Overall Vote Recommendation

Yes

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

HB 40 establishes a new system of Business Courts in Texas, aimed at creating a specialized judicial forum for resolving complex commercial and corporate disputes. The bill integrates the Business Court into the broader state judicial structure by amending multiple provisions in the Civil Practice and Remedies Code. It ensures that legal procedures such as interlocutory appeals, recusal processes, record reconstruction, and document handling apply equally to the Business Court as they do to district and county courts.

The bill stipulates that interlocutory appeals from the Business Court must be directed to a newly established appellate body—the Fifteenth Court of Appeals—ensuring a streamlined and expert review process for business-related litigation. It modifies jurisdictional statutes to allow business courts to issue and enforce prefiling orders and to participate in legal processes such as depositions, claims against judges, and issuance of temporary injunctions.

Furthermore, the bill amends procedural statutes to clarify that Business Court judges are subject to the same standards as other judicial officers in civil cases, including those involving recusal motions and appeals of judicial decisions. The bill’s comprehensive statutory updates aim to formally incorporate the Business Court across the civil justice system while maintaining consistency in procedural protections and access for litigants.

Overall, the bill represents a significant structural reform to Texas’ judiciary, aligning it with other states that have adopted business-focused court systems to improve the adjudication of high-stakes commercial cases.

The originally filed version of HB 40 was a far more expansive and detailed proposal than what ultimately appeared in the Committee Substitute. The original bill outlines a comprehensive framework for the creation and operation of the Texas Business Court system. It includes detailed provisions on jurisdiction, judicial appointments, case assignment, operational funding, judicial compensation, and procedural rules, many of which are streamlined or omitted in the committee version.

A major difference lies in the scope of jurisdiction. The originally filed bill dramatically expanded the Business Court’s authority by lowering the minimum threshold for "qualified transactions" from $10 million to $5 million, introducing jurisdiction over a wider range of disputes such as reinsurance, intellectual property, and professional liability involving organizations. It also included specific jurisdiction over arbitration-related proceedings, enforcement of non-compete agreements tied to business transactions, and supplemental jurisdiction for related claims. These expansive categories are significantly pared down or not explicitly included in the substitute bill.

Another key distinction is sunset provisions and implementation timelines. The originally filed bill removed prior sunset clauses that had applied to various Business Court divisions, thereby making them permanent. It also provided for more aggressive and earlier judicial appointments, staff organization, and salary stipulations for judges before their bench service officially began—elements that were less emphasized or omitted in the substitute.

Furthermore, the original bill contains detailed procedural guidance, including Supreme Court-mandated rules for early jurisdictional determinations, rules for recusal and venue, and provisions for judicial security and facilities management. It also proposed sweeping conforming amendments across the Government Code and Civil Practice & Remedies Code to harmonize the Business Court’s role with existing statutes. Many of these technical and logistical details are either simplified or deferred in the substitute.

Overall, the originally filed HB 40 represents a robust, systems-level overhaul of how complex business litigation would be handled in Texas, while the Committee Substitute reflects a more focused, refined approach likely aimed at easing implementation and improving legislative viability.

Author

Brooks Landgraf

Morgan Meyer

Jeff Leach

Michael Schofield

Marc LaHood

Contact the Author

Rep. Brooks Landgraf

Capitol Phone:

(512) 463-0546

Capitol Office:

EXT E2.602

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), HB 40 is projected to have a significant fiscal impact on the state budget, with an estimated negative impact of $23.6 million to General Revenue-related funds over the 2026–2027 biennium. This cost is primarily associated with establishing six new business court divisions and expanding the jurisdiction of the business court to cover disputes exceeding $5 million in value (lowered from $10 million), as well as other commercial matters.

The bill authorizes the appointment of eight new judges (including additional judges in the First and Eleventh Divisions), each of whom will receive a base salary, county supplements, and additional compensation for presiding administrative duties. This judicial compensation alone totals approximately $1.27 million per year. In addition to judicial salaries, the Office of Court Administration (OCA) estimates operational expenses of over $11.7 million in FY 2026 and $6.3 million in FY 2027, covering staff salaries, capital costs for court buildouts, and other ongoing operating expenses.

