Bill Text: TX HB4 | 2023-2024 | 88th Legislature | Enrolled

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Bill Title: Relating to the regulation of the collection, use, processing, and treatment of consumers' personal data by certain business entities; imposing a civil penalty.

Sponsorship: Moderate Partisan Bill (Republican 75-22)

Status: (Passed) 2023-06-18 - See remarks for effective date [HB4 Detail]

Download: Texas-2023-HB4-Enrolled.html

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H.B. No. 4

AN ACT
relating to the regulation of the collection, use, processing, and
treatment of consumers' personal data by certain business entities;
imposing a civil penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act may be cited as the Texas Data Privacy
and Security Act.
SECTION 2. Title 11, Business & Commerce Code, is amended by
adding Subtitle C to read as follows:
SUBTITLE C. CONSUMER DATA PROTECTION
CHAPTER 541. CONSUMER DATA PROTECTION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 541.001. DEFINITIONS. In this chapter, unless a
different meaning is required by the context:
(1) "Affiliate" means a legal entity that controls, is
controlled by, or is under common control with another legal entity
or shares common branding with another legal entity. For purposes
of this subdivision, "control" or "controlled" means:
(A) the ownership of, or power to vote, more than
50 percent of the outstanding shares of any class of voting security
of a company;
(B) the control in any manner over the election
of a majority of the directors or of individuals exercising similar
functions; or
(C) the power to exercise controlling influence
over the management of a company.
(2) "Authenticate" means to verify through reasonable
means that the consumer who is entitled to exercise the consumer's
rights under Subchapter B is the same consumer exercising those
consumer rights with respect to the personal data at issue.
(3) "Biometric data" means data generated by automatic
measurements of an individual's biological characteristics. The
term includes a fingerprint, voiceprint, eye retina or iris, or
other unique biological pattern or characteristic that is used to
identify a specific individual. The term does not include a
physical or digital photograph or data generated from a physical or
digital photograph, a video or audio recording or data generated
from a video or audio recording, or information collected, used, or
stored for health care treatment, payment, or operations under the
Health Insurance Portability and Accountability Act of 1996 (42
U.S.C. Section 1320d et seq.).
(4) "Business associate" has the meaning assigned to
the term by the Health Insurance Portability and Accountability Act
of 1996 (42 U.S.C. Section 1320d et seq.).
(5) "Child" means an individual younger than 13 years
of age.
(6) "Consent," when referring to a consumer, means a
clear affirmative act signifying a consumer's freely given,
specific, informed, and unambiguous agreement to process personal
data relating to the consumer. The term includes a written
statement, including a statement written by electronic means, or
any other unambiguous affirmative action. The term does not
include:
(A) acceptance of a general or broad terms of use
or similar document that contains descriptions of personal data
processing along with other, unrelated information;
(B) hovering over, muting, pausing, or closing a
given piece of content; or
(C) agreement obtained through the use of dark
patterns.
(7) "Consumer" means an individual who is a resident
of this state acting only in an individual or household context. The
term does not include an individual acting in a commercial or
employment context.
(8) "Controller" means an individual or other person
that, alone or jointly with others, determines the purpose and
means of processing personal data.
(9) "Covered entity" has the meaning assigned to the
term by the Health Insurance Portability and Accountability Act of
1996 (42 U.S.C. Section 1320d et seq.).
(10) "Dark pattern" means a user interface designed or
manipulated with the effect of substantially subverting or
impairing user autonomy, decision-making, or choice, and includes
any practice the Federal Trade Commission refers to as a dark
pattern.
(11) "Decision that produces a legal or similarly
significant effect concerning a consumer" means a decision made by
the controller that results in the provision or denial by the
controller of:
(A) financial and lending services;
(B) housing, insurance, or health care services;
(C) education enrollment;
(D) employment opportunities;
(E) criminal justice; or
(F) access to basic necessities, such as food and
water.
(12) "Deidentified data" means data that cannot
reasonably be linked to an identified or identifiable individual,
or a device linked to that individual.
(13) "Health care provider" has the meaning assigned
to the term by the Health Insurance Portability and Accountability
Act of 1996 (42 U.S.C. Section 1320d et seq.).
(14) "Health record" means any written, printed, or
electronically recorded material maintained by a health care
provider in the course of providing health care services to an
individual that concerns the individual and the services provided.
The term includes:
(A) the substance of any communication made by an
individual to a health care provider in confidence during or in
connection with the provision of health care services; or
(B) information otherwise acquired by the health
care provider about an individual in confidence and in connection
with health care services provided to the individual.
(15) "Identified or identifiable individual" means a
consumer who can be readily identified, directly or indirectly.
(16) "Institution of higher education" means:
(A) an institution of higher education as defined
by Section 61.003, Education Code; or
(B) a private or independent institution of
higher education as defined by Section 61.003, Education Code.
(17) "Known child" means a child under circumstances
where a controller has actual knowledge of, or wilfully disregards,
the child's age.
