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Around the Texas Capitol:
Legislature adjourns, but special sessions and election challenges already in the works

By Lauren Fairbanks, Shayne Woodard and J Pete Laney
TAD Governmental Affairs

The 87th Texas Regular Legislative Session officially adjourned Sine Die, “without day,” on Memorial Day, but plans are already being made to bring them back at least twice for special sessions. Meanwhile, Republican primary races for March 2022 are already taking shape.

The legislative interim – the time between the Memorial Day adjournment and the next regular legislative session starting in January 2023 – promises to be anything but dull.

Texas Legislature ends with a bang

While the last several legislative sessions have adjourned largely without incident, the ending of this one was anything but. On Sunday, May 30, when the House was taking final action on conference committee reports (ironing out the differences between the House and Senate versions of the same bill), Senate Bill 7, the election security bill (which the Democrats refer to as a “voter suppression” bill), was brought up for discussion.

With a little less than an hour and a half before the deadline for the House to take up and approve conference committee reports, the Democrats planned to speak against the bill long enough to run out the clock. Republicans were planning a parliamentary maneuver to cut off debate and force a vote on the bill. To avoid the measure ultimately being voted on, a number of Democrats took the keys to their voting machines and left the Capitol, breaking a quorum. In the absence of a quorum, the House adjourned leaving several conference committee reports unadopted.

Across the rotunda, Lt. Gov. Dan Patrick criticized House leadership for mismanaging the last days of session as deadlines loomed, and Gov. Greg Abbott released a statement confirming that election integrity and bail reform were still must-pass emergency items that would be added to a special session agenda. He also threatened to veto the portion of the upcoming biennial budget (that the Legislature had passed and takes effect Sept. 1) that would fund the Legislature – including staff.

While the Democrats bought some time, these two bills are likely to eventually pass during an upcoming special session of the Legislature later this year, exact dates to be announced by the governor. Lawmakers could be back in Austin as early as this summer. An announcement isn’t expected until after the governor’s veto period ends on June 20.

Abbott has confirmed there will be two special sessions – one for these priority bills that did not pass, and another for redistricting and the allocation of nearly $16 billion in federal funds for COVID-19 recovery, which have not yet arrived.

As you’ll recall, the coronavirus pandemic delayed the 2020 census, thus delaying redistricting, which is the Legislature’s charge to draw new legislative and congressional districts based on shifts in population seen in the census data. A special session for redistricting is anticipated in September or October.

Priority bills that passed

While some of the state leadership’s big-ticket items did not make it across the finish line, several did, including: expanding rural broadband access, preventing local defunding of police, liability protection from COVID-related lawsuits, reform of ERCOT (which operates the state’s electric grid), and power grid stability. In addition, the must-pass biennial state budget was approved. Abbott called this “one of the most conservative legislative sessions our state has ever seen.”

Industry-specific measures

The Legislature passed several bills of particular interest to the dairy industry, all of which were supported by the Texas Association of Dairymen:

Texas Sunset Commission. Every two years the Sunset Commission reviews state agencies to determine whether the agency is operating as intended and ensure there is no duplication or overlap with another agency. The Sunset process works by setting an automatic termination (Sunset) date in state law on which an agency will be abolished unless the Legislature passes a bill to continue it, typically for another 12 years. This cycle the Commission reviewed 19 agencies. Two agencies of particular interest to the dairy industry, the Texas Department of Agriculture (TDA) and the Texas Animal Health Commission (TAHC), were both part of that. SB 703 by Sen. Dawn Buckingham (R-Lakeway) and Rep. Terry Canales (D-Edinburg) renews the TDA for 12 years and included reform measures to streamline the agencies core functions and improve stakeholder engagement. SB 705 by Sen. Eddie Lucio, Jr. (D-Brownsville) and Rep. John Cyrier (R-Lockhart) continues the TAHC for 12 years and adopts Sunset Commission recommendations including replacing the TAHC lab and naming the Texas A&M Veterinary Medical Diagnostic Laboratory (TVMDL) as the state’s regulatory animal health lab; eliminating statutory lists specifying animal diseases TAHC is required to control, eradicate or report; and allowing TAHC to establish quarantine areas in rule rather than statute.

Rural Vet Incentive Program. HB 1259 by Rep. Drew Darby (R-San Angelo) and Sen. Kel Seliger (R-Amarillo) transfers the administration of the rural veterinarian incentive program from Texas A&M University to the Texas Animal Health Commission. The transfer of authority from A&M recognizes that there are now two veterinary schools in the state. The bill would pay for student loan forgiveness for each year of service in a rural area, meaning that a student could receive greater financial assistance the longer they agreed to serve in a rural county.

Protection of Animal/Crop Facilities. HB 1480 by Rep. John Cyrier (R-Lockhart) and Sen. Lois Kolkhorst (R-Brenham) addresses concerns with individuals entering agricultural facilities without the consent of facility owners/operators that have resulted in damage and destruction of livestock and facilities. Under the provisions of the bill, a criminal offense is created that is punishable as a Class B or Class A misdemeanor with the specific punishment based on the amount of loss to the animal or crop facility.

