HB3899 - Relating to the authority of the Texas Department of Insurance to adopt rules that implement or are based on certain environmental, social, and governance models, ratings, or standards.

  89R4620 DNC-D     By: Paul H.B. No. 3899       A BILL TO BE ENTITLED   AN ACT   relating to the authority of the Texas Department of Insurance to   adopt rules that implement or are based on certain environmental,   social, and governance models, ratings, or standards.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 36.004, Insurance Code, is amended by   amending Subsection (b) and adding Subsection (d) to read as   follows:          (b)  For purposes of Subsections [ Subsection ] (a) and (d) of   this section and Section 36.008 , a version of a rule, regulation,   directive, or standard is expressly authorized by statute if:                (1)  the statute explicitly authorizes the   commissioner to adopt rules consistent with the rule, regulation,   directive, or standard; or                (2)  that version is the latest version of the rule,   regulation, directive, or standard on the date that the statute was   enacted.           (d)     In this subsection, "environmental assessment," "social   assessment," and "governance assessment" have the meanings   assigned by Section 36.008. Notwithstanding Subsection (c) of this   section or any other law, the commissioner may not require an   insurer to comply with a rule, regulation, directive, or standard,   including an accounting standard, adopted by the National   Association of Insurance Commissioners if the rule, regulation,   directive, or standard is developed using a model, rating, or   standard that measures and considers environmental, social, and   governance assessments unless application of the rule, regulation,   directive, or standard is expressly authorized by statute.          SECTION 2.  Subchapter A, Chapter 36, Insurance Code, is   amended by adding Section 36.008 to read as follows:           Sec.   36.008.     RULES IMPLEMENTING CERTAIN ENVIRONMENTAL,   SOCIAL, AND GOVERNANCE MODELS, RATINGS, AND STANDARDS PROHIBITED.   (a) In this section:                 (1)     "Environmental assessment" means an assessment of   the response by or vulnerability of an entity to climate change,   including the extent of the entity's exposure to harm from   climate-related factors.                 (2)     "Governance assessment" means an assessment of the   ethical or moral principles that influence the corporate governance   of an entity, including the structure and composition of the   governing board, ownership structure, employee and officer pay   policy, and accounting methodology of the entity.                 (3)  "Social assessment" means an assessment of:                       (A)     the human capital management practices of an   entity, including employment practices, employee training and   development, employee safety, and the selection of suppliers and   vendors based on preferred labor standards;                       (B)     the potential for an entity's products to   directly or indirectly cause physical or financial harm to persons   or to identified groups of persons, including harm caused by   quality control or safety failures and the unintentional or   unauthorized release of personal identifying information held by   the entity;                       (C)     an entity's willingness to invest its   earnings or reserves to improve the quality and safety of the   entity's management practices and products and mitigate any   negative effect those practices and products may have on consumers   and the environment; or                       (D)     any other factor relating to the social   effect of the entity's practices or products, including opposition   to those practices and products and their effect on the supply   chain.           (b)  This section applies only to a rule that:                 (1)   implements or is based on an interstate, national,   or international model, rating, or standard, including an   accounting standard, that measures and considers environmental,   social, and governance assessments;                 (2)  is intended to:                       (A)  protect the environment;                       (B)     evaluate the effect of a particular entity or   industry on the environment; or                       (C)     encourage an entity to engage in specific   activities or behaviors in response to environmental concerns; and                 (3)  may materially affect in an adverse manner the:                       (A)     economy of this state or a sector of the   economy of this state;                       (B)     productivity and competitiveness of an   entity doing business in this state;                       (C)  number of people employed in this state; or                       (D)     health and safety of the residents of this   state.           (c)     The commissioner may not adopt or enforce a rule to   which this section applies:                 (1)     that was developed by an entity that is not   licensed or regulated by:                       (A)  the department;                       (B)     the National Association of Insurance   Commissioners; or                       (C)     an entity of this state or of the federal   government, other than an entity described by Paragraph (A) or (B),   that regulates the practice of insurance;                 (2)     that may affect the authority of this state to   regulate the practice of insurance in this state; and                 (3)     the adoption or enforcement of which is not   specifically authorized by statute.           (d)     A person may file an action for declaratory judgment   challenging the adoption of a rule on the basis that the rule was   adopted in violation of this section.     An action for declaratory   judgment under this section is governed by Section 2001.038,   Government Code.   If the court determines that the rule was adopted   in violation of this section, the rule is invalid.          SECTION 3.  The change in law made by this Act applies only   to a proposed rule for which notice is filed with the secretary of   state under Section 2001.023, Government Code, on or after the   effective date of this Act.          SECTION 4.  This Act takes effect September 1, 2025.