(18) "Nonprofit organization" means:
(A) a corporation organized under Chapters 20 and
22, Business Organizations Code, and the provisions of Title 1,
Business Organizations Code, to the extent applicable to nonprofit
corporations;
(B) an organization exempt from federal taxation
under Section 501(a), Internal Revenue Code of 1986, by being
listed as an exempt organization under Section 501(c)(3),
501(c)(6), 501(c)(12), or 501(c)(19) of that code;
(C) a political organization; or
(D) an organization that:
(i) is exempt from federal taxation under
Section 501(a), Internal Revenue Code of 1986, by being listed as an
exempt organization under Section 501(c)(4) of that code; and
(ii) is described by Section 701.052(a),
Insurance Code.
(19) "Personal data" means any information, including
sensitive data, that is linked or reasonably linkable to an
identified or identifiable individual. The term includes
pseudonymous data when the data is used by a controller or processor
in conjunction with additional information that reasonably links
the data to an identified or identifiable individual. The term does
not include deidentified data or publicly available information.
(20) "Political organization" means a party,
committee, association, fund, or other organization, regardless of
whether incorporated, that is organized and operated primarily for
the purpose of influencing or attempting to influence:
(A) the selection, nomination, election, or
appointment of an individual to a federal, state, or local public
office or an office in a political organization, regardless of
whether the individual is selected, nominated, elected, or
appointed; or
(B) the election of a
presidential/vice-presidential elector, regardless of whether the
elector is selected, nominated, elected, or appointed.
(21) "Precise geolocation data" means information
derived from technology, including global positioning system level
latitude and longitude coordinates or other mechanisms, that
directly identifies the specific location of an individual with
precision and accuracy within a radius of 1,750 feet. The term does
not include the content of communications or any data generated by
or connected to an advanced utility metering infrastructure system
or to equipment for use by a utility.
(22) "Process" or "processing" means an operation or
set of operations performed, whether by manual or automated means,
on personal data or on sets of personal data, such as the
collection, use, storage, disclosure, analysis, deletion, or
modification of personal data.
(23) "Processor" means a person that processes
personal data on behalf of a controller.
(24) "Profiling" means any form of solely automated
processing performed on personal data to evaluate, analyze, or
predict personal aspects related to an identified or identifiable
individual's economic situation, health, personal preferences,
interests, reliability, behavior, location, or movements.
(25) "Protected health information" has the meaning
assigned to the term by the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.).
(26) "Pseudonymous data" means any information that
cannot be attributed to a specific individual without the use of
additional information, provided that the additional information
is kept separately and is subject to appropriate technical and
organizational measures to ensure that the personal data is not
attributed to an identified or identifiable individual.
(27) "Publicly available information" means
information that is lawfully made available through government
records, or information that a business has a reasonable basis to
believe is lawfully made available to the general public through
widely distributed media, by a consumer, or by a person to whom a
consumer has disclosed the information, unless the consumer has
restricted the information to a specific audience.
(28) "Sale of personal data" means the sharing,
disclosing, or transferring of personal data for monetary or other
valuable consideration by the controller to a third party. The term
does not include:
(A) the disclosure of personal data to a
processor that processes the personal data on the controller's
behalf;
(B) the disclosure of personal data to a third
party for purposes of providing a product or service requested by
the consumer;
(C) the disclosure or transfer of personal data
to an affiliate of the controller;
(D) the disclosure of information that the
consumer:
(i) intentionally made available to the
general public through a mass media channel; and
(ii) did not restrict to a specific
audience; or
(E) the disclosure or transfer of personal data
to a third party as an asset that is part of a merger or acquisition.
(29) "Sensitive data" means a category of personal
data. The term includes:
(A) personal data revealing racial or ethnic
origin, religious beliefs, mental or physical health diagnosis,
sexuality, or citizenship or immigration status;
(B) genetic or biometric data that is processed
for the purpose of uniquely identifying an individual;
(C) personal data collected from a known child;
or
(D) precise geolocation data.
(30) "State agency" means a department, commission,
board, office, council, authority, or other agency in any branch of
state government that is created by the constitution or a statute of
this state, including a university system or institution of higher
education as defined by Section 61.003, Education Code.
(31) "Targeted advertising" means displaying to a
consumer an advertisement that is selected based on personal data
obtained from that consumer's activities over time and across
nonaffiliated websites or online applications to predict the
consumer's preferences or interests. The term does not include:
(A) an advertisement that:
(i) is based on activities within a
controller's own websites or online applications;
(ii) is based on the context of a consumer's
current search query, visit to a website, or online application; or
(iii) is directed to a consumer in response
to the consumer's request for information or feedback; or
(B) the processing of personal data solely for
measuring or reporting advertising performance, reach, or
frequency.
(32) "Third party" means a person, other than the
consumer, the controller, the processor, or an affiliate of the
controller or processor.
(33) "Trade secret" means all forms and types of
information, including business, scientific, technical, economic,
or engineering information, and any formula, design, prototype,
pattern, plan, compilation, program device, program, code, device,
method, technique, process, procedure, financial data, or list of
actual or potential customers or suppliers, whether tangible or
intangible and whether or how stored, compiled, or memorialized
physically, electronically, graphically, photographically, or in
writing if:
(A) the owner of the trade secret has taken
reasonable measures under the circumstances to keep the information
secret; and
(B) the information derives independent economic
value, actual or potential, from not being generally known to, and
not being readily ascertainable through proper means by, another
person who can obtain economic value from the disclosure or use of
the information.
