Description of SB 911

Trust Code Limitation on Trustee's Environmental Liability

Governor Bush signed SB 911 on May 26, 1997. SB 911 becomes effective September 1, 1997.

SB 911 was a controversial bill this session. As introduced, SB 911 would have provided a means for beneficiaries to release the trustee from liability for investments recommended by agents. This controversial part of the bill was deleted, and SB 911 as enacted into law merely provides as follows:

SECTION 1. Section 114.001, Property Code, is amended by adding Subsection (e) to read as follows:

(e) The trustee has the same protection from liability provided for a fiduciary under 42 U.S.C. Section 9607(n).

42 U.S.C. Section 9607(n) was enacted by Congress in 1996 to extend protection from certain environmental claims to fiduciaries. This move was in response to the growing number of environmentally burdened properties ending up in the hands of fiduciaries, thus exposing them to liability under CERCLA. Prior to federal relief, if the trust could not cover the cost of damages, the corporate veil could be pierced, affecting not only the corporate trustee (bank/trust company), but also the individual trustee/trustees administering the trust account. Under current federal law, in order for a fiduciary to be liable, there must be a showing that the fiduciary acted as an operator or manager. SB 911 brings the state statute in line with federal law in terms of fiduciary liability for an environmentally burdened property. The trust is still accountable for cleanup costs and reclamation.


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Copyright 1997 by Glenn M. Karisch. This page was last revised on May 28, 1997.