Unfortunately, several bills supported by the Texas Association of Dairymen that would benefit the dairy farmers did not make it to the governor’s desk:

Emergency Milk Disposal. HB 3387 by Rep. Glenn Rogers (R-Graford) and Sen. Drew Springer (R- Muenster), relating to the authorization for certain land applications and discharges into retention facilities of dairy waste, was a victim of the back-and-forth politics between the House and Senate in the waning days of session. It had broad support but ultimately did not pass after Lt. Gov. Dan Patrick limited passage of bills set on the Senate’s Local & Uncontested Calendar, in retaliation for the House killing several of his priority bills.

Meat Labeling. Several bills filed this session addressed confusion around labeling of plant-based and cell-based proteins as meat products. The bills sought to strengthen consumers’ understanding of purchased food products by requiring clear, accurate labels of plant-based products. By codifying the definition of “meat,” the bill would prevent plant-based companies from potentially misleading consumers about the way they market their meat alternatives. SB 1145/HB 316 by Sen. Charles Perry (R-Lubbock) and Rep. Brad Buckley (R-Killeen) were the bills that progressed through the process the furthest, yet ultimately failed to pass.

General bills of interest

(Bills passed are in green, bills that failed are in red)

General Appropriations Act. SB 1, funding the state’s two-year, $248 billion state budget is awaiting the governor’s signature. Coming into the session, Comptroller Glenn Hegar projected a nearly $1 billion deficit for the current state budget and an estimated $112.5 billion available to allocate for general-purpose spending in the next two-year state budget, a number that was down slightly from the current budget. However, a revised revenue estimate from Hegar in May erased the deficit, estimating a $725 million surplus for the current budget cycle and projected funds available for the 2022-2023 budget would increase by $3 billion to a total of $116 billion. As passed, SB 1 appropriates $116.368 billion in General Revenue Funds for the 2022-2023 biennium, up from $110.27 billion in the 2020-2021 biennium (a $6.1 billion increase – 5.5 percent). For a more detailed breakdown, click here. 

Gov. Abbott has the power to line-item veto the budget and has threatened to do so following the Democrats breaking quorum in the House Sunday night. Abbott announced his intention to veto Article 10 of the budget. Article 10 funds the legislative branch of state government. He has until June 20 to veto.

Expanding Rural Broadband Access. HB 5 by Rep. Trent Ashby (R-Lufkin) and Sen. Robert Nichols (R-Jacksonville) creates the Broadband Development Office at the Comptroller’s Office. The Broadband Development Office is tasked with preparing a state broadband plan, creating a map of areas with limited access to broadband service, and awarding financial incentives in those eligible areas to expand access to and adoption of service.

Chapter 313 Tax Abatements. The state’s Chapter 313 tax abatement program is set to expire Dec. 31, 2022 after two measures to reauthorize the program were approved by the House but did not have enough Senate support to pass. HB 4242 by Rep. Morgan Meyer (R-Dallas), would have provided a blanket two-year extension. HB 1556 by Rep. Jim Murphy (R-Houston) would have extended Chapter 313 until 2032 but also sought to correct the growing non-competitive problem of the current program, primarily that the average net tax savings realized by most exempt projects is now around 37% versus others states that offer tax savings of 75-80%.

Trucking Litigation Reform. HB 19 by Rep. Jeff Leach (R-Plano) and Sen. Larry Taylor (R-Friendswood), the trucking liability bill, was filed because litigation against commercial shippers and other commercial vehicle owners has reached a crisis point in terms of the ability of shippers to afford to operate in Texas. Eight- or nine-figure jury awards have become increasingly common, partly because of inflammatory and improper trial tactics, evidentiary abuses and inexperienced trial judges in certain areas of the state. HB 19 requires liable defendants to be responsible for medical bills actually paid or owed by the plaintiff and addresses the “letters of protection” that allow plaintiffs lawyers to sidestep health insurance and limits legal tactics used to manipulate juries into larger settlements.

Liability Protection from Covid-Related Lawsuits. SB 6 by Sen Kelly Hancock (R-North Richland Hills) and Rep. Jeff Leach (R-Plano), the pandemic liability bill, extends broad liability protections to health care providers, businesses, manufacturers and distributors, and non-profit entities, including schools and religious institutions, against lawsuits arising from a declared pandemic emergency. It is retroactive to the governor’s emergency declaration last March and applies to any cause of action alleging damages from exposure to COVID-19 arising on or after that date. It also will apply to any future pandemic emergencies.

Winter Storm Uri Response. Following the February storm that brought the state to a halt and completely shut down the Capitol for a week, legislators turned their focus from the ongoing pandemic to the catastrophic aftermath of the storm. Bill filing saw a drastic increase for energy reform-focused legislation and committee hearings were scheduled immediately to consider the vulnerabilities of the state’s electric grid exposed by the storm and determine the best solutions to prevent another incident. At last count, almost 300 bills were filed directly related to the incident. Of the 300 filed, only 12 passed. The measures passed include:

ERCOT Reform. SB 2 by Sen. Kelly Hancock (R-North Richland Hills) and Rep. Chris Paddie (R-Marshall) restructures the governance of ERCOT, the state’s grid operator. SB 2 reduces the number of seats on ERCOT’s board of directors from 16 to 11. A selection committee made up of three people — one each appointed by the governor, lieutenant governor and House speaker — would appoint eight of the 11 board members. The remaining three board members are nonvoting members and are comprised of the PUC Chair, the ERCOT CEO and the OPUC Chief Executive and Public Counsel. All board members must be Texas residents. Additionally, SB 2 increases the PUC’s oversight over the Board by requiring the Board get PUC approval for any new rule makings.

