Bill Caption

Relating to state agency enforcement of laws regulating small businesses.

Fiscal Notes

The fiscal implications of the bill are indeterminate. Costs associated with implementing the provisions of the bill are dependent on the number of first time violations of statute or rule by small businesses and the number of those small businesses that are able to remedy the violation. The number of small businesses who would be allowed the opportunity to remedy a first violation of a statute or of a rule administered by a state agency before any penalties are imposed is unknown. 

A state agency with regulatory authority over a small business is required to implement the provisions of the bill only if the legislature appropriates money specifically for that purpose. 

Bill Analysis

SB 424 would prevent those state agencies which regulate small businesses from imposing administrative penalties or collecting civil penalties against a small business for a first violation of a statute or a rule administered by the agency unless the agency first provides the small business written notice of the violation and an opportunity to remedy the violation within a reasonable time of receipt of the notice.   

A violation would not be considered a continuing violation during the reasonable time in which the business is attempting to remedy the violation unless specified by existing law.

This bill would not apply to a state agency that protects public health and safety or the environment, an officer in connection with the regulation of financial services or the Texas Workforce Commission if the action is required to conform to or comply with federal law.  Nor would it apply to a business which knowingly or intentionally commits a regulatory violation.

Vote Recommendation Notes

SB 424 would make modest improvements to the regulatory environment for small businesses by allowing those businesses a "right to cure" an area where they are unknowingly out of compliance with statutes or agency rules. This would achieve the aim of bringing qualified businesses into compliance without unduly punishing them with penalties.

Ultimately, this bill represents an implicit acknowledgement that the state has too many laws and agency rules imposing penalties that are too harsh and accumulate too rapidly.

Allowing a right to cure is a good first step, however we recommend amending the bill to broaden it to also cover businesses regulated by state agencies that protect public health and safety or the environment. These are areas where the regulations can be the most complicated and difficult for small businesses to understand and comply with, and for which noncompliance penalties are often overly burdensome.