Sec. 541.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to a person that:
(1) conducts business in this state or produces a
product or service consumed by residents of this state;
(2) processes or engages in the sale of personal data;
and
(3) is not a small business as defined by the United
States Small Business Administration, except to the extent that
Section 541.107 applies to a person described by this subdivision.
(b) This chapter does not apply to:
(1) a state agency or a political subdivision of this
state;
(2) a financial institution or data subject to Title
V, Gramm-Leach-Bliley Act (15 U.S.C. Section 6801 et seq.);
(3) a covered entity or business associate governed by
the privacy, security, and breach notification rules issued by the
United States Department of Health and Human Services, 45 C.F.R.
Parts 160 and 164, established under the Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d
et seq.), and the Health Information Technology for Economic and
Clinical Health Act (Division A, Title XIII, and Division B, Title
IV, Pub. L. No. 111-5);
(4) a nonprofit organization;
(5) an institution of higher education; or
(6) an electric utility, a power generation company,
or a retail electric provider, as those terms are defined by Section
31.002, Utilities Code.
Sec. 541.003. CERTAIN INFORMATION EXEMPT FROM CHAPTER. The
following information is exempt from this chapter:
(1) protected health information under the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.C.
Section 1320d et seq.);
(2) health records;
(3) patient identifying information for purposes of 42
U.S.C. Section 290dd-2;
(4) identifiable private information:
(A) for purposes of the federal policy for the
protection of human subjects under 45 C.F.R. Part 46;
(B) collected as part of human subjects research
under the good clinical practice guidelines issued by The
International Council for Harmonisation of Technical Requirements
for Pharmaceuticals for Human Use (ICH) or of the protection of
human subjects under 21 C.F.R. Parts 50 and 56; or
(C) that is personal data used or shared in
research conducted in accordance with the requirements set forth in
this chapter or other research conducted in accordance with
applicable law;
(5) information and documents created for purposes of
the Health Care Quality Improvement Act of 1986 (42 U.S.C. Section
11101 et seq.);
(6) patient safety work product for purposes of the
Patient Safety and Quality Improvement Act of 2005 (42 U.S.C.
Section 299b-21 et seq.);
(7) information derived from any of the health
care-related information listed in this section that is
deidentified in accordance with the requirements for
deidentification under the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.);
(8) information originating from, and intermingled to
be indistinguishable with, or information treated in the same
manner as, information exempt under this section that is maintained
by a covered entity or business associate as defined by the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.C.
Section 1320d et seq.) or by a program or a qualified service
organization as defined by 42 U.S.C. Section 290dd-2;
(9) information that is included in a limited data set
as described by 45 C.F.R. Section 164.514(e), to the extent that the
information is used, disclosed, and maintained in the manner
specified by 45 C.F.R. Section 164.514(e);
(10) information collected or used only for public
health activities and purposes as authorized by the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.C.
Section 1320d et seq.);
(11) the collection, maintenance, disclosure, sale,
communication, or use of any personal information bearing on a
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode
of living by a consumer reporting agency or furnisher that provides
information for use in a consumer report, and by a user of a
consumer report, but only to the extent that the activity is
regulated by and authorized under the Fair Credit Reporting Act (15
U.S.C. Section 1681 et seq.);
(12) personal data collected, processed, sold, or
disclosed in compliance with the Driver's Privacy Protection Act of
1994 (18 U.S.C. Section 2721 et seq.);
(13) personal data regulated by the Family Educational
Rights and Privacy Act of 1974 (20 U.S.C. Section 1232g);
(14) personal data collected, processed, sold, or
disclosed in compliance with the Farm Credit Act of 1971 (12 U.S.C.
Section 2001 et seq.);
(15) data processed or maintained in the course of an
individual applying to, being employed by, or acting as an agent or
independent contractor of a controller, processor, or third party,
to the extent that the data is collected and used within the context
of that role;
(16) data processed or maintained as the emergency
contact information of an individual under this chapter that is
used for emergency contact purposes; or
(17) data that is processed or maintained and is
necessary to retain to administer benefits for another individual
that relates to an individual described by Subdivision (15) and
used for the purposes of administering those benefits.
Sec. 541.004. INAPPLICABILITY OF CHAPTER. This chapter
does not apply to the processing of personal data by a person in the
course of a purely personal or household activity.
Sec. 541.005. EFFECT OF COMPLIANCE WITH PARENTAL CONSENT
REQUIREMENTS UNDER CERTAIN FEDERAL LAW. A controller or processor
that complies with the verifiable parental consent requirements of
the Children's Online Privacy Protection Act of 1998 (15 U.S.C.
Section 6501 et seq.) with respect to data collected online is
considered to be in compliance with any requirement to obtain
parental consent under this chapter.
SUBCHAPTER B. CONSUMER'S RIGHTS
Sec. 541.051. CONSUMER'S PERSONAL DATA RIGHTS; REQUEST TO
EXERCISE RIGHTS. (a) A consumer is entitled to exercise the
consumer rights authorized by this section at any time by
submitting a request to a controller specifying the consumer rights
the consumer wishes to exercise. With respect to the processing of
personal data belonging to a known child, a parent or legal guardian
of the child may exercise the consumer rights on behalf of the
child.
