According to the Legislative Budget Board (LBB), the fiscal implications of SB 2340 are currently indeterminate, primarily due to the uncertainty around how many cases might arise from the newly established criminal offense. The bill introduces a Class A misdemeanor for intentionally removing, altering, or concealing business records to avoid compliance with an Attorney General investigation. Because the frequency of these potential violations is unknown, the Legislative Budget Board (LBB) cannot accurately project the number of cases that would be prosecuted under the new statute.

That said, the bill is not expected to have a significant fiscal impact on the Office of the Attorney General (OAG). The OAG is assumed to have sufficient existing resources to absorb any additional legal, investigative, or administrative responsibilities generated by the bill. This includes the collection of sworn statements from business entities and the examination of documents to determine compliance with Texas business law.

Regarding the judicial and correctional systems, the LBB notes that any increase in demand on the courts or on correctional facilities, such as county jails, would likely be minimal. Likewise, local governments are not expected to face a significant fiscal burden in terms of enforcement, prosecution, or supervision related to the new misdemeanor offense.

In summary, while the overall fiscal impact of SB 2340 cannot be precisely estimated at this stage, state agencies and local governments are not expected to incur substantial new costs from the bill's implementation. Most enforcement and oversight activities would be handled within the scope of existing agency operations.

SB 2340 strengthens the Texas Attorney General’s ability to investigate filing entities and foreign businesses operating in Texas by clearly defining the tools available for oversight. It authorizes the AG to compel sworn written reports, examine individuals under oath, and, in cases of obstruction, prosecute individuals who intentionally destroy or alter business records. The bill also includes a judicial mechanism that allows businesses to challenge investigatory demands, providing a legal check on executive power.

The bill addresses an important gap in current law. While existing statutes permit the Attorney General to investigate business misconduct, they do not clearly outline how that authority can be exercised or how businesses can seek judicial relief. By clarifying these processes and adding enforcement provisions, the bill improves transparency, strengthens accountability, and better equips the state to respond to fraud or abuse without needing to immediately initiate litigation.

While concerns have been raised about potential regulatory burdens and government overreach, the inclusion of a good-faith judicial review process under Section 12.157 ensures businesses retain the right to challenge unreasonable demands. Moreover, the new criminal penalties are narrowly focused on intentional wrongdoing, such as deliberately falsifying or hiding records, and are not likely to impact businesses that act in good faith. Fiscal impacts to the state are expected to be minimal and manageable under current agency resources.

In sum, SB 2340 enhances the state’s ability to uphold corporate responsibility without creating excessive burdens for law-abiding businesses. It represents a reasonable expansion of oversight powers in response to modern compliance challenges and includes important safeguards to protect due process. Texas Policy Research recommends that lawmakers vote YES on SB 2340.

• Individual Liberty: The bill enhances the state's power to investigate and potentially penalize individuals (e.g., officers, employees, or agents of a business) who withhold or destroy business records. While the intent is to ensure transparency and accountability, there is a risk of government overreach if these powers are not exercised carefully. However, the bill mitigates this concern somewhat by requiring intentional misconduct for criminal prosecution and by allowing judicial review of investigatory demands.
• Personal Responsibility: The bill reinforces the principle that business owners and managers are accountable for their actions. If a business violates its governing documents or state law, or obstructs an investigation, the consequences, such as loss of business privileges or criminal liability, fall on those responsible. This fosters a legal environment where ethical corporate conduct is expected and enforced.
• Free Enterprise: The bill introduces new regulatory responsibilities and enforcement risks for businesses, particularly filing entities and foreign businesses. While these measures are targeted at preventing fraud and abuse, they may create compliance costs or legal risks, especially for small businesses unfamiliar with complex recordkeeping obligations. However, businesses acting in good faith and responding to lawful requests should face little disruption.
• Private Property Rights: By allowing the Attorney General to demand access to business records (including those located out of state), the bill touches on issues of property and privacy. Although businesses retain the right to challenge such demands in court, this still represents an increase in the government’s reach into private-sector operations.
• Limited Government: The bill expands the enforcement powers of the Attorney General without requiring additional legislative or administrative oversight. While it does not create new agencies or dramatically increase spending, it enhances the authority of a single office to investigate and penalize businesses. This expansion is tempered by the court petition process, which allows businesses to push back against potentially excessive demands.

• HB 4852 (Same As)