The staffing plan includes 32 full-time equivalent (FTE) positions for clerks, legal assistants, attorneys, project managers, and court reporters. Employee benefits, including retirement contributions and insurance, further add to the fiscal burden. Notably, a new court facility will be needed for the Eleventh Division, contributing to the capital costs.

The bill also includes technology costs of nearly $700,000 in FY 2026 to equip the new courts with necessary infrastructure like computers, internet, video conferencing, and networking tools. While counties may be reimbursed for some expenses related to security and accommodations, the Legislative Budget Board anticipates no significant fiscal implication to local governments.

Overall, while HB 40 does not itself appropriate funds, it establishes the statutory authority needed to implement and fund the expanded Business Court system, which requires substantial new investment in personnel, facilities, and operations.

Vote Recommendation Notes

HB 40 is a well-structured refinement of Texas’s emerging Business Court system. It addresses operational and jurisdictional gaps that surfaced after the court’s initial implementation in 2023 and ensures that Texas remains competitive among states offering specialized judicial forums for complex commercial litigation. The bill provides needed clarity on venue, jurisdiction, and procedures, and it expands the court’s infrastructure by activating six additional court divisions and appointing new judges where previously authorized by statute.

In evaluating whether the bill grows government or imposes new burdens, it is important to distinguish between administrative expansion and regulatory overreach. HB 40 does grow the size and scope of government in a targeted manner—it increases the number of state-employed judges and court staff, expands courtroom infrastructure, and results in an estimated cost of $23.6 million to taxpayers over the upcoming biennium. However, this growth is constrained to the judicial branch and serves the narrow function of adjudicating complex business disputes. It does not authorize new agencies, enforcement arms, or regulatory frameworks.

Critically, the bill does not increase the regulatory burden on individuals or businesses. It does not create new compliance obligations, mandates, or licensing requirements. Rather, it offers a voluntary alternative for certain civil litigants, which could improve efficiency and predictability in resolving high-dollar, sophisticated commercial cases. It also preserves access to traditional district courts, thereby maintaining choice for litigants and protecting due process.

Ultimately, HB 40 earns a “Yes” recommendation because it enhances judicial capacity, supports the rule of law in complex commercial matters, and aligns with principles of limited, effective governance. While it introduces modest fiscal and structural expansion, these are proportionate to the court’s specialized mission and bounded in scope. Texas Policy Research recommends that lawmakers vote YES on HB 40.

Individual Liberty: HB 40 protects individual liberty by enhancing access to a specialized, efficient judicial forum tailored to complex business disputes. It does not restrict access to existing courts nor infringe upon individual rights. Instead, it provides litigants—particularly owners, executives, and investors—with an additional venue designed to resolve high-stakes commercial matters more effectively. The Business Court respects due process and allows for appeals through the established judicial hierarchy, preserving fundamental legal protections.
Personal Responsibility: The bill promotes personal responsibility by creating a venue that more effectively holds parties accountable in corporate and commercial litigation. Business owners, officers, and fiduciaries face clearer standards of review and more consistent case law application under the Business Court’s specialized jurisdiction. This structure incentivizes responsible governance and ethical conduct within organizations.
Free Enterprise: HB 40 strengthens Texas’s position as a competitive, business-friendly state. By lowering the jurisdictional threshold for complex cases and expanding access to expert judges in commercial matters, the bill provides more predictable legal outcomes and reduces the cost of doing business. This legal infrastructure supports innovation, investment, and dispute resolution in sectors ranging from finance and tech to energy and biosciences.
Private Property Rights: By ensuring disputes involving ownership interests, contractual enforcement, and fiduciary duties are resolved efficiently and equitably, the bill bolsters the rule of law around private property rights. The expanded court capacity ensures that property-related claims—particularly those involving intellectual property or high-value transactions—receive timely and informed adjudication.
Limited Government: While the bill does expand the size of government modestly through new judicial appointments and infrastructure costs, this growth is bounded and purpose-specific. It does not create new regulatory authorities or impose burdens on private actors. The government’s role remains adjudicative rather than interventionist. The expansion is a measured response to growing demand for legal resolution in complex commercial environments, consistent with the constitutional design of a responsive judiciary.

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