(b) A controller shall comply with an authenticated
consumer request to exercise the right to:
(1) confirm whether a controller is processing the
consumer's personal data and to access the personal data;
(2) correct inaccuracies in the consumer's personal
data, taking into account the nature of the personal data and the
purposes of the processing of the consumer's personal data;
(3) delete personal data provided by or obtained about
the consumer;
(4) if the data is available in a digital format,
obtain a copy of the consumer's personal data that the consumer
previously provided to the controller in a portable and, to the
extent technically feasible, readily usable format that allows the
consumer to transmit the data to another controller without
hindrance; or
(5) opt out of the processing of the personal data for
purposes of:
(A) targeted advertising;
(B) the sale of personal data; or
(C) profiling in furtherance of a decision that
produces a legal or similarly significant effect concerning the
consumer.
Sec. 541.052. CONTROLLER RESPONSE TO CONSUMER REQUEST. (a)
Except as otherwise provided by this chapter, a controller shall
comply with a request submitted by a consumer to exercise the
consumer's rights pursuant to Section 541.051 as provided by this
section.
(b) A controller shall respond to the consumer request
without undue delay, which may not be later than the 45th day after
the date of receipt of the request. The controller may extend the
response period once by an additional 45 days when reasonably
necessary, taking into account the complexity and number of the
consumer's requests, so long as the controller informs the consumer
of the extension within the initial 45-day response period,
together with the reason for the extension.
(c) If a controller declines to take action regarding the
consumer's request, the controller shall inform the consumer
without undue delay, which may not be later than the 45th day after
the date of receipt of the request, of the justification for
declining to take action and provide instructions on how to appeal
the decision in accordance with Section 541.053.
(d) A controller shall provide information in response to a
consumer request free of charge, at least twice annually per
consumer. If a request from a consumer is manifestly unfounded,
excessive, or repetitive, the controller may charge the consumer a
reasonable fee to cover the administrative costs of complying with
the request or may decline to act on the request. The controller
bears the burden of demonstrating for purposes of this subsection
that a request is manifestly unfounded, excessive, or repetitive.
(e) If a controller is unable to authenticate the request
using commercially reasonable efforts, the controller is not
required to comply with a consumer request submitted under Section
541.051 and may request that the consumer provide additional
information reasonably necessary to authenticate the consumer and
the consumer's request.
(f) A controller that has obtained personal data about a
consumer from a source other than the consumer is considered in
compliance with a consumer's request to delete that personal data
pursuant to Section 541.051(b)(3) by:
(1) retaining a record of the deletion request and the
minimum data necessary for the purpose of ensuring the consumer's
personal data remains deleted from the business's records and not
using the retained data for any other purpose under this chapter; or
(2) opting the consumer out of the processing of that
personal data for any purpose other than a purpose that is exempt
under the provisions of this chapter.
Sec. 541.053. APPEAL. (a) A controller shall establish a
process for a consumer to appeal the controller's refusal to take
action on a request within a reasonable period of time after the
consumer's receipt of the decision under Section 541.052(c).
(b) The appeal process must be conspicuously available and
similar to the process for initiating action to exercise consumer
rights by submitting a request under Section 541.051.
(c) A controller shall inform the consumer in writing of any
action taken or not taken in response to an appeal under this
section not later than the 60th day after the date of receipt of the
appeal, including a written explanation of the reason or reasons
for the decision.
(d) If the controller denies an appeal, the controller shall
provide the consumer with the online mechanism described by Section
541.152 through which the consumer may contact the attorney general
to submit a complaint.
Sec. 541.054. WAIVER OR LIMITATION OF CONSUMER RIGHTS
PROHIBITED. Any provision of a contract or agreement that waives or
limits in any way a consumer right described by Sections 541.051,
541.052, and 541.053 is contrary to public policy and is void and
unenforceable.
Sec. 541.055. METHODS FOR SUBMITTING CONSUMER REQUESTS.
(a) A controller shall establish two or more secure and reliable
methods to enable consumers to submit a request to exercise their
consumer rights under this chapter. The methods must take into
account:
(1) the ways in which consumers normally interact with
the controller;
(2) the necessity for secure and reliable
communications of those requests; and
(3) the ability of the controller to authenticate the
identity of the consumer making the request.
(b) A controller may not require a consumer to create a new
account to exercise the consumer's rights under this subchapter but
may require a consumer to use an existing account.
(c) Except as provided by Subsection (d), if the controller
maintains an Internet website, the controller must provide a
mechanism on the website for consumers to submit requests for
information required to be disclosed under this chapter.
(d) A controller that operates exclusively online and has a
direct relationship with a consumer from whom the controller
collects personal information is only required to provide an e-mail
address for the submission of requests described by Subsection (c).
(e) A consumer may designate another person to serve as the
consumer's authorized agent and act on the consumer's behalf to opt
out of the processing of the consumer's personal data under
Sections 541.051(b)(5)(A) and (B). A consumer may designate an
authorized agent using a technology, including a link to an
Internet website, an Internet browser setting or extension, or a
global setting on an electronic device, that allows the consumer to
indicate the consumer's intent to opt out of the processing. A
controller shall comply with an opt-out request received from an
authorized agent under this subsection if the controller is able to
verify, with commercially reasonable effort, the identity of the
consumer and the authorized agent's authority to act on the
consumer's behalf. A controller is not required to comply with an
opt-out request received from an authorized agent under this
subsection if:
(1) the authorized agent does not communicate the
request to the controller in a clear and unambiguous manner;
(2) the controller is not able to verify, with
commercially reasonable effort, that the consumer is a resident of
this state;
(3) the controller does not possess the ability to
process the request; or
(4) the controller does not process similar or
identical requests the controller receives from consumers for the
purpose of complying with similar or identical laws or regulations
of another state.
