merger,

acquisition, lease, sale, or other transfer by or to a foreign

entity of the direct or indirect control of or an interest in a

business, real property, or other asset located in this state.

(6) "Sensitive personal data" means information,

including health, financial, or biometric information, that may

pose a threat to public safety if obtained by a foreign entity,

including by exploiting the information to cause harm or coerce an

individual to perform an act on behalf of the entity.

Sec. 426.002. APPLICABILITY. This chapter does not apply

to a transaction governed exclusively by federal law, including an

international agreement between the United States and a foreign

nation.

SUBCHAPTER B. TEXAS COMMITTEE ON FOREIGN INVESTMENT

Sec. 426.051. COMMITTEE; MEMBERSHIP. (a) The Texas

Committee on Foreign Investment is established to facilitate the

review of certain foreign transactions as provided by this chapter.

(b) The committee is composed of the following members:

(1) a representative from the office of the governor

appointed by the governor, who shall serve as chair;

(2) the following officers or their designees:

(A) the attorney general;

(B) the land commissioner;

(C) the comptroller; and

(D) the commissioner of agriculture; and

(3) the heads of the following agencies or their

designees:

(A) the Department of Public Safety;

(B) the Public Utility Commission;

(C) the Department of Information Resources, or

its successor in functions relating to cybersecurity; and

(D) the Railroad Commission of Texas.

SUBCHAPTER C. REVIEW OF CERTAIN TRANSACTIONS

Sec. 426.101. FOREIGN TRANSACTIONS SUBJECT TO REVIEW;

PUBLICATION OF CRITERIA. (a) The governor, in consultation with

the committee, shall by rule adopt criteria for determining whether

a foreign transaction is subject to this chapter. The criteria must

provide that a foreign transaction is subject to this chapter if the

transaction:

(1) exceeds the minimum dollar value or the minimum

ownership percentage as determined by the governor; and

(2) affects at least one of the following concerns:

(A) critical infrastructure in this state;

(B) agricultural land in this state;

(C) sensitive personal data of residents of this

state; or

(D) a strategic industry or asset identified by

the governor, in consultation with the committee.

(b) The governor, in consultation with the committee, may by

rule exempt certain transactions from the requirements of this

chapter.

(c) As soon as practicable after adopting the criteria under

Subsection (a) or an exemption under Subsection (b), the governor

shall submit to the secretary of state the criteria and exemptions

adopted under this section and the secretary of state shall publish

and maintain the information on the secretary of state's Internet

website.

Sec. 426.102. NOTICE; REVIEW; REPORT TO COMMITTEE. (a) A

person who intends to enter into a covered transaction shall, not

later than the 90th day before the date of the closing or other

settlement of the transaction, notify the attorney general in the

form and manner prescribed by the attorney general.

(b) Not later than the 30th day after the date the attorney

general receives notice under Subsection (a), the attorney general

shall complete an initial review of the information provided in the

notice and determine whether further investigation is warranted. If

the attorney general determines that further investigation is

warranted, the attorney general shall conduct a secondary

investigation. The attorney general shall conclude a secondary

investigation not later than the 45th day after the date the

attorney general concludes the initial review.

(c) On completion of an initial review and, if applicable,

secondary investigation under Subsection (b), the attorney general

shall submit a report containing the results of the review and

investigation to the committee.

Sec. 426.103. MITIGATION AGREEMENT. (a) If the attorney

general determines that a mitigation agreement is necessary to

protect the state's interests, the attorney general shall, as soon

as practicable after submitting the report under Section 426.102,

submit a proposed mitigation agreement to the committee. The

agreement must address concerns raised in the report and may

require a party to a covered transaction to comply with certain

requirements proposed by the attorney general, including:

(1) data protection protocols;

(2) security clearance requirements;

(3) restrictions on access by foreign entities to

assets that are a part of a covered transaction; and

(4) compliance reporting.

(b) On receipt of the mitigation agreement from the attorney

general, the committee shall adopt or reject the agreement.

(c) If the committee adopts the mitigation agreement, the

committee shall deliver the agreement to each party to the covered

transaction.

(d) If the committee rejects the mitigation agreement, the

attorney general shall prepare a new mitigation agreement that

addresses the committee's concerns with the initial agreement.

(e) The committee shall adopt rules providing procedures to

implement this section.

Sec. 426.104. VIOLATION. A person violates this chapter

if:

(1) the attorney general determines that a covered

transaction involving the person requires a mitigation agreement;

and

(2) the person:

(A) executes a covered transaction without

entering into a mitigation agreement; or

(B) violates a provision of a mitigation

agreement.

Sec. 426.105. CONFIDENTIALITY. Notwithstanding any other

law, information the committee obtains during a review under

Section 426.102 or includes in a mitigation agreement under Section

426.103 is confidential and excepted from disclosure under Chapter

552. The information may be used in a proceeding under Subchapter D

at the attorney general's discretion.

SUBCHAPTER D. ENFORCEMENT

Sec. 426.151. CIVIL PENALTY; INJUNCTION. (a) A person who

violates this chapter is liable to the state for a civil penalty in

an amount not to exceed $50,000 for each violation.

(b) The attorney general may bring an action to:

(1) recover the civil penalty imposed under Subsection

(a); and

(2) restrain or enjoin a person from violating this

chapter, including by requiring a person to divest of an interest

that is the subject of a mitigation agreement.

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

fees and other reasonable expenses incurred in bringing an action

under this section.

Sec. 426.152. VENUE. Notwithstanding any other law, the

attorney general may bring an action under this chapter in the

county where all or a substantial part of the assets that are the

subject of the covered transaction are located.

SUBCHAPTER E. ANNUAL REPORT

Sec. 426.201. ANNUAL REPORT. Not later than September 1 of

each year, the committee shall prepare and submit to the governor,

lieutenant governor, and speaker of the house of representatives a

report that includes:

(1) the number of transactions reviewed by the

attorney general during the preceding fiscal year;

(2) an analysis of the measures imposed by the

committee in mitigation agreements entered into under this chapter;

and

(3) a summary of recommendations for legislative

changes the committee considers appropriate to promote state and

national security.

SECTION 2. Not later than December 1, 2025, the governor, in

consultation with the Texas Committee on Foreign Investment, shall

adopt criteria under Section 426.101, Government Code, as added by

this Act.

SECTION 3. Chapter 426, Government Code, as added by this

Act, applies only to a transaction governed by a contract entered

into on or after January 1, 2026.

SECTION 4. This Act takes effect September 1, 2025.