Power Grid Stability and Winterization. SB 3, overhauling the state’s energy market is the broadest piece of legislation on energy since the passage of SB 7 in 1999, which deregulated the majority of the Texas retail electric market. Key provisions in SB 3 include:

Securitization. Several measures related to securitization were passed. HB 1520 by Rep. Chris Paddie (R-Marshall) and Sen. Kelly Hancock (R-North Richland Hills) provides securitization of gas utilities through rate relief bonds authorized by the Railroad Commission. HB 4492 by Rep. Chris Paddie (R-Marshall) and Sen. Kelly Hancock (R-North Richland Hills) provides securitization for electric utilities by enabling ERCOT to issue debt obligations to finance substantial balances owed by wholesale market participants and that would otherwise be uplifted as a result of Winter Storm Uri. SB 1580 by Sen. Kelly Hancock (R-North Richland Hills) and Rep. Chris Paddie (R-Marshall) provides securitization for electric co-ops.

Transmission. SB 1281 by Sen. Kelly Hancock (R-North Richland Hills) and Rep. Phil King (R-Weatherford) requires the PUC to identify projects to lower congestion costs and review transmission projects for reliability purposes.

 Membership of the PUC. SB 2154 by Sen. Charles Schwertner (R-Georgetown) and Rep. Chris Paddie (R-Marshall) increases the number of PUC commissioners from three to five and requires that commissioners be residents of Texas. The commissioners are still appointed by the governor. Additionally, any former commissioner is restricted from lobbying the PUC for one year following their service.

PUC Sunset. SB 713 by Sen. Dawn Buckingham (R-Lakeway) and Rep. John Cyrier (R-Lockhart) is the Texas Sunset Commission scheduling bill. Notably, the bill changes the Sunset date for the PUC and OPUC. They will now be considered in the Sunset process in the upcoming cycle.

State agency addresses raw milk sales

 For the first time since 2011, no bill to expand raw milk sales in Texas was filed. TAD has opposed such legislation. No bill was filed, in large part, due to the recent rulemaking at the Texas Department of State Health Services (DSHS) that legalized the delivery of raw milk anywhere in the state, effective May 17. The rules did stop short of permitting the sale of raw milk at farmer’s markets. Farmers can now have their required, regular milk sample testing done at any approved lab rather than being limited to their local lab. The new rules also recognize the legality of animal shares, meaning people can purchase a share of an animal or herd to receive a share of the milk produced. TAD submitted comments to DSHS regarding the rulemaking. You can view TAD’s comments here.

Election preview – activity already underway

Even before the legislative session adjourned, what promises to be an eventful 2022 election cycle began. Stay tuned for even more activity – the filing deadline for the Republican and Democrat primaries is not until Dec. 13.

Governor’s Race
Former Republican state senator Don Huffines announced May 10 that he will challenge Gov. Greg Abbott in the March Republican primary. Huffines has been critical of Abbott’s handling of the coronavirus pandemic and being too slow to fully reopen the state, even speaking at a protest outside the Governor’s Mansion last year. Abbott is a prolific fundraiser, and his robust campaign war chest is a weapon he’s wielded to discourage competition in the past. He currently has nearly $38 million in his campaign coffers. And while his approval rating among Republican voters has ticked down throughout the pandemic, it still remains high at 77% among Republicans in a recent poll. Rumors of other potential opponents include Allen West, former chairman of the Republican Party of Texas. West resigned his post as chair on June 4, further increasing speculation that he could challenge Abbott in the gubernatorial primary. Abbott on June 1 was endorsed by former President Donald Trump.

Attorney General
Attorney General Ken Paxton also has a challenger in the Republican primary in Land Commissioner George P. Bush, who announced on June 2. Bush made headlines when he said a challenge to Paxton would not be centered on conservative credentials but rather on how the incumbent has run his office. Paxton’s term has been overshadowed by a grand jury indictment for securities fraud and, most recently, an FBI investigation after several former aides accused him of bribery and abuse of office.

Land Commissioner
With Bush announcing his AG candidacy, Sen. Dawn Buckingham (R-Lakeway) on June 7 announced her run in the Republican primary for what will be an open office of Land Commissioner. Buckingham was first elected in 2016 to represent Senate District 24 in Central Texas. Although she won a second term last year, all members of the Senate have to run for reelection in 2022 due to redistricting, so she will have to give up her seat to run for land commissioner. Republican Weston Martinez announced May 31 for the office. A San Antonio activist, he has twice run unsuccessfully for the Texas Railroad Commission. Agriculture Commissioner Sid Miller endorsed Martinez’s bid on June 4.

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