(f) A technology described by Subsection (e):
(1) may not unfairly disadvantage another controller;
(2) may not make use of a default setting, but must
require the consumer to make an affirmative, freely given, and
unambiguous choice to indicate the consumer's intent to opt out of
any processing of a consumer's personal data; and
(3) must be consumer-friendly and easy to use by the
average consumer.
SUBCHAPTER C. CONTROLLER AND PROCESSOR DATA-RELATED DUTIES AND
PROHIBITIONS
Sec. 541.101. CONTROLLER DUTIES; TRANSPARENCY. (a) A
controller:
(1) shall limit the collection of personal data to
what is adequate, relevant, and reasonably necessary in relation to
the purposes for which that personal data is processed, as
disclosed to the consumer; and
(2) for purposes of protecting the confidentiality,
integrity, and accessibility of personal data, shall establish,
implement, and maintain reasonable administrative, technical, and
physical data security practices that are appropriate to the volume
and nature of the personal data at issue.
(b) A controller may not:
(1) except as otherwise provided by this chapter,
process personal data for a purpose that is neither reasonably
necessary to nor compatible with the disclosed purpose for which
the personal data is processed, as disclosed to the consumer,
unless the controller obtains the consumer's consent;
(2) process personal data in violation of state and
federal laws that prohibit unlawful discrimination against
consumers;
(3) discriminate against a consumer for exercising any
of the consumer rights contained in this chapter, including by
denying goods or services, charging different prices or rates for
goods or services, or providing a different level of quality of
goods or services to the consumer; or
(4) process the sensitive data of a consumer without
obtaining the consumer's consent, or, in the case of processing the
sensitive data of a known child, without processing that data in
accordance with the Children's Online Privacy Protection Act of
1998 (15 U.S.C. Section 6501 et seq.).
(c) Subsection (b)(3) may not be construed to require a
controller to provide a product or service that requires the
personal data of a consumer that the controller does not collect or
maintain or to prohibit a controller from offering a different
price, rate, level, quality, or selection of goods or services to a
consumer, including offering goods or services for no fee, if the
consumer has exercised the consumer's right to opt out under
Section 541.051 or the offer is related to a consumer's voluntary
participation in a bona fide loyalty, rewards, premium features,
discounts, or club card program.
Sec. 541.102. PRIVACY NOTICE. (a) A controller shall
provide consumers with a reasonably accessible and clear privacy
notice that includes:
(1) the categories of personal data processed by the
controller, including, if applicable, any sensitive data processed
by the controller;
(2) the purpose for processing personal data;
(3) how consumers may exercise their consumer rights
under Subchapter B, including the process by which a consumer may
appeal a controller's decision with regard to the consumer's
request;
(4) if applicable, the categories of personal data
that the controller shares with third parties;
(5) if applicable, the categories of third parties
with whom the controller shares personal data; and
(6) a description of the methods required under
Section 541.055 through which consumers can submit requests to
exercise their consumer rights under this chapter.
(b) If a controller engages in the sale of personal data
that is sensitive data, the controller shall include the following
notice:
"NOTICE: We may sell your sensitive personal data." The
notice must be posted in the same location and in the same manner as
the privacy notice described by Subsection (a).
(c) If a controller engages in the sale of personal data
that is biometric data, the controller shall include the following
notice:
"NOTICE: We may sell your biometric personal data." The
notice must be posted in the same location and in the same manner as
the privacy notice described by Subsection (a).
Sec. 541.103. SALE OF DATA TO THIRD PARTIES AND PROCESSING
DATA FOR TARGETED ADVERTISING; DISCLOSURE. If a controller sells
personal data to third parties or processes personal data for
targeted advertising, the controller shall clearly and
conspicuously disclose that process and the manner in which a
consumer may exercise the right to opt out of that process.
Sec. 541.104. DUTIES OF PROCESSOR. (a) A processor shall
adhere to the instructions of a controller and shall assist the
controller in meeting or complying with the controller's duties or
requirements under this chapter, including:
(1) assisting the controller in responding to consumer
rights requests submitted under Section 541.051 by using
appropriate technical and organizational measures, as reasonably
practicable, taking into account the nature of processing and the
information available to the processor;
(2) assisting the controller with regard to complying
with the requirement relating to the security of processing
personal data and to the notification of a breach of security of the
processor's system under Chapter 521, taking into account the
nature of processing and the information available to the
processor; and
(3) providing necessary information to enable the
controller to conduct and document data protection assessments
under Section 541.105.
(b) A contract between a controller and a processor shall
govern the processor's data processing procedures with respect to
processing performed on behalf of the controller. The contract must
include:
(1) clear instructions for processing data;
(2) the nature and purpose of processing;
(3) the type of data subject to processing;
(4) the duration of processing;
(5) the rights and obligations of both parties; and
(6) a requirement that the processor shall:
(A) ensure that each person processing personal
data is subject to a duty of confidentiality with respect to the
data;
(B) at the controller's direction, delete or
return all personal data to the controller as requested after the
provision of the service is completed, unless retention of the
personal data is required by law;
(C) make available to the controller, on
reasonable request, all information in the processor's possession
necessary to demonstrate the processor's compliance with the
requirements of this chapter;
(D) allow, and cooperate with, reasonable
assessments by the controller or the controller's designated
assessor; and
(E) engage any subcontractor pursuant to a
written contract that requires the subcontractor to meet the
requirements of the processor with respect to the personal data.
(c) Notwithstanding the requirement described by Subsection
(b)(6)(D), a processor, in the alternative, may arrange for a
qualified and independent assessor to conduct an assessment of the
processor's policies and technical and organizational measures in
support of the requirements under this chapter using an appropriate
and accepted control standard or framework and assessment
procedure. The processor shall provide a report of the assessment
to the controller on request.
(d) This section may not be construed to relieve a
controller or a processor from the liabilities imposed on the
controller or processor by virtue of its role in the processing
relationship as described by this chapter.
(e) A determination of whether a person is acting as a
controller or processor with respect to a specific processing of
data is a fact-based determination that depends on the context in
which personal data is to be processed. A processor that continues
to adhere to a controller's instructions with respect to a specific
processing of personal data remains in the role of a processor.
Sec. 541.105. DATA PROTECTION ASSESSMENTS. (a) A
controller shall conduct and document a data protection assessment
of each of the following processing activities involving personal
data:
(1) the processing of personal data for purposes of
targeted advertising;
(2) the sale of personal data;
(3) the processing of personal data for purposes of
profiling, if the profiling presents a reasonably foreseeable risk
of:
(A) unfair or deceptive treatment of or unlawful
disparate impact on consumers;
(B) financial, physical, or reputational injury
to consumers;
(C) a physical or other intrusion on the solitude
or seclusion, or the private affairs or concerns, of consumers, if
the intrusion would be offensive to a reasonable person; or
(D) other substantial injury to consumers;
(4) the processing of sensitive data; and
(5) any processing activities involving personal data
that present a heightened risk of harm to consumers.
(b) A data protection assessment conducted under Subsection
(a) must:
(1) identify and weigh the direct or indirect benefits
that may flow from the processing to the controller, the consumer,
other stakeholders, and the public, against the potential risks to
the rights of the consumer associated with that processing, as
mitigated by safeguards that can be employed by the controller to
reduce the risks; and
(2) factor into the assessment:
(A) the use of deidentified data;
(B) the reasonable expectations of consumers;
(C) the context of the processing; and
(D) the relationship between the controller and
the consumer whose personal data will be processed.
(c) A controller shall make a data protection assessment
requested under Section 541.153(b) available to the attorney
general pursuant to a civil investigative demand under Section
541.153.
(d) A data protection assessment is confidential and exempt
from public inspection and copying under Chapter 552, Government
Code. Disclosure of a data protection assessment in compliance with
a request from the attorney general does not constitute a waiver of
attorney-client privilege or work product protection with respect
to the assessment and any information contained in the assessment.
(e) A single data protection assessment may address a
comparable set of processing operations that include similar
activities.
(f) A data protection assessment conducted by a controller
for the purpose of compliance with other laws or regulations may
constitute compliance with the requirements of this section if the
assessment has a reasonably comparable scope and effect.
Sec. 541.106. DEIDENTIFIED OR PSEUDONYMOUS DATA. (a) A
controller in possession of deidentified data shall:
(1) take reasonable measures to ensure that the data
cannot be associated with an individual;
(2) publicly commit to maintaining and using
deidentified data without attempting to reidentify the data; and
(3) contractually obligate any recipient of the
deidentified data to comply with the provisions of this chapter.
(b) This chapter may not be construed to require a
controller or processor to:
(1) reidentify deidentified data or pseudonymous
data;
(2) maintain data in identifiable form or obtain,
retain, or access any data or technology for the purpose of allowing
the controller or processor to associate a consumer request with
personal data; or
(3) comply with an authenticated consumer rights
request under Section 541.051, if the controller:
(A) is not reasonably capable of associating the
request with the personal data or it would be unreasonably
burdensome for the controller to associate the request with the
personal data;
(B) does not use the personal data to recognize
or respond to the specific consumer who is the subject of the
personal data or associate the personal data with other personal
data about the same specific consumer; and
(C) does not sell the personal data to any third
party or otherwise voluntarily disclose the personal data to any
third party other than a processor, except as otherwise permitted
by this section.
(c) The consumer rights under Sections 541.051(b)(1)-(4)
and controller duties under Section 541.101 do not apply to
pseudonymous data in cases in which the controller is able to
demonstrate any information necessary to identify the consumer is
kept separately and is subject to effective technical and
organizational controls that prevent the controller from accessing
the information.
(d) A controller that discloses pseudonymous data or
deidentified data shall exercise reasonable oversight to monitor
compliance with any contractual commitments to which the
pseudonymous data or deidentified data is subject and shall take
appropriate steps to address any breach of the contractual
commitments.
Sec. 541.107. REQUIREMENTS FOR SMALL BUSINESSES. (a) A
person described by Section 541.002(a)(3) may not engage in the
sale of personal data that is sensitive data without receiving
prior consent from the consumer.
(b) A person who violates this section is subject to the
penalty under Section 541.155.
SUBCHAPTER D. ENFORCEMENT
Sec. 541.151. ENFORCEMENT AUTHORITY EXCLUSIVE. The
attorney general has exclusive authority to enforce this chapter.
Sec. 541.152. INTERNET WEBSITE AND COMPLAINT MECHANISM.
The attorney general shall post on the attorney general's Internet
website:
(1) information relating to:
(A) the responsibilities of a controller under
Subchapters B and C;
(B) the responsibilities of a processor under
Subchapter C; and
(C) a consumer's rights under Subchapter B; and
(2) an online mechanism through which a consumer may
submit a complaint under this chapter to the attorney general.
Sec. 541.153. INVESTIGATIVE AUTHORITY. (a) If the
attorney general has reasonable cause to believe that a person has
engaged in or is engaging in a violation of this chapter, the
attorney general may issue a civil investigative demand. The
procedures established for the issuance of a civil investigative
demand under Section 15.10 apply to the same extent and manner to
the issuance of a civil investigative demand under this section.
(b) The attorney general may request, pursuant to a civil
investigative demand issued under Subsection (a), that a controller
disclose any data protection assessment that is relevant to an
investigation conducted by the attorney general. The attorney
general may evaluate the data protection assessment for compliance
with the requirements set forth in Sections 541.101, 541.102, and
541.103.
Sec. 541.154. NOTICE OF VIOLATION OF CHAPTER; OPPORTUNITY
TO CURE. Before bringing an action under Section 541.155, the
attorney general shall notify a person in writing, not later than
the 30th day before bringing the action, identifying the specific
provisions of this chapter the attorney general alleges have been
or are being violated. The attorney general may not bring an action
against the person if:
(1) within the 30-day period, the person cures the
identified violation; and
(2) the person provides the attorney general a written
statement that the person:
(A) cured the alleged violation;
(B) notified the consumer that the consumer's
privacy violation was addressed, if the consumer's contact
information has been made available to the person;
(C) provided supportive documentation to show
how the privacy violation was cured; and
(D) made changes to internal policies, if
necessary, to ensure that no such further violations will occur.
Sec. 541.155. CIVIL PENALTY; INJUNCTION. (a) A person who
violates this chapter following the cure period described by
Section 541.154 or who breaches a written statement provided to the
attorney general under that section is liable for a civil penalty in
an amount not to exceed $7,500 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 person 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 other reasonable expenses incurred in investigating and
bringing an action under this section.
(d) The attorney general shall deposit a civil penalty
collected under this section in accordance with Section 402.007,
Government Code.
Sec. 541.156. NO PRIVATE RIGHT OF ACTION. This chapter may
not be construed as providing a basis for, or being subject to, a
private right of action for a violation of this chapter or any other
law.
SUBCHAPTER E. CONSTRUCTION OF CHAPTER; EXEMPTIONS FOR CERTAIN USES
OF CONSUMER PERSONAL DATA
Sec. 541.201. CONSTRUCTION OF CHAPTER. (a) This chapter
may not be construed to restrict a controller's or processor's
ability to:
(1) comply with federal, state, or local laws, rules,
or regulations;
(2) comply with a civil, criminal, or regulatory
inquiry, investigation, subpoena, or summons by federal, state,
local, or other governmental authorities;
(3) investigate, establish, exercise, prepare for, or
defend legal claims;
(4) provide a product or service specifically
requested by a consumer or the parent or guardian of a child,
perform a contract to which the consumer is a party, including
fulfilling the terms of a written warranty, or take steps at the
request of the consumer before entering into a contract;
(5) take immediate steps to protect an interest that
is essential for the life or physical safety of the consumer or of
another individual and in which the processing cannot be manifestly
based on another legal basis;
(6) prevent, detect, protect against, or respond to
security incidents, identity theft, fraud, harassment, malicious
or deceptive activities, or any illegal activity;
(7) preserve the integrity or security of systems or
investigate, report, or prosecute those responsible for breaches of
system security;
(8) engage in public or peer-reviewed scientific or
statistical research in the public interest that adheres to all
other applicable ethics and privacy laws and is approved,
monitored, and governed by an institutional review board or similar
independent oversight entity that determines:
(A) if the deletion of the information is likely
to provide substantial benefits that do not exclusively accrue to
the controller;
(B) whether the expected benefits of the research
outweigh the privacy risks; and
(C) if the controller has implemented reasonable
safeguards to mitigate privacy risks associated with research,
including any risks associated with reidentification; or
(9) assist another controller, processor, or third
party with any of the requirements under this subsection.
(b) This chapter may not be construed to prevent a
controller or processor from providing personal data concerning a
consumer to a person covered by an evidentiary privilege under the
laws of this state as part of a privileged communication.
(c) This chapter may not be construed as imposing a
requirement on controllers and processors that adversely affects
the rights or freedoms of any person, including the right of free
speech.
(d) This chapter may not be construed as requiring a
controller, processor, third party, or consumer to disclose a trade
secret.
Sec. 541.202. COLLECTION, USE, OR RETENTION OF DATA FOR
CERTAIN PURPOSES. (a) The requirements imposed on controllers and
processors under this chapter may not restrict a controller's or
processor's ability to collect, use, or retain data to:
(1) conduct internal research to develop, improve, or
repair products, services, or technology;
(2) effect a product recall;
(3) identify and repair technical errors that impair
existing or intended functionality; or
(4) perform internal operations that:
(A) are reasonably aligned with the expectations
of the consumer;
(B) are reasonably anticipated based on the
consumer's existing relationship with the controller; or
(C) are otherwise compatible with processing
data in furtherance of the provision of a product or service
specifically requested by a consumer or the performance of a
contract to which the consumer is a party.
(b) A requirement imposed on a controller or processor under
this chapter does not apply if compliance with the requirement by
the controller or processor, as applicable, would violate an
evidentiary privilege under the laws of this state.
Sec. 541.203. DISCLOSURE OF PERSONAL DATA TO THIRD-PARTY
CONTROLLER OR PROCESSOR. (a) A controller or processor that
discloses personal data to a third-party controller or processor,
in compliance with the requirements of this chapter, does not
violate this chapter if the third-party controller or processor
that receives and processes that personal data is in violation of
this chapter, provided that, at the time of the data's disclosure,
the disclosing controller or processor did not have actual
knowledge that the recipient intended to commit a violation.
(b) A third-party controller or processor receiving
personal data from a controller or processor in compliance with the
requirements of this chapter does not violate this chapter for the
transgressions of the controller or processor from which the
third-party controller or processor receives the personal data.
Sec. 541.204. PROCESSING OF CERTAIN PERSONAL DATA BY
CONTROLLER OR OTHER PERSON. (a) Personal data processed by a
controller under this subchapter may not be processed for any
purpose other than a purpose listed in this subchapter unless
otherwise allowed by this chapter. Personal data processed by a
controller under this subchapter may be processed to the extent
that the processing of the data is:
(1) reasonably necessary and proportionate to the
purposes listed in this subchapter; and
(2) adequate, relevant, and limited to what is
necessary in relation to the specific purposes listed in this
subchapter.
(b) Personal data collected, used, or retained under
Section 541.202(a) must, where applicable, take into account the
nature and purpose of such collection, use, or retention. The
personal data described by this subsection is subject to reasonable
administrative, technical, and physical measures to protect the
confidentiality, integrity, and accessibility of the personal data
and to reduce reasonably foreseeable risks of harm to consumers
relating to the collection, use, or retention of personal data.
(c) A controller that processes personal data under an
exemption in this subchapter bears the burden of demonstrating that
the processing of the personal data qualifies for the exemption and
complies with the requirements of Subsections (a) and (b).
(d) The processing of personal data by an entity for the
purposes described by Section 541.201 does not solely make the
entity a controller with respect to the processing of the data.
Sec. 541.205. LOCAL PREEMPTION. This chapter supersedes
and preempts any ordinance, resolution, rule, or other regulation
adopted by a political subdivision regarding the processing of
personal data by a controller or processor.
SECTION 3. (a) The Department of Information Resources,
under the management of the chief privacy officer, shall review the
implementation of the requirements of Chapter 541, Business &
Commerce Code, as added by this Act.
(b) Not later than September 1, 2024, the Department of
Information Resources shall create an online portal available on
the department's Internet website for members of the public to
provide feedback and recommend changes to Chapter 541, Business &
Commerce Code, as added by this Act. The online portal must remain
open for receiving feedback from the public for at least 90 days.
(c) Not later than January 1, 2025, the Department of
Information Resources shall make available to the public a report
detailing the status of the implementation of the requirements of
Chapter 541, Business & Commerce Code, as added by this Act, and any
recommendations to the legislature regarding changes to that law.
(d) This section expires September 1, 2025.
SECTION 4. Data protection assessments required to be
conducted under Section 541.105, Business & Commerce Code, as added
by this Act, apply only to processing activities generated after
the effective date of this Act and are not retroactive.
SECTION 5. Not later than July 1, 2024, the attorney general
shall post the information and online mechanism required by Section
541.152, Business & Commerce Code, as added by this Act.
SECTION 6. The provisions of this Act are hereby declared
severable, and if any provision of this Act or the application of
such provision to any person or circumstance is declared invalid
for any reason, such declaration shall not affect the validity of
the remaining portions of this Act.
SECTION 7. (a) Except as provided by Subsection (b) of this
section, this Act takes effect July 1, 2024.
(b) Section 541.055(e), Business & Commerce Code, as added
by this Act, takes effect January 1, 2025.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 4 was passed by the House on April 5,
2023, by the following vote: Yeas 146, Nays 0, 1 present, not
voting; that the House refused to concur in Senate amendments to
H.B. No. 4 on May 15, 2023, and requested the appointment of a
conference committee to consider the differences between the two
houses; and that the House adopted the conference committee report
on H.B. No. 4 on May 28, 2023, by the following vote: Yeas 144,
Nays 0, 1 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 4 was passed by the Senate, with
amendments, on May 10, 2023, by the following vote: Yeas 30, Nays
0; at the request of the House, the Senate appointed a conference
committee to consider the differences between the two houses; and
that the Senate adopted the conference committee report on H.B. No.
4 on May 27, 2023, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor