40 TexReg 7507 - Texas Secretary of State

Transcription

Volume 40 Number 44
October 30, 2015
Pages 7495 - 7
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Secretary of State –
Carlos H. Cascos
Director –
Robert Sumners
a section of the
Office of the Secretary of State
P.O. Box 12887
Austin, TX 78711
(512) 463-5561
FAX (512) 463-5569
http://www.sos.state.tx.us
[email protected]
Staff
Leti Benavides
Dana Blanton
Deana Lackey
Jill S. Ledbetter
Michelle Miner
Joy L. Morgan
Barbara Strickland
Tami Washburn
IN THIS ISSUE
ATTORNEY GENERAL
Opinions.........................................................................................7501
7 TAC §§83.5003 - 83.5005 ..........................................................7531
MOTOR VEHICLE INSTALLMENT SALES
PROPOSED RULES
7 TAC §84.608 ...............................................................................7535
COMMISSION ON STATE EMERGENCY
COMMUNICATIONS
PAWNSHOPS AND CRAFTED PRECIOUS METAL
DEALERS
9-1-1 SERVICE--STANDARDS
7 TAC §85.206 ...............................................................................7537
1 TAC §251.16 ...............................................................................7503
7 TAC §85.304 ...............................................................................7538
TEXAS HEALTH AND HUMAN SERVICES
COMMISSION
7 TAC §85.607 ...............................................................................7538
MEDICAID HEALTH SERVICES
1 TAC §354.1835 ...........................................................................7507
CONSUMER DEBT MANAGEMENT SERVICES
7 TAC §88.103 ...............................................................................7538
PROPERTY TAX LENDERS
1 TAC §354.1851 ...........................................................................7508
7 TAC §89.307 ...............................................................................7539
1 TAC §354.1863, §354.1868 ........................................................7508
CREDIT UNION DEPARTMENT
1 TAC §354.1901 ...........................................................................7509
CHARTERING, OPERATIONS, MERGERS,
LIQUIDATIONS
1 TAC §§354.1921, 354.1923, 354.1927 .......................................7509
REIMBURSEMENT RATES
7 TAC §91.101 ...............................................................................7540
1 TAC §§355.8541, 355.8546 - 355.8548, 355.8551 ....................7514
7 TAC §91.301 ...............................................................................7544
1 TAC §355.8545 ...........................................................................7516
TEXAS DEPARTMENT OF HOUSING AND
COMMUNITY AFFAIRS
FINANCE COMMISSION OF TEXAS
CREDIT CARD SURCHARGE APPEAL
PROCEDURES
7 TAC §4.105 .................................................................................7517
COMMUNITY AFFAIRS PROGRAMS
10 TAC §5.7 ...................................................................................7546
MULTIFAMILY HOUSING REVENUE BOND RULES
RULES OF PROCEDURE FOR CONTESTED CASE
HEARINGS, APPEALS, AND RULEMAKINGS
10 TAC §§12.1 - 12.10 ..................................................................7547
7 TAC §9.1 .....................................................................................7519
TEXAS DEPARTMENT OF LICENSING AND
REGULATION
7 TAC §9.12 ...................................................................................7519
TEXAS DEPARTMENT OF BANKING
TRUST COMPANY REGULATION
7 TAC §17.23 .................................................................................7520
TRUST COMPANY CORPORATE ACTIVITIES
7 TAC §21.24 .................................................................................7521
10 TAC §§12.1 - 12.10 ..................................................................7548
AUCTIONEERS
16 TAC §§67.20, 67.21, 67.25, 67.30, 67.65, 67.70 - 67.72, 67.80 7554
16 TAC §67.70 ...............................................................................7556
TEXAS HIGHER EDUCATION COORDINATING
BOARD
OFFICE OF CONSUMER CREDIT COMMISSIONER
PROGRAM DEVELOPMENT IN PUBLIC
TWO-YEAR COLLEGES
REGULATED LENDERS AND CREDIT ACCESS
BUSINESSES
19 TAC §§9.660 - 9.666 ................................................................7556
7 TAC §83.307 ...............................................................................7524
7 TAC §83.3007 .............................................................................7524
7 TAC §83.1002 .............................................................................7528
7 TAC §§83.3001, 83.3002, 83.3006, 83.3010 ..............................7528
7 TAC §83.3012 .............................................................................7529
7 TAC §83.4002, §83.4003 ............................................................7530
7 TAC §83.4003, §83.4004 ............................................................7531
NATIONAL RESEARCH UNIVERSITIES
19 TAC §15.10 ...............................................................................7557
TEXAS STATE BOARD OF EXAMINERS OF
DIETITIANS
DIETITIANS
22 TAC §711.6 ...............................................................................7559
22 TAC §§711.7, 711.8, 711.10, 711.12, 711.13............................7559
TABLE OF CONTENTS
40 TexReg 7497
DEPARTMENT OF STATE HEALTH SERVICES
37 TAC §221.3 ...............................................................................7594
37 TAC §221.3 ...............................................................................7594
CHRONIC DISEASES
25 TAC §§61.1 - 61.5, 61.7 - 61.11 ...............................................7562
37 TAC §221.5 ...............................................................................7595
25 TAC §61.11 ...............................................................................7567
37 TAC §221.13 .............................................................................7595
COMPTROLLER OF PUBLIC ACCOUNTS
37 TAC §221.43 .............................................................................7596
ENFORCEMENT
TAX ADMINISTRATION
34 TAC §3.344 ...............................................................................7567
37 TAC §223.1 ...............................................................................7596
34 TAC §3.355 ...............................................................................7571
37 TAC §223.3 ...............................................................................7597
34 TAC §3.434 ...............................................................................7573
37 TAC §223.5 ...............................................................................7598
TEXAS COUNTY AND DISTRICT RETIREMENT
SYSTEM
37 TAC §223.5 ...............................................................................7598
CALCULATIONS OR TYPES OF BENEFITS
37 TAC §223.7 ...............................................................................7599
37 TAC §223.9 ...............................................................................7599
34 TAC §103.1 ...............................................................................7575
37 TAC §223.11 .............................................................................7600
TEXAS COMMISSION ON LAW ENFORCEMENT
37 TAC §223.14 .............................................................................7600
37 TAC §223.15 .............................................................................7601
ADMINISTRATION
37 TAC §211.1 ...............................................................................7576
37 TAC §223.15 .............................................................................7601
37 TAC §211.5 ...............................................................................7579
37 TAC §223.16 .............................................................................7602
37 TAC §211.7 ...............................................................................7579
37 TAC §223.16 .............................................................................7602
37 TAC §211.13 .............................................................................7580
37 TAC §223.17 .............................................................................7603
37 TAC §211.13 .............................................................................7580
37 TAC §223.18 .............................................................................7604
37 TAC §211.16 .............................................................................7581
37 TAC §223.19 .............................................................................7605
37 TAC §211.25 .............................................................................7582
37 TAC §223.19 .............................................................................7605
37 TAC §211.29 .............................................................................7582
37 TAC §223.20 .............................................................................7606
37 TAC §211.35 .............................................................................7583
37 TAC §223.21 .............................................................................7607
TRAINING AND EDUCATIONAL PROVIDERS
SCHOOL MARSHALS
37 TAC §215.9 ...............................................................................7584
37 TAC §227.1 ...............................................................................7607
37 TAC §215.13 .............................................................................7585
37 TAC §227.3 ...............................................................................7608
ENROLLMENT, LICENSING, APPOINTMENT, AND
SEPARATION
37 TAC §227.5 ...............................................................................7609
37 TAC §217.1 ...............................................................................7586
37 TAC §227.11 .............................................................................7610
CONTINUING EDUCATION
37 TAC §218.9 ...............................................................................7588
37 TAC §218.11 .............................................................................7589
37 TAC §227.9 ...............................................................................7609
TEXAS FORENSIC SCIENCE COMMISSION
DNA, CODIS, FORENSIC ANALYSIS, AND CRIME
LABORATORIES
PRELICENSING, REACTIVATION, TESTS, AND
ENDORSEMENTS
37 TAC §§651.1, 651.3 - 651.11.................................................... 7611
37 TAC §219.1 ...............................................................................7590
37 TAC §§651.101 - 651.105 ........................................................7614
37 TAC §219.11 .............................................................................7591
WITHDRAWN RULES
37 TAC §219.11 .............................................................................7591
COMMUNITY AFFAIRS
37 TAC §219.13 .............................................................................7592
37 TAC §219.25 .............................................................................7593
PROFICIENCY CERTIFICATES
TABLE OF CONTENTS
40 TexReg 7498
37 TAC §651.12 .............................................................................7614
MANUFACTURED HOUSING
10 TAC §80.3 .................................................................................7617
10 TAC §§80.30, 80.32, 80.36 .......................................................7617
7 TAC §§90.101 - 90.105 ..............................................................7639
10 TAC §80.41 ...............................................................................7617
7 TAC §§90.201 - 90.204 ..............................................................7639
10 TAC §80.73 ...............................................................................7617
7 TAC §§90.301 - 90.304 ..............................................................7640
10 TAC §80.90 ...............................................................................7617
7 TAC §§90.401 - 90.404 ..............................................................7642
TEXAS DEPARTMENT OF MOTOR VEHICLES
7 TAC §§90.501 - 90.504 ..............................................................7647
MOTOR VEHICLE DISTRIBUTION
7 TAC §§90.601 - 90.604 ..............................................................7651
43 TAC §215.102 ...........................................................................7618
7 TAC §90.701, §90.703 ................................................................7662
43 TAC §215.133 ...........................................................................7618
7 TAC §90.703 ...............................................................................7662
ADOPTED RULES
CREDIT UNION DEPARTMENT
TEXAS ETHICS COMMISSION
CHARTERING, OPERATIONS, MERGERS,
LIQUIDATIONS
REPORTING POLITICAL CONTRIBUTIONS AND
EXPENDITURES
7 TAC §91.401 ...............................................................................7662
1 TAC §20.66 .................................................................................7619
7 TAC §91.802 ...............................................................................7663
COMMISSION ON STATE EMERGENCY
COMMUNICATIONS
7 TAC §91.803 ...............................................................................7664
ADMINISTRATION
7 TAC §91.805 ...............................................................................7665
7 TAC §91.901 ...............................................................................7666
1 TAC §252.8 .................................................................................7619
7 TAC §§91.2000 - 91.2006 ..........................................................7666
FINANCE COMMISSION OF TEXAS
COMMISSION POLICIES AND ADMINISTRATIVE
RULES
STATE BANK REGULATION
7 TAC §3.36, §3.37 ........................................................................7620
BANKING DEVELOPMENT DISTRICTS
7 TAC §§6.1 - 6.6 ..........................................................................7621
7 TAC §97.206 ...............................................................................7667
COMMUNITY AFFAIRS
COMMUNITY AFFAIRS PROGRAMS
TEXAS DEPARTMENT OF BANKING
10 TAC §5.12 .................................................................................7667
MONEY SERVICES BUSINESSES
10 TAC §§5.201, 5.203, 5.207, 5.210, 5.213, 5.214 ......................7668
7 TAC §33.4 ...................................................................................7622
10 TAC §5.503, §5.529 ..................................................................7668
TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE
LENDING
TEXAS RACING COMMISSION
TEXAS RESIDENTIAL MORTGAGE LOAN
COMPANIES
16 TAC §311.1 ...............................................................................7669
7 TAC §§80.201, 80.203, 80.204 ...................................................7623
16 TAC §311.104 ...........................................................................7669
MORTGAGE BANKERS AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS
7 TAC §§81.200, 81.201, 81.204 ...................................................7623
OFFICE OF CONSUMER CREDIT COMMISSIONER
MOTOR VEHICLE INSTALLMENT SALES
7 TAC §84.102 ...............................................................................7626
7 TAC §§84.801, 84.802, 84.805, 804.807 - 804.809 ...................7627
RETAIL CREDITORS
7 TAC §86.101 ...............................................................................7635
CHAPTER 342, PLAIN LANGUAGE CONTRACT
PROVISIONS
OTHER LICENSES
OFFICIALS AND RULES OF HORSE RACING
16 TAC §313.110 ...........................................................................7669
PARI-MUTUEL WAGERING
16 TAC §321.322 ...........................................................................7669
TEXAS DEPARTMENT OF CRIMINAL JUSTICE
GENERAL PROVISIONS
37 TAC §151.25 .............................................................................7670
37 TAC §151.75 .............................................................................7670
PRIVATE SECTOR PRISON INDUSTRIES
PROGRAMS
37 TAC §§154.1 - 154.9, 154.11....................................................7670
TABLE OF CONTENTS
40 TexReg 7499
RULE REVIEW
Notice of Approval of Coastal Boundary Survey ..........................7722
Adopted Rule Reviews
Office of the Governor
Texas Department of Banking .......................................................7671
Body-Worn Camera Program - Request for Applications .............7722
Office of Consumer Credit Commissioner ....................................7672
Texas Health and Human Services Commission
Credit Union Department...............................................................7672
Notice of Public Hearing on Proposed Medicaid Payment Rates..7726
Texas Department of Criminal Justice ...........................................7672
Public Notice - Advisory Committee Notification.........................7726
Commission on State Emergency Communications ......................7673
Texas Department of Housing and Community Affairs
TABLES AND GRAPHICS
Notice of Public Hearing and Public Comment Period on the Draft 2016
State of Texas Consolidated Plan: One-Year Action Plan .............7727
.......................................................................................................7675
Panhandle Regional Planning Commission
IN ADDITION
Capital Area Council of Governments
Texas Control Center Services Request for Proposals...................7711
Legal Notice ...................................................................................7727
Texas Parks and Wildlife Department
Notice of Hearing and Opportunity for Public Comment..............7727
Comptroller of Public Accounts
Notice of Loan Fund Availability and Request for Applications ..7711
Notice of Request for Proposals ....................................................7711
Request for Proposals ....................................................................7712
Office of Consumer Credit Commissioner
Notice of Rate Ceilings ..................................................................7712
Credit Union Department
Application for a Merger or Consolidation....................................7713
Notice of Final Action Taken.........................................................7713
Texas Commission on Environmental Quality
Agreed Orders ................................................................................7713
Enforcement Orders .......................................................................7717
Notice of Hearing...........................................................................7719
Texas Department of Public Safety
Notice of the Texas Ranger Public Integrity Unit..........................7728
Public Utility Commission of Texas
Notice of Application to Amend a Water Certificate of Convenience
and Necessity .................................................................................7728
Notice of Application to Amend a Water Certificate of Convenience
and Necessity .................................................................................7728
Notice of Application to Relinquish a Service Provider Certificate of
Operating Authority .......................................................................7728
Notice of Intent to Serve Decertified Area ....................................7728
Public Notice of Workshop ............................................................7729
Public Notice of Workshop ............................................................7729
Texas Department of Transportation
Notice of Public Hearing ...............................................................7719
Aviation Division - Request for Qualifications for Professional Engineering Services .............................................................................7729
Notice of Receipt of Application and Intent to Obtain a New Municipal
Solid Waste Permit Proposed Permit Number 2386 ......................7720
Texas Water Development Board
Texas Facilities Commission
Request for Qualifications - Water Demand Projection Methodologies .................................................................................................7730
Request for Proposals #303-7-20521.............................................7721
Request for Qualifications - Water Use Data Work Plan ...............7731
Request for Proposals #303-7-20522.............................................7721
General Land Office
Notice and Opportunity to Comment on Requests for Consistency
Agreement/Concurrence Under the Texas Coastal Management Program ...............................................................................................7721
TABLE OF CONTENTS
40 TexReg 7500
Opinions
Re: Discoverability under Brady v. Maryland and the Michael Morton
Act of recordings of inmate telephone calls to which the criminal district attorney's office has access without a warrant (RQ-0025-KP)
Opinion No. KP-0040
The Honorable Jim Murphy
SUMMARY
Chair, Committee on Corrections
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768-2910
Re: Whether a community college system may expend funds for attorney's fees incurred by a member of its board of trustees in a challenge
to the member's qualification to serve as trustee (RQ-0022-KP)
SUMMARY
While it is unlikely that a court would conclude that the Houston Community College System has a public interest in paying the legal expenses associated with a challenge to a trustee's qualifications for office, the College must determine, in good faith and subject to review
for abuse of discretion, whether the reimbursement is primarily for a
College purpose and not merely for the trustee's personal interest and
that the quo warranto proceeding involved actions of the trustee that
were taken in good faith within the scope of his official duties.
Opinion No. KP-0041
The Honorable Sharen Wilson
Tarrant County Criminal District Attorney
401 West Belknap
Fort Worth, Texas 76196
Brady v. Maryland and its progeny do not impose a general duty upon
a prosecutor to listen to all recordings of inmate telephone calls held
by the county telecommunications provider to search for exculpatory
evidence for a defendant if the prosecutor would not do so otherwise.
To the extent the investigators and other employees of the prosecutor
listen to any recorded inmate telephone call, Brady does impose upon
the prosecutor a duty to discover whether the investigators and employees find evidence favorable to a defendant in the recordings and,
if so, to disclose that evidence to the defendant. Considering the Texas
Supreme Court's definition of "possession, custody, or control" in an
analogous context, a court construing the phrase in article 39.14 of the
Code of Criminal Procedure would have a basis on which to determine
that a contract providing a criminal district attorney's office with unfettered access to recordings of inmate telephone calls gives the criminal
district attorney's office possession, custody, or control of the recordings.
For further information, please access the website at www.texasattorneygeneral.gov or call the Opinion Committee at (512) 463-2110.
TRD-201504468
Amanda Crawford
General Counsel
Office of the Attorney General
Filed: October 20, 2015
♦
♦
ATTORNEY GENERAL October 30, 2015
♦
40 TexReg 7501
TITLE 1. ADMINISTRATION
PART 12. COMMISSION ON STATE
EMERGENCY COMMUNICATIONS
CHAPTER 251.
9-1-1 SERVICE--STANDARDS
1 TAC §251.16
The Commission on State Emergency Communications (CSEC)
proposes new rule §251.16.
BACKGROUND AND PURPOSE
CSEC proposes new §251.16 (Title 1, Part 12, Chapter 251
of the Texas Administrative Code) relating to direct access to
9-1-1 service from a telephone system including a multi-line telephone system (telephone system). This rule implements Kari's
Law (Senate Bill 788, 84th Texas Legislature) which established
Texas Health and Safety Code Chapter 771A. Kari's Law requires a business service user that owns or controls a Telephone
System that provides outbound dialing capacity to "configure the
telephone system or equivalent system to allow a person initiating a 9-1-1 call on the system to directly access 9-1-1 service
by dialing the digits 9-1-1 without an additional code, digit, prefix, postfix, or trunk-access code." If compliance is "unduly and
unreasonably cost prohibitive," the law allows for 1-year waivers
of the direct access requirement upon timely submission of a
waiver request affidavit, including confirmation that the business
service user agrees to place a corresponding instructional sticker
on or immediately adjacent to each noncompliant, outbound capable telephone informing the user on how to access 9-1-1 service.
Kari's Law also requires a business service user that provides a
residential or business facility, and owns or controls a telephone
system, to configure the system to provide notification of a 9-1-1
call to a central location on the site of the facility--if notification
can be implemented without improving the system's hardware.
Additionally, based on CSEC's interpretation of Kari's Law and
its statutory rulemaking authority to implement the law, CSEC
is proposing (1) an additional location for notification; and (2) to
make clear that the liability protection provided by Health and
Safety Code §771.053 extends to a business service user that
complies with §251.16.
Kari's Law was passed in the aftermath of a tragedy that occurred
when a young girl attempted several times without success to
contact 9-1-1 to obtain help for her mother. Unbeknownst to the
young girl, the telephone handset she was using was associated with a telephone system that required her to first dial "9"
in order to make an outside call-including when making a 9-1-1
call. The law avoids imposing an undue financial hardship on
a business service user by providing for an annual self-certify-
ing waiver if the business service user determines compliance
is unduly and unreasonably cost prohibitive. Over the last 18
months untold numbers of businesses and governmental entities throughout the state and country have voluntarily changed
their telephone systems to allow direct dialing of 9-1-1. Based
on the success of these voluntary efforts, technical or cost issues do not appear to be factors in implementing the necessary
changes to existing systems.
The responsibility to implement Kari's Law is on a "business
service user," as opposed to the user's underlying service
provider. The term is defined in the law (Health and Safety
Code §771.001(2)) as well as in §251.16. Consistent with
related provisions in Health and Safety Code Chapter 771, the
rule defines the term to include a recipient of "communications"
service (e.g., Voice over Internet Protocol service), and makes
clear that the law also applies to a "governmental body" as
defined in Texas Government Code §552.003. While the law
places responsibility for compliance on a business service user,
the business service user may have had little involvement in the
programming of its non-compliant telephone system. A business service user, therefore, may require the assistance of its
underlying system provider or operator--which may or may not
be the user's underlying telecommunications or communications
service provider--in order to implement Kari's Law. CSEC and
the state's 52 independent Emergency Communication Districts
(ECDs; defined in Health and Safety Code §771.001(3)) will
assist business service users in complying with the law and
§251.16.
Defined Terms. CSEC considered but does not define the term
"cost prohibitive" because the law allows a business service user
to obtain relief by providing a self-certifying waiver request. Accordingly, cost prohibitive is determined by a business service
user rather than by CSEC or an ECD. CSEC does not define either the term "facility" or the phrase "the providing of a residential
or business facility" which are used in the notification provision
of the law. Neither the term nor the phrase can be clearly or
exhaustively defined. By way of example, a business service
user that leases office space from a third party is arguably excluded from the notification requirements, as is the third party
owner or manager of the office facility. Conversely, an owner or
manager of an office facility that makes available a telephone
system to its tenants is subject to the notification requirements.
Notwithstanding the foregoing, Kari's Law promotes the providing of notification of a 9-1-1 call made from within residential or
business facilities in order to enhance the efforts of emergency
first responders, including by allowing for access to a facility and
the providing of specific caller location.
On-site Notification and Additional Location. The notification requirement is inapplicable if compliance requires an upgrade to a
telephone system's hardware. On its face the statute envisions
PROPOSED RULES
October 30, 2015
40 TexReg 7503
that over time non-capable systems will be replaced with systems that provide notification as a feature. The notification requirement, therefore, balances the costs of replacing a system
with the benefits derived from notification of a 9-1-1 call from
within a facility. The law does not, however, require someone be
available to receive the notification. In order to promote meaningful notification, §251.16 authorizes notification be provided
to an additional location not located at the facility. Such additional location should be staffed 24 hours per day, seven days
per week, by personnel that can assist emergency first responders in providing access to a facility and better determine the
location of the 9-1-1 call, e.g., campus police or security office.
The additional location is in addition to the statutory on-site notification.
Waivers. A waiver request that complies with §251.16(d) shall
be granted by CSEC or the appropriate ECD. A compliant request is granted with or without notice being sent by CSEC or
the appropriate ECD.
Liability Protection. Health and Safety Code §771.053 provides
a limitation on liability of a service provider involved in providing
9-1-1 service. Liability protection extends to a third party provider
or other entity involved in providing 9-1-1 service, including an
officer, director, or employee of the provider or entity. A business
service user in compliance with §251.16 is deemed to be a third
party or other entity involved in providing 9-1-1 service and is
afforded the protections in §771.053.
FISCAL NOTE
Kelli Merriweather, CSEC's executive director, has determined
that for each year of the first five fiscal years (FY) that §251.16
is in effect there will be no costs to the state or to local governments as a result of enforcing or administering §251.16. Ms.
Merriweather's determination is based partly on costs not being
a factor in the successful efforts by a number of state and local
entities, and by telephone system providers and operators, and
various trade associations to implement changes to allow for direct access to 9-1-1 service from existing telephone systems.
Additionally, the direct access requirement can be waived each
year upon submission by a state or local government business
service user of an affidavit that compliance is "unduly and unreasonably cost prohibitive." Finally, the requirement that some
governmental entity business service users must provide on-site
notification of a 9-1-1 call is applicable only if providing notification does not require an upgrade in the telephone system's hardware.
PUBLIC BENEFIT
Ms. Merriweather has determined that for each year of the first
five years the new section is in effect, the public benefits anticipated as a result of the rule adoption will be to ensure that all
individuals have direct access to 9-1-1 service, including those
calling from a telephone system. If direct access is not available
from a particular telephone handset, the rule requires a sticker
be placed on or adjacent to the handset that instructs the user
on how to reach 9-1-1 service. CSEC will make available a form
sticker that is compliant with §251.16(d)(7).
REGULATORY ANALYSIS OF MAJOR ENVIRONMENTAL
RULES
CSEC has determined that this proposal is not a "major environmental rule" as defined by Government Code §2001.0225.
LOCAL EMPLOYMENT IMPACT STATEMENT
40 TexReg 7504
October 30, 2015
Texas Register
CSEC has determined that this proposal does not affect a local economy and therefore has not drafted a local employment
impact statement as would otherwise be required under Administrative Procedure Act §2001.022. CSEC makes the foregoing determination based on the foregoing Fiscal Note, and the
waiver provision provided in the rule.
SMALL AND MICRO-BUSINESS IMPACT ANALYSIS
In accordance with Government Code §2006.002(c), Ms. Merriweather has determined that there will be no adverse economic
effect on small businesses or micro-businesses. Accordingly,
CSEC has not prepared the economic impact statement or regulatory flexibility analysis that would otherwise be required. If such
an impact is found for individual small and micro businesses, the
rule provides a means to request a waiver of its provisions due
to financial hardship.
PUBLIC COMMENT
Initial and Reply comments on the proposed rule may be submitted in writing to Patrick Tyler, Commission on State Emergency
Communications, 333 Guadalupe Street, Suite 2-212, Austin,
Texas 78701-3942, by email to [email protected], or
by fax to (512) 305-6937. Comments should include in the subject line "Initial (or Reply) Comments to Proposed Rule 251.16."
Initial comments will be accepted for 30 days and Reply comments for 45 days following publication of the proposal in the
Texas Register. All comments will be published on CSEC's website www.csec.texas.gov.
STATEMENT OF AUTHORITY
The new rule is proposed pursuant to Texas Health and Safety
Code §771A.001(f) and §771.051.
No other statute, article, or code is affected by the proposal.
§251.16. Direct Access to 9-1-1 Service.
(a) Purpose. The purpose of this rule is to facilitate the implementation of Texas Health and Safety Code Chapter 771A ("Kari's
Law") requiring telephone systems that provide outbound dialing capacity to be configured to provide direct access to 9-1-1 service and, in
instances where no hardware changes are necessary, to provide notification of a 9-1-1 call to a central location on the site of the residential
or business facility from which a 9-1-1 call is made using a telephone
system.
(b) Definitions. For the purposes of this rule:
(1) "9-1-1 service" means a communications service that
connects users to a public safety answering point through a 9-1-1 system.
(2) "Additional location" means an optional location, other
than a central location, that receives notification of a 9-1-1 call that
should be staffed 24x7 with personnel that can assist emergency first
responders in accessing the residential or business facility from which
a 9-1-1 call is made and determining the location of the 9-1-1 call, e.g.,
Campus Police, Security Office.
(3) "Business service" means a telecommunications or
communications service provided a customer where the use is primarily of a business, professional, institutional, or otherwise occupational
nature.
(4) "Business service user" means a user of business
service that provides telecommunications or communications service,
including 9-1-1 service, to end users through a publicly or privately
owned or controlled telephone switch. Business service user includes
a "governmental body" as defined in §552.003, Government Code,
including an institution of higher education.
(2) address of all locations within Texas served by a noncomplaint telephone system;
(5) "Central location" means a designated location on the
site of a residential or business facility from which a 9-1-1 call is made
that receives notification of the 9-1-1 call. A central location is not
required to have a person available at the location to receive or respond
to the notification.
(3) a narrative of efforts demonstrating a good faith attempt
to reprogram or replace non-compliant telephone systems;
(6) "Commission" means the Commission on State Emergency Communications.
(7) "Internet Protocol enabled service" or "IP" has the
meaning assigned by §51.002, Texas Utilities Code.
(8) "Local exchange access line" or "Equivalent local exchange access line" has the meaning assigned in Commission Rule
255.4 (Title 1, Part 12 Tex. Admin Code, §255.4).
(9) "Notification" refers to a telephone system feature that
can send notice to a central location and optional additional location
that a 9-1-1 call has been made. Common notifications include "screen
pops" with audible alarms for security desk computers using a client
application, text messages for smartphones, and email for administrators. Where feasible, notification should provide the telephone number
or extension and location information of the telephone system handset
from which the 9-1-1 call is made.
(10) "Telephone switch" refers to the function of switching inbound and outbound calls in order to allow multiple end-users
to share a defined number of local exchange access lines or equivalent
local exchange access line.
(11) "Telephone system" refers to a legacy system, or
equivalent system using Internet Protocol enabled service, comprised
of common control units, interconnected telephone or handsets, control
hardware and software, and adjunct systems that allow for advanced
features such as call handling and transferring, conference calling, call
metering and accounting, private and shared voice message boxes, direct inward/outward dialing. A telephone system, commonly referred
to as a "multi-line telephone system" or MLTS, includes network and
premises based systems such as Centrex and VoIP, as well as private
branch exchange (PBX), Hybrid, and Key Telephone Systems (as
classified by the Federal Communications Commission under part 68
of title 47, Code of Federal Regulations) and includes systems used,
owned, or leased by governmental agencies and political subdivisions,
for-profit businesses, and non-profit entities.
(12) Any term not expressly defined in this rule has the
meaning assigned in Commission Rule 252.7, Definitions.
(c) A business service user that owns or controls a telephone
system that provides outbound dialing capacity or access shall configure the telephone system to allow a person initiating a 9-1-1 call
on the system to directly access 9-1-1 service by dialing in order the
digits 9, 1, and 1 without an additional code, digit, prefix, postfix, or
trunk-access code. All non-compliant telephone handsets that provide
outbound dialing capacity or access must have immediately adjacent to
the telephone the instructional sticker required in subsection (d)(7).
(d) A business service user shall be granted a one-year waiver
(September 1 - August 31) of the requirements of Kari's Law and this
rule upon submission of an affidavit not later than September 1 of each
year that provides:
(1) name (legal and any D/B/A), address, and contact information of the business service user;
(4) a statement that compliance with this rule is unduly and
unreasonably cost prohibitive;
(5) the manufacturer and model number of each non-compliant telephone system and the estimated costs to reprogram or replace
each system;
(6) a projected date for compliance with Kari's Law and
this rule; and
(7) confirmation that the business service agrees to or has
placed an instructional sticker on or immediately adjacent to each noncompliant telephone handset instructing the user how to access 9-1-1
service. The instructional sticker must be printed in at least 16-point
boldface type, in a contrasting color using a font that is easily readable,
and is written in English and Spanish.
(e) A business service user's waiver request affidavit may
be submitted electronically to www.csec.texas.gov/TexasKariLaw or
mailed to the appropriate address provided in the website link.
(f) A business service user that provides residential or business
facilities and owns or controls a telephone system that provides outbound dialing capacity or access shall configure the telephone system
to provide notification when a person within a residential or business
facility dials 9-1-1 if the telephone system is able to be configured to
provide the notification without an improvement to the system's hardware. The notification requirement is separate from and in addition
to the requirement in Texas law that "9-1-1 service" connects a 9-1-1
caller to the public safety answering point designated for the area from
which the call is made.
(g) A business service user in compliance with this rule is
deemed a "third party or other entity involved in the providing of
9-1-1 service" as that term is used to limit liability in §771.053, Texas
Health and Safety Code.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority
to adopt.
Filed with the Office of the Secretary of State on October 15,
2015.
TRD-201504359
Patrick Tyler
General Counsel
Commission on State Emergency Communications
Earliest possible date of adoption: November 29, 2015
For further information, please call: (512) 305-6922
♦
♦
♦
PART 15. TEXAS HEALTH AND
HUMAN SERVICES COMMISSION
CHAPTER 354. MEDICAID HEALTH
SERVICES
SUBCHAPTER F. PHARMACY SERVICES
The Texas Health and Human Services Commission (HHSC)
proposes amendments to §354.1835, Prescriber Identification
PROPOSED RULES
October 30, 2015
40 TexReg 7505
Numbers; §354.1851, Substitution of One Drug for Another
in a Prescription; §354.1863, Prescription Requirements;
§354.1901, Pharmacy Claims; §354.1921, Addition of Drugs to
the Texas Drug Code Index; §354.1923, Review and Evaluation;
and §354.1927, Retention and Deletion of Drugs. HHSC also
proposes new Title 1, Part 15, Chapter 354, Subchapter F,
Division 4, §354.1868, Exceptions in Disasters.
Background and Justification
The amended rules serve two purposes. Proposed amendments allow pharmacists to fill a 30-day refill of medications in
certain disaster situations, as allowed by Senate Bill (S.B.) 460,
84th Legislature, Regular Session, 2015. Proposed amendments also replace the estimated acquisition cost (EAC) with
the acquisition cost, which includes the National Average Drug
Acquisition Cost (NADAC), long term care pharmacy acquisition cost (LTCPAC), and specialty pharmacy acquisition cost
(SPAC), for drug ingredient reimbursement.
The proposed rule changes related to acquisition cost only affect
claims processed through the HHSC Vendor Drug Program
(VDP), which includes fee-for-service (FFS) Medicaid and the
Kidney Health Care, Children with Special Health Care Needs,
and Texas Women's Health programs. Claims processed
through managed care are not impacted by the proposed
changes to acquisition cost.
Concurrently, HHSC is proposing amendments to §§355.8541,
355.8546, 355.8547, 355.8548, and 355.8551; and repealing
§355.8545 of this title (relating to Purchased Health Services).
The proposed amendments and repeal appear elsewhere in this
issue of the Texas Register.
HHSC also proposes new §354.1868, Exceptions in Disasters,
to clarify that HHSC will reimburse pharmacists for drugs dispensed under the conditions described by S.B. 460. Managed
care organizations in Medicaid and the Children's Health Insurance Program (CHIP) must also adhere to proposed §354.1868
of this title, in accordance with §353.905(i) of this title (relating
to Managed Care Organization Requirements), and §370.701
of this title (relating to Applicability of Medicaid Managed Care
Standards for Outpatient Pharmacy Services to CHIP).
Reimbursement for Certain Drugs in Disasters
S.B. 460 allows a pharmacist to dispense a 30-day supply refill
of a prescription drug in a Governor-declared disaster without
prescriber authorization if failure to refill the prescription might
result in an interruption of a therapeutic regimen or create patient
suffering; the disaster prohibits the pharmacist from being able to
contact the practitioner; and the Texas State Board of Pharmacy
has notified pharmacists that they may dispense up to a 30-day
supply of a dangerous (i.e., prescription) drug.
Medicaid Fee-For-Service Drug Reimbursement
The 2016-17 General Appropriations Act (H.B. 1, 84th Legislature, Regular Session, 2015, Article II, HHSC, Rider 50) requires HHSC to achieve cost savings through initiatives such as
increasing efficiencies in VDP.
In a proposed Medicaid Pharmacy Outpatient Rule published by
the Centers for Medicare & Medicaid Services (CMS) (CMS2345-P) to amend 42 CFR part 447, subpart I, published on
February 2, 2012, CMS proposes that states adopt an acquisition cost, such as NADAC, that more closely reflects pharmacies' overall acquisition costs and market conditions as the
basis for state Medicaid pharmacy ingredient cost reimburse-
40 TexReg 7506
October 30, 2015
Texas Register
ment. In 2014, HHSC contracted with Myers & Stauffer to conduct studies to identify the acquisition cost being paid by Texas
pharmacies to procure drug products, determine how much it
costs them to dispense medications per prescription, and evaluate the impact of the potential adoption of the new federal upper limit prices. Based on Myers & Stauffer's reports, HHSC is
proposing the adoption of a reimbursement methodology using
NADAC for drug ingredient reimbursement. For drugs without a
NADAC rate, HHSC proposes the use of wholesale acquisition
cost (WAC) minus a percentage for brand and generic drugs.
The proposed rule amendments replace references to estimated
acquisition cost with acquisition cost, but the adoption of the
NADAC methodology is not reflected in the amendments, as the
current rule allows for the use of NADAC. The current rule also
allows for the use of WAC, as HHSC receives WAC from First
Databank.
In addition to the adoption of NADAC and WAC minus a percentage for certain drugs, HHSC also proposes to establish two new
acquisition costs that are based on NADAC: LTCPAC and SPAC,
to reimburse drug claims submitted by long term care pharmacies and specialty drug pharmacies respectively. These changes
are reflected in the rule with the addition of LTCPAC and SPAC
in the definition of acquisition cost. HHSC will no longer use direct price to chain pharmacy or the maximum allowable cost for
multiple source drugs as acquisition costs.
Furthermore, CMS suggests that moving from an estimated pricing methodology to one that is actual acquisition cost-based will
impact the balance of overall pharmacy reimbursement, thereby
requiring states to concurrently reevaluate the dispensing fee.
While this change is not reflected in the proposed rule amendments, VDP did reevaluate and will increase the dispensing fee
amount on the effective date of the proposed rule, based on Myers & Stauffer's cost of dispensing study. These adjustments
will help offset the impact of the proposed ingredient drug pricing changes.
Section-by-Section Summary
Proposed amended §354.1835 adds a reference to proposed
§354.1868 that allows for an exception during a disaster to the
requirement that pharmacies must enter the identification number of the prescriber, as listed with the appropriate medical specialty board, on each claim.
Proposed amended §354.1851(a) removes outdated language
and clarifies that substitution of one drug for another in a prescription must follow all state and federal rules and laws.
Proposed amended §354.1851(b) clarifies that pharmacies
may dispense interchangeable biological products, as allowed
by House Bill 751, 84th Legislature, Regular Session, 2015,
and clarifies that HHSC pays pharmacy claims based on the
acquisition cost rather than the estimated acquisition cost of the
drug when generic equivalents are dispensed.
Proposed deleted §354.1851(c) removes the requirement that
an authorized drug substitution be completely documented on
the prescription, as this requirement now falls under the general
requirement in subsection (a) of this section that substitutions
must meet all state and federal rules and laws.
Proposed amended §354.1863 adds subsection (c) to clarify that
prescriptions filled in a disaster, under proposed new §354.1868,
are not subject to the prescription requirements in subsection
(b) of this section. The amendments to this rule also include
nonsubstantive corrections and language changes.
Proposed new §354.1868 states that HHSC will reimburse pharmacies for refill medications dispensed during a declared disaster without having prescriber authorization if certain conditions
are met, and clarifies that pharmacists must follow state law and
Texas State Board of Pharmacy rules pertaining to these situations.
Proposed amended §354.1901(a) removes a reference to the
Direct Price to Chain Pharmacy (DPCP) price, since this price
will no longer be used.
Proposed amended §354.1901(b) updates the name of the
pharmacy provider procedures manual and adds an exception
to the requirement that providers must dispense the quantity
prescribed or ordered by the prescriber, since proposed new
§354.1868 limits prescriptions dispensed during a declared
disaster to 30 days.
Proposed amended §354.1901(e) replaces estimated acquisition cost with acquisition cost; clarifies that the acquisition cost
may be determined by sources other than HHSC in accordance
with 1 TAC §355.8541; and replaces the term "provider's dispensing fee" with "professional dispensing fee."
Proposed amended §354.1921(c)(2)(A)-(D) repeals the requirement that drug manufacturers submit to HHSC drug price
changes requested in the Price Certification section of the
Certification of Information and adds a requirement that drug
manufacturers submit these drug price changes only when
requested by HHSC, within 10 calendar days of receiving the
request.
Proposed amended §354.1921(g) removes references to DPCP
and adds definitions of long term care facility, long term care
pharmacy, long term care pharmacy acquisition cost, specialty
pharmacy, and specialty pharmacy acquisition cost.
Proposed amended §354.1923(b)(4) removes a reference to
WEAC, DPCP, and DEAC being determined based on Reported
Manufacturer Pricing and a review of published and non-published prices since VDP is adopting NADAC and WAC as the
basis of cost.
Proposed amended §354.1927(2)(B) deletes a reference stating
that the Commission establishes the cost of a drug in the event
a cost for the drug is not reported to the Commission.
Fiscal Note
Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that during the first 5-year period the new
rule and amended rules are in effect, there could be a fiscal impact to state government to implement the rules as proposed.
The rule amendments related to S.B. 460 have the potential to
increase costs of state government. The potential impact is dependent on declarations of disasters and on the quantity of additional prescriptions filled under disaster conditions described
in the bill. Therefore, HHSC lacks sufficient data to provide an
estimate of additional costs.
pharmacies to provide the prescriptions described during a declared disaster.
Public Benefit and Costs
Kay Ghahremani, Associate Commissioner for Medicaid/CHIP,
has determined that for each year of the first five years the new
rule and amended rules are in effect, the public will benefit from
the adoption of the rules. In the event of a declared disaster,
pharmacies will be able to dispense certain medications without
the required prescription on file and will ensure that individuals
in need of medications will receive uninterrupted services. Also,
implementation of the amended rules will enhance the accuracy
of reimbursements for drug ingredient costs, thereby resulting in
a more responsible and effective use of taxpayer dollars.
Ms. Rymal has determined there are no anticipated economic
costs to persons who are required to comply with the new rule
and amended rules. There is no anticipated negative impact on
local employment.
Regulatory Analysis
HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government
Code. A "major environmental rule" is defined to mean a rule the
specific intent of which is to protect the environment or reduce
risk to human health from environmental exposure and that may
adversely affect, in a material way, the economy, a sector of the
economy, productivity, competition, jobs, the environment, or the
public health and safety of a state or a sector of the state. This
proposal is not specifically intended to protect the environment
or reduce risks to human health from environmental exposure.
Takings Impact Assessment
HHSC has determined that this proposal does not restrict or limit
an owner's right to his or her property that would otherwise exist
in the absence of government action and, therefore, does not
constitute a taking under §2007.043 of the Government Code.
Public Comment
Written comments on the proposal may be submitted to Stacey
Johnston, Senior Policy Analyst, Vendor Drug Program, Health
and Human Services Commission, P.O. Box 85200, Mail Code
2250, Austin, Texas 78708-5200; by fax to (512) 730-7483; or
by e-mail to [email protected] within 30 days of
publication of this proposal in the Texas Register.
Public Hearing
A public hearing is scheduled from 10:00 to11:00 a.m. on
November 23, 2015, in the Brown-Heatly Public Hearing Room
located at 4900 North Lamar Boulevard, Austin, Texas 78751.
Persons requiring further information, special assistance, or
accommodations should contact Kristine Dahlmann at (512)
462-6299.
DIVISION 2.
ADMINISTRATION
There is no anticipated impact to the costs and revenues of local
governments.
1 TAC §354.1835
Small and Micro-business Impact Analysis
The amendment is proposed under Texas Government Code
§531.033, which provides the Executive Commissioner of HHSC
with broad rulemaking authority; and Texas Human Resources
Code §32.021 and Texas Government Code §531.021(a), which
provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.
HHSC has determined that there will be no adverse effect on
small businesses or micro-businesses to comply with the new
rule and amended rules, as there is no requirement to alter current business practices as a result of the new rule and amended
rules. The changes made by S.B. 460 permit but do not require
Statutory Authority
PROPOSED RULES
October 30, 2015
40 TexReg 7507
The proposed amendment affects Texas Human Resources
Code Chapter 32 and Texas Government Code Chapter 531. No
other statutes, articles, or codes are affected by this proposal.
§354.1835. Prescriber Identification Numbers.
Unless an exception is needed during a disaster, as described in
§354.1868 of this subchapter (relating to Exceptions in Disasters),
vendors [Vendors] must enter the identification number of the prescriber, as listed with the appropriate medical specialty board, on each
claim.
to adopt.
2015.
TRD-201504445
Karen Ray
Chief Counsel
♦
DIVISION 3.
♦
Karen Ray
Chief Counsel
♦
DIVISION 4.
♦
♦
LIMITATIONS
1 TAC §354.1863, §354.1868
Statutory Authority
The amendment and new rule are proposed under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Texas
Human Resources Code §32.021 and Texas Government Code
§531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.
The proposed rules affect Texas Human Resources Code Chapter 32 and Texas Government Code Chapter 531. No other
statutes, articles, or codes are affected by this proposal.
§354.1863. Prescription Requirements.
(a) Payment for pharmaceuticals can be made only when these
pharmaceuticals are prescribed by a practitioner licensed to prescribe
legend drugs.
♦
MEDICATIONS
1 TAC §354.1851
Statutory Authority
§354.1851. Substitution of One Drug for Another in a Prescription.
(a) Substitution of one drug for another in a prescription must
follow all state and federal rules and laws. [Substitution is legal only
if and when authorized by the the prescribing physician.]
(b) When generic equivalents or interchangeable biological
products are dispensed, the Health and Human Services Commission
pays the claim based on the acquisition cost (AC), in accordance with
§355.8541 of this title (relating to Legend and Nonlegend Medications) [the estimated acquisition cost of the drug used is claimed].
[(c) Substitution authorization must be completely documented on the prescription.]
to adopt.
(b) The pharmacist must ensure that the original prescription
conforms to the Texas State Board of Pharmacy rules concerning the
records to be maintained by a pharmacy. A signed prescription must
be maintained in the dispenser's file and available for audit at any reasonable time. Telephone orders, where legal, must be documented in
writing. The name of the prescriber and the signature of the dispensing
pharmacist must be documented. If a pharmacy maintains prescription
records in a data processing system, a hard copy of the prescription
must be retained on file unless the daily log includes all the information
required in §354.1901 [§351.1901] of this title (relating to Pharmacy
Claims). The provider must conform to all regulations issued by the
Drug Enforcement Administration and Texas State Board of Pharmacy
concerning the recording of prescriptions in a data processing system.
(c) Pharmaceuticals dispensed in disasters under §354.1868 of
this subchapter (relating to Exceptions in Disasters) are not subject to
the requirements in subsection (b) of this section.
(d) [(c)] Prescriptions [Effective April 1, 2008, prescriptions]
for covered pharmaceuticals submitted to a pharmacy in written form
are [will be] eligible for payment only if the prescription is executed
on tamper-resistant prescription paper, as required by §1903(i)(23) of
the Social Security Act (42 U.S.C. §1936b(i)(23)).
(e) [(d)] The dispensing pharmacist must date the prescription
and initial the refills.
§354.1868. Exceptions in Disasters.
(a) In the case of a disaster, a pharmacy is reimbursed for dispensing a refill medication without prescriber authorization if:
(1) failure to refill the prescription might result in an interruption of a therapeutic regimen or create patient suffering;
(2) the natural or manmade disaster prohibits the pharmacist from being able to contact the prescribing practitioner or original
filling pharmacy;
2015.
TRD-201504446
(3) the Governor has declared a state of disaster under
Chapter 418, Texas Government Code; and
40 TexReg 7508
October 30, 2015
Texas Register
(4) the Texas State Board of Pharmacy has notified pharmacies that pharmacists may dispense up to a 30-day supply of a dangerous drug, as defined in Chapter 483 of the Texas Health and Safety
Code.
(b) Protocols for drugs dispensed in disasters must conform to
state law and Texas State Board of Pharmacy rules.
to adopt.
2015.
DIVISION 6.
♦
♦
(d) The provider must submit claims as the prescription is dispensed through the on-line system. Providers who supply a large volume of medications to nursing facility recipients may submit these
claims through their data transmission company after the point of sale.
to adopt.
PHARMACY CLAIMS
1 TAC §354.1901
Statutory Authority
2015.
§354.1901.
(c) If all necessary information is not supplied, a claim will not
be processed or paid.
(e) Overcharged prescription claims are not denied. The Commission pays the appropriate drug cost. The appropriate drug cost is the
[estimated] acquisition cost, as determined by the Commission or other
source in accordance with §355.8541 of this title (relating to Legend
and Nonlegend Medications), plus the professional [provider's] dispensing fee. The amount claimed and the amount paid are shown on
the payment register.
TRD-201504447
Karen Ray
Chief Counsel
♦
Disasters) [Pharmacy Provider Handbook]. Where the actual quantity
dispensed deviates from the prescribed quantity, the provider must bill
for the amount actually dispensed. The quantity of drugs must be entered in the metric decimal quantity field. The quantity shown as the
metric decimal quantity unit must be calculated after referencing the
pricing unit shown in the Texas Drug Code Index.
Pharmacy Claims.
(a) To receive payment from the Health and Human Services
Commission (Commission), the provider must submit a pharmacy
claim through the electronic adjudication system. A separate entry is
submitted for each prescription or refill. For the original dispensing
and each subsequent refill, the provider indicates on the corresponding
pharmacy claim submitted to the Commission the usual and customary
price, the purchasing method, and the National Drug Code (NDC).
[All drug purchases through a central purchasing agreement or from a
central purchasing entity must be billed to the Commission as Direct
Price to Chain Pharmacy, as required by §355.8541 of this title (relating to Legend and Nonlegend Medications).] Claims received over 90
days after the date of service are rejected. For claims on behalf of an
individual who has applied for Medicaid coverage but has not yet been
assigned a recipient number on the date of service, the filing period
does not commence until the date the individual has been assigned a
number. The requirements in §354.1863 of this subchapter (relating
to Prescription Requirements) are also waived for retroactive claims.
The provider must ensure, however, that a prescription submitted for
a prior eligibility period conformed to Texas State Board of Pharmacy
and Commission regulations on the date of service, or a claim cannot
be submitted.
(b) Providers must dispense the quantity prescribed or ordered
by the prescriber except as limited by the policies and procedures described in the Commission's pharmacy provider procedure manual, or
as allowed by §354.1868 of this subchapter (relating to Exceptions in
TRD-201504448
Karen Ray
Chief Counsel
♦
♦
♦
DIVISION 7. TEXAS DRUG CODE
INDEX--ADDITIONS, RETENTIONS, AND
DELETIONS
1 TAC §§354.1921, 354.1923, 354.1927
Statutory Authority
The amendments are proposed under Texas Government Code
The proposed amendments affect Texas Human Resources
§354.1921. Addition of Drugs to the Texas Drug Code Index.
(a) A drug company that has a valid rebate agreement under 42
U.S.C. §1396r-8 may apply to the Health and Human Services Commission (Commission) to add a drug to the Texas Drug Code Index
(TDCI). The term "drug company" includes any manufacturer, repackager, or private labeler.
(b) To apply for the addition of a drug to the TDCI, a drug
company must complete each section of the Certification of Informa-
PROPOSED RULES
October 30, 2015
40 TexReg 7509
tion for the Addition of a Drug Product to the TDCI provided by the
Commission.
(c)
A drug company must also:
(1) update the Commission with changes to formulation,
product status, or availability; and
(2) submit changes to the prices requested in the Price Certification section of the Certification of Information, if requested by the
Commission, within 10 calendar days of receiving the request. [as follows:]
[(A) send all price updates, except Average Manufacturer Price (AMP) updates, to the Commission by the 10th day of each
month.]
[(i) If a price change occurs on or before the 10th
day of the month, send the price update by the 10th day of the next
month (for example, if the price change occurs on August 8, the due
date is the 10th day of September).]
[(ii) If a price change occurs after the 10th day of the
month, send the price update by the 10th day of the second month after
the month in which the price change occurs (for example, if the price
change occurs on August 11, the due date is the 10th day of October);]
[(B) when submitting price updates, include current
information for each price on the Certification of Information that
changed during the preceding month;]
[(C) update Average Manufacturer Price (AMP) prices
quarterly; and]
[(D) if required by the Commission, update pricing on
a more frequent basis as circumstances warrant.]
(d) Sources other than drug companies may request the addition of a drug not currently listed in the TDCI. If the request is not
from a drug company, the Commission may request that the manufacturer submit a Certification of Information as described in subsection
(b) of this section.
(e) The drug company and other sources, if applicable, are entitled to receive notification of approved or denied Certifications of Information. If a Certification of Information is denied, the Commission
will state the reasons for the denial.
(f) Notwithstanding any other state law, pricing information
reported by a drug company under this subchapter is confidential and
must not be disclosed by the Commission, its agents, contractors, or
any other State agency in a format that discloses the identity of a specific manufacturer or labeler, or the prices charged by a specific manufacturer or labeler for a specific drug, except as necessary to permit the
Attorney General to enforce state and federal law.
(g) Definitions. The following words and terms, when used in
this chapter and in Chapter 355 of this title (relating to Reimbursement
Rates), have the following meanings unless the context clearly indicates otherwise.
(1) Average Manufacturer Price (AMP)--The average manufacturer price as defined in 42 USC §1396r-8(k)(1).
(2) Average Wholesale Price (AWP)--The average wholesale price for a drug as published in a price reporting compendium such
as First DataBank or Medispan.
(3) Customary Prompt Pay Discount--Any discount off the
purchase price of a drug routinely offered by the drug company to a
wholesaler or distributor for prompt payment of purchased drugs within
40 TexReg 7510
October 30, 2015
Texas Register
a specified time frame and consistent with customary business practices
for payment.
[(4) Direct Price to Chain Pharmacy--The amount paid by
a chain pharmacy for a product when purchased directly from a drug
company, whether delivered directly to a chain warehouse facility or
indirectly through a wholesaler or a distributor. The price should be net
of price concessions. In reporting this price point to the Commission,
if the price is reported as a range, the weighted average of these prices,
based on unit sales, must be included. The following prices should be
excluded from this price point:]
[(A) prices excluded from the determination of Medicaid Best Price at 42 C.F.R. §447.505; and]
[(B) prices to entities participating in the Health Resources and Services Administration (HRSA) 340b discount program.]
(4) [(5)] Direct Price to Long Term Care Pharmacy--The
amount paid by a pharmacy servicing a long term care facility, including a nursing facility, assisted living facility, and skilled nursing facility. The price should be net of price concessions. In reporting this
price point to the Commission, if the price is reported as a range, the
weighted average of these prices, based on unit sales, must be included.
The following prices should be excluded from this price point:
(A) prices excluded from the determination of Medicaid Best Price at 42 C.F.R. §447.505; and
(B) prices to entities participating in the Health Resources and Services Administration (HRSA) 340b discount program.
(5) [(6)] Direct Price to Pharmacy--The amount paid for
a product by a pharmacy when purchased directly from a drug company. This price should be net of Price Concessions. In reporting this
price point to the Commission, if the price is reported as a range, the
weighted average of these prices, based on unit sales, must be included.
The following prices should be excluded from this price point:
(A) prices excluded from the determination of Medicaid Best Price at 42 C.F.R. §447.505;
(B) prices to entities participating in the Health Resources and Services Administration (HRSA) 340b discount program;
and
(C) [Direct Prices to a Chain Pharmacy or] Direct Prices
to Long Term Care Pharmacy.
(6) [(7)] Gross Amount Due--Has the meaning as defined
by the National Council for Prescription Drug Programs.
(7) Long term care facility--Facility that provides long
term care services, such as a nursing home, skilled nursing facility,
assisted living facility, group home, hospice facility, or intermediate
care facility for individuals with an intellectual disability or related
condition (ICF/IID).
(8) Long term care pharmacy--A pharmacy for which the
total Medicaid claims for prescription drugs to residents of long term
care facilities exceeds 50 percent of the pharmacy's total Medicaid
claims per year. Long term care pharmacies are typically not open to
the public for walk-in business.
(9) Long term care pharmacy acquisition cost (LTCPAC)-The acquisition cost determined by the Commission for a drug product
purchased by a long term care pharmacy.
(10) [(8)] "may apply to the Commission"--The act of applying to have a drug included on the TDCI. This includes completing
the Certification of Information for the Addition of a New Drug Product
to the Texas Drug Code Index, submitting National Drug Code (NDC)
changes, submitting price updates, and submitting additional package
sizes for a drug that is already included on the TDCI.
(11) [(9)] National Drug Code (NDC)--The 11-digit numerical code established by the U.S. Food and Drug Administration
that indicates the labeler, product, and package size.
(12) [(10)] Pharmacy--An entity with an approved community pharmacy license or an institutional pharmacy license.
(13) [(11)] Price concession--An action by a manufacturer
(other than a customary prompt-pay discount as defined in this section)
that has the effect of reducing the net cost of a product to a purchaser.
The term includes discounts, rebates, billbacks, chargebacks, or other
adjustments to pricing or payment terms. Lagged price concessions
must be accounted for in the Reported Manufacturer Pricing by operation of a 12-month average estimation methodology as described in
42 C.F.R. §414.804. For new, at launch products, if a manufacturer has
forecasted price concessions, the initial Reported Manufacturer Pricing
should reflect this internal business information.
(14) [(12)] Price to Wholesaler/Distributor--The amount
paid by a wholesaler or a distributor. The price should be net of price
concessions. In reporting this price point to the Commission, if the
price is reported as a range, the weighted average of these prices,
based on unit sales, must be included. The following prices should be
excluded from this price point:
(A) prices excluded from the determination of Medicaid Best Price at 42 C.F.R. §447.505; and
(B) prices to entities participating in the Health Resources and Services Administration (HRSA) 340b discount program.
(15) [(13)] Reliable Sources--Sources including other state
or federal agencies and pricing services, as well as verifiable reports
by contracted providers and Vendor Drug Program formulary and field
staff.
(16) [(14)] Reported Manufacturer Pricing--Pricing information submitted to the Commission by a drug company on a Certification of Information, or in subsequent price updates as described in
subsections (b) and (c) of this section. This includes: Average Wholesale Price, Average Manufacturer Price, Price to Wholesaler/Distributor, Direct Price to Pharmacy, [Direct Price to Chain Pharmacy,] and
Direct Price to Long Term Care Pharmacy. If a drug company does not
have a single price for a price point, it must report a range of prices.
If a drug company reports a range of prices, it must also provide the
weighted average of these prices based on unit sales.
(17) Specialty pharmacy--A pharmacy that meets all of the
following criteria:
(A) total Medicaid claims for specialty drugs, as described in §354.1853 of this subchapter (relating to Specialty Drugs),
exceeds 10 percent of the pharmacy's total Medicaid claims per year;
(B) obtains volume-based discounts or rebates on specialty drugs from manufacturers or wholesalers; and
(C) delivers at least 80 percent of dispensed prescriptions by shipment through the U.S. Postal Service or other common
carrier to customers or healthcare professionals (including physicians
and home health providers).
(18) Specialty pharmacy acquisition cost (SPAC)--The acquisition cost determined by the Commission for a drug product purchased by a specialty pharmacy.
[(15) Warehouse Purchases--Purchases through a central
purchasing agreement or from a central purchasing entity. Warehouse
purchases will be reimbursed at Direct Price to Chain Pharmacy.]
(19) [(16)] Weighted AMP (Average Manufacturer Price)-The Weighted AMP (Average Manufacturer Price) as contemplated in
42 U.S.C. §1396r-8(b)(3) and (e), and as reported by the Centers for
Medicare & Medicaid Services.
(20) [(17)] Wholesaler Cost--The net cost of a product to
a wholesaler; equivalent to Price to Wholesaler/Distributor and cost to
wholesaler.
§354.1923. Review and Evaluation.
(a) The Health and Human Services Commission (Commission) reviews Certifications of Information to determine the need for a
drug to be added to the Texas Drug Code Index and to determine the
need for restrictions, when appropriate. In determining need, the Commission considers the following:
(1) expansion of the prescriber's armamentarium by a new
drug entity or an additional multiple source drug;
(2) the predominant use of the drug in an outpatient setting;
(3) the cost of the drug to pharmacies compared to:
(A)
relevant costs as published in price reporting com-
pendia;
(B) the drug company's prices for the drug in other
packaging sizes;
(C) the Average Manufacturer Price (AMP) as defined
by 42 U.S.C. 1396r-8(k), as amended; and
(D)
other generically equivalent drug products; and
(4) whether the drug is part of a category that is subject to
inclusion in a preferred drug list (PDL) under §354.1924 of this division (relating to Preferred Drug List). If a drug is subject to inclusion
in the PDL, the manufacturer or labeler's provision of supplemental
rebates will be considered when determining whether the product is
subject to prior authorization.
(b) The Commission may return a Certification of Information
for any of the following reasons:
(1) discovery of false, erroneous, or incomplete information or documentation in the Certification of Information;
(2) failure of the drug company to provide the Commission
with documentation of the:
(A) approved New Drug Application or Abbreviated
New Drug Application, if applicable; or
(B) Food and Drug Administration (FDA) approval for
marketing;
(3) failure of the drug company to provide the Commission
with the National Drug Code, as defined by and filed with the FDA, for
the drug product as shown on the drug product container sold to the
pharmacy; or
(4) failure of the drug company to provide the Commission with current prices for the pricing points on the Certification of
Information. [The Wholesale Estimated Acquisition Cost, Direct Price
to Chain Pharmacy, and Direct Estimated Acquisition Cost are determined based on Reported Manufacturer Pricing and a review of published and non-published prices.]
(c) The Commission may deny a request if it determines that
the drug is included in one or more of the following classes:
PROPOSED RULES October 30, 2015
40 TexReg 7511
(1) amphetamines, when used for weight loss, and obesity
control drugs;
(2)
appliances;
(3)
cosmetics;
(4)
DESI-ineffective products;
(4) Effective upon notification, the Commission deletes
discontinued or permanently recalled drugs. This provision applies to:
(5)
diagnostic aids;
(6)
durable medical equipment (rental or purchase);
(7)
elastic stockings;
(8)
experimental drugs;
(9)
fertility drugs;
(10)
first aid supplies;
(11)
immunizing agents;
(12)
irrigating sets;
(13)
IV sets;
(14)
medical devices;
(15)
medical supplies;
(16)
oxygen;
(3) The Commission may delete a legend drug if the same
drug becomes available as an over-the-counter drug.
(A)
drugs permanently recalled by the manufacturer;
(B)
drugs permanently recalled by the FDA; and
(C)
drugs no longer manufactured.
(5) The Commission deletes drugs for which federal
matching funds are no longer available.
(6) The Commission may delete a drug if:
(A)
there is no federal rebate for the drug;
(B) the drug no longer meets the definition of a covered,
outpatient drug;
(C) the drug has been designated to an excludable class
of drugs; or
(D) the classification of the drug changes to a class
listed in §354.1923(c) of this division (relating to Review and Evaluation).
(17) products unsuitable for use outside of physician offices or health care facilities;
to adopt.
(18)
shampoos, unless medicated for parasite control;
(19)
skin lotions and creams (nonlegend cosmetic types);
2015.
(20)
soaps and soap substitutes;
(21)
supports and suspensories;
TRD-201504449
Karen Ray
Chief Counsel
(22)
syringes and needles;
(23)
unit-dose or convenience packaging;
(24)
vitamin and antianemia combinations;
(25)
medical foods; and/or
(26)
nutritional supplements.
§354.1927. Retention and Deletion of Drugs.
The Health and Human Services Commission (Commission) reviews
the Texas Drug Code Index to evaluate the need for retaining or deleting
drugs according to the following criteria.
(1) If the drug company fails to remove from pharmacies
any drug recalled by the Food and Drug Administration (FDA) or fails
to meet other federal requirements, the Commission has the right to
request that the U.S. Department of Health and Human Services (HHS)
allow deletion of the drug. If the drug company repeatedly fails to
meet FDA or other federal requirements, the Commission may request
permission to delete all drugs manufactured by the company.
(2)
of a drug if:
The Commission may request that HHS allow deletion
(A) the drug company or companies' actions with respect to a drug violate state or federal law; or
(B) the drug company fails to provide to the Commission the information required under §354.1921(c) of this division (relating to Addition of Drugs to the Texas Drug Code Index). [If the
Commission retains a drug for which the cost was not reported, the
Commission establishes the cost.]
40 TexReg 7512
October 30, 2015
Texas Register
♦
♦
♦
CHAPTER 355. REIMBURSEMENT RATES
SUBCHAPTER J. PURCHASED HEALTH
SERVICES
DIVISION 28. PHARMACY SERVICES:
REIMBURSEMENT
The Texas Health and Human Services Commission (HHSC)
proposes to amend §355.8541, Legend and Nonlegend Medications; §355.8546, Brand-Name Drugs; §355.8547, Reimbursement for Compound Prescriptions; §355.8548, 340B Covered
Entities; and §355.8551, Dispensing Fee, to replace the estimated acquisition cost (EAC) with the acquisition cost, which includes the National Average Drug Acquisition Cost (NADAC),
long term care pharmacy acquisition cost (LTCPAC), and specialty pharmacy acquisition cost (SPAC), for drug ingredient reimbursement. HHSC also proposes to repeal §355.8545, Texas
Maximum Allowable Cost, to delete the Texas Maximum Allowable Cost drug pricing methodology.
These proposed rule changes only affect claims processed
through the HHSC Vendor Drug Program (VDP), which includes
fee-for-service (FFS) Medicaid and the Kidney Health Care,
Children with Special Health Care Needs, and Texas Women's
Health programs.
Concurrently, HHSC is proposing amendments to §§354.1851,
354.1901, 354.1921, 354.1923, and 354.1927 of this title (relating to Pharmacy Services). The proposed amendments appear
elsewhere in this issue of the Texas Register.
Background and Justification
The 2016-17 General Appropriations Act (House Bill 1, 84th Legislature, Regular Session, 2015, Article II, HHSC, Rider 50) requires HHSC to achieve cost savings through initiatives such as
increasing efficiencies in VDP.
In a proposed Medicaid Pharmacy Outpatient Rule published
by the Centers for Medicare & Medicaid Services (CMS) (CMS2345-P) to amend 42 CFR part 447, subpart I, published on February 2, 2012, CMS proposes to replace estimated acquisition
cost with actual acquisition cost as the basis for state Medicaid
pharmacy ingredient cost reimbursement. In 2014, HHSC contracted with Myers & Stauffer to conduct studies to identify the
acquisition cost being paid by Texas pharmacies to procure drug
products, determine how much it costs them to dispense medications per prescription, and evaluate the impact of the potential
adoption of the new federal upper limit prices. Myers & Stauffer recommended the adoption of a reimbursement methodology using the National Average Drug Acquisition Cost (NADAC)
for drug ingredient reimbursement. For drugs without a NADAC
rate, the use of wholesale acquisition cost (WAC) minus a percentage for brand and generic drugs was recommended. Based
on Myers & Stauffer's reports, HHSC also proposes to establish
two new acquisition costs that are based on NADAC, long term
care pharmacy acquisition cost and specialty pharmacy acquisition cost, to reimburse drug claims submitted by long term care
pharmacies and specialty drug pharmacies.
In addition, CMS suggests that moving from an estimated pricing methodology to one that is actual acquisition cost-based will
impact the balance of overall pharmacy reimbursement, thereby
requiring states to concurrently reevaluate the dispensing fee.
VDP did reevaluate and will increase the dispensing fee amount
on the effective date of the proposed rule, based on Myers &
Stauffer's cost of dispensing study. These adjustments will help
offset the impact of the proposed ingredient drug pricing changes
and are included in the proposed rule's fiscal impact.
The proposed rule amendments incorporate these recommendations, in addition to making updates to outdated language and
repealing language that is no longer applicable to the program.
Section-by-Section Summary
Proposed amended §355.8541(a) adds nonlegend drugs because reimbursement for nonlegend drugs will be identical to
reimbursement for legend drugs.
Proposed amended §355.8541(a)(1), (b), (b)(1), and (b)(2) replaces HHSC's best estimate of acquisition cost (EAC) with acquisition cost (AC). Proposed amended §355.8541(a)(1) also reflects the proposed change to §355.8551, which renames "dispensing fee" to "professional dispensing fee."
Proposed deleted §355.8541(b)(1)(C) removes direct price to
chain pharmacy (DPCP) from the definition of AC, as the DPCP
methodology will no longer be used.
Proposed deleted §355.8541(b)(1)(D) removes maximum allowable cost (MAC) for multiple source drugs from the definition of
AC, as the MAC methodology for multiple source drugs will no
longer be used.
Proposed new §355.8541(b)(1)(C) adds long term care pharmacy acquisition cost (LTCPAC) to the definition of AC.
Proposed new §355.8541(b)(1)(D) adds specialty pharmacy acquisition cost (SPAC) to the definition of AC.
Proposed deleted §355.8541(b)(3) removes the requirement
that all drug purchases through a central purchasing agreement
or from a central purchasing entity must be billed to HHSC as
DPCP. The rule is renumbered.
Proposed amended §355.8541(b)(3) adds LTCPAC and SPAC
to the list of acquisition costs and clarifies that WEAC, LTCPAC,
and SPAC may be established by entities other than HHSC.
Proposed deleted §355.8541(b)(5) removes the requirement
that WEAC may not exceed the Wholesaler Cost plus an
amount representing wholesaler operating costs and profits, as
NADAC includes wholesaler operating costs and profits. The
rule is renumbered.
Proposed deleted §355.8541(b)(7) removes the reference to
DPCP because this methodology will no longer be used.
Proposed deleted §355.8541(c) removes a subsection related
to nonlegend drugs, because §355.8541(a) and (b) now apply
to nonlegend drugs. The rule is re-lettered.
Proposed repealed §355.8545 is deleted because Texas Maximum Allowable Cost (MAC) will no longer be used.
Proposed amended §355.8546(a) removes the reference to
maximum allowable cost, as this will no longer be used; clarifies
that physicians who want to dispense a brand name for a
prescription for a multisource drug must write the phrase "brand
necessary" on the prescription; and clarifies that a pharmacy
provider must enter "1" in the field rather than "6" for "Dispense
as Written."
Proposed new §355.8546(c) includes existing language that is
in proposed repealed §355.8545 and clarifies that a pharmacy
provider that dispenses a brand name drug that is subject to
a NADAC generic reimbursement limit and bills HHSC for the
service must accept Medicaid reimbursement as payment in full.
Proposed amended §355.8547 replaces the estimate of acquisition cost with acquisition cost, makes a non-substantive change
to replace "the department" with HHSC, and renames "dispensing fee" to "professional dispensing fee."
Proposed amended §355.8548(c) is amended to remove a reference to Texas MAC and adds the term "professional" to dispensing fee to align the term with the proposed amendments in
§355.8541.
Proposed amended §355.8551 adds "professional" to the rule
title and corresponding sections within the rule and removes
the reference to MAC. The rule is renumbered to reflect these
amendments.
Proposed amended §355.8551(a) adds a definition for "acquisition cost," deletes a definition for "estimated acquisition cost,"
adds a reference to 42 C.F.R. §447.502 in the definition for "professional dispensing fee," and clarifies that the definition of "professional dispensing fee" includes the pharmacist's professional
services.
Proposed amended §355.8551 (b) eliminates unnecessary verbiage from the rule and adds the term "professional" to dispensing fee.
PROPOSED RULES
October 30, 2015
40 TexReg 7513
Proposed deleted §355.8551(c) removes the language that allows HHSC to make inflation adjustments, as this practice was
not required by law and has not been undertaken. The rule is
re-lettered.
HHSC has determined that this proposal does not restrict or limit
an owner's right to his or her property that would otherwise exist
in the absence of government action and, therefore, does not
constitute a taking under §2007.043 of the Government Code.
Proposed amended §355.8551 (e) adds the term "professional"
to dispensing fee to align the term with the proposed amendments in §355.8541.
Public Comment
Fiscal Note
Greta Rymal, Deputy Executive Commissioner for Financial
Services, has determined that during the first 5-year period the
amended and repealed rules are in effect, there will be a net
reduction of costs to state government. The anticipated cost
reduction results from decreased costs for drug acquisition, net
of a small increase to dispensing fees implemented concurrently, as discussed in the Background and Justification section
of the preamble. The expected savings are ($676,327) General
Revenue (GR) (($1,577,623) All Funds (AF)) for state fiscal
year (SFY) 2016, ($263,261) GR (($608,133) AF) for SFY 2017,
($234,269) GR (($540,663) AF) for SFY 2018, ($266,497) GR
(($615,040) AF) for SFY 2019, and ($304,914) GR (($703,701)
AF) for SFY 2020.
The costs and revenues of local governments will not be affected.
Small Business and Micro-business Impact Analysis
Ms. Rymal has also determined that there may be an effect
on small businesses or micro businesses to comply with the
amended rules. There are an estimated 1,231 pharmacies operating that qualify as small businesses or micro-businesses.
HHSC expects the individual impact to these small businesses
and micro-businesses to be small; totaling around $41.39 per
year. There are no alternative methods of achieving the purpose
of the proposed rule that are consistent with the health, safety,
environmental, and economic welfare of the state.
Public Benefit and Costs
Kay Ghahremani, Associate Commissioner for Medicaid/CHIP,
has determined that for each year of the first five years the
amended rules are in effect, the public will benefit from the
adoption of the rules. HHSC anticipates that enforcement of
the amended rules as proposed will enhance the accuracy of
reimbursements for drug ingredient costs thereby resulting in a
more responsible and effective use of taxpayer dollars.
Ms. Rymal has determined there are no anticipated economic
costs to persons who are required to comply with the amended
rules. There is no anticipated negative impact on local employment.
Written comments on the proposal may be submitted to Stacey
Johnston, Senior Policy Analyst, Vendor Drug Program, Health
and Human Services Commission, P.O. Box 85200, Mail Code
2250, Austin, Texas 78708-5200; by fax to (512) 730-7483; or
by e-mail to [email protected] within 30 days of
publication of this proposal in the Texas Register.
Public Hearing
A public hearing is scheduled from 8:45 to 9:45 a.m. on November 23, 2015, in the Brown-Heatly Public Hearing Room located
at 4900 North Lamar Boulevard, Austin, TX 78751. Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) 462-6299.
1 TAC §§355.8541, 355.8546 - 355.8548, 355.8551
Statutory Authority
The amendments are proposed under Texas Government Code
Code §32.021 (and Texas Government Code §531.021(a),
which provide HHSC with the authority to administer the federal
medical assistance (Medicaid) program in Texas).
The proposed amendments affect Texas Human Resources
§355.8541. Legend and Nonlegend Medications.
(a) Legend and nonlegend drug reimbursement. A pharmaceutical provider is reimbursed for legend and nonlegend drugs based
on the lesser of the:
(1) acquisition cost (AC) plus the Health and Human Services Commission's (HHSC's) [best estimate of acquisition cost (EAC)
plus HHSC's] currently established professional dispensing fee per prescription;
usual and customary price charged the general public;
(3)
Gross Amount Due, if provided.
(b) Acquisition cost (AC). The AC is an [Estimated acquisition
cost (EAC). The EAC is HHSC's best] estimate of prices generally and
currently paid in the market.
(1)
Regulatory Analysis
HHSC has determined that this proposal is not a "major environmental rule" as defined by §2001.0225 of the Texas Government
Code. A "major environmental rule" is defined to mean a rule the
specific intent of which is to protect the environment or reduce
risk to human health from environmental exposure and that may
adversely affect, in a material way, the economy, a sector of the
economy, productivity, competition, jobs, the environment, or the
October 30, 2015
The AC [EAC] is defined as the:
(A)
Texas Register
wholesale estimated acquisition cost (WEAC);
(B) direct estimated acquisition cost (DEAC), according to the pharmacist's usual purchasing source and the pharmacist's
usual purchasing quantity;
(C)
long term care pharmacy acquisition cost (LTC-
(D)
specialty pharmacy acquisition cost (SPAC).
[(C)
direct price to chain pharmacy (DPCP); or]
PAC); or
[(D)
source drugs.]
Takings Impact Assessment
40 TexReg 7514
(2)
or
maximum allowable cost (MAC) for multiple
(2) The AC [EAC] is verifiable by invoice audit conducted
by HHSC to include necessary supporting documentation that will verify the final cost to the provider.
[(3) All drug purchases through a central purchasing agreement or from a central purchasing entity must be billed to HHSC as
DPCP.]
(3) [(4)] The WEAC, LTCPAC, and SPAC are [is] established [by HHSC] using market or government sources, which include,
but are not limited to:
(A)
Reported Manufacturer Pricing;
(B) First Databank;
(C) Redbook;
(D) Weighted AMP, as published by the Centers for
Medicare & Medicaid Services (CMS);
(E) National Average Drug
(NADAC), as published by the CMS; or
(F)
Acquisition
Cost
face of the prescription. This procedure enables payment for the drug
at the more expensive brand name [estimated] acquisition cost. To
indicate this certification (override) on the pharmacy claim form, the
pharmacy provider must enter "1" ["6"] in the field for "Dispense as
Written." For telephone orders involving physician overrides, a written
prescription must be obtained from the prescribing physician within 30
days from the time the order was placed.
(b) A physician override for a prescription is valid only for
the life of the prescription. The life of the prescription is defined as
the original dispensing and any authorized refills, not to exceed eleven
refills or a twelve-month supply. The physician override cannot be
forwarded or transferred to any other prescription for the same drug.
(c) A pharmacy provider that dispenses a brand drug that is
subject to a generic reimbursement and bills HHSC for the service must
accept Medicaid reimbursement as payment in full. No additional dispensing fee or product cost amounts may be billed to the Medicaid
recipient.
§355.8547. Reimbursement for Compound Prescriptions.
Gold Standard.
[(5) The WEAC may not exceed the Wholesaler Cost, as
supplied by a drug company, plus an amount representing wholesaler
operating costs and profits. Wholesaler operating conditions may be
determined from information supplied to HHSC by drug companies,
wholesalers, or other reliable sources. Exceptions to general pricing
determinations may be made on certain drugs and/or drug categories
based on information from these same sources.]
Reimbursement for compounded prescriptions is based on [estimated]
acquisition cost of the ingredients used, verifiable by invoice audit, plus
HHSC's [the department's] currently established professional dispensing fee per prescription or the usual and customary price charged to
the general public, whichever is lower. Only drugs listed in the latest
revision of the Texas Drug Code Index are considered for reimbursement. There is no provision for a compounding fee over and above the
professional dispensing fee.
(4) [(6)] The DEAC is established by HHSC using direct
price information supplied by a drug company. Providers are reimbursed only at the DEAC on all drug products that are available from
select manufacturers/distributors who actively seek and encourage direct purchasing.
§355.8548. 340B Covered Entities.
[(7) The DPCP is established by HHSC using price information supplied by a drug company.]
(b) Definitions. For purposes of this section, the following
terms are defined as follows:
[(c)
Nonlegend drugs.]
[(1) Reimbursement for nonlegend drugs is based on the
lesser of the:]
[(A)
usual and customary price charged to the general
public;]
[(B) EAC, plus 50 percent of the EAC; or]
[(C) Gross Amount Due, if provided.]
[(2) No dispensing fee is added to the price of nonlegend
drugs paid under this subsection, except as described in paragraph (3)
of this subsection.]
(a) Scope. This section applies to each manufacturer of outpatient drugs that has executed an agreement with the Secretary of the
United States Department of Health and Human Services under Section 340B of the Public Health Service Act (42 U.S.C. §256b).
(1) 340B covered entity--A health-care organization enrolled in the 340B Program.
(2) 340B covered outpatient drug--A drug eligible for purchase through the 340B Program, as defined in 42 C.F.R. §10.20 and
§10.21.
(3) 340B price--The maximum price that the United States
Health Resources and Services Administration will allow a drug manufacturer to charge a 340B covered entity for a 340B covered outpatient
drug purchased through the 340B program. The 340B price is also
known as the "ceiling price."
[(3) If 50 percent of the EAC exceeds the standard dispensing fee calculation, the nonlegend drug is reimbursed under subsection
(a) of this section.]
(4) 340B program--A drug-pricing program established
under Section 340B of the Public Health Service Act (42 U.S.C.
§256b) under which a manufacturer of covered outpatient drugs agrees
that it will not charge a 340B covered entity more than the 340B price
for a 340B covered outpatient drug.
(c) [(d)] Public hearing. Notice of a public hearing to receive
comments on proposed changes to general pricing determinations derived under this section will be published in the Texas Register.
(5) HHSC--The Texas Health and Human Services Commission or its designee.
(d) [(e)] Definitions. The terms used in this section have the
meanings as defined for the same terms in §354.1921(g) of this title
(relating to Addition of Drugs to the Texas Drug Code Index).
§355.8546. Brand-Name Drugs.
(a) Physicians[,] who want [to dispense] a brand name drug
dispensed on a prescription for a multisource drug must [with a maximum allowable cost,] handwrite the phrase "Brand necessary" on the
(c) Reimbursement methodology. HHSC reimburses a 340B
covered entity for a 340B covered outpatient drug purchased through
the 340B program and dispensed to a patient of a 340B covered entity based on [the lower of] HHSC's estimate of the 340B price [or the
maximum allowable cost in accordance with §355.8545 of this division
(relating to Texas Maximum Allowable Cost)] plus a professional dispensing fee assigned by HHSC in accordance with §355.8551 of this
division (relating to Dispensing Fee). HHSC establishes the estimate
PROPOSED RULES
October 30, 2015
40 TexReg 7515
(1)
Reported manufacturer pricing;
(2)
Weekly data from national drug pricing publishers; and
as to the general public; and publicly displaying the availability of prescription delivery services at no charge. The delivery incentive is to
be paid on all Medicaid prescriptions filled for legend drugs. This delivery incentive is not to be paid for over-the-counter drugs that are
prescribed as a benefit of this program.
(3) Quarterly data from the Centers for Medicare and Medicaid Services.
(d) [(e)] Preferred generic drugs are subject to the Preferred
Drug List requirements.
§355.8551. Professional Dispensing Fee.
(a) The following words and terms, when used in this section,
have the following meanings, unless the context clearly indicates otherwise.
(e) [(f)] The total professional dispensing fee will not exceed
$200 per prescription.
of the 340B price using market or government sources, which include,
but are not limited to:
(1) Acquisition Cost--As defined in §355.8541 of this division (relating to Legend and Nonlegend Medications).
(2) [(1)] Delivery Incentive--An incentive for offering
no-charge prescription delivery to all Medicaid recipients, in accordance with subsection (d) of this section.
(3) [(2)] Professional Dispensing Fee--The portion of the
reimbursement paid to a pharmacy under §355.8541 of this division
[(relating to Legend and Nonlegend Medications)], in accordance with
42 C.F.R. §50.504 and 42 C.F.R. §447.502, to provide a reasonable
payment for the cost of dispensing a prescription drug, including the
pharmacist's professional services, and which may include incentive
amounts for providers that qualify under this section.
[(3) Estimated Acquisition Cost--As defined in §355.8541
of this division and §355.8545 of this division (relating to Texas Maximum Allowable Cost).]
(4) Fixed Component--A component that provides the base
reimbursement to a pharmacy for the cost of dispensing a prescription;
it includes reimbursement for professional services costs and overhead
costs.
(5) Preferred Generic Incentive--An incentive to fill a Medicaid prescription with a premium preferred generic drug for which a
drug manufacturer has agreed to pay a supplemental rebate.
(6) Variable Component--A component that is expressed as
a percentage of the [estimated] acquisition cost, and provides an incentive to a pharmacy to stock and dispense higher-cost drugs by covering
additional expenses incurred when providing those drugs.
(b) The Texas Health and Human Services Commission
(HHSC) reimburses contracted Medicaid pharmacy providers according to the following dispensing fee formula: Professional Dispensing
Fee = ((([Estimated] Acquisition Cost + Fixed Component) divided
by (1 - the percentage used to calculate the Variable Component))
- [Estimated] Acquisition Cost) + Delivery Incentive + Preferred
Generic Incentive.
[(c) An inflation adjustment may be made, subject to the availability of appropriated funds, on the first day of the biennium. The
projected rate of inflation is based upon a forecast of the Personal Consumption Expenditures (PCE) chain-type price index as the general
cost inflation index. HHSC uses the lowest feasible PCE forecast consistent with the forecasts of nationally recognized sources available to
HHSC at the time proposed reimbursement is prepared for public dissemination and comment.]
(c) [(d)] A delivery incentive is paid to approved providers
who certify in a form prescribed by HHSC that the delivery services
meet minimum conditions for payment of the incentive. These conditions include: making deliveries to individuals rather than just to institutions, such as nursing homes; offering no-charge prescription delivery to all Medicaid recipients requesting delivery in the same manner
40 TexReg 7516
October 30, 2015
Texas Register
(f) [(g)] Notwithstanding other provisions of this section,
HHSC may adjust the dispensing fee to address budgetary constraints
in accordance with the provisions of §355.201 of this division (relating
to Establishment and Adjustment of Reimbursement Rates by the
Health and Human Services Commission).
to adopt.
2015.
TRD-201504443
Karen Ray
Chief Counsel
♦
♦
♦
1 TAC §355.8545
(Editor's note: The text of the following section proposed for repeal
will not be published. The section may be examined in the offices of the
Texas Health and Human Services Commission or in the Texas Register
office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.)
Statutory Authority
The repeal is proposed under Texas Government Code
Code §32.021 (and Texas Government Code §531.021(a),
which provide HHSC with the authority to administer the federal
medical assistance (Medicaid) program in Texas).
The proposed repeal affect Texas Human Resources Code
Chapter 32 and Texas Government Code Chapter 531. No
§355.8545. Texas Maximum Allowable Cost.
to adopt.
2015.
TRD-201504444
Karen Ray
Chief Counsel
♦
♦
♦
TITLE 7. BANKING AND SECURITIES
PART 1. FINANCE COMMISSION OF
TEXAS
CHAPTER 4. CREDIT CARD SURCHARGE
APPEAL PROCEDURES
SUBCHAPTER A. CONTESTED CASE
PROCEDURE FOR VIOLATIONS ON OR
BEFORE AUGUST 31, 2013
7 TAC §4.105
The Finance Commission of Texas (commission) proposes
amendments to Title 7 of the Texas Administrative Code, §4.105,
concerning the rules applicable to a contested case hearing on
a credit card surcharge violation occurring on or before August
31, 2013.
In general, the purpose of these amendments is to clarify which
rules of procedure are applicable to a contested case hearing
for persons regulated by the Office of Consumer Credit Commissioner.
The agency circulated an early draft of the proposed amendments to interested stakeholders and held a stakeholders meeting where the following background of the amendments was provided.
The commission has previously adopted rules of procedure applicable to a contested case hearing conducted by an administrative law judge employed by or contracted by a finance agency.
See, 7 TAC §9.1. The Office of Consumer Credit Commissioner
(OCCC) has recently contracted with the State Office of Administrative Hearings (SOAH) to conduct contested case hearings.
SOAH applies its own procedural rules to all matters referred
to SOAH, unless otherwise required by statute or rule. 1 TAC
§155.1(a).
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the first five-year period the amendments are in
effect, there will be no fiscal implications for state or local government as a result of administering the amendments.
For each year of the first five years that the amendments to
§4.105 are in effect, Commissioner Pettijohn has also determined that the public benefit anticipated as a result of the proposed amendments will be that the commission's rules will conform to current practice of administrative agencies, will be more
easily understood by persons required to comply with the rules,
and will be more easily enforced.
There is no anticipated cost to persons who are required to comply with the amendments as proposed. There will be no adverse
economic effect on small or micro-businesses. There will be no
effect on individuals required to comply with the amendments as
proposed.
Comments on the proposed amendments may be submitted
in writing to Laurie Hobbs, Assistant General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar
Boulevard, Austin, Texas 78705-4207 or by email to [email protected]. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day
after the date the proposal is published in the Texas Register.
At the conclusion of business on the 31st day after the proposal
is published in the Texas Register, no further written comments
will be considered or accepted by the commission.
The amendments are proposed under Texas Government Code,
§2001.004(1), which requires all administrative agencies to
adopt rules of practice stating the nature and requirements of all
available formal and informal procedures. The amendments are
further proposed under the authority of Texas Finance Code,
§11.304, which authorizes the commission to adopt rules to
enforce Chapter 14 and Title 4 of the Texas Finance Code.
The statutory provisions affected by the proposal are contained
in Texas Finance Code, Chapter 14, 339, and Title 4.
§4.105. Contested Case on Credit Card Surcharge.
(a) (No change.)
Concurrent with these proposed rule amendments, the commission is proposing amendments to §9.1(a) of Title 7 (relating to
Definitions and Interpretation; Severability; proposed new title:
"Application, Construction, and Definitions") to clarify which
rules of procedure apply to a contested case hearing conducted
by an administrative law judge contracted by a finance agency,
and which rules apply to a hearing conducted by SOAH. The
amended subsection (a) in §9.1 is proposed to read: "This
chapter governs contested case hearings conducted by an
administrative law judge employed or contracted by an agency.
All contested case hearings conducted by the State Office
of Administrative Hearings (SOAH) are governed by SOAH's
procedural rules found at Title 1, Chapter 155 of the Texas
Administrative Code."
(b) A contested case under this chapter is subject to Texas
Government Code, Chapter 2001, and the rules of procedure applicable under §9.1(a) of this title (relating to Application, Construction, and
Definitions) [Chapter 9 of this title (relating to Rules of Procedure for
Contested Case Hearings, Appeals, and Rulemakings)]. To the extent
of any conflict between this chapter and Chapter 9, this chapter prevails.
Title 7, Part 1 (relating to the Finance Commission of Texas),
contains one reference to the Chapter 9 rules of procedure concerning credit card surcharge violations regulated by the OCCC
under Chapter 4. Section 4.105(b) identifies the rules of procedure applicable to a contested case hearing regarding a credit
card surcharge violation occurring on or before August 31, 2013.
The proposed amendment replaces the reference in this subsection to Chapter 9 with a reference to §9.1(a) of Title 7 (relating to
Application, Construction, and Definitions).
2015.
(c)
(No change.)
to adopt.
TRD-201504390
Leslie L. Pettijohn
Consumer Credit Commissioner
Finance Commission of Texas
PROPOSED RULES
♦
♦
October 30, 2015
♦
40 TexReg 7517
CHAPTER 9. RULES OF PROCEDURE FOR
CONTESTED CASE HEARINGS, APPEALS,
AND RULEMAKINGS
amendments to 7 TAC Chapter 9, concerning Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings.
Specifically, the amendments are proposed in §9.1, concerning
Definitions and Interpretation; Severability; and in §9.12, concerning Default in a contested case subject to the rules under
Chapter 9, Subchapter B.
In general, the purpose of the proposed amendments is to update and clarify certain contested case procedural rules applicable to the finance agencies (Texas Department of Banking,
Texas Department of Savings and Mortgage Lending, and Office of Consumer Credit Commissioner).
Regarding §9.1, the purpose of the proposed amendments is to
clarify the rules applicable to different forums in which contested
cases may be heard for individuals and entities regulated by the
finance agencies.
Regarding §9.12, the purpose of the proposed amendments is to
clarify that the finance agencies may informally dispose of contested cases by default, as authorized by Section 2001.056 of
the Texas Government Code.
The finance agencies circulated drafts of the proposed amendments to interested stakeholders and held a stakeholders meeting where the background of the amendments was provided.
The following background information relates to the proposed
amendments in §9.1, regarding contested case forums.
Some of the finance agencies have contracted with a licensed
attorney to serve as an administrative law judge and conduct
contested case hearings. This administrative law judge used by
the Texas Department of Savings and Mortgage Lending (SML)
and by the Office of Consumer Credit Commissioner (OCCC)
elected to not renew the contract for the 2016 fiscal year. In order to provide an appropriate, timely, and transparent forum to
persons subject to SML and OCCC regulation, these two finance
agencies entered into contracts with the State Office of Administrative Hearings (SOAH) to conduct contested case hearings.
In contrast, the Texas Department of Banking has contracted
with another administrative law judge for this fiscal year. At
present, contested cases for the Texas Department of Banking
will continue to be governed by the rules contained in 7 TAC
Chapter 9.
With regard to the SML and the OCCC, the law requires that
SOAH's rules of procedure control a contested case conducted
by SOAH. In order to clarify the application of procedural rules in
various forums, the proposed amendments have been prepared
for persons regulated by the SML and the OCCC whose cases
may be heard by SOAH.
Additionally, should any of the finance agencies have the need
to utilize a different contested case forum in the future, the proposed amendments will provide the flexibility for contested cases
to be heard by either a contracted administrative law judge or by
SOAH.
The proposed amendments to §9.1 add new subsection (a),
which states that the rules provided in Chapter 9 govern contested case hearings conducted by an administrative law judge
employed or contracted by one of the finance agencies. The
40 TexReg 7518
October 30, 2015
Texas Register
amendments to §9.1 further explain that contested case hearings conducted by SOAH are governed by SOAH's procedural
rules.
The proposed amendments also revise the title of the rule to provide a more appropriate description of the amended content of
the rule. The new title of "Application, Construction, and Definitions" is proposed to replace the current title of §9.1, "Definitions
and Interpretation; Severability." In addition, the existing subsections have been relettered accordingly.
The following background information relates to the proposed
amendments in §9.12, concerning default in a contested case
subject to the rules under Chapter 9, Subchapter B.
A contested case is a formal proceeding to determine the legal
rights, duties, or privileges of licensees and applicants after an
opportunity for an adjudicative hearing. The proceeding is governed by formal rules of procedure, which allow an agency to
dispose of a case by default.
The finance agencies expend considerable resources preparing
for and conducting contested case hearings where the respondent fails to appear at the hearing, or withdraws its request
shortly before the hearing date. These costs are ultimately
passed on to licensees and applicants in the form of higher
license and renewal fees.
During the last session, the Texas Legislature expressed further
support for disposing of cases by default according to the individual agency's rules. Therefore, the proposed amendments
to §9.12 further the Legislature's directive to conserve state resources where a party does not intend to proceed with a hearing.
The proposed amendments to §9.12 clarify the finance agencies'
authority to informally dispose of a contested case by default.
The amendments add a single sentence to the end of the existing rule. The additional sentence states that a finance agency
may, as an alternative to conducting a hearing when a party fails
to appear, informally dispose of the matter as permitted by Section 2001.056 of the Texas Government Code, without the necessity of a hearing. This amendment is consistent with Section 2001.056(4) of the Texas Government Code, as well as the
Finance Commission's existing default procedures found within
the current language of §9.12 (deeming the defaulting party to
have waived the right to contest the evidence, cross-examine the
witnesses, and present an affirmative case or defense), and the
default procedures of the State Office of Administrative Hearings
found at 1 Texas Administrative Code §155.501.
Charles Cooper, Banking Commissioner, as Executive Director
of the Finance Commission, has determined that for the first
five-year period the amendments are in effect, there will be no
fiscal implications for state or local government as a result of administering the amendments.
For each year of the first five years the amendments are in effect, Commissioner Cooper has also determined that the public
benefit anticipated as a result of the proposed amendments will
be that the commission's rules will conform to current practice of
administrative agencies, will be more easily understood by persons required to comply with the rules, and will be more easily
enforced.
proposed.
To be considered, comments on the proposed amendments
must be submitted no later than 5:00 p.m. on November 29,
2015. Comments should be addressed to General Counsel,
Texas Department of Banking, Legal Division, 2601 North Lamar
Boulevard, Suite 300, Austin, Texas 78705-4294. Comments
may also be submitted by email to [email protected].
SUBCHAPTER A.
GENERAL
7 TAC §9.1
available formal and informal procedures.
The amendments are also proposed under specific rulemaking
authority in the substantive statutes administered by the agencies. Texas Finance Code, §11.301 and §31.003(a)(5) authorize
the finance commission to adopt rules necessary or reasonable
to facilitate the fair hearing and adjudication of matters before
the banking commissioner and the finance commission. Texas
Finance Code, §151.102(a)(1) authorizes the finance commission to adopt rules necessary to implement and clarify Chapter
151. Texas Finance Code, §154.051(b) authorizes the department of banking to adopt rules concerning matters incidental to
the enforcement and orderly administration of Chapter 154.
Texas Finance Code, §11.302 authorizes the finance commission to adopt rules applicable to state savings associations or
to savings banks. Texas Finance Code, §96.002(a)(2) authorize
the savings and mortgage lending commissioner and the finance
commission to adopt procedural rules for deciding applications
filed with the savings and mortgage lending commissioner or the
department of savings and mortgage lending.
Texas Finance Code, §11.304 authorizes the finance commission to adopt rules necessary for supervising the consumer credit
commissioner and for ensuring compliance with Texas Finance
Code, Chapter 14 and Title 4. Texas Finance Code, §371.006
authorizes the consumer credit commissioner to adopt rules necessary for the enforcement of Texas Finance Code, Chapter
371. Texas Finance Code, §11.306 authorizes the commission
to adopt residential mortgage loan origination rules as provided
by Chapter 156. Texas Finance Code, §180.004 authorizes the
commission to adopt rules to enforce Chapter 180. Texas Finance Code, §393.622 authorizes the commission to adopt rules
to enforce Chapter 393.
in Texas Finance Code, Chapters 14, 154, 156, 157, 180, 339,
393, 394, and Title 4, and Texas Occupations Code, Chapter
1956.
§9.1. Application, Construction, and Definitions [Definitions and Interpretation; Severability].
(a) This chapter governs contested case hearings conducted by
an administrative law judge employed or contracted by an agency. All
contested case hearings conducted by the State Office of Administrative Hearings (SOAH) are governed by SOAH's procedural rules found
at Title 1, Chapter 155 of the Texas Administrative Code.
(b) [(a)] The same rules of construction that apply to interpretation of Texas statutes and codes, the definitions in Government Code,
§2001.003, and the definitions in subsection (c) [(b)] of this section
govern the interpretation of this chapter. If any section of this chapter
is found to conflict with an applicable and controlling provision of other
state or federal law, the section involved shall be void to the extent of
the conflict without affecting the validity of the rest of this chapter.
(c) [(b)] The following words and terms, when used in this
chapter, have the following meanings, unless the context clearly indicates otherwise:
(1) Administrative law judge--The hearings officer employed by or contracted by an agency to conduct administrative
hearings for the finance commission, the department of banking,
the department of savings and mortgage lending, and the office of
consumer credit commissioner.
(2) Agency--The finance commission, the department of
banking, the department of savings and mortgage lending, or the office of consumer credit commissioner.
(3) Agency head(s)--Finance commission members, the
banking commissioner, the savings and mortgage lending commissioner, or the consumer credit commissioner, or a designee if
authorized by law.
(4) Applicant--A party seeking a license, registration, charter, or permit, or to amend its authority under an existing license, registration, charter or permit, or other action from an agency.
(5) Protestant--A party opposing an application for a license, registration, charter, permit, or other action filed with an agency
who has paid any filing fees required by an applicable law.
(6) Respondent--A permittee, licensee, registrant, charter
holder, or other party against whom a disciplinary proceeding is directed by an agency.
to adopt.
2015.
TRD-201504385
Charles Cooper
Executive Director
♦
♦
♦
SUBCHAPTER B. CONTESTED CASE
HEARINGS
7 TAC §9.12
available formal and informal procedures.
The amendments are also proposed under specific rulemaking
authority in the substantive statutes administered by the agencies. Texas Finance Code, §11.301 and §31.003(a)(5) authorize
the finance commission to adopt rules necessary or reasonable
to facilitate the fair hearing and adjudication of matters before
the banking commissioner and the finance commission. Texas
Finance Code, §151.102(a)(1) authorizes the finance commission to adopt rules necessary to implement and clarify Chapter
151. Texas Finance Code, §154.051(b) authorizes the department of banking to adopt rules concerning matters incidental to
the enforcement and orderly administration of Chapter 154.
PROPOSED RULES
October 30, 2015
40 TexReg 7519
Texas Finance Code, §11.302 authorizes the finance commission to adopt rules applicable to state savings associations or
to savings banks. Texas Finance Code, §96.002(a)(2) authorize
the savings and mortgage lending commissioner and the finance
commission to adopt procedural rules for deciding applications
filed with the savings and mortgage lending commissioner or the
department of savings and mortgage lending.
Texas Finance Code, §11.304 authorizes the finance commission to adopt rules necessary for supervising the consumer credit
commissioner and for ensuring compliance with Texas Finance
Code, Chapter 14 and Title 4. Texas Finance Code, §371.006
authorizes the consumer credit commissioner to adopt rules necessary for the enforcement of Texas Finance Code, Chapter
371. Texas Finance Code, §11.306 authorizes the commission
to adopt residential mortgage loan origination rules as provided
by Chapter 156. Texas Finance Code, §180.004 authorizes the
commission to adopt rules to enforce Chapter 180. Texas Finance Code, §393.622 authorizes the commission to adopt rules
to enforce Chapter 393.
in Texas Finance Code, Chapters 14, 154, 156, 157, 180, 339,
393, 394, and Title 4, and Texas Occupations Code, Chapter
1956.
§9.12.
Default.
If, after served with notice in compliance with §9.11 of this title (relating to Notice and Initiation of Proceedings), a party fails to attend a
hearing, the administrative law judge may proceed in that party's absence and, where appropriate, may issue a proposal for decision against
that party. The proposal for decision shall be served upon the defaulting party and the party will be afforded the opportunity to contest the
law as stated in the proposal for decision, but shall be deemed to have
waived the right to contest the evidence, cross-examine the witnesses,
and present an affirmative case or defense. In the alternative, an agency
may informally dispose of the matter as permitted by §2001.056 of the
Texas Government Code, without the necessity of a hearing.
to adopt.
2015.
TRD-201504388
Charles Cooper
Executive Director
♦
♦
♦
PART 2. TEXAS DEPARTMENT OF
BANKING
CHAPTER 17. TRUST COMPANY
REGULATION
SUBCHAPTER B. EXAMINATION AND CALL
REPORTS
Finance Code §181.107(c) and §182.013(a) were amended effective September 1, 2015 by Sections 3 and 7 of S.B. 875 (Acts
2015, 84th Leg., R.S., Ch. 250, §3 and §7), which make confidential the statement of condition and income (call report) of an
exempt trust company, and require the trust company's annual
certification that it is maintaining the conditions and limitations of
its exemption to be submitted with the company's call report. The
statutory amendments further make clear that these provisions
apply to all exempt trust companies, whether exempt under Finance Code §182.011 or §182.019.
Proposed amendments to §17.23(b)(2) will revise the due date
for an exempt trust company to file its call report from January 31
to April 30 of each year, and to simultaneously file its annual certification of exempt status required by Finance Code §182.013(a).
Section 17.23(f) is proposed to be amended to incorporate the
changes in law regarding confidentiality of call reports. Finally,
conforming changes are proposed in §17.23(g)(2).
Robert L. Bacon, Deputy Commissioner, Texas Department of
Banking, has determined that for the first five-year period the
proposed rule is in effect, there will be no fiscal implications for
state government or for local government as a result of enforcing
or administering the rule.
Mr. Bacon also has determined that, for each year of the first
five-year period the section as proposed will be in effect, the
public benefit anticipated as a result of enforcing this section is
the enhanced ability of an exempt trust company to consult with
accounting professionals before filing its annual reports and certifications.
For each year of the first five years that the rule will be in effect,
there will be no economic costs to persons required to comply
with the rule as proposed, no adverse economic effect on small
businesses or micro-businesses, and no difference in the cost
of compliance for small businesses as compared to large businesses.
To be considered, comments on the proposed amended section must be submitted no later than 5:00 p.m. on November
30, 2015. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North
Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to [email protected].
The amendments are proposed pursuant to Finance Code
implement and clarify applicable law, and pursuant to Finance
Code §181.107(b)(1), which empowers the commission to
adopt rules requiring trust companies to file their statements
of condition and income with the banking commissioner at
specified intervals.
Finance Code §181.107 and §182.013 are affected by the proposed amendments.
§17.23. Call Reports.
(a) (No change.)
(b) Reporting requirements of trust companies.
(1)
(No change.)
(2) Exempt [Family] trust companies. Each trust company
that is exempt pursuant to Finance Code, §182.011 or §182.019 [and
7 TAC §17.23
40 TexReg 7520
The Finance Commission of Texas (the commission), on behalf
of the Texas Department of Banking (the department), proposes
amendments to §17.23, regarding trust company call reports.
October 30, 2015
Texas Register
§182.012, and §21.24 of this title (relating to Exemptions for Trust
Companies Administering Family Trusts),] shall file an annual call report with the banking commissioner no later than April 30 [January
31] of each year relating to the preceding calendar year, accompanied
by its annual certification, required by Finance Code, §182.013(a), that
the trust company is maintaining the conditions and limitations of its
exemption.
(3) (No change.)
(c) - (e)
(No change.)
(f) Confidentiality. Call reports filed under subsection (b)(2)
of this section are confidential as provided by [Pursuant to] Finance
Code, §181.107(c)(2). Call [§181.107(b) and (c) and 181.301, call]
reports filed under subsection (b)(1) [(b) of this section] are public information except for those portions designated as confidential by the
banking commissioner [to the extent that such reports are considered
public records], and may be published or otherwise disclosed to the
public. Special call reports filed pursuant to subsection (c) of this section and non-public portions of call reports filed pursuant to subsection
(b) of this section are confidential, subject only to such disclosure as
may be permitted by Finance Code, §§181.301, et seq. or by §3.111 of
this title (relating to Confidential Information).
(g) Reports containing significant errors and penalties for failure to file or for filing a report with false or misleading information.
(1)
(No change.)
(2) Exempt [Family] trust companies. Failure of a trust
company that is exempt pursuant to Finance Code, §182.011 or
§182.019 [and §182.012, and §21.24 of this title] to make, file, or
submit a timely call report or a special call report as required by this
section is grounds for revocation of its exempt status.
(3)
(No change.)
to adopt.
TRD-201504371
Catherine Reyer
General Counsel
Texas Department of Banking
♦
Section 21.24 specifies the information that must be contained
in an application for exemption as a family trust company, and
further specifies the specific provisions of the Trust Company Act
(Finance Code, Title 3, Subtitle F), from which a trust company
may request an exemption, subject to conditions or limitations
imposed by the banking commissioner. Proposed amendments
to Subsection (a) will clarify the definition of "family member" by
eliminating ambiguities in Finance Code, §182.011(a - 1)(2), and
define the term "key employee" as required by Finance Code,
§182.011(a - 1)(1)(C).
As proposed, §21.24(c) would be amended to delete existing
paragraph (1) and renumber the subsequent paragraphs accordingly. An exempt family trust company is no longer required to
request confidential treatment of its call report because Finance
Code, §181.107(c), was amended effective September 1, 2015,
to make such call reports confidential by law.
Proposed new §21.24(f) would establish one year as a reasonable transition period for terminating services to a former key
employee or to a formerly revocable trust that is no longer an eligible family client. The banking commissioner is proposed to be
empowered to grant an extension of up to one year based on a
finding that additional time is needed for the trust company to appropriately discharge its fiduciary duty to affected beneficiaries,
notwithstanding its demonstrated good faith efforts to terminate
the ineligible relationship.
Proposed new §21.24(g) would extend the revised statutory exemption scheme to a family trust company that was granted exempt status prior to September 1, 2015. However, the control
person named in its certificate of formation would be deemed
to be the shared common ancestor for purposes of determining
family client eligibility under Finance Code, §182.011, unless the
trust company amends its certificate of formation to name a new
shared common ancestor.
2015.
♦
84th Leg., R.S., Ch. 250, §5 - §6), to materially revise the requirements for exemption as a family trust company. In general,
prior to September 1, 2015, a trust company could obtain an exemption from certain otherwise applicable requirements if it restricted its client services to individuals related within the fourth
degree of affinity or consanguinity to an individual who controls
the trust company, and to certain of their related interests. Effective September 1, 2015, the exemption is available to a trust
company that serves only individuals related within the seventh
degree to a shared common ancestor and their related interests,
provided the trust company is wholly owned by family members,
see Finance Code §182.011(a).
Finally, the proposed amendments to §21.24 that are not discussed in this preamble are nonsubstantive and proposed solely
to conform the text to new law and the proposed, substantive
amendments to §21.24.
♦
CHAPTER 21. TRUST COMPANY
CORPORATE ACTIVITIES
SUBCHAPTER B. TRUST COMPANY
CHARTERING AND POWERS
Robert L. Bacon, Deputy Commissioner, Texas Department of
Banking, has determined that for the first five-year period the
proposed rule is in effect, there will be no fiscal implications for
state government or for local government as a result of enforcing
or administering the rule.
7 TAC §21.24
of the Texas Department of Banking (the department), proposes
amendments to §21.24, regarding exemptions for family trust
companies.
Finance Code §182.011 and §182.012 were amended effective
September 1, 2015, by Sections 5 and 6 of S.B. 875 (Acts 2015,
Mr. Bacon also has determined that, for each year of the first
five-year period the section as proposed will be in effect, the public benefit anticipated as a result of enforcing this section is the
clarification of highly complex and recently amended statutory
standards to aid the industry in compliance.
PROPOSED RULES
October 30, 2015
40 TexReg 7521
For each year of the first five years that the rule will be in effect,
there will be no economic costs to persons required to comply
with the rule as proposed, no adverse economic effect on small
businesses or micro-businesses, and no difference in the cost
of compliance for small businesses as compared to large businesses.
To be considered, comments on the proposed new section must
be submitted no later than 5:00 p.m. on November 30, 2015.
Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also
be submitted by email to [email protected].
The amendments are proposed pursuant to Finance Code
§181.003, which grants the commission authority to adopt rules
to implement and clarify applicable law, and Finance Code
§182.011(e)(2) - (4), which grants the commission authority to
adopt rules (1) specifying the provisions of Finance Code, Title
3, Subtitle F that are subject to an exemption request, (2) establishing procedures and requirements for obtaining, maintaining,
or revoking an exemption, and (3) defining or further defining
terms used in Finance Code §182.011.
Finance Code §182.011 and §182.012 are affected by the proposed amendments.
§21.24. Exemptions for Family Trust Companies [Administering
Family Trusts].
(a) Definitions. Definitions in Finance Code, §182.011(a 1), are incorporated herein by reference except for the term "family
member." As used in this section and in Finance Code, Title 3, Subtitle
F (the Trust Company Act), the following words and terms shall have
the following meanings, unless the context clearly indicates otherwise:
[Compliance required. Pursuant to Finance Code, §182.011 and
§182.012, a trust company, which does not transact business with
the public, may request in writing that it be exempted from specified
provisions of the Trust Company Act. The banking commissioner
may grant the request in whole or in part if the trust company does not
transact business with the public. A trust company does not transact
business with the public if it acts as a corporate fiduciary for accounts
in which all beneficiaries are related within the fourth degree of affinity
or consanguinity to the person who controls the trust company. A trust
company administering family trusts which request exemption from
specified provisions of the Trust Company Act, must comply with this
section.]
(1) "Family" means individuals who are related within the
seventh degree of affinity or consanguinity to a shared common ancestor.
(2) "Family member" means each individual included in
the definition of "family," provided that a foster child is considered the
child of the foster parent and a person for whom a guardian was appointed before the person's 18th birthday is considered the child of the
guardian. The term "family member" also includes the shared common
ancestor.
(3) "Key employee" means the president of the trust company, any of its officers in charge of a principal business unit, division
or function (such as administration or finance), an officer who performs
a policymaking function for the trust company, or another person who
performs similar policymaking functions for the trust company.
(b)
Application for exemption.
(1) Pursuant to Finance Code, §182.011 and §182.012, a
trust company may request in writing that it be exempted from specified provisions of the Trust Company Act, if it has only family clients,
40 TexReg 7522
October 30, 2015
Texas Register
transacts business solely on behalf of family clients and their related interests, is wholly owned, directly or indirectly, legally or beneficially,
by one or more family members, and does not hold itself out to the general public as a corporate fiduciary for hire. [A trust company administering family trusts which seeks exemption from specified provisions
of the Trust Company Act, shall file an application, together with the
appropriate filing fee required by §21.2 of this title (relating to Filing
and Investigation Fees), with the banking commissioner. ]
(2)
The application must:
(A) be accompanied by the appropriate filing fee required by §21.2 of this title (relating to Filing and Investigation Fees);
(B) specify the specific exemptions requested and the
reasons or justification for requesting the exemptions; and[. The application must also]
(C) include a copy of the trust company's certificate of
formation containing, or a proposed amendment to the certificate of
formation that would cause it to [which must] contain, the following
statement in its purposes clause: "The sole purpose for which the trust
company is organized is to act as a corporate fiduciary for accounts in
which all beneficiaries are related within the seventh [fourth] degree
of affinity or consanguinity to _____________ (name of common ancestor), and their related interests to the extent permitted by the Texas
Finance Code or applicable rules and regulations [person who controls
the trust company)]."
[(2) A person who has beneficial ownership of sufficient
outstanding shares of a class of voting securities to constitute control
of a state trust company may be designated as the control person for
purposes of Finance Code, §182.011(a) and this section. Such identification of a beneficial shareholder as the controlling person is permissive and does not affect determinations of control made pursuant to
Finance Code, §183.001.]
(c) Exemption. Subject to conditions or limitations being
imposed by the banking commissioner, a family trust company
[administering family trusts] may request exemption from the following provisions of the Trust Company Act:
[(1) the requirement of Finance Code, §181.107(c), providing that the report of assets portion of a statement of condition and
income is a public record.]
(1) [(2)] the requirement of Finance Code, §183.103(a),
that five is the minimum number of directors, managers, or managing
participants that can be specified in the certificate of formation, provided that the certificate of formation must specify the number of directors, managers, or managing participants, consistent with paragraph
(2) [(3)] of this subsection;
(2) [(3)] the requirement of Finance Code, §183.103(a),
that the number of directors, managers, or managing participants of a
trust company cannot be less than five or more than 25, the majority
of whom must be residents of this state, provided that the board of a
trust company seeking exemption under this section must consist of
not fewer than three or more than 25 directors, managers, or managing
participants, at least one of whom must be a resident of this state;
(3) [(4)] the restrictions of Finance Code, §183.109(a) (c), regarding transactions with management and affiliates;
(4) [(5)] the limitations of Finance Code, §184.002, on investment in trust company facilities;
(5) [(6)] the limitations of Finance Code, §184.101, on securities investments, provided that the exemption request must address
each limitation and the reasons for exemption separately;
(6)
[(7)] the restrictions of Finance Code, §184.102,
regarding transactions in state trust company shares or participation
shares;
PART 5. OFFICE OF CONSUMER
CREDIT COMMISSIONER
(7) [(8)] the limitations of Finance Code, §184.003, on
other real estate investments; and
CHAPTER 83. REGULATED LENDERS AND
CREDIT ACCESS BUSINESSES
(8) [(9)] the limitations of Finance Code, §§184.201 184.203, regarding lending limit and lease financing transaction restrictions, provided that no loans may be made from a trust company's
minimum restricted capital amount.
(d) Notice to applicant. The banking commissioner shall issue
a written notice as required by §21.4 of this title (relating to Required
Information and Abandoned Filings) informing the applicant either that
all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required.
(e) Notice to clients [beneficiary]. A family trust company
[administering family trusts] which has been granted an exemption
under subsection (c) of this section must provide each family client
[beneficiary of the family trust] with a copy of the exemption granted
by the banking commissioner. The trust company must maintain an acknowledged receipt of such notice in its files.
(f) Transition period for certain former family clients. Pursuant to Finance Code, §182.011(a - 1)(1)(C) and (I), a family trust
company may continue providing services to a former key employee
or a formerly revocable trust that is no longer an eligible family client
for a period of one year after the date of the disqualifying event. The
banking commissioner may grant an extension of up to one year in response to a written request if the commissioner determines that:
(1) the trust company has acted diligently and in good faith
in its efforts to terminate the disqualified relationship in a manner consistent with its fiduciary duties; and
(2) additional time is needed to avoid harm to the affected
beneficiaries and appropriately discharge the trust company's fiduciary
duties with respect to the disqualified relationship.
(g) Effect on existing family trust company. A family trust
company with exemptions granted prior to September 1, 2015, under
Finance Code, §182.011 and §182.012, is not required to take any action to preserve its exemption as a result of changes in law made by
Acts 2015, 84th Leg., R.S., Ch. 250, §5. However, unless and until any such family trust company amends its certificate of formation
to name a new shared common ancestor, the control person named in
its certificate of formation is considered to be the shared common ancestor for purposes of determining eligibility of family members under
Finance Code, §182.011, and this section.
to adopt.
2015.
TRD-201504372
Catherine Reyer
General Counsel
♦
♦
♦
amendments to the following sections of Title 7 of the Texas
Administrative Code: §83.307, concerning the rules applicable
to a regulated lender license application denial hearing; and
§83.3007, concerning the rules applicable to a credit access
business license application denial hearing.
§155.1(a).
Title 7, Part 5 (relating to the OCCC), contains eight references
to the Chapter 9 rules of procedure. Chapter 83 contains two
of these eight references. The proposed amendments replace
these references with references to the rules of procedure made
applicable by the amendment to §9.1(a) of Title 7, described
earlier. Accordingly, the proposed amendments will clarify that
Chapter 9 rules of procedure apply to a contested case hearing conducted by an administrative law judge contracted by a
finance agency, and SOAH rules of procedure apply to a hearing conducted by SOAH.
Section 83.307(d) identifies the rules of procedure applicable to
a regulated lender license application denial hearing. The proposed amendment replaces the reference in this subsection to
Chapter 9 with a reference to §9.1(a) of Title 7 (relating to Application, Construction, and Definitions).
a credit access business license application denial hearing. The
PROPOSED RULES
October 30, 2015
40 TexReg 7523
proposed amendment replaces the reference in this subsection
to Chapter 9 with a reference to §9.1(a) of Title 7 (relating to
§83.307 and §83.3007 are in effect, Commissioner Pettijohn has
also determined that the public benefit anticipated as a result of
the proposed amendments will be that the commission's rules
will conform to current practice of administrative agencies, will
be more easily understood by persons required to comply with
the rules, and will be more easily enforced.
proposed.
SUBCHAPTER A. RULES FOR REGULATED
LENDERS
DIVISION 3. APPLICATION PROCEDURES
7 TAC §83.307
§11.304, which authorizes the commission to adopt rules to enforce Chapter 14 and Title 4 of the Texas Finance Code; Texas
Finance Code, §11.306, which authorizes the commission to
adopt residential mortgage loan origination rules as provided by
Chapter 156; Texas Finance Code, §180.004, which authorizes
the commission to adopt rules to enforce Chapter 180; and
Texas Finance Code, §393.622, which authorizes the commission to adopt rules to enforce Chapter 393.
in Texas Finance Code, Chapters 14, 156, 180, 393, and Title 4.
§83.307. Processing of Application.
(a) - (c) (No change.)
(d) Hearing. Whenever an application is denied, the affected
applicant has 30 calendar days from the date the application was denied to request in writing a hearing to contest the denial. This hearing
will be conducted pursuant to the Administrative Procedure Act, Texas
40 TexReg 7524
October 30, 2015
Texas Register
Contested Case Hearings, Appeals, and Rulemakings)], before an administrative law judge who will recommend a decision to the commissioner. The commissioner will then issue a final decision after review
of the recommended decision.
(e) - (f)
(No change.)
to adopt.
2015.
TRD-201504415
Leslie L. Pettijohn
Commissioner
Office of the Consumer Credit Commissioner
♦
♦
♦
SUBCHAPTER B. RULES FOR CREDIT
ACCESS BUSINESSES
DIVISION 3. APPLICATION PROCEDURES
7 TAC §83.3007
§11.304, which authorizes the commission to adopt rules to enforce Chapter 14 and Title 4 of the Texas Finance Code; Texas
adopt residential mortgage loan origination rules as provided by
Chapter 156; Texas Finance Code, §180.004, which authorizes
the commission to adopt rules to enforce Chapter 180; and
Texas Finance Code, §393.622, which authorizes the commission to adopt rules to enforce Chapter 393.
in Texas Finance Code, Chapters 14, 156, 180, 393, and Title 4.
(a) - (c)
(No change.)
(e) - (f)
(No change.)
to adopt.
2015.
TRD-201504416
Leslie L. Pettijohn
Commissioner
♦
♦
♦
SUBCHAPTER B. RULES FOR CREDIT
ACCESS BUSINESSES
amendments to §§83.1002, 83.3001, 83.3002, 83.3006,
83.3010, and 83.4002 and proposes new §§83.4003 (repeal and
replace), 83.5003, 83.5004, and 83.5005 in 7 TAC Chapter 83,
Subchapter B, concerning Rules for Credit Access Businesses.
In addition, the commission proposes the repeal of §83.3012,
§83.4003 (repeal and replace), and §83.4004.
In general, the purpose of the proposal regarding these rules
for credit access businesses is to implement changes resulting
from the commission's review of Chapter 83, Subchapter B under Texas Government Code, §2001.039.
The proposed amendments include clarifying changes regarding
definitions, license applications, and fees. Proposed new sections outline examination authority and recordkeeping requirements, including a list of documents that credit access businesses are required to maintain, and relate to separation between credit access businesses and third-party lenders.
Section 83.4003 is being proposed for repeal and being replaced
with a reorganized rule regarding the review of criminal history.
The content of current §83.4004 has been incorporated into proposed new §83.4003. Section 83.3012 concerning provisional
licenses is being proposed for repeal, as this rule is no longer
necessary.
This is the first of two anticipated rule actions for credit access
businesses. The agency anticipates that the second action, to be
published in a later issue of the Texas Register, will include rule
amendments on the following issues: (1) consumer disclosures,
(2) reporting requirements, and (3) license transfers.
The notice of intention to review 7 TAC Chapter 83, Subchapter
B was published in the September 11, 2015, issue of the Texas
Register (40 TexReg 6165). The commission received no comments in response to that notice.
The agency circulated an early draft of proposed changes to
interested stakeholders and received some informal precomments. Certain concepts recommended by the precommenters
have been incorporated into this proposal, and the agency
appreciates the thoughtful input provided by stakeholders.
The individual purposes of the proposed amendments, new
rules, and repeals are outlined in the paragraphs to follow.
Section 83.1002 provides general definitions to be used
throughout the chapter. The proposed amendments to this
section contain definitions for the terms "multiple payment auto
title loan," "multiple payment payday loan," "single payment
auto title loan," and "single payment payday loan." The agency
intends to apply these definitions for purposes of the require-
ments for recordkeeping (proposed §83.5004), data reporting
(current §83.5001), and disclosures (current §§83.6001 through
83.6008).
Two precommenters expressed concern about
these definitions. One precommenter recommended "deferred
presentment transaction" instead of "payday loan," due to the
limited uses of the phrase "payday loan" in Texas Finance
Code, Chapter 393. However, the agency believes that the term
"payday loan" is appropriate, because it is widely used by the
industry, and Texas Finance Code, §393.221(2) specifies that
the term "[d]eferred presentment transaction . . . is also referred
to as a payday loan." The other precommenter recommended
the terms "installment pay day loans" and "installment auto
title loan" instead of terms beginning with "multiple payment,"
because the precommenter believed that this more closely
corresponds to how the products are marketed. However, the
agency has consistently used the phrases "multiple payment"
and "multi-payment" in the rule for consumer disclosures at
§83.6007 and the accompanying figures.
A proposed amendment to §83.3001(2)(A) amends the definition of "principal party" for sole proprietorships. The amendment
removes the statement that proprietors include spouses with
a community property interest. In addition, an amendment
to §83.3002(1)(A)(iv)(I) removes the requirement to disclose
community property interests and documentation regarding
separate property status, and replaces it with a requirement
to disclose the names of the spouses of principal parties if
requested. The agency currently spends considerable time
requesting information from license applicants to determine
the status of spouses' property interests, and explaining these
concepts to applicants. These amendments will help streamline
the licensing process.
Proposed amendments to §83.3006 clarify the circumstances in
which a licensee must notify the OCCC of changes to information in the original license application. The amendments specify
that the requirement to provide updated information within 10
days applies before a license application is approved. Proposed
new §83.3006(b) provides that a licensee must notify the OCCC
within 30 days if the information relates to the names of principal parties or third-party lenders, criminal history, regulatory actions, or court judgments. Proposed new §83.3006(c) specifies
that each applicant or licensee is responsible for ensuring that
all contact information on file with the OCCC is current and correct, and that it is a best practice for licensees to regularly review
contact information.
A proposed amendment to §83.3010(c) provides that a license
applicant must pay a fee to a party designated by the Texas Department of Public Safety (DPS) for processing fingerprints, replacing a statement that the fee will be paid to the OCCC. This
amendment conforms the rule to the method by which applicants
currently provide fingerprint information through DPS's Fingerprint Applicant Services of Texas (FAST) program.
A proposed amendment to §83.3010(g)(1)(B) contains a technical correction for the method of calculating the volume-based
portion of the annual assessment fee. Currently, the rule provides that the volume-based fee will not exceed "$0.03 per each
$1,000 advanced . . . in accordance with the most recent quarterly report filing required by Texas Finance Code, §393.627."
However, the total dollar amount of extensions of consumer
credit is not part of the information the OCCC currently requests
on the quarterly report. Rather, this information is requested on
the annual report. For this reason, the proposed amendment
specifies that the fee will be based on the most recent annual
PROPOSED RULES
October 30, 2015
40 TexReg 7525
report under §83.5001. This amendment is intended to provide
technical clarification.
Section 83.3012 is proposed for repeal because it is no longer
necessary. The agency issued provisional licenses during 2012
(the first year in which credit access businesses were licensed),
but no longer issues provisional licenses.
Proposed amendments to §83.4002 clarify the agency's procedure for providing delinquency notices to licensees that have
failed to pay an annual assessment fee. The amendments specify that notice of delinquency is considered to be given when the
OCCC sends the notice by mail to the address on file with the
OCCC as a master file address, or by e-mail to the address on
file with the OCCC (if the licensee has provided an e-mail address). The amendments replace current language stating that
notice is given upon mailing in a properly addressed envelope.
Proposed new §83.4003 specifies the criminal history information collected by the OCCC, outlines factors the OCCC will consider when reviewing criminal history information, and describes
grounds for denial, suspension, and revocation of a credit access
business license. This section replaces the current §83.4003
and §83.4004, which are proposed for repeal. Subsection (a)
describes the OCCC's collection of criminal history record information from law enforcement agencies. Subsection (b) identifies the criminal history information that the applicant must disclose. Subsection (c) describes the OCCC's denial, suspension, and revocation based on crimes that are directly related
to the licensed occupation of a credit access business. Subsection (c)(1) lists the types of crimes that the OCCC considers to directly relate to the duties and responsibilities of being
a credit access business, including the reasons the crimes relate to the occupation, as provided by Texas Occupations Code,
§53.025(a). Subsection (c)(2) contains the factors the OCCC
will consider in determining whether a criminal offense directly
relates to the duties and responsibilities of a licensee, as provided by Texas Occupations Code, §53.022. Subsection (c)(3)
provides the mitigating factors the OCCC will consider to determine whether a conviction renders an applicant or licensee unfit,
as provided by Texas Occupations Code, §53.023. Subsection
(d) describes the OCCC's authority to deny a license application if it does not find that the financial responsibility, experience,
character, and general fitness of the applicant are sufficient to
command the confidence of the public and warrant the belief that
the business will be operated lawfully and fairly, as provided by
Texas Finance Code, §393.607(a). Subsection (e) explains that
the OCCC will revoke a license on the licensee's imprisonment
following a felony conviction, felony community supervision revocation, revocation of parole, or revocation of mandatory supervision, as provided by Texas Occupations Code, §53.021(b).
Subsection (f) identifies other grounds for denial, suspension, or
revocation, including convictions for specific offenses described
by statutory provisions cited in the rule.
Proposed new §83.5003 describes the OCCC's examination authority for credit access businesses. This section implements
Texas Finance Code, §393.622(a)(3), which allows the commission to "adopt rules with respect to periodic examination" of credit
access businesses by the agency, as well as Texas Finance
Code, §393.622(b), which authorizes the commission to "adopt
rules . . . to allow the commissioner to review, as part of a
periodic examination, any relevant contracts between the credit
access business and the third-party lender organizations with
which the credit access business contracts to provide services."
Subsection (a) provides that the OCCC may periodically exam-
40 TexReg 7526
October 30, 2015
Texas Register
ine each place of business of a licensee. Subsection (b) requires
licensees to allow the OCCC to access their offices and make
copies of records. Subsection (c) provides that the OCCC's examination authority includes the authority to examine third-party
lender agreements. Subsections (d) and (e) allow the OCCC to
take witness and records statements during an examination, and
specifies the requirements of these statements. Unlike the other
chapters of the Texas Finance Code that provide examination
authority to the OCCC, Chapter 393 does not include express
authority to take oaths. For this reason, under subsections (d)
and (e), the OCCC may obtain unsworn witness and records,
rather than sworn affidavits. Both statements would require an
acknowledgment that the statements could be used in an enforcement action in which the licensee is a party.
Proposed new §83.5004 describes the recordkeeping requirements for credit access businesses. Paragraph (1) requires a
transaction register showing the name of each consumer, the
transaction number, and the type of transaction. Paragraph (2)
outlines the information that must be included in the record of
an individual consumer's account. Paragraph (2)(A) identifies
the records that must be kept for every transaction, including
required disclosures and any agreements with the consumer.
Paragraph (2)(B) identifies additional records for transactions
that the licensee services or collects, including account histories, documentation of repossessed collateral, litigation records,
and records of criminal charges. Paragraph (2)(C) specifies the
time period for maintaining the information in the individual consumer's file, which generally must be kept for four years from the
date of the transaction, or two years from the date of the final
entry made on the consumer's account, whichever is later. This
provision is intended to ensure that the licensee keeps transaction records at least until the time specified in applicable statutes
of limitations, including the four-year limitations period in Texas
Finance Code, §393.505. Paragraph (4) requires a licensee to
maintain the required in-store fee schedule and notices. Paragraph (5) requires a licensee to maintain online disclosures and
copies of web pages used to access online disclosures. Paragraph (6) requires a licensee to maintain advertisements. Paragraph (7) requires a licensee to maintain credit applications and
adverse action records for the time period specified in Regulation B, 12 C.F.R. §1002.12(b). Paragraph (8) requires a licensee
to maintain an index of transfers, assignments, and sales. Paragraph (9) requires a licensee to maintain an index of litigation,
criminal charges, and repossessions. Paragraph (10) requires a
licensee to maintain records of its registration and surety bond
as a credit services organization. Paragraph (11) requires a licensee to maintain an official correspondence file for communications with the OCCC. Paragraph (12) requires a licensee to
maintain general business records showing its compliance with
applicable laws.
One precommenter requested a delayed implementation period
for the recordkeeping requirements in §83.5004. As of the effective date of the rules, a licensee will be required to maintain any
records described by §83.5004 that are in the licensee's possession. However, the agency is willing to consider a delayed
implementation date for generating new records (such as the
transaction register or the index of litigation, criminal charges,
and repossessions) in order to comply with the rule. The agency
invites comments about the amount of time that would be required in order to generate any new records not currently maintained.
Proposed new §83.5005 describes the requirements for separation between credit access businesses and third-party lenders.
Subsection (a) describes the general separation requirement for
credit access businesses and third-party lenders. Subsection
(b) explains that the relationship must be consistent with special
agency. Subsection (c) prohibits the credit access business from
sharing its fee with the third-party lender.
This rule helps ensure that credit access businesses comply
with Texas Finance Code, §393.001(3), which provides that a
credit services organization's services include obtaining for a
consumer or assisting a consumer in obtaining an extension of
consumer credit "by others." Because a credit access business
is a type of credit services organization, this means that a credit
access business must be a separate entity from any third-party
lender that provides an extension of credit to a consumer. The
credit access business and third-party lender must operate independently. The agency is aware of two published court decisions
analyzing the separation between credit services organizations
and lenders under Texas law. First, in Lovick v. Ritemoney Ltd.,
378 F.3d 433 (5th Cir. 2004), the Fifth Circuit analyzed whether
the relationship between a credit services organization and a
lender was consistent with special agency for purposes of Chapter 393 and Texas usury laws. The court determined that the relationship was consistent with special agency, based primarily on
four facts: (1) the credit services organization was not the same
entity as the lender, (2) the credit services organization did not
select underwriting criteria for making loans (instead, the credit
services organization applied criteria selected by the lender), (3)
the credit services organization's fee was not passed on to the
lender, and (4) the credit services organization's fee did not directly benefit the lender. Lovick, 378 F.3d at 440-44. According
to the court, the fact that the credit services organization and
lender shared an exclusive relationship was not sufficient to create a general-agency or joint-participant relationship that would
lead to a violation of Texas usury law. Id. at 439-40. Second,
in In re Grayson, 488 B.R. 579, 589 (S.D. Tex. Bankr. 2012), a
Texas bankruptcy court rejected a debtor's allegation that a credit
services organization and lender were not truly independent and
operated as a combined entity. Although the lender developed
the software to prepare agreements between the credit services
organization and lender, the court found that the facts did not
support the debtor's allegation.
Two precommenters discussed the requirements for separation
between credit access businesses and third-party lenders. One
precommenter noted that some credit access businesses perform an initial credit evaluation to determine whether they will
provide services for the consumer, before applying the lender's
separate underwriting criteria to determine whether the loan will
be made. In response to this precomment, proposed subsection (b) specifies that a licensee "may not select the underwriting
criteria used in determining whether the lender will make a loan
to the consumer." Another precommenter suggested that the requirement that the credit access business be a "separate legal
entity" from the third-party lender was insufficient, stating that
this would provide credit access businesses with a loophole to
get around the separation requirement. In response to this precomment, subsection (a) specifies that a credit access business
"must operate independently from any third-party lender." The
agency believes that with this language, the rule includes the
necessary requirements to ensure that a credit access business
assists in obtaining extensions of credit "by others," consistent
with the case law discussed above.
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the first five-year period the rule changes are in
effect there will be no fiscal implications for state or local government as a result of administering the rules.
Commissioner Pettijohn also has determined that for each year
of the first five years the rule changes are in effect, the public
benefit anticipated as a result of the changes will be increased
protection of consumers, clear and consistent regulations for
credit access businesses, and enhanced compliance with the
law.
Additional economic costs may be incurred by a person required
to comply with this proposal. The agency anticipates that any
costs resulting from the proposal would involve fulfilling certain
requirements in the proposed recordkeeping rule, §83.5004.
The three main types of potential costs the agency anticipates
licensees may encounter in complying with the proposal are:
1) labor costs, 2) costs involved to maintain records for longer
periods than they are currently maintained, 3) costs involved to
generate new records not currently kept, and 4) programming
costs for licensees that utilize electronic recordkeeping systems.
For licensees that utilize manual or electronic recordkeeping systems, the anticipated costs may include expenses related to employee training to review and implement the new recordkeeping
requirements. These costs would vary widely among licensees
depending on the number of employees who must be trained,
as well as the labor costs associated with supervisors or other
personnel assigned to create or maintain a licensee's records.
For licensees that utilize manual or electronic recordkeeping
systems, the anticipated costs would include expenses required
to generate new records not currently kept. In particular,
the proposed provisions that may result in the generation of
new records are: 1) §83.5004(1) (transaction register), 2)
§83.5004(2)(B)(i)(IX) and (X) (individual payment entries and
refunds for each consumer's transaction file), 3) §83.5004(8)
(index of transfers, assignments, and sales), 4) §83.5004(9)
(index of litigation, criminal charges, and repossessions). The
amount of potential costs would vary considerably and be
impossible to predict, as much will depend on how licensees
currently maintain certain records, and the ability of licensees to
produce certain records not retained with their current recordkeeping systems. However, based on the agency's experience
with other licensees that maintain similar registers and indexes,
such records should be easily produced from existing records
(e.g., software program query or report).
Some licensees who use or lease specialized computer software programs for their business may experience some additional costs. These costs are impossible to predict, as much will
depend on the particular licensee's current software system and
the amount of programming changes required to comply with the
proposal. Some training may be necessary to teach employees
how to use existing or updated software to produce the records
contemplated by the rule. The amount of software training necessary for each licensee is impossible to predict due to several
variable factors, such as number of employees, amount of previous training conducted, and current knowledge of employees.
In relation to software programming, it is the agency's experience
that today's credit access business transactions involve highly
automated software systems. The agency expects that many
licensees will select computer programs that will result in any
marginal costs increases being relatively low.
First, licensees should already be maintaining a majority of the
required records outlined in proposed new §83.5004 in order to
comply with mandated quarterly and annual reporting require-
PROPOSED RULES
October 30, 2015
40 TexReg 7527
ments. In order to provide accurate reports, licensees must
maintain detailed transaction records, including the type of transaction and all charges imposed in connection with the transaction. Second, most of these records should be maintained in
order to demonstrate compliance with the law during examinations and investigations. Third, retention of the records outlined
in proposed §83.5004 is a prudent business practice, and complying with these requirements helps ensure that licensees can
properly address inquiries from the OCCC, federal regulators,
and consumers.
proposed under Texas Finance Code, §393.622(a)(3), which authorizes the commission to adopt rules regarding periodic examinations of credit access businesses by the OCCC, and under
Texas Finance Code, §393.622(b), which authorizes the commission to adopt rules regarding the review of third-party lender
agreements.
in Texas Finance Code, Chapter 393.
§83.1002. Definitions.
The agency has attempted to lessen any potential costs by providing flexibility in the recordkeeping rules, which allow paper,
electronic, or optically imaged systems. As noted earlier, this
proposal incorporates the ability to access several items, or produce the information in the form of a report or list, which if generated from an electronic system, does not have to be maintained
as a separate file or record. The agency has also allowed for
certain records to be maintained at a centralized location, thus
reducing the costs of keeping records at multiple locations, and
providing examination access to these records at a particular location upon request. Additionally, the agency is considering a
delaying implementation date for the generation of new records,
which will help minimize potential costs.
Words and terms used in this chapter that are defined in Texas Finance
Code, Chapter 393 have the same meanings as defined in Chapter 393.
The following words and terms, when used in this chapter, will have
the following meanings, unless the context clearly indicates otherwise.
Overall, the agency anticipates that any costs involved to comply
with the proposal will be minimal for most licensees. However,
due to several factors resulting in varying, uncertain, and unpredictable costs, the agency would like to invite comment from
licensees on any costs involved to comply with the proposal, as
well as any alternatives to lessen those costs while achieving the
purpose of the proposal.
(7) Single payment auto title loan--An auto title loan for
which the entire principal balance, interest, and all fees required under
the terms of the transaction, including fees required to be paid to a credit
access business, are due in a single payment.
Aside from the previously outlined costs, there will be no other
effects on individuals required to comply with the rule changes
as proposed.
The agency is not aware of any adverse economic effect on
small or micro-businesses resulting from this proposal. But in
order to obtain more complete information concerning the economic effect of these rule changes, the agency invites comments
from interested stakeholders and the public on any economic impacts on small businesses, as well as any alternative methods of
achieving the purpose of the proposal while minimizing adverse
impacts on small businesses.
Comments on the proposal may be submitted in writing to Laurie
Hobbs, Assistant General Counsel, Office of Consumer Credit
Commissioner, 2601 North Lamar Boulevard, Austin, Texas
78705-4207 or by e-mail to [email protected]. To
be considered, a written comment must be received on or
before 5:00 p.m. central time on the 31st day after the date the
proposal is published in the Texas Register. At the conclusion of
business on the 31st day after the proposal is published in the
Texas Register, no further written comments will be considered
or accepted by the commission.
DIVISION 1. GENERAL PROVISIONS
7 TAC §83.1002
These rule changes are proposed under Texas Finance Code,
§393.622(a), which authorizes the Finance Commission to adopt
rules to necessary to enforce and administer Chapter 393, Subchapter G. Ensuring compliance with Chapter 393 is necessary
to the enforcement and administration of Chapter 393, Subchapter G. In addition, proposed new §83.5003 and §83.5004 are
40 TexReg 7528
October 30, 2015
Texas Register
(1) - (3) (No change.)
(4) Multiple payment auto title loan--An auto title loan that
is not a single payment auto title loan.
(5) Multiple payment payday loan--A payday loan that is
not a single payment payday loan.
(6) [(4)] OCCC--The Office of Consumer Credit Commissioner of the State of Texas.
(8) Single payment payday loan--A payday loan for which
the entire principal balance, interest, and all fees required under the
terms of the transaction, including fees required to be paid to a credit
access business, are due in a single payment.
to adopt.
2015.
TRD-201504408
Leslie L. Pettijohn
Commissioner
♦
DIVISION 3.
♦
♦
APPLICATION PROCEDURES
7 TAC §§83.3001, 83.3002, 83.3006, 83.3010
agreements.
Words and terms used in this chapter that are defined in Texas Finance
Code, Chapter 393, have the same meanings as defined in Chapter 393.
The following words and terms, when used in this chapter, will have
(1)
(No change.)
(2) Principal party--An adult individual with a substantial
relationship to the applicant by ownership of more than 10% of the
applicant, or having control of the proposed credit access business of
the applicant. The following individuals are principal parties:
(A) a proprietor holding a 100% ownership interest
[proprietors, including spouses with community property interest];
(B) - (H)
(No change.)
§83.3002. Filing of New Application.
An application for issuance of a new credit access business license must
be submitted in a format prescribed by the commissioner at the date
of filing and in accordance with the commissioner's instructions. The
commissioner may accept the use of prescribed alternative formats to
facilitate multistate uniformity of applications or in order to accept approved electronic submissions. Appropriate fees must be filed with the
application and the application must include the following:
(1) Required application information. All questions must
be answered.
(A)
Application for license.
(i) - (iii)
(iv)
(No change.)
Owners and principal parties.
(I) Proprietorships. The applicant must disclose
the name of the individual holding a 100% ownership interest in the
business and the name of any individual [who owns and who is] responsible for operating the business. If requested, the applicant must also
disclose the names of the spouses of these individuals. [All community property interests must also be disclosed. If the business interest
is owned by a married individual as separate property, documentation
establishing or confirming separate property status must be provided.]
(II) - (VI)
(B) - (E)
(2) - (3)
(No change.)
(No change.)
§83.3006. Updating Application and Contact Information
[Reportable Actions After Application].
(a) Applicant's updates to license application information. Before a license application is approved, an applicant must report to the
OCCC any [Any action, fact, or] information that would require a materially different answer than that given in the original license application and that relates to the qualifications for license[, must be reported]
within 10 calendar days after the person has knowledge of the [action,
fact, or] information.
(b) Licensee's updates to license application information. A
licensee must report to the OCCC any information that would require
a different answer than that given in the original license application
within 30 calendar days after the licensee has knowledge of the information, if the information relates to any of the following:
the names of principal parties;
(2)
the names of third-party lender organizations;
criminal history;
(4) actions by regulatory agencies; or
(5)
court judgments.
(c) Contact information. Each applicant or licensee is responsible for ensuring that all contact information on file with the OCCC is
current and correct, including all mailing addresses, all phone numbers,
and all e-mail addresses. It is a best practice for licensees to regularly
review contact information on file with the OCCC to ensure that it is
current and correct.
§83.3010. Fees.
(a) - (b) (No change.)
(c) Fingerprint processing. An applicant must pay a fee to a
party designated by the Texas Department of Public Safety for processing fingerprints. The Texas Department of Public Safety and the
designated party determine the amount of the fee and whether it is refundable. [A nonrefundable fee as prescribed by the commissioner will
be charged to recover the costs of investigating each principal party's
fingerprint record.]
(d) - (f)
(No change.)
(g) Annual renewal and assessment fees.
(1) An annual assessment fee is required for each license
consisting of:
(A)
(No change.)
(B) a volume fee based upon the volume of business
that consists of an amount not to exceed $0.03 per each $1,000 advanced for license holders whose operations occur within Texas Finance Code, Chapter 393 in accordance with the most recent annual
report required by §83.5001 of this title (relating to Data Reporting
Requirements) [quarterly report filing required by Texas Finance Code,
§393.627].
(2) - (4) (No change.)
to adopt.
2015.
(No change.)
(1)
(3)
TRD-201504410
Leslie L. Pettijohn
Commissioner
♦
♦
♦
7 TAC §83.3012
will not be published. The section may be examined in the offices of
the Office of Consumer Credit Commissioner or in the Texas Register
This repeal is proposed under Texas Finance Code,
§393.622(a), which authorizes the Finance Commission to
adopt rules to necessary to enforce and administer Chapter
393, Subchapter G. Ensuring compliance with Chapter 393 is
necessary to the enforcement and administration of Chapter
393, Subchapter G.
PROPOSED RULES
October 30, 2015
40 TexReg 7529
§83.3012. Provisional License.
to adopt.
2015.
TRD-201504413
Leslie L. Pettijohn
Commissioner
♦
♦
♦
with the OCCC. Failure to provide any information required as part
of the application or requested by the OCCC reflects negatively on the
belief that the business will be operated lawfully and fairly. The OCCC
may request additional criminal history information from the applicant,
including the following:
(1) information about arrests, charges, indictments, and
convictions of the applicant and its principal parties;
(2) reliable documents or testimony necessary to make a
determination under subsection (c), including letters of recommendation from prosecution, law enforcement, and correctional authorities;
(3) proof that the applicant has maintained a record of
steady employment, has supported the applicant's dependents, and has
otherwise maintained a record of good conduct; and
(4) proof that all outstanding court costs, supervision fees,
fines, and restitution as may have been ordered have been paid.
7 TAC §83.4002, §83.4003
(c) Crimes directly related to licensed occupation. The OCCC
may deny a license application, or suspend or revoke a license, if the
applicant or licensee has been convicted of an offense that directly relates to the duties and responsibilities of a credit access business, as
provided by Texas Occupations Code, §53.021(a)(1).
agreements.
(1) Providing credit access business services involves or
may involve making representations to consumers regarding the terms
of the contract, receiving money from consumers, remitting money
to third parties, maintaining accounts, repossessing property without
a breach of the peace, maintaining goods that have been repossessed,
and collecting due amounts in a legal manner. Consequently, crimes
involving the misrepresentation of costs or benefits of a product or service, the improper handling of money or property entrusted to the person, failure to file a governmental report or filing a false report, or the
use or threat of force against another person are directly related to the
duties and responsibilities of a licensee and may be grounds for denial,
suspension, or revocation.
DIVISION 4.
LICENSE
§83.4002. Notice of Delinquency in Payment of Annual Assessment
Fee.
For purposes of Texas Finance Code, §393.613, notice of delinquency
in the payment of an annual assessment fee is given when the OCCC
sends the delinquency notice: [upon the mailing of the delinquency
notice, enclosed in a postpaid, properly addressed envelope, in a post
office or official depository under the care and custody of the United
States Postal Service.]
(1) by mail to the address on file with the OCCC as a master
file address; or
(2) by e-mail to the address on file with the OCCC, if the
licensee has provided an e-mail address.
§83.4003. Denial, Suspension, or Revocation Based on Criminal
History.
(a) Criminal history record information. After an applicant
submits a complete license application, including all required fingerprints, and pays the fees required by §83.3010 of this title (relating to
Fees), the OCCC will investigate the applicant and its principal parties. The OCCC will obtain criminal history record information from
the Texas Department of Public Safety and the Federal Bureau of Investigation based on the applicant's fingerprint submission. The OCCC
will continue to receive information on new criminal activity reported
after the fingerprints have been initially processed.
(b) Disclosure of criminal history. The applicant must disclose
all criminal history information required to file a complete application
40 TexReg 7530
October 30, 2015
Texas Register
(2) In determining whether a criminal offense directly relates to the duties and responsibilities of holding a license, the OCCC
will consider the following factors, as specified in Texas Occupations
Code, §53.022:
(A)
the nature and seriousness of the crime;
(B) the relationship of the crime to the purposes for requiring a license to engage in the occupation;
(C) the extent to which a license might offer an opportunity to engage in further criminal activity of the same type as that in
which the person previously had been involved; and
(D) the relationship of the crime to the ability, capacity,
or fitness required to perform the duties and discharge the responsibilities of a licensee.
(3) In determining whether a conviction for a crime renders
an applicant or a licensee unfit to be a licensee, the OCCC will consider
the following factors, as specified in Texas Occupations Code, §53.023:
(A)
the extent and nature of the person's past criminal
activity;
(B) the age of the person when the crime was committed;
(C) the amount of time that has elapsed since the person's last criminal activity;
(D) the conduct and work activity of the person before
and after the criminal activity;
(E) evidence of the person's rehabilitation or rehabilitative effort while incarcerated or after release, or following the criminal
activity if no time was served; and
(F) evidence of the person's current circumstances relating to fitness to hold a license, which may include letters of recommendation from one or more of the following:
(i) prosecution, law enforcement, and correctional
officers who prosecuted, arrested, or had custodial responsibility for
the person;
(ii) the sheriff or chief of police in the community
where the person resides; and
(iii)
other persons in contact with the convicted per-
to adopt.
2015.
TRD-201504411
Leslie L. Pettijohn
Commissioner
♦
son.
(d) Crimes related to character and fitness. The OCCC may
deny a license application if the OCCC does not find that the financial
responsibility, experience, character, and general fitness of the applicant are sufficient to command the confidence of the public and warrant
the belief that the business will be operated lawfully and fairly, as provided by Texas Finance Code, §393.607(a). In conducting its review
of character and fitness, the OCCC will consider the criminal history
of the applicant and its principal parties. If the applicant or a principal
party has been convicted of an offense described by subsections (c)(1)
or (f)(2) of this section, this reflects negatively on an applicant's character and fitness. The OCCC may deny a license application based on
other criminal history of the applicant or its principal parties if, when
the application is considered as a whole, the agency does not find that
the financial responsibility, experience, character, and general fitness
of the applicant are sufficient to command the confidence of the public
and warrant the belief that the business will be operated lawfully and
fairly. The OCCC will, however, consider the factors identified in subsection (c)(2) - (3) of this section in its review of character and fitness.
(e) Revocation on imprisonment. A license will be revoked
on the licensee's imprisonment following a felony conviction, felony
community supervision revocation, revocation of parole, or revocation
of mandatory supervision, as provided by Texas Occupations Code,
§53.021(b).
(f) Other grounds for denial, suspension, or revocation. The
OCCC may deny a license application, or suspend or revoke a license,
based on any other ground authorized by statute, including the following:
(1) a conviction for an offense that does not directly relate
to the duties and responsibilities of the occupation and that was committed less than five years before the date of application, as provided
by Texas Occupations Code, §53.021(a)(2);
(2) a conviction for an offense listed in Texas Code of
Criminal Procedure, art. 42.12, §3g, or art. 62.001(6), as provided by
Texas Occupations Code, §53.021(a)(3) - (4);
(3)
errors or incomplete information in the license applica-
tion;
(4) a fact or condition that would have been grounds for
denying the license application, and that either did not exist at the time
of the application or the OCCC was unaware of at the time of application, as provided by Texas Finance Code, §393.614(a)(3); and
(5) any other information warranting the belief that the
business will not be operated lawfully and fairly, as provided by Texas
Finance Code, §393.607(a) and §393.614(a).
♦
♦
7 TAC §83.4003, §83.4004
(Editor's note: The text of the following sections proposed for repeal
will not be published. The sections may be examined in the offices of
the Office of Consumer Credit Commissioner or in the Texas Register
The repeals are proposed under Texas Finance Code,
§393.622(a), which authorizes the Finance Commission to
adopt rules to necessary to enforce and administer Chapter
393, Subchapter G. Ensuring compliance with Chapter 393 is
necessary to the enforcement and administration of Chapter
393, Subchapter G.
§83.4003. Effect of Criminal History Information on Applicants and
Licensees.
§83.4004. Crimes Directly Related to Fitness for License; Mitigating
Factors.
to adopt.
2015.
TRD-201504414
Leslie L. Pettijohn
Commissioner
♦
♦
♦
DIVISION 5. OPERATIONAL REQUIREMENTS
7 TAC §§83.5003 - 83.5005
PROPOSED RULES
October 30, 2015
40 TexReg 7531
agreements.
§83.5003. Examinations.
(a) Examination authority. The OCCC may periodically examine each place of business of a licensee and investigate the licensee's
transactions and records, including books, accounts, papers, and correspondence, to the extent the transactions and records pertain to business
regulated under Texas Finance Code, Chapter 393.
(b) Access to records. A licensee must allow the OCCC to
examine the licensee's place of business and make a copy of an item
that may be investigated under subsection (a) of this section.
(c) Third-party lender agreements. The OCCC's examination
authority includes the authority to review all agreements between a
licensee and any third-party lender with which the licensee contracts
to provide services under Texas Finance Code, Chapter 393.
(d) Witness statements. In connection with an examination,
the OCCC may obtain witness statements that pertain to business regulated under Texas Finance Code, Chapter 393. A witness statement
must be signed and dated, and must include an acknowledgment that
the statement may be introduced in an enforcement action in which the
licensee is a party.
(e) Records statements. In connection with an examination,
the OCCC may obtain statements regarding records maintained by the
licensee that pertain to business regulated under Texas Finance Code,
Chapter 393. A records statement must be signed and dated by a witness, and must include acknowledgments of the following:
(1)
a statement of the witness's position and duties at the
licensee;
(2) a statement that the witness is familiar with the manner
in which records are created and maintained by virtue of duties and
responsibilities;
(3)
the number of pages of attached records;
(4) a statement that the records are original records or exact
duplicates of the original records;
generally accepted accounting principles. If federal law requirements
for record retention are different from the provisions contained in this
section, the federal law requirements prevail only to the extent of the
conflict with the provisions of this section.
(1) Transaction register. A licensee must maintain a transaction register, or be able to produce this information within a reasonable amount of time. Each record in the register must contain the transaction number, the date of the transaction, the last name of the consumer, the total fees payable to the licensee, the total of payments, and
the type of transaction (single payment payday loan, single payment
auto title loan, multiple payment payday loan, or multiple payment auto
title loan). Each record in the transaction register must be retained for
four years from the date of the transaction, or two years from the date
of the final entry made on the consumer's account, whichever is later.
(2) Consumer's transaction file. A licensee must maintain
a paper or electronic transaction file for each individual transaction under Texas Finance Code, Chapter 393, or be able to produce this information within a reasonable amount of time. The transaction file must
contain documents that show the licensee's compliance with applicable
state and federal law, including Texas Finance Code, Chapter 393. If a
substantially equivalent electronic record for any of the following documents exists, a paper copy of the record does not have to be included
in the transaction file if the electronic record can be accessed upon request.
(A) The transaction file must include the following documentation for each transaction under Texas Finance Code, Chapter
393:
(i) any agreement between the consumer and the
licensee, including the contract described by Texas Finance Code,
§393.201, with all provisions required by that section, as well as the
notice of cancellation described by Texas Finance Code, §393.202;
(ii) any agreement between the consumer and the
lender, including the promissory note;
(iii) documentation referencing which agreements
between the licensee and a third-party lender apply to the transaction,
including any guarantee or letter of credit issued by the licensee;
(iv) all legally required disclosures provided in connection with the transaction, including:
(5) a statement that the records were made at or near the
time of each act, event, condition, opinion, or diagnosis set forth;
(I) the consumer disclosure required by Texas Finance Code, §393.223, and §83.6007 of this title (relating to Consumer
Disclosures);
(6) a statement the records were made by, or from information transmitted by, persons with knowledge of the matters set forth;
(II) the credit services organization disclosure
required by Texas Finance Code, §393.105;
(7) a statement that the records were kept in the course of
regularly conducted business activity;
(III) any disclosures provided under the Truth in
Lending Act, 15 U.S.C. §§1601-1667f, and Regulation Z, 12 C.F.R.
Part 1026;
(8) a statement that it is the regular practice of the business
activity to make the records; and
(9) an acknowledgment that the statement and the accompanying records may be introduced in an enforcement action in which
the licensee is a party.
§83.5004. Files and Records Required.
A licensee must maintain records for each transaction under Texas
Finance Code, Chapter 393, and make those records available to the
OCCC for examination. The records required by this section may be
maintained by using a paper or manual recordkeeping system, electronic recordkeeping system, optically imaged recordkeeping system,
or a combination of these types of systems, unless otherwise specified. All records must be prepared and maintained in accordance with
40 TexReg 7532
October 30, 2015
Texas Register
(IV) any privacy notice provided under the
Gramm-Leach-Bliley Act, 15 U.S.C. §§6801-6809, and Regulation P,
12 C.F.R. Part 1016;
(V) any notice to cosigner provided under the
Federal Trade Commission's Credit Practices Rule, 16 C.F.R. §444.3;
(v) the consumer's credit application and any other
written or recorded information used in evaluating the application;
(vi) any document signed by a co-borrower, co-signor, or other guarantor in connection with the transaction;
(vii) any documentation of whether the consumer is
a covered borrower under the Department of Defense's Military Lending Act Rule, 32 C.F.R. Part 232, including the identification of covered
borrower described by 32 C.F.R. §232.5;
(viii) complete documentation of any ancillary products (including insurance or an automobile club) offered to the consumer or purchased by the consumer in connection with the transaction;
(ix) complete documentation of all payments made
by or to the licensee during the transaction and all payments made by
or to the third-party lender at the inception of the transaction (including the amount of each payment, the source of each payment, and the
recipient of each payment);
(x) any other documentation created or obtained by
the licensee in connection with the transaction.
(B) The transaction file must include the following documentation if the licensee services or collects a loan in connection with
a transaction under Texas Finance Code, Chapter 393, or if the licensee
otherwise obtains this documentation in the course of business:
(i) Consumer's account record. The licensee must
maintain an account record containing at least the following information:
(XII) corrective entries to the consumer's account
record, if justified, including the reason and supporting documentation
for each corrective entry.
(ii) Payday loan records. For a payday loan, the
transaction file must include documentation relating to the personal
check or authorization to debit a deposit account accepted in connection with the loan.
(iii) Auto title loan records. For an auto title loan,
the transaction file must include all documentation relating to the attachment and perfection of a security interest in the motor vehicle, including any of the following documentation obtained by the licensee:
(I) the security agreement;
(II) if obtained by the licensee or the third-party
lender, the original certificate of title to the vehicle, a certified copy
of the negotiable certificate of title, or a copy of the front and back of
either the original or certified copy of the title;
(III) if executed by the licensee or the third-party
lender, an application for certificate of title (Texas Department of Motor
Vehicles Form 130-U for Texas vehicles);
(I) loan number or another unique number identifying the transaction;
(IV) if obtained by the licensee or the third-party
lender, a title application receipt (Texas Department of Motor Vehicles
Form VTR-500-RTS for Texas vehicles), or a similar document evidencing the filing of the application for certificate of title and payment
of required fees and taxes.
(II) loan schedule and terms itemized to show the
number of installments and the due date and amount of each installment, including installments payable to the licensee;
(iv) Repossession records. The transaction file must
include complete documentation of any repossession initiated by the
licensee, including:
(III)
name, address, and telephone number of
(IV)
names and addresses of co-borrowers, if
consumer;
any;
(V)
(VI)
(VII)
(I) any condition report indicating the condition
of the collateral, if prepared by the licensee, the licensee's agent, or any
independent contractor hired to perform the repossession;
(II) any invoices or receipts for any reasonable
and authorized out-of-pocket expenses that are assessed to the consumer and incurred in connection with the repossession or sequestration of the vehicle including cost of storing, reconditioning, and reselling the vehicle;
principal balance;
total interest charges;
all fees paid to the licensee;
(VIII) amount of official fees for recording,
amending, or continuing a notice of security interest that are collected
at the time the loan is made;
(IX) individual payment entries for all payments
described by subparagraph (A)(ix) of this paragraph, and any other payments made by the consumer during the transaction, itemized to show
the date payment was received (dual postings are acceptable if date of
posting is other than date of receipt), actual amounts received for application to due amounts, and actual amounts paid for default, deferment,
or other authorized charges;
(X) any refunds of unearned charges that are required in the event a loan is prepaid in full, including records of final entries, and entries to substantiate that refunds due were paid to
consumers, with refund amounts itemized to show interest charges refunded;
(XI) collection contact history, including a written or electronic record of each contact made by a licensee with the
consumer or any other person and each contact made by the consumer
with the licensee, in connection with amounts due, with each record including the date, method of contact, contacted party, person initiating
the contact, and a summary of the contact;
(III) for a vehicle disposed of in a public or private sale as permitted by the Texas Business and Commerce Code,
§9.610, the following documents:
(-a-) one of the following notices:
(-1-) a copy of the notification of
disposition as sent to the consumer and other obligors as required by
Texas Business and Commerce Code, §9.614; or
(-2-) a copy of the waiver of the notice of intended disposition prescribed by subitem (-1-) of this item, as
applicable, signed by the consumer and other obligors after default;
(-b-) copies of evidence of the type or manner
of private sale that was conducted. These records must show that the
manner of the disposition was commercially reasonable, such as circumstances surrounding a dealer-only auction, internet sale, or other
type of private disposition;
(-c-) copies of evidence of the type or manner
of public sale that was conducted. These records must show that the
manner of the disposition was commercially reasonable, such as documentation of the date, place, manner of sale of the vehicle, and amounts
received for disposition of the vehicle;
(-d-) the bill of sale showing the name and address of the purchaser of the repossessed collateral and the purchase
price of the vehicle;
PROPOSED RULES
October 30, 2015
40 TexReg 7533
(-e-) for a disposition or sale of collateral creating a surplus balance, a copy of the check representing the payment
of the surplus balance paid to the consumer or other person entitled to
the surplus;
(-f-) for a disposition or sale of collateral resulting in a surplus or deficiency, a copy of the explanation of calculation of surplus or deficiency as required by Texas Business and Commerce Code, §9.616, if requested by the consumer;
(-g-) a copy of the waiver of the deficiency
letter if the licensee elects to waive the deficiency balance in lieu of
sending the explanation of calculation of surplus or deficiency form, if
applicable;
Code, §393.105, which must be kept for two years from the date on
which it is provided to the consumer, as provided by Texas Finance
Code, §393.106.
(IV) for a vehicle disposed of using the strict
foreclosure method permitted by the Texas Business and Commerce
Code, §9.620 and §9.621, the following documents:
(-a-) one of the two following notices:
(3) Agreements between licensee and third-party lender. A
licensee must maintain all documentation of its current agreements
with third-party lenders, including copies of the agreement, any guarantees or letters of credit, and underwriting guidelines issued by the
lender. The documentation must show the licensee's compliance with
§83.5005 of this title (relating to Separation Between Credit Access
Business and Third-Party Lender). The licensee may maintain this documentation at a centralized location other than the licensed location
or branch office if the agreements apply to multiple locations. However, upon the OCCC's request, the licensee must have the ability to
promptly obtain or access copies of the complete documentation so that
the OCCC can examine it. If an agreement terminates, documentation
of the agreement must be maintained until the latest of:
(-1-) a copy of the proposal to accept collateral in full satisfaction of the obligation; or
(A) four years from the date of the last consumer transaction subject to the agreement;
(-2-) for a transaction where 60%
or more of the principal balance has been paid, a copy of the debtor
or obligor's waiver of compulsory disposition of collateral signed by
the consumer and other obligors after default;
(-b-) for a transaction where the consumer rejects the offer under item (-a-)(-1-) or (-2-) of this subclause, a copy of
the consumer's signed objection to retention of the collateral;
(-c-) copies of the records reflecting the total
satisfaction of the obligation.
(B) two years from the date of the final entry made on
the consumer's account in the last consumer transaction subject to the
agreement;
(v) Litigation records. The transaction file must
include complete documentation of any litigation filed by a licensee
against a consumer, or by a consumer against the licensee, including
all pleadings, the terms of settlement (if a settlement was entered),
documentation of any mediation or arbitration, the final judgment (if
the court entered a final judgment), and records of all payments received after judgment, properly identified and applied. If the licensee
maintains the complete documentation of litigation at a centralized
location other than the licensed location or branch office, then the
licensee's transaction file may include a written summary of the status
of the litigation, rather than complete documentation of the litigation.
However, upon the OCCC's request, the licensee must have the ability
to promptly obtain or access copies of the complete documentation so
that the OCCC can examine it.
(4) In-store fee schedule and notices. The in-store fee
schedule and notices required by Texas Finance Code, §393.222(a),
and §83.6003(a) of this title must be available for inspection by the
OCCC in a conspicuous location visible to the general public. If a
licensee amends the in-store fee schedule or notices, it must maintain
documentation of the previous versions of the schedule or notices for
one year from the date of amendment or until the next examination
by OCCC staff, whichever is later. The licensee may maintain the
documentation of previous in-store fee schedules and notices at a
centralized location other than the licensed location or branch office.
In this case, the documentation must be maintained for one year from
the date of amendment or until the OCCC's next examination of the
centralized location, whichever is later. However, upon the OCCC's
request, the licensee must have the ability to promptly obtain or access
copies of the complete documentation so that the OCCC can examine
it.
(vi) Criminal charge records. The transaction file
must include complete documentation of any criminal charge or complaint filed by a licensee against a consumer, showing the licensee's
compliance with Texas Finance Code, §393.201(c)(3). This must include any written evidence of criminal conduct, a written summary of
any oral statement submitted to law enforcement, any police report,
and any court records obtained by the licensee.
(vii) Claim records for insurance or ancillary products. The transaction file must include complete documentation of any
claims or disbursement of money related to insurance or another ancillary product provided in connection with the transaction.
(viii) Transfer records. The transaction file must include transfer, assignment, or sale records for any loan transferred, assigned, or sold to or from another person.
(C) The transaction file and its contents must be retained for four years from the date of the transaction, or two years
from the date of the final entry made on the consumer's account,
whichever is later. However, this retention period does not apply to
the credit services organization disclosure required by Texas Finance
40 TexReg 7534
October 30, 2015
Texas Register
(C)
one year from the date of termination of the agree-
ment; or
(D) the OCCC's next examination of the licensee (if the
documentation is maintained at a centralized location, this refers to the
next examination of the centralized location).
(5) Website and online disclosures. If a licensee maintains
a website, it must make the website available to the OCCC for inspection. The website must include a fee schedule to show the licensee's
compliance with §83.6003(b) of this title, and applicable consumer
disclosures to show the licensee's compliance with §83.6007(f) of this
title. If a licensee amends the website's fee schedule, consumer disclosures, or method of accessing the fee schedule or consumer disclosures, the licensee must maintain documentation of the previous version of the website to show compliance with §83.6003(b) of this title
and §83.6007(f) of this title. This must include the home page, any
pages used in accessing the fee schedule and disclosures, and copies
of the previously used fee schedule and disclosures. The licensee must
maintain this documentation for one year from the date of amendment
or until the next examination by OCCC staff, whichever is later. This
paragraph does not require a licensee to maintain previously used pages
of the website that were not the home page or pages used in accessing
the fee schedule and consumer disclosures. The licensee may maintain
the documentation of previous versions of the website at a centralized
location other than the licensed location or branch office. In this case,
the documentation must be maintained for one year from the date of
amendment or until the OCCC's next examination of the centralized
location, whichever is later. However, upon the OCCC's request, the
licensee must have the ability to promptly obtain or access copies of
the complete documentation so that the OCCC can examine it.
(6) Advertisements. A licensee must maintain advertising and solicitation records, including examples of all written
and electronic communications soliciting transactions (including
advertisements at the place of business, scripts of radio and television broadcasts, and reproductions of billboards and signs not at
the licensed place of business) for one year from the date of use or
until the next examination by OCCC staff, whichever is later. If any
language other than English is used in any advertising material, a true
and correct translation must be maintained along with the advertising
material. The licensee may maintain the documentation of advertising
at a centralized location other than the licensed location or branch
office. In this case, the documentation must be maintained for one year
from the date of amendment or until the OCCC's next examination
of the centralized location, whichever is later. However, upon the
OCCC's request, the licensee must have the ability to promptly obtain
or access copies of the complete documentation so that the OCCC can
examine it.
(7) Adverse action records. Each licensee must maintain
adverse action records for all applications relating to Texas Finance
Code, Chapter 393 transactions. Adverse action records must be maintained according to the record retention requirements in Regulation B,
12 C.F.R. §1002.12(b). The current retention period is 25 months for
consumer credit. These records include the loan application, any written or recorded information used in evaluating the application, the adverse action notice (if required), the notice of incompleteness (if applicable), and counteroffer notice (if applicable).
(8) Index of transfers, assignments, and sales. The licensee
must maintain (or be able to produce within a reasonable period of time)
an index of all loans transferred, assigned, or sold to or from another
person, including a third-party lender, or to a different location of the
licensee. Each record in the index must be retained for four years from
the date of the transaction, or two years from the date of the final entry
made on the consumer's account, whichever is later. (For transfers from
the licensee, the date of transfer is the date of the final entry.)
(9) Index of litigation, criminal charges, and repossessions.
A licensee must maintain (or be able to produce within a reasonable period of time) an index of each litigation action and criminal charge filed
by or against the licensee, as well as each repossession initiated by the
licensee. The index must show the consumer's name, account number,
and date of action. Each record in the index must be retained for a period of four years from the date of the transaction, or two years from
the date of the final entry made on the consumer's account, whichever
is later.
(10) Registration and surety bond records. A licensee must
maintain documentation of its registration as a credit services organization with the Texas Secretary of State, including its registration statement and registration certificate, to show its compliance with Texas
Finance Code, §393.101. A licensee must maintain complete documentation of any surety bond obtained by the licensee under Texas Finance Code, §393.401, and any surety bond required by the OCCC
under Texas Finance Code, §393.605. If a registration or surety bond
terminates, the licensee must maintain the documentation for one year
after the date of termination or until the next examination by OCCC
staff, whichever is later.
(11) Official correspondence file. A licensee must maintain
an official correspondence file, including all communications from the
OCCC, copies of correspondence and reports addressed to the OCCC
(including quarterly and annual reports), examination reports issued by
the OCCC, and notices of relocation described by §83.3008 of this title
(relating to Relocation of Licensed Office).
(12) General business records. A licensee must maintain
any other business records showing its compliance with applicable law,
including accounting records showing that the licensee maintains net
assets required by Texas Finance Code, §393.611, records used to compile quarterly and annual reports, records of disbursement of funds between the licensee and third-party lenders, receipts, bank statements,
and any master insurance policies.
§83.5005. Separation Between Credit Access Business and ThirdParty Lender.
(a) Generally. A licensee assists consumers in obtaining
extensions of credit by others, as provided by Texas Finance Code,
§393.001(3). A licensee must operate independently from any
third-party lender that makes a loan in connection with a transaction
under Texas Finance Code, Chapter 393. A licensee must be a separate
legal entity from any third-party lender.
(b) Special agency. The relationship between the licensee and
a third-party lender must be limited to special agency. A licensee may
not engage in a general agency or joint-venture relationship with a
third-party lender. A licensee may not select the underwriting criteria
used in determining whether the lender will make a loan to the consumer, but a licensee may apply underwriting criteria selected by the
third-party lender.
(c) Fee sharing. No portion of a fee charged by the licensee
may be passed on to the third-party lender. A fee charged by a licensee
may not directly benefit a third-party lender.
to adopt.
2015.
TRD-201504412
Leslie L. Pettijohn
Commissioner
♦
♦
♦
CHAPTER 84. MOTOR VEHICLE
INSTALLMENT SALES
SUBCHAPTER F. LICENSING
7 TAC §84.608
amendments to Title 7 of the Texas Administrative Code,
§84.608, concerning the rules applicable to a motor vehicle
installment sales license application denial hearing.
The agency circulated an early draft of the proposed amendments to interested stakeholders and held a stakeholders meet-
PROPOSED RULES
October 30, 2015
40 TexReg 7535
ing where the following background of the amendments was provided.
§155.1(a).
to the Chapter 9 rules of procedure. Chapter 84 contains one of
these references. The proposed amendments replace this reference with a reference to the rules of procedure made applicable
by the amendment to §9.1(a) of Title 7, described earlier. Accordingly, the proposed amendments will clarify that Chapter 9
and SOAH rules of procedure apply to a hearing conducted by
SOAH.
a motor vehicle installment sales license application denial hearing. The proposed amendment replaces the reference in this
subsection to Chapter 9 with a reference to §9.1(a) of Title 7 (relating to Application, Construction, and Definitions).
proposed.
Boulevard, Austin, Texas 78705-4207 or by email to lau-
40 TexReg 7536
October 30, 2015
Texas Register
[email protected]. To be considered, a written comment must be received on or before 5:00 p.m. on the 31st day
enforce Chapter 14 and Title 4 of the Texas Finance Code;
Texas Finance Code; and Texas Finance Code, §348.513,
which authorizes the commission to adopt rules to enforce
Chapter 348.
in Texas Finance Code, Chapters 14, 348, and Title 4.
(a) - (c)
(No change.)
(e) - (f)
(No change.)
to adopt.
2015.
TRD-201504417
Leslie L. Pettijohn
Commissioner
♦
♦
♦
CHAPTER 85. PAWNSHOPS AND CRAFTED
PRECIOUS METAL DEALERS
SUBCHAPTER A RULES OF OPERATION
FOR PAWNSHOPS
amendments to the following sections of Title 7 of the Texas
Administrative Code: §85.206, concerning the rules applicable
to a pawnshop employee license application denial hearing;
§85.304, concerning the rules applicable to a pawnshop license
application denial hearing; and §85.607, concerning the rules
applicable to a pawnshop license revocation, suspension, and
surrender hearing.
§§85.206, 85.304, and 85.607 are in effect, Commissioner Pettijohn has also determined that the public benefit anticipated as a
result of the proposed amendments will be that the commission's
rules will conform to current practice of administrative agencies,
will be more easily understood by persons required to comply
with the rules, and will be more easily enforced.
§155.1(a).
to the Chapter 9 rules of procedure. Chapter 85 contains three
of these references. The proposed amendments replace these
references with references to the rules of procedure made applicable by the amendment to §9.1(a) of Title 7, described earlier.
Accordingly, the proposed amendments will clarify that Chapter 9
SOAH.
Section 85.206(g) identifies the rules of procedure applicable to
a pawnshop employee license application denial hearing. The
proposed amendment replaces the reference in this subsection
to Chapter 9 with a reference to §9.1(a) of Title 7 (relating to
Section 85.304(e) identifies the rules of procedure applicable to
a pawnshop license application denial hearing. The proposed
amendment replaces the reference in this subsection to Chapter
9 with a reference to §9.1(a) of Title 7 (relating to Application,
Construction, and Definitions).
Section 85.607 identifies the rules of procedure applicable to a
pawnshop license revocation, suspension, and surrender hearing. The proposed amendment replaces the reference in this
subsection to Chapter 9 with a reference to §9.1(a) of Title 7 (relating to Application, Construction, and Definitions).
proposed.
DIVISION 2. PAWNSHOP LICENSE
7 TAC §85.206
and Texas Finance Code, §371.006, which authorizes the
commission to adopt rules to enforce Chapter 371.
(a) - (f)
(No change.)
(g) Hearing. When an application is denied, the applicant has
30 days from the date of the denial to request a hearing in writing to
contest the denial. Also, upon a proper and timely protest pursuant
to subsection (e) of this section, a hearing will be set. This hearing
will be conducted within 60 days of the date of the appeal or protest
unless the parties agree to an extension of time or the administrative
law judge grants an extension of time pursuant to the Administrative
Procedure Act, Texas Government Code, Chapter 2001 and the rules
of procedure applicable under §9.1(a) of this title (relating to Application, Construction, and Definitions) [Chapter 9 of this title (relating to
Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings)], before an administrative law judge who will recommend a
decision to the commissioner. The commissioner will then issue a final
decision after review of the recommended decision either approving or
denying the license.
(h)
(No change.)
to adopt.
PROPOSED RULES
October 30, 2015
40 TexReg 7537
7 TAC §85.607
2015.
commission to adopt rules to enforce Chapter 371 regarding
pawnshops.
TRD-201504418
Leslie L. Pettijohn
Commissioner
♦
DIVISION 3.
LICENSE
♦
♦
PAWNSHOP EMPLOYEE
7 TAC §85.304
§85.607. Hearings.
commission to adopt rules to enforce Chapter 371 regarding
pawnshops.
Hearings held under this subchapter will be held in accordance with
the rules of procedure applicable under §9.1(a) of this title (relating to
Application, Construction, and Definitions) [Administrative Hearing
Process and Rules of Procedure in the Finance Commission Agencies,
Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings (Chapter 9 of this title)], the Administrative Procedure Act,
the Texas Rules of Civil Procedure, and the Texas Rules of Evidence.
(e) Hearing. When an application is denied, the applicant has
30 days from the date of the denial to request a hearing in writing to
contest the denial. This hearing will be conducted pursuant to the Administrative Procedure Act, Texas Government Code, Chapter 2001
and the rules of procedure applicable under §9.1(a) of this title (relating to Application, Construction, and Definitions) [Chapter 9 of this
title]. When a hearing is requested following an initial license application denial, the hearing will be held within 60 days after a request
for a hearing is made unless the parties agree to an extension of time.
The commissioner will make a final decision approving or denying the
license application after receipt of the proposal for decision from the
administrative law judge.
(f) (No change.)
to adopt.
2015.
TRD-201504419
Leslie L. Pettijohn
Commissioner
♦
♦
DIVISION 6. LICENSE REVOCATION,
SUSPENSION, AND SURRENDER
40 TexReg 7538
2015.
(a) - (d) (No change.)
♦
to adopt.
October 30, 2015
Texas Register
TRD-201504420
Leslie L. Pettijohn
Commissioner
♦
♦
♦
CHAPTER 88. CONSUMER DEBT
MANAGEMENT SERVICES
SUBCHAPTER A. REGISTRATION
PROCEDURES
7 TAC §88.103
§88.103, concerning the rules applicable to a consumer debt
management services registration application denial hearing.
§155.1(a).
SOAH.
a consumer debt management services registration application
denial hearing. The proposed amendment replaces the reference in this subsection to Chapter 9 with a reference to §9.1(a)
of Title 7 (relating to Application, Construction, and Definitions).
enforce Chapter 14 and Title 4 of the Texas Finance Code.
in Texas Finance Code, Chapter 14 and Title 4.
(a) - (c)
(No change.)
(d) Hearing. Whenever an application is denied, the applicant has 30 days from the date the application was denied to request
in writing a hearing to contest the denial. This hearing will be conducted pursuant to the Administrative Procedure Act, Texas Government Code, Chapter 2001, and the rules of procedure applicable under
§9.1(a) of this title (relating to Application, Construction, and Definitions) [Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings)], before an administrative law judge who will recommend a decision to the commissioner.
The commissioner will then issue a final decision after review of the
recommended decision.
(e) - (f)
(No change.)
to adopt.
2015.
TRD-201504421
Leslie L. Pettijohn
Commissioner
♦
♦
♦
CHAPTER 89. PROPERTY TAX LENDERS
SUBCHAPTER C. APPLICATION
PROCEDURES
proposed.
§89.307, concerning the rules applicable to a property tax lender
license application denial hearing.
7 TAC §89.307
PROPOSED RULES
October 30, 2015
40 TexReg 7539
§155.1(a).
SOAH.
a property tax lender license application denial hearing. The proposed amendment replaces the reference in this subsection to
Chapter 9 with a reference to §9.1(a) of Title 7 (relating to Application, Construction, and Definitions).
proposed.
40 TexReg 7540
October 30, 2015
Texas Register
enforce Chapter 14 and Title 4 of the Texas Finance Code; and
Texas Finance Code, §351.007, which authorizes the commission to adopt rules to ensure compliance with Chapter 351.
(a) - (c)
(No change.)
(e) - (f)
(No change.)
to adopt.
2015.
TRD-201504422
Leslie L. Pettijohn
Commissioner
♦
♦
♦
PART 6. CREDIT UNION
DEPARTMENT
CHAPTER 91. CHARTERING, OPERATIONS,
MERGERS, LIQUIDATIONS
SUBCHAPTER A. GENERAL RULES
7 TAC §91.101
The Credit Union Commission (the Commission) proposes
amendments to §91.101 concerning Definitions and Interpretations.
The amendments revise and update certain
characteristics used to determine if a unifying factor among a
group of persons satisfies the requirements and qualifies for
inclusion in a credit union's field of membership. The absence
of a characteristic is determinative. The modification will help
ensure credit union compliance with membership requirements.
Additionally, the proposal clarifies that only a credit union owned,
deposit-taking ATM is included in the definition of "office."
The amendments proposed will result in more objective applications of the standards, less difficulty for credit unions, and more
efficient use of agency recourses.
(7) Catastrophic act--any natural or man-made disaster
such as a flood, tornado, earthquake, major fire or other disaster
resulting in physical destruction or damage.
The amendments are proposed as a result of the Department's
general rule review.
(8) Community of interest--a unifying factor among persons that by virtue of its existence, facilitates the successful organization of a new credit union or promotes economic viability of an existing
credit union. The types of community of interest currently recognized
are:
Shari Shivers, General Counsel, has determined that for the first
five-year period the proposed amendments are in effect there
will be no fiscal implications for state or local government as a
result of enforcing or administering the amended rule.
Ms. Shivers has also determined that for each year of the first
five years the proposed amendments are in effect, the public
benefits anticipated as a result of enforcing the rule will be
greater clarity and ease of use of the rule. There will be no
effect on small or micro businesses as a result of adopting
the amended rule. There is no economic cost anticipated to
the credit union system or to individuals for complying with the
amended rule if adopted.
Written comments on the proposal must be submitted within 30
days after its publication in the Texas Register to Shari Shivers,
General Counsel, Credit Union Department, 914 East Anderson
Lane, Austin, Texas 78752-1699.
The amendments are proposed under Texas Finance Code,
§15.402, which authorizes the Commission to adopt reasonable
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code.
The specific section affected by the proposed amended rule is
Texas Finance Code, §15.402.
§91.101.
(A) Associational--based on commonality of interest
related to membership in a recognized organization or a portion of
such a group. The organization must satisfy each of the following
criteria:
(i) The organization's primary purpose must be other
than providing eligibility for credit union services. For purposes of this
subparagraph, the practice of a credit union enrolling an individual in
an association without that person's knowledge or consent is presumed
to be the equivalent of providing eligibility for credit union services;
(ii) The organization's membership must be primarily composed of natural persons;
(iii) The organization's organizational documents
clearly define membership eligibility and it may not be based primarily
on a client or customer relationship; and
(iv) The organization observes the formalities of
corporate separateness from the credit union.
(v) With respect to an associational group within a
credit union's field of membership, a credit union may admit to membership:
Definitions and Interpretations.
(I)
Employees of the enterprise;
(a) Words and terms used in this chapter that are defined in
Finance Code §121.002, have the same meanings as defined in the Finance Code. The following words and terms, when used in this chapter,
shall have the following meanings, unless the context clearly indicates
otherwise.
(II) Directors, employees, volunteers, and retirees of the enterprise or its subsidiaries or affiliates;
(1) Act--the Texas Credit Union Act (Texas Finance Code,
Subtitle D).
(IV) Family members (as determined by the
credit union) of any of the above-described natural persons;
(2) Allowance for loan and lease losses (ALLL)--a general
valuation allowance that has been established through charges against
earnings to absorb losses on loans and lease financing receivables. An
ALLL excludes the regular reserve and special reserves.
(3) Applicant--an individual or credit union that has submitted an application to the commissioner.
(4) Application--a written request filed by an applicant
with the department seeking approval to engage in various credit union
activities, transactions, and operations or to obtain other relief for
which the commission is authorized by the act to issue a final decision
or order subject to judicial review.
(5) Appraisal--a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion as to
the market value of a specifically described asset as of a specific date,
supported by the presentation and analysis of relevant market information.
(6) Automated teller machine (ATM)--an automated, unstaffed credit union facility owned by or operated exclusively for the
credit union at which deposits are received, cash dispensed, or money
lent.
(III) Natural persons under contract to work for
the enterprise, or its subsidiaries or affiliates;
(V)
The enterprise and its subsidiaries and affili-
(VI)
Other persons approved by the commis-
ates; and
sioner.
(B) Occupational--based on an commonality of interest related to employment by, work for, an enterprise, or employment
within a specific trade, industry or profession (TIP) with a close nexus
and narrow attributes. A geographic limitation is not a requirement
for an occupational community of interest; however, for purposes of
describing the field of membership, the geographic areas being served
may be included. With respect to an occupational group within a credit
union's field of membership, a credit union may admit to membership:
(i)
Employees of the enterprise;
(ii) Directors, employees, volunteers, and retirees of
the enterprise or its subsidiaries or affiliates;
(iii) Natural persons under contract to work for the
enterprise, or its subsidiaries or affiliates;
(iv) Family members (as determined by the credit
union) of any of the above-described natural persons;
(v)
The enterprise and its subsidiaries and affiliates;
and
PROPOSED RULES
October 30, 2015
40 TexReg 7541
(vi) Other persons approved by the commissioner.
[(A) Occupational--based on an employment relationship that may be established by:]
[(i) employment (or a long term contractual relationship equivalent to employment) by a single employer, affiliated
employers or employers under common ownership with at least a 10%
ownership interest;]
[(ii) employment or attendance at a school; or]
[(iii) employment in the same trade, industry or profession (TIP) with a close nexus and narrow commonality of interest,
which is geographically limited.]
[(B) Associational--based on groups consisting primarily of natural persons whose members participate in activities developing common loyalties, mutual benefits, or mutual interests. In determining whether a group has an associational community of interest, the
commissioner shall consider the totality of the circumstances, which
include:]
[(i) whether the members pay dues,]
[(ii) whether the members participate in furtherance
of the goals of the association,]
[(iii) whether the members have voting rights,]
[(iv)
whether there is a membership list,]
[(v)
whether the association sponsors activities,]
[(vi) what the association's membership eligibility
requirements are, and]
[(vii) the frequency of meetings. Associations
formed primarily to qualify for credit union membership and associations based on client or customer relationships, do not have a sufficient
associational community of interest.]
(C) Geographic--based on a clearly defined and specific geographic boundary. Geographic boundaries may include a city,
county (single, multiple, or portions of a county) or their political
equivalent, school districts, or a clearly identifiable neighborhood. The
Department recognizes four types of affinity on which a geographic
community of interest can be based--persons who live in, worship
in, attend school in, or work in the geographic area. Businesses and
other legal entities with the geographic boundaries may also qualify
for membership. The geographic community of interest requirement
is met if the area to be served is in a recognized single political
jurisdiction, e.g., a city, county, or their political equivalent, or any
contiguous portion thereof. Some examples of insufficiently defined
or unacceptable geographic communities of interest are: [area where
persons have common interests and/or interact. More than one credit
union may share the same geographic community of interest area
where persons have common interests and/or interact. More than one
credit union may share the same geographic community of interest.
There are currently four types of affinity on which a geographic
community of interest can be based: persons, who]
(i) Persons who live or work within, and business
located within, a ten-mile radius of a credit union office;
(ii) Persons who live or work in the greater Houston
area; or
(iii) Persons who live or work in the State of Texas;
[(i) live in,]
October 30, 2015
attend school in, or]
[(iv) work in that community. The geographic community of interest requirements are met if the area to be served is in
a recognized single political jurisdiction, e.g., a city or a county, or a
portion thereof.]
(D) Other--The commissioner may authorize other
types of community of interest, if the commissioner determines that
either a credit union or foreign credit union has sufficiently demonstrated that a proposed factor creates an identifiable affinity among the
persons within the proposed group. Such a factor shall be well-defined,
have a geographic definition, and may not circumvent any limitation
or restriction imposed on one of the other enumerated types.
(9) Construction or development loan--a financing arrangement for acquiring property or rights to property, including
land or structures, with the intent of converting the property into
income-producing property such as residential housing for rental or
sale; commercial use; industrial use; or similar use. Construction
or development loan includes a financing arrangement for the major
renovation or development of property already owned by the borrower
that will convert the property to income-producing property or convert
the use of income-producing property to a different or expanded
use from its former use. Construction or development loan does not
include loans to finance maintenance, repairs, or improvements to an
existing income-producing property that do not change its use.
(10) Day--whenever periods of time are specified in this
title in days, calendar days are intended. When the day, or the last
day fixed by statute or under this title for taking any action falls on
Saturday, Sunday, or a state holiday, the action may be taken on the
next succeeding day which is not a Saturday, Sunday, or a state holiday.
(11) Department newsletter--the monthly publication that
serves as an official notice of all applications, and by which procedures
to protest applications are described.
(12) Field of membership (FOM)--refers to the totality of
persons a credit union may accept as members. The FOM may consist
of one group, several groups with a related community of interest, or
several unrelated groups with each having its own community of interest.
(13) Finance Code or Texas Finance Code--the codification
of the Texas statutes governing financial institutions, financial businesses, and related financial services, including the regulations and supervision of credit unions.
(14) Imminent danger of insolvency--a circumstance or
condition in which a credit union is unable or lacks the means to meet
its current obligations as they come due in the regular and ordinary
course of business, even if the value of its assets exceeds its liabilities;
or the credit union has a positive net worth ratio equal to two percent
or less of its assets.
(15) Improved residential property--real property consisting of a residential dwelling having one to four dwelling units, at least
one of which is occupied by the owner of the property. This term shall
also include a one to four unit dwelling occupied in whole or in part by
the owner on a seasonal basis.
(16) Indirect financing--a program in which a credit union
makes the credit decision in a transaction where the credit is extended
by the vendor and assigned to the credit union or a loan transaction
that generally involves substantial participation in and origination of
the transaction by a vendor.
(17) Loan-to-value ratio--the aggregate amount of all sums
borrowed including outstanding balances plus any unfunded commit-
[(ii) worship in,]
40 TexReg 7542
[(iii)
Texas Register
ment or line of credit from all sources on an item of collateral divided
by the market value of the collateral used to secure the loan.
(18) Loan and extension of credit--a direct or indirect advance of funds to a member, or on that member's behalf, that is conditioned upon the repayment of the funds by the member or the application of collateral. The terminology also includes the purchase of
a member's loan or other obligation, a lease financing transaction, a
credit sale, a line of credit or loan commitment under which the credit
union is contractually obligated to advance funds to or on behalf of a
member, an advance of funds to honor a check or share draft drawn on
the credit union by a member, or any other indebtedness not classified
as an investment security.
(19) Manufactured home--a HUD-code manufactured
home as defined by the Texas Manufactured Housing Standards Act.
The terminology may also include a mobile home, house trailer, or
similar recreational vehicle if the unit will be used as the member's
residence and the loan is secured by a first lien on the unit, and the unit
meets the requirements for the home mortgage interest deduction under the Internal Revenue Code (26 U.S.C. Section 163(a), (h)(2)(D)).
(20) Market Value--the most probable price which an asset
should bring in a competitive and open market under an arm's-length
sale, the buyer and seller each acting prudently and knowledgeably, and
assuming the price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified date and the
passing of ownership from seller to buyer where:
(A)
Buyer and seller are typically motivated;
(B) Both parties are well informed or well advised, and
acting in their own best interests;
(C) A reasonable time is allowed for exposure in the
open market;
(D) Payment is made in cash in U.S. dollars or in terms
of financial arrangements comparable thereto; and
(E) The price represents the normal consideration for
the property sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.
(21) Metropolitan Statistical Area (MSA)--a geographic
area as defined by the director of the U. S. Office of Management and
Budget.
(22) Mobile office--a branch office that does not have a single, permanent site, including a vehicle that travels to various public
locations to enable members to conduct their credit union business.
(23) Office--includes any service facility or place of
business established by a credit union at which deposits are received,
checks or share drafts paid, or money lent. This definition includes a
credit union owned branch, a mobile branch, an office operated on a
regularly scheduled weekly basis, a credit union owned deposit-taking
ATM, or a credit union owned electronic facility that meets, at a
minimum, these requirements; however, it does not include the credit
union's Internet website. This definition also includes a shared branch
or a shared branch network if either:
(A) the credit union has an ownership interest in the service facility either directly or through a CUSO or similar organization;
or
(B) the service facility is local to the credit union and
the credit union is an authorized participant in the service center.
(24) Overlap--the situation which exists when a group of
persons is eligible for membership in two or more state, foreign, or
federal credit unions doing business in this state. Notwithstanding this
provision, no overlap exists if eligibility for credit union membership
results solely from a family relationship.
(25) Pecuniary interest--the opportunity, directly or indirectly, to make money on or share in any profit or benefit derived from
a transaction.
(26) Person--an individual, partnership, corporation, association, government, governmental subdivision or agency, business
trust, estate, trust, or any other public or private entity.
(27) Principal office--the home office of a credit union.
(28) Protestant--a credit union that opposes or objects to
the relief requested by an applicant.
(29) Real estate or real property-an identified parcel or tract
of land. The term includes improvements, easements, rights of way,
undivided or future interest and similar rights in a tract of land, but does
not include mineral rights, timber rights, growing crops, water rights
and similar interests severable from the land when the transaction does
not involve the associated parcel or tract of land.
(30) Remote service facility--an automated, unstaffed
credit union facility owned or operated by, or operated for, the credit
union, such as an automated teller machine, cash dispensing machine,
point-of-sale terminal, or other remote electronic facility, at which
deposits are received, cash dispensed, or money lent.
(31) Reserves--allocations of retained earnings including
regular and special reserves, except for any allowances for loan, lease
or investment losses.
(32) Resident of this state--a person physically located in,
living in or employed in the state of Texas.
(33) Respondent--a credit union or other person against
whom a disciplinary proceeding is directed by the department.
(34) Shared service center--a facility which is connected
electronically with two or more credit unions so as to permit the facility, through personnel at the facility and the electronic connection,
to provide a credit union member at the facility the same credit union
services that the credit union member could lawfully obtain at the principal office of the member's credit union.
(35) Secured credit--a loan made or extension of credit
given upon an assignment of an interest in collateral pursuant to
applicable state laws so as to make the enforcement or promise more
certain than the mere personal obligation of the debtor or promisor.
Any assignment may include an interest in personal property or real
property or a combination thereof.
(36) TAC--an acronym for the Texas Administrative Code,
a compilation of all state agency rules in Texas.
(37) Title or 7 TAC--Title 7, Part VI of the Texas Administrative Code [(TAC)], Banking and Securities, which contains all of
the department's rules.
(38) Underserved area--a geographic area, which could
be described as one or more contiguous metropolitan statistical areas
(MSA) or one or more contiguous political subdivisions, including
counties, cities, and towns, that satisfy any one of the following
criteria:
(A) A majority of the residents earn less than 80 percent
of the average for all wage earners as established by the U. S. Bureau
of Labor Statistics;
PROPOSED RULES
October 30, 2015
40 TexReg 7543
(B) The annual household income for a majority of the
residents falls at or below 80 percent of the median household income
for the State of Texas, or the nation, whichever is higher; or
The amendments proposed allow more flexibility to credit unions
for determining a community of interest and will result in reduced
regulatory burden for credit unions.
(C) The commission makes a determination that the
lack of available or adequate financial services has adversely effected
economic development within the specified area.
Shari Shivers, General Counsel, has determined that for the first
five-year period the proposed amendments are in effect there
will be no fiscal implications for state or local government as a
result of enforcing or administering the amended rule.
(39) Uninsured membership share--funds paid into a credit
union by a member that constitute uninsured capital under conditions
established by the credit union and agreed to by the member including
possible reduction under §122.105 of the act, risk of loss through operations, or other forfeiture. Such funds shall be considered an interest in
the capital of the credit union upon liquidation, merger, or conversion.
(40) Unsecured credit--a loan or extension of credit based
solely upon the general credit financial standing of the borrower. The
term shall include loans or other extensions of credit supported by the
signature of a co-maker, guarantor, or endorser.
(b) The same rules of construction that apply to interpretation
of Texas statutes and codes, the definitions in the Act and in Government Code §2001.003, and the definitions in subsection (a) of this section govern the interpretation of this title. If any section of this title is
found to conflict with an applicable and controlling provision of other
state or federal law, the section involved shall be void to the extent of
the conflict without affecting the validity of the rest of this title.
to adopt.
2015.
TRD-201504432
Harold E. Feeney
Commissioner
♦
♦
SUBCHAPTER C.
♦
The Credit Union Commission (the Commission) proposes
amendments to §91.301, concerning Field of Membership. The
proposed amendments to §91.301 make changes to reflect that
a credit union's field of membership may include a mosaic of
communities of interest. More specifically, the amendments
expand the local service area requirement to a newly delineated
market area with certain limitations. The amendments eliminate
many existing restrictions imposed\ by the Commissioner. The
amendments also add a direct marketing restriction. Additionally, the amendments delete the restrictions for underserved
communities by granting the Department a more permissive
waiver provision and makes amendments necessary to include
the provisions of Subchapter K, related to Credit Union Development Districts. The amendments change and streamline the
notice requirements. Finally, the rule places certain affirmative
obligations on a credit union who presents an application to
expand their field of membership.
The amendments are proposed as a result of the Department's
general rule review.
October 30, 2015
Written comments on the proposal must be submitted within 30
days after its publication in the Texas Register to Shari Shivers,
General Counsel, Credit Union Department, 914 East Anderson
Lane, Austin, Texas 78752-1699.
The amendments are proposed under Texas Finance Code,
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code and under Texas Finance Code
§122.051, concerning membership.
§91.301. Field of Membership.
(a) General. Membership in a credit union shall be limited to
one or more groups, each of which (the Group) has its own community
of interest and is within the credit union's market [local service] area.
[In this section, local service area shall mean an area that is within
reasonable proximity of a credit union's office, and allows members
to be realistically served from that office.] For purposes of field of
membership, the Group as a whole will be considered to be within the
credit union's market [local service] area when:
(1) A majority of the persons in the Group live, work, or
gather regularly within the market [local service] area;
(2) The Group's corporate headquarters is located within
the market [local service] area; or
MEMBERS
7 TAC §91.301
40 TexReg 7544
Ms. Shivers has also determined that for each year of the first
five years the proposed amendments are in effect, the public
benefits anticipated as a result of enforcing the rule will be
greater clarity and ease of use of the rule. There will be no
effect on small or micro businesses as a result of adopting
the amended rule. There is no economic cost anticipated to
the credit union system or to individuals for complying with the
amended rule if adopted.
Texas Register
(3) The persons in the Group are "paid from" or "supervised from" an office or facility located within the market [local service] area. The commissioner may impose a geographical limitation
on any Group if the commissioner reasonably determines that the applicant credit union does not have the facilities and staffing to serve a
larger group or there are other operational or management concerns.
(b) Delineation of market area. A credit union shall delineate
its market area in the bylaws. A credit union whose field of membership
does not include any geographic communities of interest, may delineate
its membership bylaw provisions as its market area.
(1) Market area. The market area for a credit union shall
consist generally of one or more MSA's or metropolitan divisions or
one or more contiguous political subdivisions, such as counties, cities,
or towns in which the credit union has its principal place of business,
offices, and deposit-taking ATMs.
(2) Limitations on market area. Each credit union's market
area(s):
(A) Must consist only of whole metropolitan areas or
political subdivisions;
(B) Must be of reasonable geographic size, taking into
account the credit union's size, financial condition, and location of its
offices and deposit-taking ATMs; and
feasibility, complies with the requirements of this rule, and no protestant reasonably establishes a basis for denying the request, it shall be
approved.]
(C) May not reflect illegal discrimination.
[(3) If a finding is made that overlap protection is warranted, the commissioner shall reject the application or require the applicant to limit or eliminate the overlap by adding exclusionary language to the text of the amendment, e.g., "excluding persons eligible
for primary membership in any occupation or association based credit
union that has an office within a specified proximity of the applicant
credit union at the time membership is sought." Exclusionary clauses
are rarely appropriate for inclusion on a geographic community of interest.]
[(b) Other persons eligible for membership. A number of persons by virtue of their close relationship to a Group may be included
in the field of membership at the option of the applicant credit union.
These include:]
[(1) members of the family or household of a member of
the Group;]
[(2) volunteers performing services for or on behalf of the
Group;]
[(3) organizations owned or controlled by a member or
members of the Group, and any employees and members of those
organizations;]
[(4)
spouses of persons who died while in the Group;]
[(5)
employees of the credit union;]
[(6) subsidiaries of the credit union and their employees;
and businesses and other organizations whose employees or members
are within the Group.]
(c)
Multiple-groups.
(1) The commissioner may approve a credit union's original articles of incorporation and bylaws or a request for approval of an
amendment to a credit union's bylaws to serve one or more communities of interest or a combination of types of communities of interest.
(2) In addition to general requirements, special requirements pertaining to multiple-Group applications may be required
before the commissioner will grant such a certificate or approve such
an amendment.
(A) Each Group to be included in the proposed field of
membership of the credit union must have its own community of interest.
(B) Each associational or occupational Group must individually request inclusion in the proposed credit union's field of membership.
(d) Direct marketing restriction. A credit union with a geographic community of interest may not direct marketing targeted primarily at the persons in an occupational or associational Group unless:
(1) the Group was included in the bylaws of the credit
union prior to October 31, 2015. An occupational or associational
Group is "included" in the bylaws of a credit union if the underlying
enterprise or organization, as applicable, is specifically named in the
credit unions bylaws.
(2) a management official of the underlying enterprise or
organization has provided the credit union with a written statement,
signed by the official, that the Group desires service by the credit union.
[(d)
Overlap protection.]
[(1) The commissioner will only consider the financial effect of an overlap proposed by an application to expand a credit union's
field of membership or when a charter application proposes an overlap
for a Group of 3,000 members or more.]
[(2) The commissioner will weigh the information in support of the application and any information provided by a protesting or
affected credit union. If the applicant has the financial capacity to serve
the financial needs of the proposed members, demonstrates economic
[(4) Generally, if the overlapped credit union does not submit a notice of protest form, and the department determines that there
is no safety and soundness problem, an overlap will be permitted. If,
however, a notice of protest is filed, the commissioner will consider the
following in performing an overlap analysis:]
[(A) whether the overlap is incidental in nature, ie., the
group(s) in question is so small as to have no material effect on the
overlapped credit union;]
[(B) whether there is limited participation by members
of the group(s) in the overlapped credit union after the expiration of a
reasonable period of time;]
[(C) whether the overlapped credit union provides requested service;]
[(D)
the financial effect on the overlapped credit union;]
[(E)
the desires of the group(s); and]
[(F) the best interests of the affected group(s) and the
credit union members involved.]
[(5) Where a sponsor organization expands its operations
internally, by acquisition or otherwise, the credit union may serve these
new entrants to its field of membership if they are part of the community
of interest described in the credit union's bylaws. Where acquisitions
are made which add a new subsidiary or affiliate, the group cannot be
served until the entity is included in the field of membership through
the application process.]
[(6) Credit unions affected by the organizational restructuring or merger of a group within its field of membership must apply for
a modification of their fields of membership to reflect the group to be
served.]
(e)
Underserved communities.
(1) The Department may waive any provision of this section as the commissioner deems appropriate to facilitate credit union
service to low and moderate income persons.
(2) A credit union may extend membership to persons and
organizations in an underserved community where such area has been
designated a credit union development district in accordance with Subchapter K (related to Credit Union Development Districts).
[(1) All credit unions may include underserved areas in
their fields of membership, without regard to location. More than one
credit union can serve the same underserved area.]
[(2) Once an underserved area has been added to a credit
union's field of membership, the credit union must establish and maintain an office or facility in the community. For the purposes of this
subsection, service facility is defined as a place where shares are accepted for members' accounts, loan applications are accepted and loan
proceeds are disbursed. This definition includes a credit union owned
PROPOSED RULES
October 30, 2015
40 TexReg 7545
branch, a shared branch, a mobile branch, and an office operated on a
regularly scheduled weekly basis, or a credit union owned electronic
facility that meets, at a minimum, these requirements. This definition
does not include an ATM or a credit union's Internet website.]
[(3) A credit union desiring to add an underserved area
must document that the community meets the definition. In addition,
the credit union must develop a business plan specifying how it will
serve the community. The business plan, at a minimum, must identify the credit and depository needs of the community and detail how
the credit union plans to serve those needs. The credit union will be
expected to regularly review the business plan to determine if the community is being adequately served. The commissioner may require periodic service status reports from a credit union pertaining to the underserved area to ensure that of the area are being met, as well as requiring
such reports before allowing a credit union to add an additional underserved area.]
(f) Parity with Federal Credit Unions. Credit unions will be
allowed to have, at a minimum, at least as much flexibility as federal
credit unions have in field of membership regulation. If a credit union
proposes a type of Group that the National Credit Union Administration
has previously determined meets the Federal requirements, the commissioner shall approve the application unless the commissioner finds
that the credit union has not demonstrated sufficient managerial and
financial capacity to safely and soundly serve such expanded membership.
(g)
Application to expand field of membership.
(1) In order to request the approval of the commissioner to
add a Group to its field of membership [bylaws], a credit union must
submit a written application to the Department. The applicant credit
union shall have the burden to show to the Department such facts and
data that support the requirements and considerations in this rule. In
reviewing such application, the commissioner shall consider:
the credit union to expand its field of membership to include another
geographic community of interests or change its market area.
(2) A credit union has a continuing and affirmative obligation to help meet the financial needs of a geographic community of
interest. This obligation, however, does not require a credit union to
make loans or to provide services that are inconsistent with safe and
sound operations.
(i)
Applicability of this section.
(1) This section also applies to the conversion of a foreign
or federal credit union to a credit union chartered and operating under
Texas Finance Code, Title 3, Subtitle D.
(2) This section does not apply to mergers where the continuing credit union is organized and operating under Texas Finance
Code, Title 3, Subtitle D. The continuing credit union may amend its
bylaws to add the field of membership of the merging credit union.
(3) This section does not restrict Groups added to a credit
union's bylaws prior to October 31, 2015.
to adopt.
2015.
TRD-201504433
Harold E. Feeney
Commissioner
♦
♦
♦
(A) [(1)] Whether the Group has adequate unifying
characteristics or a mutual interest such that the safety and soundness
of the credit union is maintained;
TITLE 10. COMMUNITY DEVELOPMENT
(B) [(2)] The ability of credit unions to maintain parity
and to compete fairly with their counterparts;
HOUSING AND COMMUNITY AFFAIRS
(C) [(3)] Service by the credit union that is responsive
to the convenience and needs of prospective members;
(D) [(4)] Protection for the interest of current and future
members of the credit union; and
(E) [(5)] The encouragement of economic progress in
this State by allowing opportunity to expand services and facilities.
(2) Notice published in accordance with Section 91.104
(relating to Public Notice and Comment on Certain Applications) is
deemed sufficient notification to all credit unions that the applicant
credit union has submitted a request to expand its field of membership
and comments on the proposed expansion are being accepted.
(h)
Plan to Serve Geographic Community of Interest.
(1) A credit union must develop a business plan specifying
how it will serve a proposed geographic community of interest. The
business plan, at a minimum, must identify the credit and depository
needs of the geographic area and detail how the credit union plans to
serve those needs. The board of directors should periodically evaluate
the credit union's record of helping to meet the credit needs of a geographic area(s) included in its field of membership. The commissioner
may require a service status report from a credit union before allowing
40 TexReg 7546
October 30, 2015
Texas Register
CHAPTER 5. COMMUNITY AFFAIRS
PROGRAMS
SUBCHAPTER A. GENERAL PROVISIONS
10 TAC §5.7
The Texas Department of Housing and Community Affairs (the
"Department") proposes amendments to 10 TAC Chapter 5,
§5.7, Fidelity Bond Requirements.
The purpose of the amendments to 10 TAC §5.7 is to remove
reference to Office of Management and Budget ("OMB") Circular
A-110 "Administrative Requirements for Grants to Non-Profits,"
which has been replaced by requirements now included in 2
Code of Federal Regulations ("CFR") Part 200 and addressed
elsewhere in this Subchapter, and to update Subrecipient
requirements for fidelity bond documentation. The proposed
amendments make changes to harmonize the section with 10
TAC §5.2 and 10 TAC Chapter 2, Subchapter B, and reduce the
reporting burden for Subrecipients.
FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that, for each year of the first five years the amendments
are in effect, enforcing or administering the amendments does
not have any foreseeable implications related to costs or revenues of the state or local governments.
after. A copy of the actual policy shall remain on file with the Subrecipient and shall be subject to monitoring by the Department.
PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined
that, for each year of the first five years the amendments are in
effect, the public benefit anticipated as a result of the amendments will be clarity of program requirements and programmatic
adherence to federal guidelines. There will not be any economic
cost to any individuals required to comply with the amendments.
(5) Subrecipients are responsible for filing claims against
the fidelity bond when a covered loss is discovered. The Department
may take any one or more of the actions described in Chapter 2, Subchapter B of this Part, titled "Enforcement Regarding Community Affairs Contract Subrecipients." [subparagraphs (A) - (D) of this paragraph for noncompliance.]
ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The
Department has determined that there will be no economic effect
on small or micro-businesses.
[(A) Deny Subrecipient's requests for advances and
place the Subrecipient on a Modified Cost Reimbursement plan until
written assurance of compliance is received by the Department.]
REQUEST FOR PUBLIC COMMENT. The public comment period will be held October 23, 2015, to November 23, 2015, to
receive input on the amendments. Written comments may be
submitted to the Texas Department of Housing and Community
Affairs, Attention: Annette Cornier, Rule Comments, P.O. Box
13941, Austin, Texas 78711-3941, by email to the following address: [email protected], or by fax to (512)
475-3935. ALL COMMENTS MUST BE RECEIVED BY 5:00
P.M. NOVEMBER 23, 2015.
[(B) Withhold Subrecipient payments (either reimbursement or advance) until written assurance of compliance is
received by the Department.]
STATUTORY AUTHORITY. The amendments are proposed pursuant to Texas Government Code §2306.053, which authorizes
the Department to adopt rules, and Chapter 2306, Subchapter
E, which authorizes the Department to administer its Community
Affairs programs.
The proposed amendments affect no other code, article, or
statute.
§5.7. Fidelity Bond Requirements.
The Department is required to assure that fiscal control and accounting
procedures for federally funded entities will be established to assure the
proper disbursal and accounting for the federal funds paid to the state
[(A-110 "Administrative Requirements for Grants to Non-Profits")].
In compliance with that assurance the Department requires program
Subrecipients to maintain adequate fidelity bond coverage. A fidelity
bond is a bond indemnifying the Subrecipient against losses resulting
from the fraud or lack of integrity, honesty or fidelity of one or more of
its employees, officers, or other persons holding a position of trust.
(1) In administering Contracts, Subrecipients shall observe
their regular requirements and practices with respect to bonding and
insurance. In addition, the Department may impose bonding and insurance requirements by contract.
(2) If a Subrecipient is a non-governmental organization,
the Department requires an adequate fidelity bond. If the amount of the
fidelity bond is not prescribed in the contract, the fidelity bond must be
for a minimum of $10,000 or an amount equal to the contract if less
than $10,000. The bond must be obtained from a company holding a
certificate of authority to issue such bonds in the State of Texas.
(3) The fidelity bond coverage must include all persons authorized to sign or counter-sign checks or to disburse sizable amounts
of cash. Persons who handle only petty cash (amounts of less than
$250) need not be bonded, nor is it necessary to bond officials who are
authorized to sign payment vouchers, but are not authorized to sign or
counter-sign checks or to disburse cash.
(4) [The Department must receive written assurance from
the Subrecipient that the required fidelity bond has been established.]
The Subrecipient must receive an assurance letter [must be received]
from the bonding company or agency stating the type of bond, the
amount and period of coverage, the positions covered, and the annual
cost of the bond. Compliance must be continuously maintained there-
[(C) Suspend performance of the contract until written
assurance of compliance is received by the Department.]
[(D)
Contract termination.]
to adopt.
2015.
TRD-201504426
Timothy K. Irvine
Executive Director
♦
♦
♦
CHAPTER 12. MULTIFAMILY HOUSING
REVENUE BOND RULES
10 TAC §§12.1 - 12.10
(Editor's note: The text of the following sections proposed for repeal
will not be published. The sections may be examined in the offices
of the Texas Department of Housing and Community Affairs or in the
Texas Register office, James Earl Rudder Building, 1019 Brazos Street,
Austin, Texas.)
The Texas Department of Housing and Community Affairs
(the "Department") proposes the repeal of 10 TAC Chapter
12, §§12.1 - 12.10, concerning the 2015 Multifamily Housing
Revenue Bond Rules. The purpose of the repeal is to allow for
the proposal and adoption of new sections. The proposed new
Chapter 12, concerning the 2016 Multifamily Housing Revenue
Bond Rules, is published concurrently with this proposed repeal
in this issue of the Texas Register.
FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that, for each year of the first five years the repeal will
be in effect, enforcing or administering the repeal does not have
any foreseeable implications related to costs or revenues of the
state or local governments.
that, for each year of the first five years the repeal is in effect,
the public benefit anticipated as a result of the repeal will be
the adoption of new rules for multifamily housing revenue bonds;
PROPOSED RULES
October 30, 2015
40 TexReg 7547
providing updates and greater clarity, and enhancing the state's
ability to provide decent, safe and sanitary housing administered
by the Department. There will not be any economic cost to any
individuals required to comply with the repeal.
Department has determined that there will be no economic effect
on small or micro-businesses.
REQUEST FOR PUBLIC COMMENT. The public comment
period will be held October 30, 2015, to November 30, 2015, to
receive input on the repeal. Written comments may be submitted to the Texas Department of Housing and Community Affairs,
Shannon Roth, Rule Comments, P.O. Box 13941, Austin, Texas
78711-3941 or by fax to (512) 475-1895. ALL COMMENTS
MUST BE RECEIVED BY 5:00 P.M. November 30, 2015.
STATUTORY AUTHORITY. The repeal is proposed pursuant to
Texas Government Code, §2306.053, which authorizes the Department to adopt rules.
The proposed repeal affects no other code, article, or statute.
§12.1. General.
§12.3. Bond Rating and Investment Letter.
§12.4. Pre-Application Process and Evaluation.
§12.5. Pre-Application Threshold Requirements.
§12.6. Pre-Application Scoring Criteria.
§12.7. Full Application Process.
§12.8. Refunding Application Process.
§12.9. Regulatory and Land Use Restrictions.
§12.10. Fees.
to adopt.
2015.
TRD-201504450
Tom Gouris
Deputy Executive Director
♦
♦
♦
10 TAC §§12.1 - 12.10
"Department") proposes new 10 TAC Chapter 12, §§12.1 12.10, concerning the 2016 Multifamily Housing Revenue Bond
Rules. The purpose of the proposed new rules is to implement
changes that will improve the 2016 Private Activity Bond Program. The Multifamily Housing Revenue Bond Rules outline the
threshold and scoring related requirements associated with private activity bond funding from the Department. The proposed
repeal of existing Chapter 12 is published concurrently with this
rulemaking.
FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that, for each year of the first five years the new sections will be in effect, enforcing or administering the new sections
40 TexReg 7548
October 30, 2015
Texas Register
does not have any foreseeable implications related to costs or
revenues of the state or local governments.
that, for each year of the first five years the new sections will be
in effect, the public benefit anticipated as a result of the new sections will be the adoption of new rules for multifamily housing revenue bonds; providing updates and greater clarity and thereby
enhancing the state's ability to provide decent, safe and sanitary
housing administered by the Department. The average cost of
filing an application is between $40,000 and $50,000, which may
vary depending on the specific type of application, location of the
development site, and other non-state of Texas funding sources
utilized. The proposed rules do not, on average, result in an increased cost of filing an application as compared to the existing
program rules.
Department has determined that there will be no new or additional economic effect on small or micro-businesses. The average cost of filing an application is between $40,000 and $50,000,
which may vary depending on the specific type of application,
location of the development site, and other non-state of Texas
funding sources utilized. The proposed rules do not, on average,
result in an increased cost of filing an application as compared
to the existing program rules.
REQUEST FOR PUBLIC COMMENT. The public comment period will be held October 30, 2015, to November 30, 2015, to
receive input on the new sections. Written comments may be
submitted to the Texas Department of Housing and Community Affairs, Shannon Roth, Rule Comments, P.O. Box 13941,
Austin, Texas 78711-3941 or by fax to (512) 475-1895. ALL
COMMENTS MUST BE RECEIVED BY 5:00 P.M. November 30,
2015.
STATUTORY AUTHORITY. The new sections are proposed pursuant to Texas Government Code, §2306.053, which authorizes
the Department to adopt rules.
The proposed new sections affect no other code, article, or
statute.
§12.1. General.
(a) Authority. The rules in this chapter apply to the issuance
of multifamily housing revenue bonds ("Bonds") by the Texas Department of Housing and Community Affairs ("Department"). The Department is authorized to issue Bonds pursuant to Texas Government
Code, Chapter 2306. Notwithstanding anything in this chapter to the
contrary, Bonds which are issued to finance the Development of multifamily rental housing are subject to the requirements of the laws of the
State of Texas, including but not limited to Texas Government Code,
Chapters 1372 and 2306, and federal law pursuant to the requirements
of Internal Revenue Code ("Code"), §142.
(b) General. The purpose of this chapter is to state the Department's requirements for issuing Bonds, the procedures for applying for
Bonds and the regulatory and land use restrictions imposed upon Bond
financed Developments. The provisions contained in this chapter are
separate from the rules relating to the Department's administration of
the Housing Tax Credit program. Applicants seeking a Housing Tax
Credit Allocation should consult Chapter 11 of this title (relating to the
Housing Tax Credit Program Qualified Allocation Plan) and Chapter
10 of this title (relating to Uniform Multifamily Rules) for the current
program year. In general, the Applicant will be required to satisfy the
requirements of the Qualified Allocation Plan ("QAP") and Uniform
Multifamily Rules in effect at the time the Certificate of Reservation is
issued by the Texas Bond Review Board. If the applicable QAP or Uniform Multifamily Rules contradict rules set forth in this chapter, the applicable QAP or Uniform Multifamily Rules will take precedence over
the rules in this chapter. The Department encourages participation in
the Bond program by working directly with Applicants, lenders, Bond
Trustees, legal counsels, local and state officials and the general public
to conduct business in an open, transparent and straightforward manner.
(c) Costs of Issuance. The Applicant shall be responsible for
payment of all costs related to the preparation and submission of the
pre-application and Application, including but not limited to, costs associated with the publication and posting of required public notices and
all costs and expenses associated with the issuance of the Bonds, regardless of whether the Application is ultimately approved or whether
Bonds are ultimately issued. At any stage during the process, the Applicant is solely responsible for determining whether to proceed with
the Application and the Department disclaims any and all responsibility and liability in this regard.
(d) Taxable Bonds. The Department may issue taxable Bonds
and the requirements associated with such Bonds, including occupancy
requirements, shall be determined by the Department on a case by case
basis.
(e) Waivers. Requests for waivers of program rules must be
made in accordance with §10.207 of this title (relating to Waiver of
Rules for Applications).
§12.2.
Definitions.
The following words and terms, when used in this chapter, shall have
Any capitalized terms not specifically mentioned in this section shall
have the meaning as defined in Texas Government Code, Chapter 2306,
§§141, 142, and 145 of the Internal Revenue Code, and Chapter 10 of
this title (relating to Uniform Multifamily Rules).
(1) Institutional Buyer--Shall have the meaning prescribed
under 17 CFR §230.501(a), but excluding any natural person or any
director or executive officer of the Department (17 CFR §230.501(a)(4)
- (6)), or as defined by 17 CFR §230.144(A), promulgated under the
Securities Act of 1935, as amended.
(2) Persons with Special Needs--Shall have the meaning
prescribed under Texas Government Code, §2306.511.
(3) Bond Trustee--A financial institution, usually a trust
company or the trust department in a commercial bank, that holds collateral for the benefit of the holders of municipal securities. The Bond
Trustee's obligations and responsibilities are set forth in the Indenture.
§12.3. Bond Rating and Investment Letter.
(a) Bond Ratings. All publicly offered Bonds issued by the
Department to finance Developments shall have a debt rating the equivalent of at least an "A" rating assigned to long-term obligations by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. If such rating is based
upon credit enhancement provided by an institution other than the Applicant or Development Owner, the form and substance of such credit
enhancement shall be subject to approval by the Board, evidenced by
a resolution authorizing the issuance of the credit enhanced Bonds.
(b) Investment Letters. Bonds rated less than "A," or Bonds
which are unrated must be placed with one or more Institutional Buyers and must be accompanied by an investor letter acceptable to the
Department. Subsequent purchasers of such Bonds shall also be qualified as Institutional Buyers and shall execute and deliver to the Department an investor letter in a form satisfactory to the Department.
Bonds rated less than "A" and Bonds which are unrated shall be issued
in physical form, in minimum denominations of one hundred thousand
dollars ($100,000), and shall carry a legend requiring any purchasers
of the Bonds to sign and deliver to the Department an investor letter in
a form acceptable to the Department.
§12.4. Pre-Application Process and Evaluation.
(a) Pre-Inducement Questionnaire. Prior to the filing of a preapplication, the Applicant shall submit the Pre-Inducement Questionnaire, in the form prescribed by the Department, so the Department
can get a preliminary understanding of the proposed Development plan
before a pre-application and corresponding fees are submitted. Information requested by the Department in the questionnaire includes, but
is not limited to, the financing structure, borrower and key principals,
previous housing tax credit or private activity bond experience, related
party or identity of interest relationships and contemplated scope of
work (if proposing Rehabilitation). After reviewing the pre-inducement questionnaire, Department staff will follow-up with the Applicant
to discuss the next steps in the process and may schedule a pre-inducement conference call or meeting. Prior to the submission of a pre-application, it is important that the Department and Applicant communicate
regarding the Department's objectives and policies in the development
of affordable housing throughout the State using Bond financing. The
acceptance of the questionnaire by the Department does not constitute
a pre-application or Application and does not bind the Department to
any formal action regarding an inducement resolution.
(b) Undesirable Neighborhood Characteristics.
If the
Development Site has any of the characteristics described in
§10.101(a)(4)(B) of this title (relating to Site and Development
Requirements and Restrictions), the Applicant must disclose the
presence of such characteristics to the Department. Disclosure may
be done at time of pre-application and handled in connection with
the inducement or it can be addressed at the time of Application
submission. The Application may be subject to termination should
staff conclude that the Development Site has any characteristics found
in §10.101(a)(4)(B) of this title (relating to Site and Development
Requirments and Restrictions) and the Applicant failed to disclose.
(c) Pre-Application Process. An Applicant who intends to pursue Bond financing from the Department shall submit a pre-application
by the corresponding pre-application submission deadline, as set forth
by the Department. The required pre-application fee as described in
§12.10 of this chapter (relating to Fees) must be submitted with the
pre-application in order for the pre-application to be accepted by the
Department. Department review at the time of the pre-application is
limited and not all issues of eligibility and documentation submission
requirements pursuant to Chapter 10 of this title (relating to Uniform
Multifamily Rules) are reviewed. The Department is not responsible
for notifying an Applicant of potential areas of ineligibility or other deficiencies at the time of pre-application. If the Development meets the
criteria as described in §12.5 of this chapter (relating to Pre-Application Threshold Requirements), the pre-application will be scored and
ranked according to the selection criteria as described in §12.6 of this
chapter (relating to Pre-Application Scoring Criteria).
(d) Scoring and Ranking. The Department will rank the preapplication according to score within each priority defined by Texas
Government Code, §1372.0321. All Priority 1 pre-applications will
be ranked above all Priority 2 pre-applications which will be ranked
above all Priority 3 pre-applications. This priority ranking will be
used throughout the calendar year. The selection criteria, as further
described in §12.6 of this chapter, reflect a structure which gives priority consideration to specific criteria as outlined in Texas Government
Code, §2306.359. In the event two or more pre-applications receive the
same score, the Department will use the tie breaker factors as outlined
PROPOSED RULES
October 30, 2015
40 TexReg 7549
in §11.7 of this title (relating to Tie Breaker Factors) in the order they
are presented to determine which pre-application will receive preference in consideration of a Certificate of Reservation.
submission of a pre-application and the submission of an Application,
Applicants are required to notify the newly elected (or appointed) official.
(e) Inducement Resolution. After the pre-applications have
been scored and ranked, the pre-application and proposed financing
structure will be presented to the Department's Board for consideration
of an inducement resolution declaring the Department's initial intent to
issue Bonds with respect to the Development. Approval of the inducement resolution does not guarantee final Board approval of the Bond
Application. Department staff may recommend that the Board not approve an inducement resolution for a pre-application. Each Development is unique, and therefore, making the final determination to issue
Bonds is often dependent on the issues presented at the time the full
Application is considered by the Board.
§12.6. Pre-Application Scoring Criteria.
This section identifies the scoring criteria used in evaluating and ranking pre-applications. The criteria identified below include those items
required under Texas Government Code, §2306.359 and other criteria considered important by the Department. Any scoring items that
require supplemental information to substantiate points must be submitted in the pre-application, as further outlined in the Multifamily
Bond Pre-Application Procedures Manual. Applicants proposing multiple sites will be required to submit a separate pre-application for each
Development Site. Each Development Site will be scored on its own
merits and the final score will be determined based on an average of all
of the individual scores.
§12.5. Pre-Application Threshold Requirements.
The threshold requirements of a pre-application include the criteria
listed in paragraphs (1) - (9) of this section. As the Department reviews the pre-application the assumptions as reflected in Chapter 10,
Subchapter D of this title (relating to Underwriting and Loan Policy)
will be utilized even if not reflected by the Applicant in the pre-application.
(1) Submission of the multifamily bond pre-application in
the form prescribed by the Department;
(2) Completed Bond Review Board Residential Rental Attachment for the current program year;
(3) Site Control, evidenced by the documentation required
under §10.204(10) of this title (relating to Required Documentation
for Application Submission). The Site Control must be valid through
the date of the Board meeting at which the inducement resolution is
considered and must meet the requirements of §10.204(10) of this title
at the time of Application;
(4) Boundary survey or plat clearly identifying the location
and boundaries of the subject Property;
(5) Local area map that shows the location of the Development Site and the location of at least six (6) community assets within
a one mile radius (two miles if in a Rural Area). Only one community
asset of each type will count towards the number of assets required.
The mandatory community assets and specific requirements are identified in §10.101(a)(2) of this title (relating to Site and Development
Requirements and Restrictions);
(6) Organization Chart showing the structure of the Development Owner and of any Developer or Guarantor, providing the
names and ownership percentages of all Persons having an ownership
interest in the Development Owner or the Developer or Guarantor, as
applicable.
(7) Distribution List Form, as provided in the pre-application, to include the anticipated financing participants;
(8) Evidence of Entity Registration or Reservation with the
Texas Office of the Secretary of State;
(9) A certification, as provided in the pre-application, that
the Applicant met the requirements and deadlines for public notifications as identified in §10.203 of this title (relating to Public Notifications (§2306.6705(9)). Notifications must not be older than three
(3) months prior to the date of Application submission. Re-notification will be required by Applicants who have submitted a change
from pre-application to Application that reflects a total Unit increase
of greater than 10 percent or a 5 percent increase in density (calculated
as units per acre) as a result of a change in the size of the Development
Site. In addition, should a change in elected official occur between the
40 TexReg 7550
October 30, 2015
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(1) Income and Rent Levels of the Tenants. Pre-applications may qualify for up to (10 points) for this item.
(A) Priority 1 designation includes one of clauses (i) (iii) of this subparagraph. (10 points)
(i) Set aside 50 percent of Units rent capped at 50
percent AMGI and the remaining 50 percent of units rents capped at
60 percent AMGI; or
(ii) Set aside 15 percent of units rent capped at 30
percent AMGI and the remaining 85 percent of units rent capped at 60
percent AMGI; or
(iii) Set aside 100 percent of units rent capped at 60
percent AMGI for Developments located in a census tract with a median income that is higher than the median income of the county, MSA
or PMSA in which the census tract is located.
(B) Priority 2 designation requires the set aside of at
least 80 percent of the Units capped at 60 percent AMGI. (7 points)
(C) Priority 3 designation. Includes any qualified residential rental development. Market rate units can be included under
this priority. (5 points)
(2) Cost of Development per Square Foot. (1 point) For
this item, costs shall be defined as either the Building Cost or the Hard
Costs as represented in the Development Cost Schedule, as originally
provided in the pre-application. This calculation does not include indirect construction costs. Pre-applications that do not exceed $95 per
square foot of Net Rentable Area will receive one (1) point. Rehabilitation will automatically receive (1 point).
(3) Unit Sizes. (5 points) The Development must meet the
minimum requirements identified in this subparagraph to qualify for
points. Points for this item will be automatically granted for Applications involving Rehabilitation (excluding Reconstruction) provided
they are requested in the Private Activity Bond Pre-Application Scoring Form.
(A)
five-hundred-fifty (550) square feet for an Effi-
ciency Unit;
(B) six-hundred-fifty (650) square feet for a one Bedroom Unit;
(C) eight-hundred-fifty (850) square feet for a two Bedroom Unit;
(D) one-thousand-fifty (1,050) square feet for a three
Bedroom Unit; and
(E) one-thousand, two-hundred-fifty (1,250) square
feet for a four Bedroom Unit.
(4) Extended Affordability. (2 points) A pre-application
may qualify for points under this item for Development Owners that
are willing to extend the Affordability Period for a Development to a
total of thirty-five (35) years.
(5) Unit and Development Features. A minimum of
(7 points) must be selected, as certified in the pre-application, for
providing specific amenity and quality features in every Unit at no
extra charge to the tenant. The amenities and corresponding point
structure is provided in §10.101(b)(6)(B) of this title (relating to Site
and Development Requirements and Restrictions). The amenities
selected at pre-application may change at Application so long as
the overall point structure remains the same. The points selected at
pre-application and/or Application and corresponding list of amenities
will be required to be identified in the LURA and the points selected
must be maintained throughout the Extended Use Period. Applications
involving scattered site Developments must have a specific amenity
located within each Unit to count for points. Rehabilitation Developments will start with a base score of (3 points).
(6) Common Amenities. All Developments must provide
at least the minimum threshold of points for common amenities based
on the total number of Units in the Development as provided in subparagraphs (A) - (F) of this paragraph. The common amenities include
those listed in §10.101(b)(5) of this title and must meet the requirements as stated therein. The Owner may change, from time to time,
the amenities offered; however, the overall points as selected at Application must remain the same. For Developments with 41 Units or
more, at least two (2) of the required threshold points must come from
the Green Building Features as identified in §10.101(b)(5)(C)(xxxi) of
this title.
(9) Development Support/Opposition. (Maximum +24 to
-24 points) Each letter will receive a maximum of +3 to -3 and must be
received ten (10) business days prior to the date of the Board meeting at
which the pre-application will be considered. Letters must clearly state
support or opposition to the specific Development. State Representatives or Senators as well as local elected officials to be considered are
those in office at the time the pre-application is submitted and represent
the district containing the proposed Development Site. Letters of support from State or local elected officials that do not represent the district
containing the proposed Development Site will not qualify for points
under this exhibit. Neutral letters, letters that do not specifically refer
to the Development or do not explicitly state support will receive (zero
(0) points). A letter that does not directly express support but expresses
it indirectly by inference (i.e., a letter that says "the local jurisdiction
supports the Development and I support the local jurisdiction") will be
treated as a neutral letter.
(A) State Senator and State Representative of the districts whose boundaries include the proposed Development Site;
(B) Mayor of the municipality (if the Development is
within a municipality or its extraterritorial jurisdiction);
(C) All elected members of the Governing Body of the
municipality (if the Development is within a municipality or its extraterritorial jurisdiction);
(D) Presiding officer of the Governing Body of the
county in which the Development Site is located;
(E) All elected members of the Governing Body of the
county in which the Development Site is located;
Developments with 16 to 40 Units must qualify for
(F) Superintendent of the school district in which the
Development Site is located; and
(B) Developments with 41 to 76 Units must qualify for
(G) Presiding officer of the board of trustees of the
school district in which the Development Site is located.
(A)
(4 points);
(7 points);
(C) Developments with 77 to 99 Units must qualify for
(10 points);
(D)
for (14 points);
Developments with 100 to 149 Units must qualify
(E) Developments with 150 to 199 Units must qualify
for (18 points); or
(F)
for (22 points).
Developments with 200 or more Units must qualify
(7) Tenant Supportive Services. (8 points) By electing
points, the Applicant certifies that the Development will provide
supportive services, which are listed in §10.101(b)(7) of this title,
appropriate for the proposed tenants and that there will be adequate
space for the intended services. The provision and complete list of
supportive services will be included in the LURA and must be maintained throughout the Extended Use Period. The Owner may change,
from time to time, the services offered; however, the overall points as
selected at Application must remain the same. The services provided
should be those that will directly benefit the Target Population of the
Development and accessible to all. No fees may be charged to the
tenants for any of the services. Services must be provided on-site or
transportation to those off-site services identified on the list must be
provided. The same service may not be used for more than one scoring
item. All services must be provided by a person on the premises.
(8) Underserved Area. An Application may qualify to receive up to (2 points) if the Development Site is located in an Underserved Area as further described in §11.9(c)(6)(A)-(G) of this title.
(10) Preservation Initiative. (10 points) Preservation Developments, including rehabilitation proposals on properties which are
nearing expiration of an existing affordability requirement within the
next two (2) years or for which there has been a rent restriction requirement in the past ten (10) years may qualify for points under this item.
Evidence must be submitted in the pre-application.
(11) Declared Disaster Areas. (7 points) If at the time the
complete pre-application is submitted or at any time within the twoyear period preceding the date of submission, the proposed Development Site is located in an area declared to be a disaster area under Texas
Government Code, §418.014.
§12.7. Full Application Process.
(a) Application Submission. Once the inducement resolution
has been approved by the Board, an Applicant who elects to proceed
with submitting a full Application to the Department must submit the
complete tax credit Application pursuant to §10.201 of this title (relating to Procedural Requirements for Application Submission).
(b) Eligibility Criteria. The Department will evaluate the Application for eligibility and threshold at the time of full Application
pursuant to Chapter 10 of this title (relating to Uniform Multifamily
Rules). If there are changes to the Application at any point prior to
closing that have an adverse affect on the score and ranking order and
that would have resulted in the pre-application being placed below another pre-application in the ranking, the Department will terminate the
Application and withdraw the Certificate of Reservation from the Bond
Review Board (with the exception of changes to deferred developer's
fees and support or opposition points). The Development and the Applicant must satisfy the requirements set forth in Chapter 10 of this
PROPOSED RULES
October 30, 2015
40 TexReg 7551
title (relating to Uniform Multifamily Rules) and Chapter 11 of this title (relating to Housing Tax Credit Program Qualified Allocation Plan)
in addition to Texas Government Code, Chapter 1372, the applicable
requirements of Texas Government Code, Chapter 2306, and the Code.
The Applicant will also be required to select a Bond Trustee from the
Department's approved list as published on its website.
(c) Bond Documents. Once the Application has been submitted and the Applicant has deposited funds to pay costs, the Department's bond counsel shall draft Bond documents.
(d) Public Hearings. For every Bond issuance, the Department
will hold a public hearing in order to receive comments from the public pertaining to the Development and the issuance of the Bonds. The
Applicant or member of the Development Team must be present at the
public hearing and will be responsible for conducting a brief presentation on the proposed Development and providing handouts at the hearing that should contain at a minimum, a description of the Development, maximum rents and income restrictions. If the proposed Development is Rehabilitation then the presentation should include the proposed scope of work that is planned for the Development. All handouts
must be submitted to the Department for review at least two (2) days
prior to the public hearing. Publication of all notices required for the
public hearing shall be at the sole expense of the Applicant, as well as
any facility rental fees or required deposits.
(e) Approval of the Bonds. Subject to the timely receipt and
approval of commitments for financing, an acceptable evaluation for eligibility, the satisfactory negotiation of Bond documents, and the completion of a public hearing, the Board, upon presentation by Department staff, will consider the approval of the final Bond resolution relating to the issuance, final Bond documents and in the instance of privately placed Bonds, the pricing, terms and interest rate of the Bonds.
The process for appeals and grounds for appeals may be found under §1.7 of this title (relating to Staff Appeals Process) and §1.8 of
this title (relating to Board Appeals Process). To the extent applicable
to each specific Bond issuance, the Department's conduit multifamily
Bond transactions will be processed in accordance with 34 TAC Part
9, Chapter 181, Subchapter A (relating to Bond Review Board Rules)
and Texas Government Code, Chapter 1372.
(f) Local Permits. Prior to closing on the Bond financing, all
necessary approvals, including building permits from local municipalities, counties, or other jurisdictions with authority over the Development Site must have been obtained or evidence that the permits are
obtainable subject only to payment of certain fees must be submitted
to the Department.
§12.8. Refunding Application Process.
(a) Application Submission. Owners who wish to refund or
modify tax-exempt bonds that were previously issued by the Department must submit to the Department a summary of the proposed refunding plan or modifications. To the extent such modifications constitute a re-issuance under state law the Applicant shall then be required
to submit a refunding Application in the form prescribed by the Department pursuant to the Bond Refunding Application Procedures Manual.
(b) Bond Documents. Once the Department has received the
refunding Application and the Applicant has deposited funds to pay
costs, the Department's bond counsel will draft the required Bond documents.
(c) Public Hearings. Depending on the proposed modifications to existing Bond covenants a public hearing may be required.
Such hearing must take place prior to obtaining Board approval and
must meet the requirements pursuant to §12.7(d) of this chapter (relating to Full Application Process) regarding the presence of a member of
40 TexReg 7552
October 30, 2015
Texas Register
the Development Team and providing a summary of proposed Development changes.
(d) Rule Applicability. Refunding Applications must meet the
requirements pursuant to Chapter 10 of this title (relating to Uniform
Multifamily Rules) and Chapter 11 of this title (relating to Housing
Tax Credit Program Qualified Allocation Plan) with the exception of
criteria stated therein specific to the Competitive Housing Tax Credit
Program. At the time of the original award the Application would have
been subject to eligibility and threshold requirements under the QAP
in effect the year the Application was awarded. Therefore, it is anticipated the Refunding Application would not be subject to the site and
development requirements and restrictions pursuant to §10.101 of this
title (relating to Site and Development Requirements and Restrictions).
The circumstances surrounding a refunding Application are unique to
each Development; therefore, upon evaluation of the refunding Application, the Department is authorized to utilize its discretion in the
applicability of the Department's rules as it deems appropriate.
§12.9. Regulatory and Land Use Restrictions.
(a) Filing and Term of Regulatory Agreement. A Bond Regulatory and Land Use Restriction Agreement will be filed in the property records of the county in which the Development is located for each
Development financed from the proceeds of Bonds issued by the Department. The term of the Regulatory Agreement will be based on the
criteria as described in paragraphs (1) - (3) of this subsection, as applicable:
(1) the longer of thirty (30) years, from the date the Development Owner takes legal possession of the Development;
(2) the end of the remaining term of the existing federal government assistance pursuant to Texas Government Code,
§2306.185; or
(3)
(b)
the period required by the Code.
Federal Set Aside Requirements.
(1) Developments which are financed from the proceeds of
Private Activity Bonds must be restricted under one of the two minimum set-asides as described in subparagraphs (A) and (B) of this paragraph:
(A) at least 20 percent of the Units within the Development shall be occupied or held vacant and available for occupancy at
all times by persons or families whose income does not exceed 50 percent of the area median income; or
(B) at least 40 percent of the Units within the Development shall be occupied or held vacant and available for occupancy at
all times by persons or families whose income does not exceed 60 percent of the area median income.
(2) The Development Owner must designate at the time of
Application which of the two set-asides will apply to the Development
and must also designate the selected priority for the Development in
accordance with Texas Government Code, §1372.0321. Units intended
to satisfy set-aside requirements must be distributed evenly throughout
the Development, and must include a reasonably proportionate amount
of each type of Unit available in the Development.
(3) No tenant qualifying under either of the set-asides
shall be denied continued occupancy of a Unit in the Development
because, after commencement of such occupancy, such tenant's income increases to exceed the qualifying limit; provided, however, that
should a tenant's income, as of the most recent determination thereof,
exceed 140 percent of the applicable income limit and such tenant
constitutes a portion of the set-aside requirement of this section, then
such tenant shall only continue to qualify for so long as no Unit of
comparable or smaller size is rented to a tenant that does not qualify
as a Low-Income Tenant.
§12.10.
Fees.
LICENSING AND REGULATION
CHAPTER 67.
AUCTIONEERS
(a) Pre-Application Fees. The Applicant is required to submit, at the time of pre-application, the following fees: $1,000 (payable
to TDHCA), $2,500 (payable to the Department's bond counsel) and
$5,000 (payable to the Texas Bond Review Board (BRB) pursuant to
Texas Government Code, §1372.006(a)). These fees cover the costs of
pre-application review by the Department, its bond counsel and filing
fees to the BRB.
The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas
Administrative Code (TAC) Chapter 67, §§67.20, 67.25, 67.30,
67.65 and 67.80; proposes new rules §§67.21, 67.70, 67.71 and
67.72; and proposes the repeal of current §67.70, regarding the
Auctioneer program.
(b) Application Fees. At the time of Application the Applicant
is required to submit a tax credit application fee of $30/unit and $10,000
for the bond application fee (for multiple site Applications the application fee shall be $10,000 or $30/unit, whichever is greater). Such
fees cover the costs associated with Application review and the Department's expenses in connection with providing financing for a Development. For Developments proposed to be structured as part of a
portfolio such application fees may be reduced on a case by case basis
at the discretion of the Executive Director.
House Bill 2481 (H.B. 2481), 84th Legislature, Regular Session
(2015), made substantive changes to Chapter 1802, Occupations Code in the regulation of auctioneers. The bill authorized
the Texas Commission of Licensing and Regulation (Commission) to establish an associate auctioneer license; exempted certain auctions of property through the internet from Chapter 1802;
and added several exemptions for auctioneers to conduct auctions of certain motor vehicles. The proposed amendments, new
rules and repeal are necessary to implement the changes made
by H.B. 2481 and make editorial and technical corrections.
(c) Closing Fees. The closing fee for Bonds, other than refunding Bonds is equal to 50 basis points (0.005) of the issued principal amount of the Bonds. The Applicant will also be required to pay at
closing of the Bonds the first two years of the administration fee equal
to 20 basis points (0.002) of the issued principal amount of the Bonds
and a Bond compliance fee equal to $25/unit (such compliance fee shall
be applied to the third year following closing).
(d) Application and Issuance Fees for Refunding Applications.
For refunding Applications the application fee will be $10,000 unless
the refunding is not required to have a public hearing, in which case the
fee will be $5,000. The closing fee for refunding Bonds is equal to 25
basis points (0.0025) of the issued principal amount of the refunding
Bonds. If applicable, administration and compliance fees due at closing
may be prorated based on the current billing period of such fees. If
additional volume cap is being requested other fees may be required
as further described in the Bond Refunding Applications Procedures
Manual.
The proposed amendments to §67.20 make editorial corrections
and add an alternative path to obtaining an auctioneer license,
via experience gained through licensure as an associate auctioneer.
Proposed new §67.21 establishes the requirements for an associate auctioneer.
The proposed amendments to §67.25 add "associate auctioneer" to the continuing education requirements and make an editorial change.
The proposed amendments to §67.30 provide clarity for exemptions regarding internet based auctions.
Proposed amendment to the title of §67.65 removes "Education"
from the name of the advisory board to bring about consistency
in the names of the Department's boards.
(e) Administration Fee. The annual administration fee is equal
to 10 basis points (0.001) of the outstanding bond amount on its date
of calculation and is paid as long as the Bonds are outstanding.
The proposed repeal and replacement of current §67.70 will reorganize the current standards and add certain standards of practice for auctioneers into a more logical format, by separating the
duties relating to advertising, auctioneering and recordkeeping.
(f) Bond Compliance Fee. The Bond compliance monitoring
fee is equal to $25/Unit.
The proposed new §67.71 creates duties and responsibilities for
the sponsoring auctioneer.
to adopt.
Proposed new §67.72 creates duties and responsibilities for associate auctioneers.
2015.
TRD-201504451
Tom Gouris
Deputy Executive Director
♦
♦
♦
TITLE 16. ECONOMIC REGULATION
The proposed amendments to §67.80 create an application fee
and renewal fee for the associate auctioneer license.
William H. Kuntz, Jr., Executive Director, has determined that for
the first five-year period the proposed amendments, new rules,
and repeal are in effect there will be no direct cost to state or local government as a result of enforcing or administering the proposed rules. There is no estimated loss in revenue to the state
as a result of enforcing or administering the proposed amendments, new rules or repeal. The anticipated increase in revenue
to the state would be $5,000 annually, which is comprised of the
annual license application fee and annual renewal fee for the associate which is $25 multiplied by the anticipated population of
associates which was 200 at the time the program was abolished
by H.B. 3038 on June 14, 2013.
PROPOSED RULES
October 30, 2015
40 TexReg 7553
Mr. Kuntz also has determined that for each year of the first
five-year period the proposed amendments, new rules and repeal are in effect, the public benefit will be auctioneers who have
had experience in the various aspects of the auction business
through the associate program and will also benefit from employment opportunities in this occupation.
There will be no anticipated economic effect on small and micro-businesses who are required to comply with the rules as proposed. An auctioneer is not required to hire an associate auctioneer.
Since the agency has determined that the proposed amendments and new rules will have no adverse economic effect on
small or micro-businesses, preparation of an Economic Impact
Statement and a Regulatory Flexibility Analysis, under Texas
Government Code §2006.002, is not required.
Comments on the proposal may be submitted by mail to Pauline
Easley, Legal Assistant, General Counsel's Office, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin,
Texas 78711; or by facsimile to (512) 475-3032; or electronically
to [email protected]. The deadline for comments
is 30 days after publication in the Texas Register.
16 TAC §§67.20, 67.21, 67.25, 67.30, 67.65, 67.70 - 67.72,
67.80
The amendments and new rules are proposed under Texas Occupations Code, Chapters 51 and 1802, which authorize the
Commission, the Department's governing body, to adopt rules
as necessary to implement these chapters and any other law
establishing a program regulated by the Department.
The statutory provisions affected by the proposal are those set
forth in Texas Occupations Code, Chapters 51 and 1802. No
other statutes, articles, or codes are affected by the proposal.
§67.20.
License Requirements--Auctioneer.
(a)
(No change.)
(b)
To obtain a license as an auctioneer an applicant must:
be at least 18 years of age;
(2)
be a citizen of the United States or a legal alien; and
(3)
either:
§67.25. Continuing Education.
(a)
(No change.)
(b) To renew a license as an auctioneer or associate auctioneer,
a licensee must complete six hours of continuing education in courses
approved by the department, including two hours of instruction in laws
and rules that regulate the conduct of auctioneers and associate auctioneers.
(c) - (d) (No change.)
(e) A licensee must [shall] retain a copy of the certificate of
completion for a course for one year after the date of completion. In
conducting any inspection or investigation of the licensee, the department may examine the licensee's records to determine compliance with
this subsection.
(f) To be approved under Chapter 59 of this title, a provider's
course must be dedicated to instruction in one or more of the following
topics:
(1) - (2) (No change.)
(3) other laws and rules that regulate the conduct of auctioneers and associate auctioneers;
(4) - (5) (No change.)
(g) (No change.)
§67.30. Exemptions.
(a) Any auction of property conducted by live bid call, regardless of whether the property may be bid upon through the internet, is
subject to this chapter and Texas Occupations Code, Chapter 1802 and
is not exempt under §1802.002(14). [A person is not engaged in the
business of selling property at auction for purposes of Texas Occupations Code, §1802.002(4), if the person acquired the property at issue
for reasons other than resale at auction.]
(c) This chapter does not apply to a person providing an online
platform to facilitate an auction.
§67.65. Auctioneer [Education] Advisory Board.
(A) [(3)] pass a written or oral examination provided by
the department; or
(B) provide proof of employment and licensure as an
associate auctioneer for at least two (2) years, and of having participated in at least ten (10) auctions, as described in §67.72(c).
(4) hold a high school diploma or a high school equivalency certificate;
(5) not have been convicted of a felony during the [within]
five (5) years preceding [of] the application date; and
(6) show proof of successful completion of at least eighty
(80) [80] hours of classroom instruction at an auction school with a
curriculum approved by the department.
§67.21. License Requirements--Associate Auctioneers.
An applicant for licensure as an associate must:
submit a completed application along with required
fees;
40 TexReg 7554
(3) either be a citizen of the United States or a legal alien.
(b) (No change.)
(1)
(1)
(2) be employed under the direct supervision of an auctioneer licensed under this chapter; and
October 30, 2015
Texas Register
(a) - (d)
(No change.)
§67.70. Auctioneer Standards of Practice.
(a)
Advertising
(1) All advertisements designed to solicit auction business,
including the advertisement of an auction, shall include the auctioneer's
name as it appears on the license and the license number.
(2) If an auctioneer advertises an auction as "absolute" or
"without reserve", no lots included may have a minimum bid. Advertising may include the wording "many lots are without reserve"; however, the auction may not be titled, headed or called an "absolute" or
"without reserve" auction unless all lots meet the criteria.
(3) An auctioneer who intends to charge a buyer's premium
at an auction must state this condition and the amount of the buyer's
premium in all advertising for the auction.
(4) An auctioneer may not make a false or misleading statement in an advertisement.
(b)
Recordkeeping
(1) An auctioneer must furnish to the department the name,
including assumed names, addresses, website, or social media pages,
and telephone numbers of all auction companies that he owns or operates.
(2) An auctioneer must report any change of address to the
department in writing within thirty (30) days of the change.
(3) Each licensed auctioneer shall keep records relative to
all auctions for a minimum of two (2) years from the date of the sale.
(4) The records for each auction must state the name(s) and
address of the owners of the property auctioned, the date of the sale,
the name of the auctioneer and clerk of the sale, the gross proceeds,
the location and account number of the auctioneer's trust or escrow
account, an itemized list of all expenses charged to the consignor or
seller, a list of all purchasers at the auction and a description and selling
price for each item sold.
(5) The auctioneer shall keep, as part of the records for
each auction, all documents relating to the auction, These documents
shall include, but are not limited to, settlement sheets, written contracts,
copies of advertising and clerk sheets.
(6)
These documents include records and documents on-
(7)
Each licensed auctioneer must:
line.
(A) Maintain a separate trust or escrow account in a federally insured bank or savings and loan association, in which shall be
deposited all funds belonging to others which come into the auctioneer's possession and control.
(B) Deposit all proceeds from an auction into the trust
or escrow account within seventy two (72) hours of the auction unless
the owner or consignor of the property auctioned is paid immediately
after the sale or the written contract stipulates other terms, such as sight
drafts.
(C) Pay any public monies, including, but not limited to
state sales tax, received into the State Treasury at the times and as per
the regulations prescribed by law; and
(2) A licensee may not allow any person who is not either
a Texas licensed auctioneer or associate auctioneer who is directly supervised by a licensed auctioneer, to call bids at a sale.
(3) A licensee may not knowingly use or permit the use of
false bidders at any auction.
(4) All licensed auctioneers shall notify consumers and service recipients of the department's name, mailing address, telephone
number and website "www.tdlr.texas.gov" for purposes of directing
complaints to the department. The notification shall be included on
any auction listing contract and on at least one of the following:
(A) A sign prominently displayed at the place of the
auction or on any auction website;
(B) Bills of sale or receipt to be given to buyers; or
(C) Bidder cards.
§67.71. Requirements--Sponsoring Auctioneer.
(a) There must be a legitimate employee-employer relationship between an associate auctioneer and the sponsoring auctioneer or
between the associate and an auction company operated by a licensed
auctioneer that employs the sponsoring auctioneer.
(b) A sponsoring auctioneer must be on the premises and directly supervising an associate auctioneer when the associate is bid calling.
(c) A sponsoring auctioneer is responsible for supervision of
an associate auctioneer as the associate performs the items listed in
§67.72(c).
(d) An auctioneer who terminates his sponsorship of an associate auctioneer must:
(1)
within thirty (30) days notify the department in writing;
and
(2) provide signed documentation to the associate auctioneer showing:
(A)
the beginning and ending date of sponsorship;
(B) date and location of up to ten (10) auctions bid
called by the associate;
(D) Pay all amounts due the seller or consignor within
fifteen (15) banking days of the auction unless otherwise required by
statute or a written contract between license holder and seller.
formed.
(E) A licensed auctioneer shall cooperate with the department in the performance of an investigation. This includes, but
is not limited to responding to requests from the department, including
producing requested documents or other information, within thirty (30)
days of request.
§67.72. Requirements--Associate Auctioneers.
(a) An associate auctioneer shall provide auction services only
when under the supervision of the licensed Texas auctioneer whose
name is on file with the department as the associate's sponsoring auctioneer.
(F) The failure of a licensed auctioneer to timely pay
a consignor may subject the licensed auctioneer to a claim under the
Auctioneer Education and Recovery Fund.
(b) When bid calling, an associate auctioneer must be under
the direct on-premises supervision of the sponsoring auctioneer.
(c)
At auction
(1) Before beginning an auction, a licensee must ensure the
announcement of, give notice, display notice or disclose:
(C) items listed in §67.72(c), that the associate has per-
(c) In order to be eligible for licensure as an auctioneer without
taking the examination, an associate auctioneer must participate in all
aspects of the auction business involving the laws of this state, in at
least ten (10) auctions including but not limited to:
(1)
appraising;
(2)
inventorying;
(B) the terms and conditions of the sale including
whether a buyer's premium will be assessed; and
(3)
advertising;
(4)
property make ready;
(C) if the owner, consignor, or agent thereof has reserved the right to bid.
(5) site selection and preparation;
(A) that the auctioneer conducting the sale is licensed
by the department;
(6) lotting;
PROPOSED RULES
October 30, 2015
40 TexReg 7555
♦
♦
registration;
(8)
clerking;
16 TAC §67.70
(9)
cashiering;
Texas Department of Licensing and Regulation or in the Texas Register
(10)
bid-calling;
(11)
ring working;
(12)
property check out;
(13)
security;
(14)
accounting; and
(15)
managing an escrow account.
The repeal is proposed under Texas Occupations Code, Chapters and 1802, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement
these chapters and any other law establishing a program regulated by the Department.
(d) An associate auctioneer must report any change of address
to the department within thirty (30) days.
(e) When a sponsoring auctioneer terminates the sponsorship
of an associate auctioneer, the associate may not provide auction
services until an agreement with a new sponsoring auctioneer, whose
name and signature are on file with the department, has been made.
§67.80. Fees.
(a) (No change.)
$25.
(c) [(b)] The annual application fee to renew an auctioneer
license is $50.
(d) The annual fee to renew an associate auctioneer license is
$25.
(e) [(c)] Late renewal fees for licenses issued under this chapter are provided under §60.83 of this title (relating to Late Renewal
Fees).
[(d)] Inactive License Status--Auctioneer
(1)
The fee to place a license on 'inactive' status--no charge.
(2) The fee to renew a license on 'inactive' status--renewal
fee as stated in subsection (c) or (d).
(3)
The fee to change from 'inactive' status to 'active status'
is $25.
(g) [(e)] Revised/Duplicate License/Certificate/Permit/Registration--$25.
(h) [(f)] A $250 curriculum review fee will be assessed to
all schools submitting their curriculum for review and approval by the
department.
(i)
[(g)] The initial recovery fund fee is $50.
(j)
[(h)] All fees are non-refundable.
to adopt.
2015.
TRD-201504430
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
40 TexReg 7556
The statutory provisions affected by the proposal are those set
forth in Texas Occupations Code, Chapters 51 and 1802. No
other statutes, articles, or codes are affected by the proposal.
§67.70. Requirements--Auctioneer.
to adopt.
(b) The application fee for an associate auctioneer license is
(f)
♦
(7)
October 30, 2015
Texas Register
2015.
TRD-201504429
William H. Kuntz, Jr.
Executive Director
Texas Department of Licensing and Regulation
♦
♦
♦
TITLE 19. EDUCATION
PART 1. TEXAS HIGHER EDUCATION
COORDINATING BOARD
CHAPTER 9. PROGRAM DEVELOPMENT IN
PUBLIC TWO-YEAR COLLEGES
SUBCHAPTER M. BLOCK SCHEDULING
19 TAC §§9.660 - 9.666
The Texas Higher Education Coordinating Board (Coordinating
Board) proposes new §§9.660 - 9.666 regarding Rules Applying
to Program Development in Public Two-Year Colleges concerning Block Scheduling. The intent of these new sections is to establish the Board's oversight for public junior colleges regarding
block scheduling of certain associate degree and certificate programs. House Bill 1583, 84th Texas Legislature, Regular Session requires public junior colleges to adopt at least five associate degree or certificate programs from the allied health, nursing, or career and technology education fields as block scheduled programs. In addition, Senate Bill 215, 83rd Texas Legislature, Regular Session, called for the Board to engage institutions of higher education in a negotiated rulemaking process
as described in Subchapter 2008, Government Code in the development of such rules. The new Block Scheduling rules proposed for this chapter were reviewed and approved by the Negotiated Rulemaking Committee on Block Scheduling on October
13, 2015.
Dr. Rex C. Peebles, Assistant Commissioner for Academic
Quality and Workforce, has determined that for the first five
years there will be no fiscal implications for state or local governments as a result of these proposed new rules.
Dr. Peebles has also determined that for the first five years the
new rules are in effect, the program will encourage more students to complete associate degree or certificate programs in
a timelier manner and with fewer semester credit hours that do
not apply to the program of study. There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no impact on local employment.
Comments on the proposed new rules may be submitted by mail
to Rex C. Peebles, Assistant Commissioner, Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711
or via email at [email protected]. Comments
will be accepted for 30 days following publication of the proposal
in the Texas Register.
The new rules are proposed under the Texas Education Code,
Chapter 130, §130.0095, which provides the Coordinating Board
with the authority to adopt rules to administer the section.
The new rules affect the implementation of Texas Education
Code, Chapter 130.
§9.660. Purpose.
The purpose of this subchapter is to establish the coordinating board's
oversight for public junior colleges regarding block scheduling of certain associate degree or certificate programs.
§9.661. Authority.
Authority for this subchapter is provided by Texas Education Code,
§130.0095, which provides the board with the authority to administer
block schedule programs.
The following words and terms, when used in this subchapter, shall
(1) Block Scheduling--Co-registration in a group of
courses equal to a full-time load related to a specific program of study
or major to facilitate schedule predictability from semester to semester
and encourage timely degree completion.
(2) Board or Coordinating Board--The Texas Higher Education Coordinating Board.
(3) Full-time load--The number of semester credit hours a
student is required to complete per semester to complete the program
in the amount of time the degree or certificate represents. As examples,
a Level I certificate should be completed in one year or less; a Level II
certificate should be completed in less than two years; and an associate
degree should be completed in two years.
(4) Block Scheduled Program--A Coordinating Board approved associate of applied science degree or credit-bearing certificate
program in the fields of allied health, nursing, or career education and
technology utilizing block scheduling.
(5) Public Junior College--Has the meaning as defined in
Texas Education Code, §61.003(2).
§9.663. Block Scheduled Program.
A block scheduled program established at a public junior college under this section must allow a student to enroll in courses equal to that
of a full-time load for the program of study and shall be offered each
semester in scheduled blocks, such as a morning, full-day, afternoon,
evening, or weekend block to provide scheduling predictability from
semester to semester for students enrolled in the program. Clinical,
practicum and other externships may deviate from the block schedule.
§9.664. Adoption of Block Scheduled Programs.
Each public junior college shall establish a block scheduled program
curriculum from among the allied health, nursing, and career education
and technology associate degree or certificate programs offered by the
public junior college in at least five of those programs not previously
offered as a block scheduled curriculum.
§9.665. Block Enrollment.
Each public junior college shall publish in advance of each semester
the available curricula for each associate degree or certificate program
identified as a block scheduled program offered by the college for that
semester. Students may enroll in an entire block scheduled program
curriculum offered under the program in a semester, rather than enrolling in individual courses leading toward the degree or certificate.
§9.666. Demonstration of Hardship.
If a public junior college does not offer the minimum number of block
scheduled programs as described by this subchapter, the institution
must provide detailed written documentation to the coordinating board
describing the reason why offering the required number of programs
creates a hardship for the institution and how students would be impacted by offering additional block scheduled programs. Factors creating an institutional hardship may include, but are not limited to, programmatic accreditation requirements; statutory requirements; number
of students enrolled in the program; availability of faculty; or availability of classroom, laboratory, or other types of instructional/experiential
spaces. The Coordinating Board will review the documentation provided and make a determination to approve or deny a request to not
offer the minimum number of block scheduled programs as defined by
this subchapter.
to adopt.
2015.
TRD-201504441
Bill Franz
General Counsel
Texas Higher Education Coordinating Board
♦
♦
♦
CHAPTER 15. NATIONAL RESEARCH
UNIVERSITIES
19 TAC §15.10
The Texas Higher Education Coordinating Board (Coordinating
Board) proposes amendments to §15.10, pertaining to the Texas
Research Incentive Program (TRIP). The proposed amendment
to this section explicitly allows matches for donations restricted
to undergraduate research and disallows matches for donations
restricted to undergraduate financial aid grants.
Dr. Julie Eklund, Interim Assistant Commissioner, Strategic
Planning and Funding, Texas Higher Education Coordinating
Board (THECB), has determined that for each year of the first
PROPOSED RULES
October 30, 2015
40 TexReg 7557
five years the section is in effect, there will not be a fiscal impact
to the state.
Dr. Eklund has determined that there will be no impact on the
public. There is no effect on small businesses. There are no anticipated economic costs to persons who are required to comply
with the section as proposed. There is no impact on local employment.
Comments on the proposed amendments may be submitted to
Mr. David Young, Senior Director, Special Projects, Strategic
Planning and Funding, 1200 East Anderson Lane, Austin, TX
78752, [email protected]. Comments will be accepted for 30 days following publication of the proposal in the
Texas Register.
The amendments are proposed under the Texas Education
Code, §62.123. Section 62.124 provides the coordinating board
with the authority to adopt rules relating to the Texas Research
Incentive Program (TRIP).
The amendments affect Texas Education Code, §62.123, Matching Grants.
§15.10. Texas Research Incentive Program (TRIP).
(a) - (b)
(No change.)
(c) Definitions.
The following words and terms, when used in this subchapter, shall
(1) - (2)
(No change.)
(No change.)
(6) Ineligible Funds-A gift for undergraduate scholarships
or undergraduate financial aid grants, bundled gifts, or any portion in
excess of $10 million of gifts or endowments received from a single
source in a state fiscal year or gifts that are bundled by a [an] university
[universities]-associated entity.
(7) - (8)
(No change.)
(9) University-Affiliated Entity-An entity whose sole purpose is to support the mission or programs of the university.
(d) - (h)
♦
♦
♦
TITLE 22. EXAMINING BOARDS
PART 31. TEXAS STATE BOARD OF
EXAMINERS OF DIETITIANS
CHAPTER 711. DIETITIANS
SUBCHAPTER A. LICENSED DIETITIANS
The Texas State Board of Examiners of Dietitians (board) proposes the repeal of §711.6 and amendments to §§711.7, 711.8,
711.10, 711.12 and 711.13, concerning the licensing and regulation of dietitians.
The proposed amendments remove obsolete requirements regarding preplanned professional experience programs for applicants; remove references to §711.6 concerning preplanned professional experience programs throughout the chapter; remove
examination requirements that are not under the board's jurisdiction; and add the ability for licensees to show their highest
academic degrees on their license certificates.
SECTION-BY-SECTION SUMMARY
(3) Eligible Funds-Gifts or endowments certified on or after September 1, 2009, to an eligible public institution from private
sources in a state fiscal year for the purpose of enhancing research activities at the institution, including a gift or endowment for endowed
chairs, professorships, research facilities, research equipment, program
costs, [or] graduate research stipends or fellowships, or undergraduate
research. These include [Including] gifts that are bundled from a private source. All gifts, cash and non-cash, must have been originally
donated for research purposes.
(4) - (5)
Bill Franz
General Counsel
Texas Higher Education Coordinating Board
(No change.)
The repeal of §711.6 deletes language concerning applicants
for the preplanned professional experience program, which no
longer exists.
The amendment to §711.7 deletes the requirement for applying
to take the examination for licensure. The national examination
is administered by the Commission on Dietetic Registration and
is not administered by the board.
The amendment to §711.8 deletes the reference to §711.6, which
is proposed for repeal.
The amendment to §711.10 deletes the reference to §711.6
which is proposed for repeal.
The amendment to §711.12 adds new text that allows the licensee to add their highest academic degree to their license certificate.
The amendment to §711.13 deletes the reference to §711.6
which is proposed for repeal.
FISCAL NOTE
to adopt.
Bobbe Alexander, Executive Secretary, has determined that for
each year of the first five years the sections are in effect, there
will be no fiscal implications to state or local governments as a
result of enforcing or administering the sections as proposed.
SMALL AND MICRO-BUSINESS IMPACT ANALYSIS
2015.
Ms. Alexander has also determined that there will be no adverse
economic impact on small businesses or micro-businesses. This
was determined by finding that small businesses and micro-businesses will not be required to alter their business practices to
comply with the sections as proposed.
TRD-201504442
40 TexReg 7558
October 30, 2015
Texas Register
ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL
EMPLOYMENT
There are no anticipated economic costs to persons who are
required to comply with the sections as proposed. There is no
anticipated negative impact on local employment.
Janet S. Hall, R.D., L.D.
Chair
Texas State Board of Examiners of Dietitians
♦
PUBLIC BENEFIT
Ms. Alexander has also determined that for each year of the
first five years the sections are in effect, the public will benefit
from adoption of the sections. The public will benefit by having
updated rules, which will promote public health, safety, and welfare.
REGULATORY ANALYSIS
The board has determined that this proposal is not a "major environmental rule" as defined by Government Code, §2001.0225.
"Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk
to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the
economy, productivity, competition, jobs, the environment or the
TAKINGS IMPACT ASSESSMENT
The board has determined that the proposal does not restrict or
limit an owner's right to his or her property that would otherwise
exist in the absence of government action and, therefore, do not
constitute a taking under Government Code, §2007.043.
PUBLIC COMMENT
Comments on the proposal may be submitted to Bobbe Alexander, Executive Secretary, State Board of Examiners of Dietitians,
Department of State Health Services, Mail Code 1982, and
P.O. Box 149347, Austin, Texas 78714-9347 or by email to
[email protected]. When emailing comments to the
board, please indicate "Comments on Proposed Rules" in the
email subject line. Comments will be accepted for 30 days
following publication of the proposal in the Texas Register.
22 TAC §711.6
Texas State Board of Examiners of Dietitians or in the Texas Register
STATUTORY AUTHORITY
The repeal is authorized by Occupations Code, §55.004, which
requires licensing agencies to adopt rules for issuance of a license to spouses of active members of the U.S. armed forces;
and Occupations Code, §701.152, which authorizes the board
to adopt rules consistent with Chapter 701.
♦
♦
22 TAC §§711.7, 711.8, 711.10, 711.12, 711.13
STATUTORY AUTHORITY
The proposed amendments are authorized by Occupations
Code, §55.004, which requires licensing agencies to adopt rules
for issuance of a license to spouses of active members of the
U.S. armed forces; and Occupations Code, §701.152, which
authorizes the board to adopt rules consistent with Chapter 701.
§711.7. Examination for Dietitian Licensure.
[(c)
Applications for examination.]
[(1) The board shall notify an applicant whose application
has been approved. The board or its designee shall forward an examination registration form to each approved applicant.]
[(2) An applicant who wishes to take a scheduled examination must complete the registration form and return it with the appropriate fee to the board or its designee by the established deadline.]
[(3) Any applicant who fails to apply for and take the licensure examination within a period of three years after an examination approval notice is mailed to the applicant may have such approval
withdrawn.]
[(d) Locations. Examinations administered by the commission or its designee will be held in locations to be announced by the
commission.]
[(e) Grading. Examinations administered by the commission
shall be graded by the commission or its designee.]
[(f) Results.]
[(1) If the examination is graded or reviewed by a national
or state testing service, the board shall notify each examinee of the
examination results within 14 days of the date the board receives the
results from the testing service.]
[(2) If examination results will be delayed for more than 90
days after the examination, the board shall notify each applicant of the
reason for the delay before the 90th day.]
[(3) No matter what numerical or other scoring system the
national or state testing service may use in arriving at examination results, the official notice of results to applicants shall be stated in terms
of "pass" or "fail."]
[(g)
Failures.]
§711.6. Preplanned Professional Experience Requirements for
Licensure.
[(1) An applicant who fails the examination prescribed by
the board may take a subsequent examination after paying the examination fee.]
to adopt.
[(2) If requested in writing, the board shall furnish an applicant who fails an examination an analysis of performance.]
2015.
TRD-201504363
[(3) An applicant who fails the licensing examination three
times shall have his/her application denied unless the applicant furnished the board an official transcript from an accredited college or
university indicating completed course work taken for credit with a
passing grade in the area(s) of weakness determined by analysis of the
PROPOSED RULES
October 30, 2015
40 TexReg 7559
previous examination(s). Before the applicant will be scheduled for
another examination, the applicant shall submit an official transcript
showing course work completed in the area of weakness after the date
of the last examination taken by the applicant.]
[(4) An applicant who completes course work as described
in paragraph (3) of this subsection must file an updated application for
examination with the application fee.]
§711.8. Application Procedures.
(c) Required application materials.
(1)
(No change.)
(2) The internship [or preplanned professional experience
program] documentation form shall contain:
(A) - (D)
(No change.)
(E) the type of setting, the type of clients served, and
the type of work performed; and
(F)
program.[; and]
the credentials of the director or coordinator of each
[(G) the signed statement(s) of endorsements from the
person(s) who can formally attest to the applicant's successful completion of experience as set out in §711.6(a)(1) and (2) of this title (relating
to Preplanned Professional Experience Requirements for Licensure).]
(3) - (6) (No change.)
§711.10. Provisional Licensed Dietitians.
(c) Upgrading a provisional license. The purpose of this subsection is to set out the procedure to upgrade from PLD to a licensed
dietitian.
[(1) The PLD who has completed a board approved experience program in accordance with §711.6 of this title (relating to
Preplanned Professional Experience Requirements for Licensure) shall
submit to the board a letter from the sponsor indicating the date the PLD
completed the program.]
(1) [(2)] A PLD who becomes registered by the commission shall submit proof of current registration status with a written request to upgrade and submit the required fee for upgrade to a licensed
dietitian.
(2) [(3)] The requirements of sponsorship as defined in subsection (a)(4)(F) of this section, shall continue until the PLD becomes
a licensed dietitian.
(d) - (e)
(No change.)
§711.12. Licensing.
(c) The highest academic degree in Dietetics or Nutrition may
appear on the license certificate.
(d) [(c)] Licensing of Military Service Members, Military Veterans, and Military Spouses.
(1) This section sets out licensing procedures for military
service members, military veterans, and military spouses required under Occupations Code, Chapter 55 (relating to Licensing of Military
Service Members, Military Veterans, and Military Spouses). For purposes of this section:
(A) "Military service member" means a person who is
currently serving in the armed forces of the United States, in a reserve
40 TexReg 7560
October 30, 2015
Texas Register
component of the armed forces of the United States, including the National Guard, or in the state military service of any state.
(B) "Military spouse" means a person who is married to
a military service member who is currently on active duty.
(C) "Military veteran" means a person who has served
in the army, navy, air force, marine corps, or coast guard of the United
States, or in an auxiliary service of one of those branches of the armed
forces.
(2) An applicant shall provide documentation of the applicant's status as a military service member, military veteran, or military spouse. Acceptable documentation includes, but is not limited to,
copies of official documents such as military service orders, marriage
licenses, and military discharge records. The application of a person
who fails to provide documentation of his or her status shall not be
processed under the requirements of this section.
(3) Upon request, an applicant shall provide acceptable
proof of current licensure issued by another jurisdiction. Upon request,
the applicant shall provide proof that the licensing requirements of that
jurisdiction are substantially equivalent to the licensing requirements
of this state.
(4) The board's authority to require an applicant to undergo
a criminal history background check, and the timeframes associated
with that process, are not affected by the requirements of this section.
(5) For an application for a license submitted by a verified
military service member or military veteran, the applicant shall receive
credit towards any licensing or internship requirements, except an examination requirement, for verified military service, training, or education that is relevant to the occupation, unless he or she holds a restricted
license issued by another jurisdiction or if he or she has an unacceptable criminal history as described by the Act and this chapter.
(6) An applicant who is a military spouse who holds a current license issued by another jurisdiction that has substantially equivalent licensing requirements shall complete and submit an application
form and fee. The board shall issue a license to a qualified applicant
who holds such a license as soon as practicable and the renewal of the
license shall be in accordance with paragraph (9) of this subsection.
(7) In accordance with Occupations Code, §55.004(c), the
executive director may waive any prerequisite to obtaining a license
after reviewing the applicant's credentials and determining that the applicant holds a license issued by another jurisdiction that has licensing
requirements substantially equivalent to those of this state.
(8) A military spouse who within the five years preceding
the application date held the license in this state that expired while the
applicant lived in another state for at least six months is qualified for licensure based on the previously held license, if there are no unresolved
complaints against the applicant and if there is no other bar to licensure,
such as criminal background or non-compliance with a board order.
(9) If the board issues an initial license to an applicant who
is a military spouse in accordance with paragraph (6) of this subsection, the board shall assess whether the applicant has met all licensing
requirements of this state by virtue of the current license issued by another jurisdiction. The board shall provide this assessment in writing
to the applicant at the time the license is issued. If the applicant has
not met all licensing requirements of this state, the applicant must provide proof of completion at the time of the first application for license
renewal. A license shall not be renewed, shall be allowed to expire,
and shall become ineffective if the applicant does not provide proof of
completion at the time of the first application for licensure renewal.
§711.13. Temporary License.
(a) - (c)
SECTION-BY-SECTION SUMMARY
(No change.)
(d) Status change. The board shall issue a license to the holder
of a temporary license after:
(1)
(No change.)
(2) the board verifies that the temporary licensee has met
the academic requirements set out in 711.5 of this title (relating to Academic Requirements for Licensure) [and the experience requirements
in §711.6 of this title (relating to Preplanned Professional Experience
Requirements for Licensure), if applicable].
to adopt.
2015.
TRD-201504364
Janet S. Hall, R.D., L.D.
Chair
Texas State Board of Examiners of Dietitians
♦
♦
Proposed amendments to §61.1 update existing language for
accuracy and clarity by adding the term "authorized entities" and
replacing the acronym "KHC" with the word "program."
Proposed amendments to §61.2 revise existing definitions, remove unnecessary definitions, and add new definitions. New
terms used in this subchapter include authorized entity; enrolled
provider; incomplete claim; resubmitted claim; and veterans programs.
Proposed amendments to §61.3 update the program requirement to align with eligibility requirements of the Social Security
Administration and replace the acronym "KHC" with the word
"program."
Proposed amendments to §61.4 add language which stipulates
that applications must be submitted by an authorized entity. The
notary requirement was removed to streamline the application
process.
Proposed amendments to §61.5 replace the term "drug products" with "supplies" to accurately reflect program benefits; add
language that better describes benefit limitations; and replace
the acronym "KHC" with the word "program."
♦
TITLE 25. HEALTH SERVICES
PART 1. DEPARTMENT OF STATE
HEALTH SERVICES
CHAPTER 61. CHRONIC DISEASES
SUBCHAPTER A. KIDNEY HEALTH CARE
The Executive Commissioner of the Health and Human Services
Commission, on behalf of the Department of State Health Services (department), proposes the amendments to §§61.1 - 61.5
and §§61.7 - 61.10, new §61.11 and repeal of §61.11, concerning the Kidney Health Care (KHC) Program (program).
The KHC Program serves Texas residents with an end-stage
renal disease (ESRD) diagnosis, who are not Medicaid eligible,
and have a gross income of less than $60,000 annually. The
program provides Medicare Part D premium payment, deductible and coinsurance benefits; limited drug benefits; travel
reimbursement for ESRD related travel up to 13 round trips
monthly; and allowable dialysis and access surgery benefits.
The KHC rules implement Texas Health and Safety Code, Chapter 42, Kidney Health Care, and set guidelines necessary for the
administration of the program. The proposed amendments to
§§61.1 - 61.5 and 61.7 - 61.10, repeal of §61.11, and new §61.11
are necessary to strengthen and clarify understanding of the program, and improve flow, accuracy, and clarity of the rules.
Government Code, §2001.039, requires that each state agency
review and consider for re-adoption each rule adopted by that
agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Sections 61.1 - 61.5 and 61.7 61.11 have been reviewed, and the department has determined
that reasons for adopting the sections continue to exist because
rules on this subject are needed to administer the program effectively.
Section 61.6 was moved into new 1 TAC §392.605, concerning
Kidney Health Care Provider Requirements and Effective Dates,
to comply with the consolidation of contract and procurement
rules under the Health and Human Services Commission. Section 392.605 defines some words and terms used in Subchapter G (relating to Contracting with Providers for Certain DSHS
Programs) and establishes certain requirements for providers to
qualify as providers for the program. This section also establishes effective dates for all enrolled provider agreements and
pharmacy agreements.
Proposed amendments to §61.7 add language that specifies
who may file claims; remove reference to the Automated System
for Kidney Information Tracking to allow for an updated software
application; and replace the acronym "KHC" with the word
"program." Amendments in this section also add new language
that the program will not pay claims for medical benefits until the
provider has entered into a fully executed provider agreement.
Proposed amendments to §61.8 clarify existing language by explaining that claims that do not meet the filing deadlines will be
denied; and replacing the term "approved" provider with "enrolled" provider for consistency throughout the subchapter.
Proposed amendments to §61.9 clarify existing language related
to client and provider rights and responsibilities; add new language to outline responsibilities for authorized entities; and replace the acronym "KHC" with the word "program."
Proposed amendments to §61.10 clarify existing language by
specifying that clients must reapply for benefits when program
eligibility is terminated, and by replacing the acronym "KHC" with
the word "program."
Proposed new §61.11 clarifies the rights of appeal for applicants,
clients, and providers by outlining the circumstances for which an
administrative review may be requested.
FISCAL NOTE
Sam Cooper, LMSW-IPR, Director, Specialized Health Services
Section, has determined that for each year of the first five years
that the sections will be in effect, there will be no fiscal implica-
PROPOSED RULES
October 30, 2015
40 TexReg 7561
tions to state or local governments as a result of enforcing and
administering the sections as proposed.
SMALL AND MICRO-BUSINESSES IMPACT ANALYSIS
Mr. Cooper has also determined that there will be no adverse
effect on small businesses or micro-businesses required to comply with the sections as proposed because small businesses and
micro-businesses will not be required to alter their business practices in order to comply with the sections.
ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL
EMPLOYMENT
There are no anticipated economic costs to persons who are
required to comply with the sections as proposed. There is no
anticipated negative impact on local employment.
PUBLIC BENEFIT
Mr. Cooper has determined that for each year of the first five
years the sections are in effect, the public will benefit from
adoption of the sections. The anticipated benefits include
improved consistency and interpretation of the rules for clients
and providers, as well as efficiencies in program operations and
functions regarding eligibility, enrollment, and administrative
reviews.
REGULATORY ANALYSIS
The department has determined that this proposal is not a
"major environmental rule" as defined by Government Code,
§2001.0225. "Major environmental rule" is defined to mean a
rule the specific intent of which is to protect the environment
or reduce risk to human health from environmental exposure
and that may adversely affect, in a material way, the economy,
a sector of the economy, productivity, competition, jobs, the
environment or the public health and safety of a state or a
sector of the state. This proposal is not specifically intended to
protect the environment or reduce risks to human health from
environmental exposure.
The amendments and new section are authorized by Health and
Safety Code, §42.003(c), which authorizes the Executive Commissioner of the Health and Human Services Commission to
adopt rules necessary to carry out Chapter 42 and to provide adequate kidney care and treatment for citizens of this state; and
by Government Code, §531.0055(e), and the Health and Safety
Code, §1001.075, which authorize the Executive Commissioner
of the Health and Human Services Commission to adopt rules
and policies necessary for the operation and provision of health
and human services by the department and for the administration of Health and Safety Code, Chapter 1001.
The amendments and new section affect Government Code,
Chapter 531; and Health and Safety Code, Chapters 42 and
1001. Review of the sections implements Government Code,
§2001.039.
§61.1. General.
(a) (No change.)
(b) Confidentiality of Information.
(1) All information submitted, as required by this subchapter, may be verified at the discretion of the Department of State
Health Services (department) with or without notice to applicants,
clients, authorized entities, or providers of program [KHC] benefits or
services. This information is confidential to the extent authorized by
law.
(2) (No change.)
(c) Forms. The program provides approved forms to applicants, clients, authorized entities, and providers.
The following words and terms when used in this subchapter [shall]
(1) (No change.)
(2) Action--A suspension, modification, denial, or termination of program [KHC] eligibility, benefits, or participation.
TAKINGS IMPACT ASSESSMENT
The department has determined that the proposed amendments,
repeal and new rule do not restrict or limit an owner's right to
his or her property that would otherwise exist in the absence
of government action and, therefore, do not constitute a taking
under Government Code, §2007.043.
PUBLIC COMMENT
Comments on the proposal may be submitted by mail to Laura
Ethridge, Purchased Health Services Unit, Mail Code 1938, Department of State Health Services, P.O. Box 149347, Austin,
Texas 78714-9347; by telephone at (512) 776-3664; or by email
to [email protected]. Comments will be accepted
for 30 days following publication of the proposal in the Texas
Register.
(3) - (4) (No change.)
(5) Applicant--A person [An individual] who has submitted an application for program [KHC] benefits and has not received a
final determination of eligibility.
(6) Authorized entity--Any individual or organization approved by the program to submit applications for benefits or travel verification reports on behalf of an applicant or client.
(7) [(6)] Claim--A request for payment or reimbursement
of services.
(8) [(7)] Client--A person who has applied for program services and who meets all program [KHC] eligibility requirements and
is determined to be eligible for program services.
LEGAL CERTIFICATION
(9) [(8)] CMS--The Centers for Medicare and Medicaid
The Department of State Health Services General Counsel, Lisa
Hernandez, certifies that the proposed rules have been reviewed
by legal counsel and found to be within the state agencies' authority to adopt.
25 TAC §§61.1 - 61.5, 61.7 - 61.11
October 30, 2015
(10) [(9)] Co-insurance--A cost-sharing arrangement in
which a covered person is responsible for paying a specified percentage of the charge for a covered service or product.
(11) [(10)] Commissioner--The commissioner of the Department of State Health Services.
STATUTORY AUTHORITY
40 TexReg 7562
Services.
Texas Register
(12) [(11)] Co-pay/Co-payment--A cost-sharing arrangement in which a covered person is responsible for paying a specified
or fixed charge for a covered service or product.
(13)
[(12)] CRNA--Certified registered nurse anesthetist.
(14)
[(13)] Date of service (DOS)--The date a service is
rendered.
(15) [(14)] Denial--An action by the program that
disallows program eligibility, benefits, or provider enrollment
[administrative review requests].
(16)
[(15)] Department--The Department of State Health
Services.
(17) [(16)] Effective date--The [initial] date a program
client or enrolled provider is approved to receive program benefits or
reimbursements [of eligibility for a KHC client or provider].
(18) [(17)] End-Stage Renal Disease (ESRD)--The final
stage of renal failure [impairment] that requires dialysis or [and/or]
kidney transplant to reduce uremic symptoms and [and/or] prevent the
death of the patient.
(19) Enrolled provider--Any individual or entity who has
completed all the requirements located in the Texas Health and Human
Services Commission rule at 1 TAC §392.605, Kidney Health Care
Provider Requirements and Effective Dates, and is deemed enrolled by
the program to furnish covered services to program clients including:
(A) outpatient dialysis facilities;
(B) out-of-state outpatient dialysis facilities;
(C) hospitals and ambulatory surgical centers (ASCs)
located in Texas and operating in compliance with applicable law;
(D)
out-of-state hospitals and ASCs;
(E) military or Veterans Administration hospitals
located in Texas which have a renal unit;
(F) pharmacies approved as Texas Medicaid providers
and licensed to operate within the United States and its territories, including mail order pharmacies;
(G) physicians and certified registered nurse anesthetists (CRNAs) licensed in Texas;
(H) out-of-state physicians and CRNAs; and
(I) Medicare Prescription Drug Plan (PDP) providers.
(20) [(18)] Explanation of benefits (EOB) [EOB]--A form,
in paper or electronic format, which provides an explanation of benefits. It is used to explain a payment or denial of a claim.
(21) [(19)] Fair hearing--The informal hearing process the
department follows under §§1.51 - 1.55 of this title (relating to Fair
Hearing Procedures).
(22) [(20)] Filing deadline--The last date that a claim may
be received by the program and still be considered eligible for benefit.
(23) [(21)] Final decision--A decision that is made by a decision maker after conducting a fair hearing under §§1.51 - 1.55 of this
title.
(24) Incomplete claim--A claim that is submitted to the
program without the required information to enable determination of
program liability or payment.
[(22) Interim approval--The status given by the program to
an outpatient dialysis facility, free-standing or hospital-based, which
has applied for participation as a KHC provider but has not executed
an agreement with the program.]
(25)
[(23)] KHC--Kidney Health Care.
(26) [(24)] KHC formulary--A list of general therapeutic
categories of drugs, over-the-counter products, and limited diabetic
supplies that are covered for reimbursement by the program.
(27) [(25)] Low Income Subsidy (LIS)--The subsidy provided under the Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 for Medicare Part D plan premiums and
related costs, at varying levels, for some low-income Medicare beneficiaries.
(28) [(26)] Medical benefit--Any medical treatment or procedure approved by the program as a covered service.
(29) [(27)] Medicare Advantage Plan--A Medicare health
plan that is similar to a health maintenance organization, participating provider organization, or other Medicare health plan, and includes
medical, drug coverage and other benefits.
(30) [(28)] Medicare Part A--Hospital insurance for people
age 65 or older, or under age 65 with certain disabilities, that helps
cover inpatient hospital stays, care in a skilled nursing facility, hospice
care, and some home health care.
(31) [(29)] Medicare Part B--Health insurance for people
age 65 or older, or under age 65 with certain disabilities, and any age
with ESRD, that helps cover medically necessary services, such as doctors' services and outpatient care, and some preventive services.
(32) [(30)] Medicare Part D--Established by the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003
(MMA), it provides members with prescription drug coverage, expanded health plan options, improved health care access for rural
Americans, and preventive care services.
(33) [(31)] Medicare Part D out-of-pocket expenses--Include premiums, deductibles, co-payments, or [and] co-insurance
amounts.
(34) [(32)] Medicare Part D Premium--The amount paid
monthly under a Medicare Part D contract to insure coverage.
(35) [(33)] Medicare Prescription Drug Plan (PDP)--A
stand-alone drug plan offered by insurers and other private companies
to individuals eligible for Medicare Part D.
(36) [(34)] Medigap plan--A Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in Medicare coverage.
(37) [(35)] Modification--A change made to a client or
provider account [client's record] that can affect [affects a] program
benefits, [benefit or] eligibility, or enrollment [status].
(38) [(36)] Program--Kidney Health Care [Program].
(39) [(37)] Provider--Any individual or entity who furnishes benefits or [approved by the program to furnish covered]
services to program [KHC] clients. [including:]
[(A)
outpatient dialysis facilities;]
[(B) out-of-state outpatient dialysis facilities;]
[(C) hospitals and ambulatory surgical centers (ASCs)
located in Texas and operating in compliance with applicable law;]
[(D)
PROPOSED RULES
out-of-state hospitals and ASCs;]
October 30, 2015
40 TexReg 7563
[(E) military or Veterans Administration hospitals located in Texas which have a renal unit approved by the Joint Commission on Accreditation of Healthcare Organizations or the American
Osteopathic Association];
[(F) pharmacies approved as Texas Medicaid providers
and licensed to operate within the United States and its territories, including mail order pharmacies;]
[(G) physicians and certified registered nurse anesthetists (CRNAs) licensed in Texas;]
[(H) out-of-state physicians and CRNAs; and]
[(I) Medicare Prescription Drug Plan (PDP) and Medicare Advantage Plan (MA-PD) providers.]
(40) [(38)] Qualified Individual (QI) Program--A Medicaid
program for beneficiaries who need help in paying for Medicare Part
B premiums. The beneficiary must be entitled to [have] Medicare Part
A, have [and] limited income and resources as calculated using federal
and state guidelines, and not be otherwise eligible for Medicaid. For
those who qualify, the Medicaid program pays full Medicare Part B
premiums only.
(1) A client must meet the following requirements within
the first 3 months of program [KHC] eligibility:
(A) - (D)
(No change.)
(2) A client must meet the following requirements to continue benefit eligibility:
(A) continue premium payments to [on] health insurance plans under Medicare, individual or group health insurance plans,
and prepaid medical plans, where enrollment was effective prior to
program [KHC] eligibility;
(B) re-apply for LIS as required by the Social Security
Administration [annually];
(C) - (D)
(E)
(No change.)
notify the program within 30 days of changes in the
following:
(i) - (ii) (No change.)
(iii) coverage under Medicaid, Medicare, individual
or group insurance, Veterans programs, or any other health benefits
coverage; [insurance coverage; and]
(41) [(39)] Qualified Medicare Beneficiary (QMB)
Program--A Medicaid program for beneficiaries who need help in
paying for Medicare services. The beneficiary must be entitled to
[have] Medicare Part A, have [and] limited income and resources as
calculated using federal and state guidelines. For those who qualify,
the Medicaid program pays Medicare Part A premiums, Part B premiums, and Medicare deductibles and coinsurance amounts for Medicare
services.
§61.4. Applications.
Persons meeting the eligibility requirements set forth in §61.3(a) - (c)
of this title (relating to Client Eligibility Requirements) must submit an
[make a complete] application packet for benefits.
(42) [(40)] Reimbursement--Payment of a claim for
covered benefits or services [allowable services or transportation].
(1) A complete application packet must be submitted by an
authorized entity and include all of the following:
(43) [(41)] Reimbursement rate--The program [KHC] payment rate for covered benefits or services [allowable products, services,
and transportation determined annually for the following fiscal year].
(A) a completed, signed and dated program application
[complete and notarized Application for Benefits, with the applicant's,
or the applicant's representative's, original signature or "mark;"];
(44) Resubmitted claim--A claim that is submitted to the
program more than once to correct errors.
(B) a copy of the completed, signed and dated Centers for Medicare and Medicaid Services (CMS) End-Stage Renal Disease Medical Evidence Report or, with program approval, the Kidney
Health Care Physician Assessment Form;
(45) [(42)] Specified Low Income Medicare Beneficiary
(SLMB) Program--A Medicaid program that pays for Medicare Part B
premiums for individuals who have Medicare Part A, a low monthly
income, and limited resources as calculated using federal and state
guidelines.
(46) [(43)] Suspension--An action by the program,
[Eligibility for benefits] which holds client benefits or reimbursement
to enrolled providers [is held without final action] pending satisfaction
of a program request or requirement.
(47) [(44)] Termination--A final action by the program,
which ends client or enrolled provider participation in the [KHC]
program.
(48) Veterans programs--Health care programs authorized
and administered by the United States Department of Veterans Affairs
and the United States Department of Defense.
(iv)
location of treatment; and[.]
(v)
income.
(C) documentation of Texas residency as required by
§61.3 of this title;
(D) a copy of the applicant's social security card issued
by the Social Security Administration (SSA), or an allowable substitute, as follows:
(i)
(No change.)
(ii) a copy of a valid Medicare card, if the Medicare
account is established in the applicant's own social security number and
the social security number is printed on the Medicare card; and[.]
(E) applicant's financial data. The applicant or the person(s) legally obligated to support the applicant must verify income by
providing one of the following:
§61.3. Client Eligibility Requirements.
(i) a copy of the first page of the federal individual
income tax return for the most recent tax year, if self-employed; or
(a) A person must [shall] meet all of the following requirements to be eligible for program [KHC] benefits:
(ii) a statement of estimated or declared income for
the current tax year, and supporting documentation[, if requested].
(1) - (5)
(b) - (c)
(No change.)
(2) (No change.)
(No change.)
(3) [Eligibility date for KHC benefits.] The program
[KHC] eligibility date is the date the program receives a complete
application packet; if approved, the client receives an effective date.
(d) Maintenance of Benefits Eligibility.
40 TexReg 7564
October 30, 2015
Texas Register
(4) If program [KHC] benefits are terminated, the eligibility date for any subsequent benefit period is the date the program receives a subsequent complete application packet for program [KHC]
benefits.
(5)
§61.5.
(No change.)
Benefits and Limitations.
(a) Benefits.
(1) Outpatient drugs and supplies [drug products] listed on
the current KHC formulary.
(2) - (4)
(No change.)
(5) Medicare Part B immunosuppressive drug co-insurance
amounts. To qualify for this benefit, clients must:
(A) be eligible for program [KHC] drug benefits;
(B) - (F) (No change.)
(6) Limited Medicare Part D out-of-pocket expenses. To
qualify for this benefit, clients must:
(A)
(6) Transportation reimbursement is available from the first
day of the month following the program [KHC eligibility] effective
date for in-center dialysis clients or from the program [KHC] effective
date for transplant and home peritoneal dialysis clients.
(7) Clients eligible for coverage under Medicaid, Medicare, individual or group insurance, Veterans programs, or any other
health benefits coverage [hospital and medical benefits from Medicare,
or other government programs] which cover the treatment of ESRD are
not eligible to receive program [KHC] medical benefits.
(8)
[(9) Clients eligible for hospital and medical benefits from
private/group health insurance which covers the treatment of ESRD are
not eligible for KHC medical benefits.]
(9) [(10)] The program is the payor of last resort. All third
parties must be billed prior to the program. The Commissioner may
waive this requirement in individually considered cases where its enforcement will deny services to a class of ESRD patients because of
conflicting state or federal laws or regulations, under the Texas Health
and Safety Code, §42.009.
be eligible for program [KHC] drug benefits;
(B) - (E)
(b) Limitations.
(1) Only enrolled [out-of-state] providers [approved by the
program] may be reimbursed for [provide] covered services and [KHC]
allowable drugs.
(2) Covered services are limited to a maximum allowable
amount [per client] based upon:
(No change.)
(C) an agreement between the department and the
enrolled [client's] provider;
(D) - (F)
(10) [(11)] If budgetary limitations exist, the department
may:
(No change.)
(7) Benefits are payable beyond the Medicare three-month
qualifying period for eligible clients who have applied for and have
been denied Medicare coverage based on ESRD. Clients must submit
a copy of the official Social Security Administration Medicare denial
notification (based on chronic renal disease) to the department.
(A) - (B)
(No change.)
(No change.)
(A) restrict or categorize covered services. Categories
will be prioritized based upon medical necessity, other third party eligibility and projected third party payments for the different treatment
modalities, caseloads, and demands for services. Caseloads and demands for services may be based on current or [and/or] projected data.
In the event covered services must be reduced, they will be reduced
in a manner that takes into consideration medical necessity and other
third party coverage. The department may change covered services
by adding or deleting specific services, entire categories or by making
changes proportionally across a category or categories, or by a combination of these methods; or
(B) establish a waiting list of eligible applicants. Information will be collected from each applicant who is placed on a waiting
list to facilitate contacting the applicant when benefits become available and to allow efficient enrollment of the applicant for benefits.
§61.7. Claims Submission and Payment Rates.
(a)
(3) Clients eligible for drug coverage under Medicaid,
Medicare Advantage Plan, individual or group insurance, Veterans
programs, or any other health benefits coverage [an individual or group
health insurance plan] are not eligible to receive program [KHC] drug
benefits. A client that has exhausted drug coverage under Medicaid,
Medicare Advantage Plan, individual or group insurance, Veterans
programs, or any other health benefits coverage [an individual or
group health insurance plan] may be eligible to receive drug benefits
from the program.
(4) Access surgery benefits are payable only if the services
are performed on or after the date Texas residency is established and
not more than 180 days prior to the client's program [KHC eligibility]
effective date.
(5) Program [KHC] medical benefits are payable during the
Medicare three-month qualifying period. Benefits are payable for services received on or after the client's program [KHC eligibility] effective date. The three-month qualifying period is calculated from the
first day of the month the client begins chronic maintenance dialysis.
When a client becomes eligible for Medicare during the three-month
period, program [KHC] medical benefits are not payable from the date
of Medicare eligibility.
(No change.)
(b) Medical benefit claims must be submitted to the program
by the provider who rendered the service(s) to the program [KHC]
client or by the provider's designee.
(c) Transportation benefit claims must be submitted to the program by the client or an authorized entity [the provider performing
outpatient dialysis services]. Claims must be submitted electronically
through the current automated [Automated System for Kidney Information Tracking (ASKIT), or any other designated] claims payment
system, except when the program allows or requires paper submissions.
(d) Payments are made using the rates in effect on the date the
service is rendered[, and not prospectively].
(e) Claims for medical benefits will not be considered for payment by the program until the program has a fully executed agreement
with the provider.
(f) [(e)] Incomplete or incorrect claims will not be considered
for payment. [Claims which are not received by the program within
the deadlines established in §61.8 of this title (relating to Claim Filing
Deadlines) will be denied payment.]
§61.8. Claim Filing Deadlines.
PROPOSED RULES
October 30, 2015
40 TexReg 7565
(a) The program must receive all claims [for transportation
reimbursement, hospital, out-patient dialysis, and access surgery services,] within the claim filing deadlines established in this section.
(1) - (2)
(No change.)
(b) In addition to the requirements in subsection (a) of this section, the program must receive claims for out-patient dialysis and access surgery services within 60 days from the date on the agreement
approval letter for newly enrolled [approved] providers, but no later
than 180 days from the date of service.
(c) - (e)
(No change.)
(f) Claims which are not received by the program within the
filing deadlines will be denied payment.
§61.9. Rights and Responsibilities.
(a) An [The] applicant and client [shall] have the right to:
(1)
(No change.)
(2)
choose providers subject to program [KHC] limita-
(2)
not discriminate against applicants or clients.
§61.10. Modifications, Suspensions, Denials, and Terminations.
(a) (No change.)
(b) A provider's participation may be modified, suspended or
denied for failing to comply with the provider responsibilities listed in
1 TAC §392.605 [§61.6(a) of this title] (relating to Kidney Health Care
Provider Requirements and Effective Dates) and §61.9(d) of this title.
(c) A client's eligibility may be terminated for any of the following reasons:
(1) (No change.)
(2) failing to continue to meet the income requirements for
program eligibility or to provide income data as requested by the department to determine continued program [KHC] eligibility;
(3) - (12)
(No change.)
(d) (No change.)
tions;
(3) be notified of the program's decisions relating to modifications, suspensions, denials, or terminations; and
(4) appeal the program's decisions and receive a response
within the deadline as described in §61.11 of this title (relating to Rights
of Appeal).[; and]
(e) A client [An applicant] must reapply for [KHC] benefits
when eligibility for program [KHC] benefits is terminated.
(f) - (g)
(No change.)
(h) An enrolled [A] provider's participation may be terminated
or suspended for any of the following reasons:
(1) - (4) (No change.)
[(5) assurance that all information concerning his or her
status as an applicant or client shall be confidential in the manner and
to the extent authorized by law.]
(5) filing false or fraudulent information or claims for
program [KHC] benefits;
(b) A provider has [Providers shall have] the right to:
(7) failure to maintain the participation criteria contained
in 1 TAC §392.605 [§61.6(a) of this title].
(1)
(No change.)
(6)
(No change.)
(2) appeal the program's decisions and receive a response
within the deadline as described in §61.11 of this title.
(i) Enrolled providers [Providers] may appeal a termination or
suspension under §61.11 of this title.
[(2) assurance that all information concerning the
provider's program status shall be confidential in the manner and to
the extent authorized by law.]
§61.11. Rights of Appeal.
(a) Administrative review.
(c) A client has [The applicant and client shall have] the responsibility to:
(1) provide accurate medical information to providers and
notify providers of program [KHC] eligibility prior to delivery of services;
(2)
abide by program [KHC] rules and policies; and
(3)
(No change.)
(d) An enrolled provider has [The provider shall have] the responsibility to:
[(1) enroll as a KHC provider and submit a completed application to the program, including all documents requested;]
(1)
[(2)] abide by [the] program rules and policies;
(2) [(3)] not discriminate against applicants or clients based
on source of payment; and
(3) [(4)] notify the program of any lawsuit(s) contemplated
or filed concerning the cause of the medical condition for which the
program has made payment.
(e) An authorized entity has the responsibility to:
(1)
abide by program rules and policies; and
40 TexReg 7566
October 30, 2015
Texas Register
(1) If the program denies eligibility to an applicant, the program will give the applicant written notice of the denial and the applicant's right to request an administrative review of the denial within 30
days of the date of the notification.
(2) If the program proposes to modify, suspend, or terminate a client's eligibility for covered benefits, the program will give the
client written notice of the proposed action and the client's right to request an administrative review of the proposed action within 30 days
of the date of notification.
(3) If the program denies a prior-authorization or authorization request for program services, the program will give the client
and provider written notice of the denial and the right of the client or
provider to request an administrative review of the denial within 30
days of the date of notification.
(4) If the program denies a client's or enrolled provider's
claim for benefits or services, according to §61.7 of this title (relating to
Claims Submission and Payment Rates) and §61.8 of this title (relating
to Claim Filing Deadlines), the program will give the client or enrolled
provider written notice of the denial. The client or enrolled provider
has the right to request an administrative review of the denial within 30
days of the date of notification.
(5) If the program denies or proposes to modify, suspend,
or terminate a provider's participation in the program, the program
will give the provider written notice of the proposed action and the
provider's right to request an administrative review of the proposed action within 30 days of the date of notification.
(6) The department establishes the program's reimbursement rates. Clients and providers may not request an administrative
review of reimbursement amounts for claims that are paid in accordance with the reimbursement rates as described in §61.5 of this title
(relating to Benefits and Limitations).
(7) A client or provider may not request administrative review of the program's decision to restrict or categorize program services or reduce provider reimbursement amounts that are authorized
by §61.5(b)(10) of this title.
(8) If the program receives a written request for administrative review within 30 days of the date of the notification, the program
will conduct an administrative review of the circumstances surrounding the proposed action. Within 30 days following receipt of a request
for administrative review, the program will send the applicant, client,
or provider written notice of:
(A) the program decision, including the supporting reasons for the decision; or
(B) the need for extended time to research the circumstances, including an expected date for response to the request.
(9) If the program does not receive a written request for administrative review within 30 days of the date of the notification, the
applicant, client, or provider is presumed to have waived the administrative review as well as access to a fair hearing, and the program's
action is final.
(b) Fair hearing.
(1) If the applicant, client, or provider is dissatisfied with
the program's decision and supporting reasons following the administrative review, the applicant, client, or provider may request a fair
hearing in writing, addressed to the program, within 20 days of receipt
of the administrative review decision notice.
(2) If the program receives a written request for fair hearing
within 20 days of receipt of the administrative review decision notice,
a fair hearing will be conducted in accordance with §§1.51 - 1.55 of
this title (relating to Fair Hearing Procedures).
(A) The program may not terminate a client or enrolled
provider's eligibility until a final decision is rendered under the department's fair hearings process.
(B) The program may withhold claims payment pending final decision under the department's fair hearings process.
(C) The program must release any withheld payments
and reinstate participation if the final determination is in favor of the
client or provider.
(D) The program must not enter into, extend, or renew
an agreement with a provider until a final decision is rendered under
the department's fair hearings process.
(3) If the applicant, client, or provider fails to request a fair
hearing within the 20-day period, the applicant, client, or provider is
presumed to have waived the request for a fair hearing, and the program
may take final action.
to adopt.
2015.
TRD-201504374
Lisa Hernandez
General Counsel
Department of State Health Services
♦
♦
♦
25 TAC §61.11
the Department of State Health Services or in the Texas Register office,
James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.)
STATUTORY AUTHORITY
The repeal is authorized by Health and Safety Code, §42.003(c),
which authorizes the Executive Commissioner of the Health
and Human Services Commission to adopt rules necessary to
carry out Chapter 42 and to provide adequate kidney care and
treatment for citizens of this state; and by Government Code,
§531.0055(e), and the Health and Safety Code, §1001.075,
which authorize the Executive Commissioner of the Health
and Human Services Commission to adopt rules and policies
necessary for the operation and provision of health and human
services by the department and for the administration of Health
and Safety Code, Chapter 1001. Review of the sections implements Government Code, §2001.039.
The repeal affects Government Code, Chapter 531; and Health
and Safety Code, Chapters 42 and 1001.
§61.11. Rights of Appeal.
to adopt.
2015.
TRD-201504375
Lisa Hernandez
General Counsel
Department of State Health Services
♦
♦
♦
TITLE 34. PUBLIC FINANCE
PART 1. COMPTROLLER OF PUBLIC
ACCOUNTS
CHAPTER 3. TAX ADMINISTRATION
SUBCHAPTER O. STATE AND LOCAL SALES
AND USE TAXES
34 TAC §3.344
The Comptroller of Public Accounts proposes an amendment
to §3.344, concerning telecommunications services.
This
PROPOSED RULES
October 30, 2015
40 TexReg 7567
section is amended to implement Senate Bill 140, 84th Legislature, 2015, which amended Tax Code, §151.316, subject to
§151.1551, to exempt telecommunications services exclusively
provided or used for the navigation of specified machinery
and equipment exclusively used on a farm or ranch effective
September 1, 2015.
Subsection (c) is amended to more accurately describe the content in the subsequent paragraphs includes nontaxable and exempt items. Paragraph (2) is amended to correct the name of
§3.313.
Subsection (c)(7) is added to enumerate the exemption for
telecommunications services exclusively provided or used for
navigating machinery and equipment exclusively used on a farm
or ranch. The purchaser must be an agricultural registrant and
provide the seller with an agricultural exemption certificate.
Tom Currah, Chief Revenue Estimator, has determined that for
the first five-year period the rule will be in effect, there will be no
significant revenue impact on the state or units of local government.
Mr. Currah also has determined that for each year of the first
five years the rule is in effect, the public benefit anticipated as
a result of enforcing the rule will be by conforming the rule to
current state statutes. This rule is proposed under Tax Code,
Title 2, and does not require a statement of fiscal implications for
small businesses. There is no significant anticipated economic
cost to individuals who are required to comply with the proposed
rule.
Comments on the proposal may be submitted to Teresa G.
Bostick, Director, Tax Policy Division, P.O. Box 13528, Austin,
Texas 78711-3528. Comments must be received no later than
30 days from the date of publication of the proposal in the Texas
Register.
This amendment is proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt,
and enforce rules relating to the administration and enforcement
of the provisions of Tax Code, Title 2.
This amendment implements Tax Code, §151.1551 (Registration Number Required for Timber and Certain Agricultural Items)
and §151.316 (Agricultural Items).
§3.344. Telecommunications Services.
(a) Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context
clearly indicates otherwise.
(1) Basic local exchange telephone service--The provision
by a telephone company of each access line and each dial tone to a fixed
location for sending and receiving telecommunications in the telephone
company's local exchange network. Services are considered basic irrespective of whether the customer has access to a private or party line,
or whether the customer has limited or unlimited access. The term
does not include international, interstate, or intrastate long-distance
telecommunications services or mobile telecommunications services.
(2) Internet--Collectively the myriad of computer and
telecommunications facilities, including equipment and operating
software, that comprise the interconnected worldwide network of
networks that employ the Transmission Control Protocol/Internet
Protocol, or any predecessor or successor protocols to the protocol, to
communicate information of all kinds by wire or radio.
(3) Internet access service--A service that enables users to
access content, information, electronic mail, or other services offered
40 TexReg 7568
October 30, 2015
Texas Register
over the Internet and may also include access to proprietary content,
information, and other services as part of a package of services offered
to consumers. The term does not include telecommunications services.
See §3.366 of this title (relating to Internet Access Services).
(4) Interstate long-distance telecommunication service--A
telecommunication service that originates in one state, crosses state
lines, and terminates in another state.
(5) Intrastate long-distance telecommunications service--A telecommunication service that originates and terminates
within one state, but crosses the boundaries on subdivisions or jurisdictions within the state.
(6) Mobile telecommunications service--The provision of
a commercial mobile radio service, as defined in 47 C.F.R. 20.3 of the
Federal Communications Commission's (FCC) regulations in effect on
June 1, 1999, under the Mobile Telecommunications Sourcing Act (4
U.S.C. §§116 - 126). The term includes cellular telecommunications
services, personal communications services (PCS), specialized mobile
radio services, wireless voice over Internet protocol services, and paging services. The term does not include telephone prepaid calling cards
or air-ground radio telephone services as defined in 47 C.F.R. 22.99 of
FCC regulations in effect on June 1, 1999.
(7) Pay telephone coin sent--Telecommunications service
paid for by the insertion of coins into a coin-operated telephone.
(8) Place of primary use--The physical street address that
is representative of where a customer primarily uses a mobile telecommunications service. That location must be either the customer's residential street address or the customer's primary business street address
that is within the licensed service area of the service provider. The individual or entity that contracts with the service provider is the customer.
If the individual or entity that contracts with the service provider is not
the end user, then the physical street address where the end user primarily uses the service determines the customer's place of primary use.
For example, a business owner who is located in Austin, Texas establishes mobile telecommunication service accounts for employees who
are located in other cities. One employee does business from his home
in Dallas, Texas. Two other employees work at an office that is located
in Houston, Texas. Another employee works at an office that is located
in New Orleans, Louisiana. The home street address of the employee
in Dallas is the place of primary use for that cellular phone account.
The place of primary use for the two Houston employees is the street
address of the Houston office. The place of primary use for the employee in Louisiana is the street address of the New Orleans office.
(9) Prepaid telecommunications service--A wireless or
wire telecommunications service for which the provider requires a
customer to prepay the full amount prior to provision of the service.
The term does not include the sale or use of a telephone prepaid
calling card as defined in paragraph (15) of this subsection. A card,
pin number, access code or similar device that allows a user to access
only a specific network, or that is intended for use with a specific user
account or device (e.g., to add more minutes to an existing account),
is a prepaid telecommunications service and is taxed as the sale of a
telecommunications service. Local sales tax is collected as explained
in subsection (h) of this section.
(10) Private communication service--A telecommunication service that entitles the customer to exclusive or priority use of
a communications channel or group of channels between or among
termination points, regardless of the manner in which such channel or
channels are connected, and includes switching capacity, extension
lines, stations, and any other associated services that are provided in
connection with the use of such channel or channels.
(A) As it relates to private communication service, the
term "communications channel" means a physical or virtual path of
communications over which signals are transmitted between or among
customer channel termination points.
(B) As it relates to private communication service, the
term "customer channel termination point" means the location where
the customer either inputs or receives the communications.
(11) Seller--Any person who sells telecommunications services including a hotel, motel, owner or lessor of an office, residential
building or development that contracts and pays for telecommunications services for resale to guests or tenants.
(12) Taxable service--A telecommunications service or
other taxable service listed in Tax Code, §151.0101.
(13) Telecommunications services--The electronic or
electrical transmission, conveyance, routing, or reception of sounds,
signals, data, or information utilizing wires, cable, radio waves, microwaves, satellites, fiber optics, Voice over Internet Protocol (VoIP),
or any other method now in existence or that may be devised, including
but not limited to long-distance telephone service. The term includes
mobile telecommunications services and prepaid telecommunications
services. The term does not include:
(A) the storage of data or other information for subsequent retrieval or the processing, or reception and processing, of data
or information intended to change its form or content;
(B) the sale or use of a telephone prepaid calling card;
(C) Internet access service; or
(D)
pay telephone coin sent.
(14) Telephone company--A person who owns or operates
a telephone line or telephone in this state and charges for its use.
(15) Telephone prepaid calling card--A card or other item,
including an access code, that represents the right to access telecommunications services, other than prepaid telecommunications services
as defined in paragraph (9) of this subsection, through multiple devices,
regardless of the network providing direct service to the device used,
for which payment is made in incremental amounts and before the call
or transmission is initiated. For example, a calling card that allows a
user to access a long distance telecommunications network for the purpose of making international calls through a pay phone is a telephone
prepaid calling card. The sale of a telephone prepaid calling card is
taxed as the sale of tangible personal property.
(16) Voice over Internet Protocol (VoIP)--A telecommunication service where a phone call is transmitted over a data network.
The term "Internet Protocol" is a catchall phrase for the protocols and
technologies of encoding a voice call that allow the voice call to be
slotted in between data on a data network, including the Internet, a
company's Intranet, or any other type of data network.
(b) Taxable telecommunications services. The total amount
charged for a taxable telecommunications service is subject to sales
tax. Sales tax is due on a charge for the following:
(1)
basic local exchange telephone services;
(2) enhanced services such as metro service, extended area
service, multiline hunting, and PBX trunk;
(3)
auxiliary services such as call waiting and call forward-
(4)
intrastate long-distance telecommunications services;
ing;
(5) interstate long-distance telecommunications services
that are both originated from, and billed to, a telephone number or
billing or service address within Texas such that if a call originates in
Texas and is billed to a Texas service address, the charge is taxable
even if the invoice, statement, or other demand for payment is sent to
an address in another state;
(6) mobile telecommunications services for which the
place of primary use is located in Texas;
(7) telegraph services that are both originated from, and
billed to, a person within Texas;
(8) a telecommunications service paid for by the insertion
of tokens, credit or debit card into a coin-operated telephone located in
Texas;
(9) subject to subsection (e) of this section, the lease, rental,
or other charges for telecommunication equipment including separately
stated installation charges. Separately stated charges for labor to install
wiring will not be taxable if the wiring is installed in new structures
or residences in such manner as to become a part of the realty. Separately stated charges for labor to install wiring in existing nonresidential
real property are taxable. See §3.291 and §3.357 of this title (relating
to Contractors; Nonresidential Real Property Repair, Remodeling, and
Restoration; Real Property Maintenance) for additional information. If
charges for the installation of wiring and charges for the equipment are
not separated, the total charge will be treated as a sale and installation
of tangible personal property. Equipment sold by a telecommunications service provider is subject to sales or use tax and is not taxed
as part of the telecommunications service if the service provider separately invoices the sale of the equipment. The sale of equipment is not
separately invoiced if it is identified on the same bill, receipt or invoice
as the sale of the telecommunications service, even if it is identified as
a separate line item on the same bill, receipt, or invoice;
(10) installation of telecommunications services, including
service connection fees;
(11) private communication services. Taxable receipts include the channel termination charge imposed at each channel termination point within this state, the total channel mileage charges imposed
between channel termination points or relay points within this state,
and an apportionment of the interoffice channel mileage charge that
crosses the state border. An apportionment on the basis of the ratio of
the miles between the last channel termination point in Texas and the
state border to the total miles between that channel termination point
and the next channel termination point in the route will be accepted. If
there is a single charge for a private communication service in which
the customer has channel termination points both inside and outside of
Texas, the apportionment can also be determined by dividing the number of customer channel termination points in Texas by the total number
of customer channel termination points to establish the percentage of
the charge subject to state sales tax for Texas. Other apportionment
methods may be used by the seller if first approved in writing by the
comptroller;
(12) charges that are passed through to a purchaser for federal, state, or local taxes or fees that are imposed on the seller of the
telecommunications service rather than on the purchaser. Such charges
are a cost or expense of the seller and are included in the total price subject to sales tax; and
(13) prepaid wireless telecommunications services as defined by subsection (a)(9) of this section when the purchase is made
in person at a Texas business or is made by telephone or the Internet
and the purchaser's primary business address or residential address is
in Texas.
PROPOSED RULES
October 30, 2015
40 TexReg 7569
(c) Nontaxable or exempt charges [services]. Sales tax is not
due on charges for:
(1) interstate long-distance telecommunications services
that are not both originated from, and billed to, a telephone number
or billing or service address within Texas. Records must clearly
distinguish between taxable and exempt long-distance services;
(2) broadcasts by commercial radio or television stations
licensed or regulated by the FCC. See §3.313 of this title (relating to
Cable Television Service and Bundle Cable Service) for the tax status
of cable television services;
(3)
telecommunications services purchased for resale;
(4) telegraph services that are not both originated from and
billed to a person within Texas;
(5) mobile telecommunications services for which the
place of primary use is located outside of Texas; [and]
(6) charges for federal, state, or local taxes or fees that are
imposed on the purchaser rather than on the seller of the telecommunications service. For example, no sales tax is due on a separately stated
charge for federal excise tax or for 9-1-1 Emergency Service Fee and
9-1-1 Equalization Surcharge because these taxes or fees are imposed
on the purchaser and are not a cost of doing business of the seller; and[.]
(7) telecommunications services exclusively provided or
used for the navigation of machinery and equipment exclusively used
or employed on a farm or ranch in the building or maintaining of roads
or water facilities or in the production of:
(A)
food for human consumption;
(B) grass;
(C) feed for animal life; or
(D) other agricultural products to be sold in the regular
course of business.
(E) The purchaser must be an agricultural registrant and
provide the seller with an agricultural exemption certificate.
(F) This paragraph is effective September 1, 2015, and
applies to telecommunication services provided after this date.
(d) Billing and records requirements. If any nontaxable
charges are combined with and not separately stated from taxable
telecommunications service charges on the purchaser's bill or invoice
from a provider of telecommunications services, the combined charge
is subject to tax unless the service provider can identify the portion
of the charges that are nontaxable through the provider's books and
records kept in the regular course of business. If the nontaxable
charges cannot reasonably be identified, the charges from the sale of
both nontaxable services and taxable telecommunications services are
attributable to taxable telecommunications services. The provider of
telecommunications services has the burden of proving nontaxable
charges.
(e) Resale of tangible personal property. See §3.285 of this
title (relating to Resale Certificate; Sales for Resale).
(1) Transfer of tangible personal property to the care,
custody and control of the purchaser. A telecommunications service
provider may claim a resale exemption on the purchase of tangible
personal property that is transferred by the telecommunications service provider to the care, custody, and control of the purchaser. A
telecommunications service provider must collect sales tax on charges
for such items.
40 TexReg 7570
October 30, 2015
Texas Register
(2) Wireless voice communication devices. A person may
claim a resale exemption on the purchase of a cell phone or other wireless voice communication device as an integral part of a taxable service, regardless of whether there is a separate charge for the wireless
voice communication device or whether the purchaser is the provider
of the taxable telecommunications service, if payment for the service
is a condition for receiving the wireless voice communication device.
For example, if a person signs a contract for the purchase of telecommunications services at the location of a retailer and the retailer sells
the person a cell phone as a condition of entering the contract for the
telecommunications services that will be provided by someone other
than the retailer, the retailer can purchase the cell phone tax free with
a properly completed resale certificate.
(f)
Resale of a telecommunications service. See §3.285 of this
title.
(1) Sales tax is not due on the charge by one telephone company to another for providing access to a local exchange network. The
telecommunications service provider must collect sales tax from the final purchaser on the total charge for the taxable service including the
charge for access.
(2) A telecommunications service may be purchased tax
free for resale if resold by the purchaser as an integral part of a taxable service. The purchaser must give the service provider a properly
completed resale certificate to purchase the telecommunications service tax free for resale. A telecommunications service is an integral
part of a taxable service if the telecommunications service is essential
to the performance of the taxable service and without which the taxable service could not be rendered. For example, an Internet access
service provider (ISP) may give a resale certificate when purchasing
the dedicated dial-up line services to be used by the ISP's customers.
However, the ISP must pay sales tax when purchasing its own personal
or business use of telecommunications services such as charges for its
office phone lines, mobile telecommunications services for its traveling salespersons, or for a customer service call-center.
(3) A mobile telecommunications service provider may
purchase roaming services from another mobile telecommunications
service provider tax free for resale to its customers that are using the
roaming services. For example, an out-of-state mobile telecommunications service provider purchases roaming services in Texas for resale
to its out-of-state customers (i.e., persons who have a place of primary
use outside Texas). To be exempt from sales tax, the out-of-state
mobile telecommunications service provider must give the seller of
the roaming services a resale certificate showing either a Texas sales
tax permit number or the sales tax permit number or registration
number issued by its home state. Effective for billing periods that
begin on or after August 1, 2002, these out-of-state customers do not
owe Texas sales tax on roaming charges incurred while visiting or
traveling through Texas.
(g) Taxable purchases. Subject to the provisions of subsections (e) and (f) of this section, a telecommunications service provider
owes sales or use tax on all tangible personal property and services
that are used to provide the service. See §3.346 of this title (relating to
Use Tax), §3.281 of this title (relating to Records Required; Information Required), and §3.282 of this title (relating to Auditing Taxpayer
Records).
(h) Local tax.
(1) Subject to the provisions of paragraph (2) of this subsection, jurisdictions that impose local sales and use taxes may repeal the local sales tax exemption on telecommunications services.
See Publication 96-339 (Jurisdictions That Impose Local Sales Tax on
Telecommunications Services) for a list of jurisdictions that impose local taxes on telecommunications services.
(2) Taxable interstate long-distance telecommunications
are only subject to state sales tax. Local taxing jurisdictions may
not repeal the local sales tax exemption on interstate long-distance
telecommunications services.
(3) A seller of taxable telecommunications services, with
the exception of mobile telecommunications services as explained in
paragraph (4) of this subsection and prepaid wireless telecommunications services as explained in paragraph (6) of this subsection, must
collect local sales taxes based on the location from which the telecommunications service originates. If the point of origin cannot be determined, the telecommunications service provider must collect local
taxes based on the address to which the telecommunications service is
billed.
(4) A seller of mobile telecommunications services must
collect local sales taxes based on the place of primary use as defined
in subsection (a)(8) of this section and per Tax Code, §151.061. The
location from which a mobile telecommunications service originates
does not determine whether the service is exempt or is subject to state
or local sales tax.
(5) A seller of telephone prepaid calling cards is not selling
a telecommunications service and must collect state and local sales or
use tax on the sale of the cards in the same manner as sales of other
tangible personal property.
(6) A seller of prepaid wireless telecommunications services as defined in subsection (a)(9) of this section must collect local
tax based on the business address of the seller when the sale occurs
in Texas in person. However, if the sale occurs over the telephone or
Internet, tax is due if the primary business address of the purchaser or
residential address of the purchaser is in Texas.
to adopt.
Subsection (c)(4) is added to state that services performed on
behalf of an insured by a public insurance adjuster on or after
October 1, 2015, are not taxable insurance services. This subsection also provides that the date the services are performed,
and not the date billed or paid, determines the taxability of the
services.
Subsection (i) is amended to correct a typographical error.
Subsection (k) is amended to refer to §3.334 Local Sales and
Use Taxes and to delete references to previous rules which were
repealed with the adoption of §3.334.
current state law. This rule is proposed under Tax Code, Title 2,
and does not require a statement of fiscal implications for small
businesses. There is no significant anticipated economic cost to
individuals who are required to comply with the proposed rule.
Register.
The amendment is proposed under Tax Code 111.002, which
provides the comptroller with the authority to prescribe, adopt,
and enforce rules relating to the administration and enforcement
of provisions of Tax Code, Title 2, and taxes, fees, or other
charges or refunds which the comptroller administers under
other law.
The amendment implements amendments to Tax Code,
§151.0039 (Insurance Service).
§3.355. Insurance Services.
2015.
TRD-201504423
Lita Gonzalez
General Counsel
♦
♦
(1) Insurance loss or damage appraisal--Any activity performed for purposes of valuing damages, or estimating the quantity,
value, or extent of loss of property. Appraisal activities performed prior
to damage or loss, such as the appraisal of jewelry for scheduling on
a homeowners insurance policy, are not considered loss or damage appraisal.
♦
34 TAC §3.355
The Comptroller of Public Accounts proposes amendments to
§3.355, concerning insurance services. This section is amended
to implement House Bill 1841, 84th Legislature, 2015, which
amended Tax Code, §151.0039(b)(2) to exclude services performed by a public insurance adjuster from the scope of taxable
insurance services. House Bill 1841 is effective October 1, 2015.
The section is also amended to make clerical edits and to update
rule references.
Subsection (a)(8) is added to define a public insurance adjuster as set out in, and by reference to, Insurance Code,
§4102.001(3). Subsequent paragraphs are renumbered accordingly.
(2) Insurance inspection--Any activity performed to evaluate risks to property, to survey or value property in connection with
the furnishing of insurance coverage, or any other similar activity.
(3) Insurance investigation--Any activity performed to
evaluate an individual's eligibility or qualifications for insurance coverage, or for the payment of benefits, or any other similar activity. For
example, the assembly or evaluation of information for the purpose
of determining whether to issue a life insurance policy to a specific
individual would be considered an insurance investigation.
(4) Insurance or annuity actuarial analysis or research--Any activity performed in connection with the calculation
of rates for a policy of insurance or annuity rates, reserves, refunds,
dividends, insurance benefits, or other similar activities.
PROPOSED RULES
October 30, 2015
40 TexReg 7571
(5) Insurance claims adjustment or claims processing--Any
activities to supervise, handle, investigate, pay, settle, or adjust claims
or losses.
(6) Insurance loss prevention service--Any activities performed in an effort to identify, analyze, evaluate, control, anticipate
and/or eliminate the occurrence of accidents, losses, or damage. Examples include: survey recommendations, training programs, consultations, analysis of accident causes, and industrial hygiene and health
services.
(7) Insurance carrier--Every type of insurer engaged in the
business of insurance that is licensed or operates under or is required to
be licensed or to operate under the provisions of the Insurance Code.
(8) Public insurance adjuster--A person, as set out in Insurance Code, §4102.001(3), who:
(A)
for direct, indirect, or any other compensation:
(i) acts on behalf of an insured in negotiating for or
effecting the settlement of a claim or claims for loss or damage under
any policy of insurance covering real or personal property; or
(ii) on behalf of any other public insurance adjuster,
investigates, settles, or adjusts or advises or assists an insured with
a claim or claims for loss of damage under any policy of insurance
covering real or personal property; or
(B) advertises, solicits business, or holds himself or herself out to the public as an adjuster of claims for loss or damage under
any policy of insurance covering real or personal property.
(9) [(8)] Self-insured plan--A plan whereby an employer
maintains funds for providing employee benefits rather than transferring risk by purchasing insurance from an insurance carrier. This plan
is not considered a policy of insurance for sales tax purposes.
(10) [(9)] Third-party administrator--A person hired by an
employer to administer the provisions of the employer's self-insured
plan.
(b) Taxable services. Insurance services defined in subsection
(a) of this section performed on behalf of an insurance carrier, its insured, its policyholders, or others pertaining to a policy or policies
of insurance for monetary fees, dues, or other consideration are taxable. These services performed pursuant to a self-insured plan or for a
third-party administrator handling distribution of funds under a self-insured plan are not taxable.
(c) Nontaxable services. The following services are not taxable as insurance services:
(1) insurance coverage for which a premium is paid or sales
commissions are paid to insurance agents. Insurance services provided
by an insurance agent without charge to the customer are not taxable.
If a customer pays a separate amount for these services over and above
the amount paid as a commission for a policy, this separate charge is
taxable;
(2) medical services provided by any medical provider, including physicians, medical staff at the physician's direction, hospitals,
clinics, chiropractors, and other practitioners of the healing arts;
(3) services related to automobile warranties or service
contracts for which the State Board of Insurance allows an exclusion
to third-party administrators; and[.]
(4) services performed on behalf of an insured by a public insurance adjuster on or after October 1, 2015. Insurance services
performed by a public insurance adjuster before October 1, 2015, are
subject to tax regardless of the date billed, invoiced, or paid.
40 TexReg 7572
October 30, 2015
Texas Register
(d) Doing business. Insurance services will be subject to taxation in Texas if the individual, entity, or property which is the object
of the service is in Texas and the company for which the services are
performed is either an insurance carrier as that term is defined in subsection (a)(7) of this section, or if not an insurance carrier, is doing
business in Texas.
(e) Fees and premiums. Insurance premiums and any other
form of compensation subject to gross administrative or service fees
taxes under the Insurance Code are subject to tax hereunder if paid in
connection with the performance of an insurance service. Insurance
premiums subject to gross premiums taxes under the Insurance Code
are not subject to sales tax.
(f) Not insurance related. Where an insurance service is performed as a part of a nontaxable service and the primary purpose for
purchasing the nontaxable service is not insurance related, no part of
the fee or charge is taxable. For example, the charge for an appraisal
required by a lender as a condition of extending credit is not taxable as
an insurance service because the primary purpose in obtaining the service is financing the loan. The fact that the appraisal may also be used
as the basis for establishing minimum property insurance required by
the lender as a condition of financing does not render the service taxable as an insurance service.
(g) Responsibilities of persons providing insurance services.
Persons providing insurance services must obtain a tax permit and collect tax on the entire sales price of their services. The presumption
is that all services are taxable unless the service provider obtains an
exemption certificate from a customer claiming an exemption. For example, a third-party administrator may issue an exemption certificate
for charges for claim adjustment activities done pursuant to a self-insured plan.
(h)
Resale certificates.
(1) Providers of insurance service may issue a resale certificate in lieu of tax to suppliers of tangible personal property only
if care, custody, and control of the property will be transferred to the
service provider's client. For example, an insurance service provider
purchases magnetic tape to transfer the results of actuarial research to
service provider's client. The tape is transferred to the client and the
client owns and uses the tape to review the results of the actuarial research. The insurance service provider may purchase the tape tax free
by issuing a resale certificate. Tax is due on the total amount charged
the customer, including amounts for the tape and for the services.
(2) A resale certificate may be issued for a service if the
buyer intends to transfer the service as an integral part of taxable services. A service will be considered an integral part of a taxable service
if the service purchased is essential to the performance of the taxable
service and without which the taxable service could not be rendered.
(3) A resale certificate may be issued for a taxable service
if the buyer intends to incorporate the service into tangible personal
property which will be resold. If the entire service is not incorporated
into the tangible personal property, it will be presumed the service is
subject to tax and the service will only be exempt to the extent the
buyer can establish the portion of the service actually incorporated into
the tangible personal property. If the buyer does not intend to incorporate the entire service into the tangible personal property, no resale
certificate may be issued, but credit may be claimed at the time of sale
of the tangible personal property to the extent the service was actually
incorporated into the tangible personal property.
(i) Unrelated services.
(1) A service will be considered as unrelated if:
(A) it is not an insurance service, nor a service taxed
under other provisions of [the] Tax Code, Chapter 151;
means the place from which the trade or business is directed or managed.
(B) it is of a type which is commonly provided on a
stand-alone basis; and
(k) Local tax. [Local sales and use taxes (city, county, transit
authority, and special purpose district) apply to services in the same
way as they apply to tangible personal property. Generally, service
providers must collect local sales taxes if their place of business is
within a local taxing jurisdiction, even if the service is actually provided at a location outside that jurisdiction. However, MTA and CTD
sales taxes do not apply to services provided outside the boundaries of
the transit area. If the place of business is outside such a jurisdiction but
the service is provided to a customer within a local taxing jurisdiction,
local use taxes apply and the service provider is responsible for collecting them.] For information on the collection and reporting responsibilities of providers and purchasers of taxable services, see §3.334 of this
title (relating to Local Sales and Use Taxes) [§3.374 of this title (relating to Imposition of the Sales Tax; Collection by Retailer; Bracket
System Formula; Determining City Tax); §3.375 of this title (relating
to Administration of Use Tax; Collection by Retailer); §3.424 of this
title (relating to Imposition of Sales Tax); and §3.425 of this title (relating to Administration of Use Tax; Imposition and Collection)].
(C) the performance of the unrelated service is distinct
and identifiable. Examples of an unrelated service which may be excluded from the tax base include activities as third-party administrators,
appraisals for reasons other than loss or damage, or doctor's fees.
(2) Where nontaxable unrelated services and taxable services are sold or purchased for a single charge and the portion relating to taxable services represents more than 5.0% of the total charge,
the total charge is presumed to be taxable. The presumption may be
overcome by the insurance service provider at the time the transaction
occurs by separately stating to the customer a reasonable charge for
the taxable services. However, if the charge for the taxable portion of
the services is not separately stated at the time of the transaction, the
service provider or the purchaser may later establish for the comptroller, through documentary evidence, the percentage of the total charge
that relates to nontaxable unrelated services. The insurance service
provider's books must support the apportionment between exempt and
nonexempt activities based on the cost of providing the service or on a
comparison to the normal charge for each service if provided alone. If
the charge for exempt services is unreasonable when the overall transaction is reviewed considering the cost of providing the service or a
comparable charge made in the industry for each service, the comptroller will adjust the charges and assess additional tax, penalty, and
interest on the taxable services.
(3) Charges for services or expenses directly related to and
incurred while providing the taxable service are taxable and may not be
separated for the purpose of excluding these charges from the tax base.
Examples would be charges for meals, telephone calls, hotel rooms, or
airplane tickets.
(j) Service benefit location--multistate customer.
(1) To the extent an insurance service is used to support a
separate, identifiable segment of a customer's business (other than general administration or operation of the business) the service is presumed
to be used at the location where that part of the business is conducted.
(2) If that part of the business is conducted at locations both
within and outside the state, the service is not taxable to the extent it
is used outside Texas. A multistate customer may use any reasonable
method for allocation which is supported by business records.
(3) A multistate customer purchasing insurance services, such as actuarial services, for the benefit of both in-state and
out-of-state locations is responsible for issuing to the insurance services provider an exemption certificate asserting a multistate benefit,
and for reporting and paying the tax on that portion of the insurance
services charge which will benefit the Texas location. A provider of
insurance services that accepts such a certificate in good faith is relieved of responsibility for collecting and remitting tax on transactions
to which the certificate relates.
(4) The customer's books must support the assignment of
the service to an identifiable segment of the business, the determination
of the location or locations of the use of the service, and the allocation
of the taxable charge to Texas.
(5) To the extent the use of the service cannot be assigned
to an identifiable segment of a customer's business, the service is presumed to be used to support the administration or operation of the customer's business generally. The service is presumed to be used at the
customer's principal place of business. The principal place of business
(l) Use tax. If a provider of an insurance service is not doing
business in Texas or in a specific local taxing jurisdiction and is not
required to collect Texas state or local tax, it is the Texas customer's
responsibility to report and pay the use tax directly to this office.
to adopt.
2015.
TRD-201504360
Lita Gonzalez
General Counsel
♦
SUBCHAPTER S.
♦
♦
MOTOR FUEL TAX
34 TAC §3.434
The Comptroller of Public Accounts proposes amendments to
§3.434, concerning liquefied gas tax decal. The amendments
are proposed to implement the provisions of House Bill 1905,
84th Legislature, 2015 which repealed the tax on liquefied gas
effective September 1, 2015.
The section is amended by adding new subsection (a) indicating that the rule applies to periods prior to September 1, 2015.
All subsequent subsections are relettered accordingly and corresponding cross-references in those subsections are also relettered.
The subsection cross-reference in the attached graphic is relettered.
PROPOSED RULES
October 30, 2015
40 TexReg 7573
current state statutes. This rule is proposed under Tax Code,
Title 2, and does not require a statement of fiscal implications for
small businesses. There is no significant anticipated economic
cost to individuals who are required to comply with the proposed
rule.
Register.
The amendments are proposed under Tax Code, §111.002,
which provides the comptroller with the authority to prescribe,
adopt, and enforce rules relating to the administration and
enforcement of the provisions of Tax Code, Title 2.
The amendments implement the repeal of Tax Code, Chapter
162, Subchapter D (Motor Fuel Taxes).
§3.434. Liquefied Gas Tax Decal.
(a) This section applies to periods prior to September 1, 2015.
Effective September 1, 2015, the tax on liquefied gas is repealed.
(b) [(a)] Use of decal. Except as provided in subsections (c)
[(b)], (d) [(c)], and (g) [(f)] of this section, a person who operates a motor vehicle that is required to be licensed in Texas for use on the public
highways of Texas and that is powered by ethane, propane, butane, or
a mixture of those gases, including a motor vehicle equipped to use
liquefied gas interchangeably with another motor fuel, must:
(1)
obtain from the comptroller a liquefied gas decal; and
(2) prepay the liquefied gas tax to the comptroller on an
annual basis.
(c) [(b)] Motor Vehicle Dealer. A motor vehicle dealer registered under Transportation Code, Chapter 503, must pay the liquefied
gas tax to a licensed liquefied gas dealer when the fuel is delivered into
the fuel supply tanks of each motor vehicle that display a motor vehicle
dealer decal and that is held for resale.
(d) [(c)] Interstate trucker. An interstate trucker registered under a multistate tax agreement (International Fuel Tax Agreement),
must pay the liquefied gas tax to a licensed liquefied gas dealer when the
fuel is delivered into the fuel supply tanks of motor vehicles that have
two axles and a registered gross weight in excess of 26,000 pounds;
have three or more axles, or are used in combination and the registered gross weight of the combination exceeds 26,000 pounds, and that
display current multistate tax agreement (International Fuel Tax Agreement) decals.
(e) [(d)] Vehicle registered in another state. A liquefied gas tax
decal cannot be issued to a motor vehicle registered in a state other than
Texas. Owners of such vehicles must pay tax to a licensed liquefied gas
dealer on fuel delivered into the fuel supply tanks.
(f) [(e)] Application. Each person purchasing liquefied gas for
use in a liquefied gas powered motor vehicle must submit an annual
application to the comptroller for each vehicle.
(1) Initial application. An applicant initially applying for a
liquefied gas tax decal for a Class A - F motor vehicle must purchase a
decal based on an estimate of miles that will be driven during the next
one-year period.
(2) Renewal. The applicant must produce an ending
odometer reading on the renewal application. In the absence of an
40 TexReg 7574
October 30, 2015
Texas Register
ending odometer reading, the previous year's mileage will be presumed
to be at least 15,000 miles. Applications for the upcoming year should
be submitted during the month of expiration of the current decal.
(A) The liquefied gas tax does not apply to miles traveled outside the state. A record of miles traveled by the motor vehicle
outside Texas must be maintained and submitted with the renewal each
year. The record must include the date(s) of travel, beginning and ending odometer readings and destination.
(B) Special use vehicles. Vehicles required to be licensed for highway use but whose main purpose, design, and use is
off the highway may renew a liquefied gas decal for a rate less than
the mileage indicated on the odometer if a record or log indicating the
miles traveled on the highway by the vehicle is maintained and attached
to the renewal application.
(g) [(f)] Exceptions.
(1) School district transportation and county exceptions.
The liquefied gas tax does not apply to liquefied gas sold to public
school districts and counties in this state, or to commercial transportation companies providing transportation services to public school districts in this state. These transportation companies must obtain letters
of exception from the comptroller, as discussed in §3.448 of this title
(relating to Transportation Services for Texas Public School Districts).
(2) Decal not required. A public school district, a commercial transportation company providing transportation services to a
public school district and holding a valid letter of exception from the
comptroller, or a county in this state operating a motor vehicle powered by liquefied gas is not required to prepay the liquefied gas tax and
obtain a decal for the motor vehicle.
(h) [(g)] Rate schedule.
(1) The following rate schedule (based on mileage driven
the previous year) applies.
Figure: 34 TAC §3.434(h)(1)
[Figure: 34 TAC §3.434(g)(1)]
(2) Transit company. A special use liquefied gas tax decal
and tax is required for the following type of vehicles: Class T: Transit
carrier vehicles operated by a transit company, $444. The Class T special use liquefied gas decal may be displayed by compressed natural
gas and liquefied natural gas transit carrier vehicles that qualify under
Tax Code, §162.312.
(i) [(h)] Display of decal. The decal shall be affixed to the
inside, lower right corner of the windshield (passenger side) of the vehicle. An expired or invalid liquefied gas tax decal shall be removed
before installing a new decal or transferring ownership of the motor
vehicle.
(j) [(i)] Refunds; transfer of decal. If a motor vehicle bearing
a liquefied gas tax decal is sold, transferred, destroyed, or the liquefied gas carburetor system (regulator or fuel supply tank) is removed
from the motor vehicle the owner is entitled to a refund of the unused
portion of the advanced taxes paid for the decal year. The owner must
submit to the comptroller the liquefied gas tax decal with an affidavit
identifying the motor vehicle and circumstances for requesting a refund. The comptroller shall refund that portion of the tax payment that
corresponds to the number of complete months remaining in the decal
year.
to adopt.
2015.
TRD-201504424
Lita Gonzalez
General Counsel
♦
♦
Subsection (c) is proposed to be removed as it is duplicative of
existing law.
♦
PART 5. TEXAS COUNTY AND
DISTRICT RETIREMENT SYSTEM
CHAPTER 103.
OF BENEFITS
standard benefit. Mortality assumptions for these calculations
are blended 50% male and 50% female for retirees, and blended
30% male and 70% female for beneficiaries. Subsection (b)(3)
provides that the annuity purchase rates are based on the respective retiree's and beneficiary's attained ages in years and
months. Subsection (b)(4) provides that service credit, has the
meaning as denied in §841.001(16) of the Texas Government
Code.
CALCULATIONS OR TYPES
34 TAC §103.1
The Texas County and District Retirement System ("TCDRS")
proposes an amendment to §103.1 concerning actuarial tables
used to calculate annuity purchase rates. Annuity purchase
rates convert member savings into lifetime monthly benefits.
The proposed amendment is based on the recommendation
of the actuary, Milliman Inc., after consideration of the results
of a longevity study that was conducted for the system. The
amendment would update the annuity purchase rates to reflect
improving longevity.
This proposed update would keep retirement costs in line with
life expectancy, keep employers from experiencing cost creep
due to improving life expectancy, and strengthen the retirement
system for the future. Application of these new rates will not
impact retirees or any member benefits earned before January
1, 2018.
To ensure that benefits already earned are not affected and to
minimize impact on members, any benefits earned on or before
January 1, 2018, would use the current annuity purchase rates
to calculate benefits. The current annuity purchase rates also
apply to future interest on those pre-2018 benefits. The updated
annuity purchase rates would only apply to benefits earned after
January 1, 2018, and annuity purchase rates would be based
on the member's and beneficiaries' attained ages in years and
months.
Subsection (a) of the proposed amendment provides that service
and disability retirement benefits in which the first benefit payment is payable before January 1, 2018 will be calculated under
the existing annuity purchase rates. Subsection (a)(2) provides
that the annuity purchase rate would be based on the respective
retiree's and beneficiary's attained age in years.
Subsection (b) applies to benefits payable after January 1, 2018.
Subsection (b)(1) provides the benefit that is associated with service credit that accrued before January 1, 2018 would be calculated using the current annuity purchase rates. Subsection
(b)(2) provides that the portion of the benefit that is associated
with service credit that accrues on or after January 1, 2018 would
be calculated using the new annuity purchase rates that are determined on a generational mortality basis using the RP-2000
Combined Mortality Table projected to 2014 using Scale AA and
for projections after 2014 using 110% of MP-2014 Ultimate Projection Scale, with a 32.79% reserve refund assumption for the
Ann McGeehan, General Counsel of TCDRS, has determined
that for the first five-year period the rule is in effect there will be
no fiscal implications for state government, and only potential
immaterial fiscal implications for local governments participating
in TCDRS as a result of enforcing or administering the rule. In the
first five-year period, it is expected that participating counties and
districts will experience decreases or increases in their employer
contribution rates due to the combined effects of economic and
other demographic factors. However, this proposed amendment
reduces the risk of employer cost increases due to improving
longevity.
Ms. McGeehan has also determined that for each year of the first
five years the rule is in effect the public benefit anticipated as a
result of administering the rule will be to keep retirement costs in
line with life expectancy, to prevent employers from experiencing
cost creep due to improving life expectancy, and to strengthen
the retirement system. There will be no costs to small businesses. Individuals who might be affected by the amendment
are TCDRS members whose retirement is based wholly or partly
on service credit accrued on or after January 1, 2018. The portion of the retirement benefit associated with service credit that
accrues on or after January 1, 2018 will continue to be the actuarial equivalent of the retirement benefit that would have been
calculated using existing annuity purchase rates. The monthly
payment amount will be less but will be expected to continue
over a longer period of time due to longer life expectancies.
Comments on the proposed amendment may be submitted to
Ann McGeehan, General Counsel, TCDRS, P.O. Box 2034,
Austin, Texas 78768-2034, faxed to (512) 328-8887, or submitted electronically to [email protected].
The amendment is proposed under the Government Code,
§841.001(1) and §845.110, which authorizes the TCDRS board
of trustees to adopt rates and tables, including a mortality basis
to be used in determining actuarial equivalents.
The Government Code, §841.001(1) is affected by this proposed
rule.
§103.1. Actuarial Tables.
(a) Service retirement benefits and disability retirement benefits for [on service retirements, on] which the first benefit payment is
payable before January 1, 2018, [on or after October 1, 1985,] shall be
calculated under the following rules:
(1) The annuity purchase rate is calculated on the basis of
the UP-1984 table with an age setback of five years for retirees [retired
members] and an age setback of 10 years for beneficiaries [of retired
members], with a 30% reserve refund assumption for the standard benefit.
(2) Annuity purchase rates are based on the respective retiree's and beneficiary's attained ages in years.
PROPOSED RULES
October 30, 2015
40 TexReg 7575
(b) For benefits payable on or after January 1, 2018, service
retirement benefits and disability retirement benefits shall be calculated
under the following rules: [Disability retirement benefits on disability
retirements, on which the first benefit is payable on or after January
1, 1992, shall be calculated with a 30% reserve refund assumption for
the standard benefit, and on the basis of the UP-1984 table with an age
setback of five years for disabled annuitants and an age setback of 10
years for beneficiaries of disabled annuitants.]
encompasses not only pre-employment investigation, but preenrollment investigations. Subsection (a)(16) is a new definition
for a contract jailer. New subsection (a)(19) removes redundant
information. New subsection (a)(32) is a new definition for an
honorably retired peace officer for clarification in response to legislation. Subsection (a)(17) - (31) and (33) - (68) are amended
for renumbering. Subsection (b) is amended to reflect the effective date of the changes.
(1) The annuity purchase rate for the portion of the benefit that is associated with service credit that accrued before January 1,
2018, and all future interest earned and employer matching attributable
to this portion shall be calculated based on the assumptions described
in Subsection (a)(1) of this section.
These amendments are necessary to make background investigation a broader definition which encompasses not only pre-employment investigation, but pre-enrollment investigations, provide a definition for a contract jailer, to remove redundant information, and to define honorably retired peace officer for clarification in response to legislation.
(2) The annuity purchase rate for the portion of the benefit
that is associated with service credit that accrues on or after January
1, 2018, and is not included in amounts described in Subsection (b)(1)
above shall be calculated on a generational mortality basis using the
RP-2000 Combined Mortality Table projected to 2014 using Scale AA
and for projections after 2014 using 110% of MP-2014 Ultimate Projection Scale, with a 32.79% reserve refund assumption for the standard
benefit. Mortality assumptions for these calculations are blended 50%
male and 50% female for retirees, and blended 30% male and 70% female for beneficiaries.
(3) The annuity purchase rates are based on the respective
retiree's and beneficiary's attained age in years and months regardless
of when the service credit was accrued.
(4) For the purpose of this rule, service credit means the
monetary credits allowed a member for service for a participating employer as defined in Section 841.001(16) of the Texas Government
Code.
[(c) The actuarial tables may be changed by the board on recommendations of the actuary to more nearly conform to the actual experience of the system with affected categories.]
to adopt.
John Beauchamp, General Counsel, has determined that for
each year of the first five years the section as proposed will be
in effect, there will be a positive benefit to the public by removing
redundant information and defining contract jailer and honorably
retired peace officer.
Mr. Beauchamp has determined that for each year of the first
five years the section as proposed will be in effect, there will be
no anticipated cost to small business, individuals, or both as a
result of the proposed section.
Comments on the proposal may be submitted electronically
to [email protected] or in writing to Mr. Kim
Vickers, Executive Director, Texas Commission on Law Enforcement, 6330 E. Highway 290, Suite 200, Austin, Texas
78723-1035.
The amendment is proposed under Texas Occupations Code
§1701.151, General Powers of the Commission; Rulemaking
Authority.
The rule amendment as proposed is in compliance with Texas
Occupations Code §1701.151, General Powers of the Commission; Rulemaking Authority.
No other code, article, or statute is affected by this proposal.
2015.
TRD-201504373
Ann McGeehan
General Counsel
Texas County and District Retirement System
♦
♦
♦
TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART 7. TEXAS COMMISSION ON
LAW ENFORCEMENT
CHAPTER 211.
ADMINISTRATION
37 TAC §211.1
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §211.1, concerning Definitions. Subsection (a)(8) is amended to make this a broader definition which
40 TexReg 7576
October 30, 2015
Texas Register
(a) The following words and terms, when used in this part,
shall have the following meanings, unless the context clearly indicates
otherwise.
(1) Academic alternative program--A program for college
credit offered by a training provider recognized by the Southern Association of Colleges and Schools and the Texas Higher Education Coordinating Board, authorized by the commission to conduct preparatory
law enforcement training as part of a degree plan program, and consisting of commission-approved curricula.
(2) Academic provider--A school, accredited by the Southern Association of Colleges and Schools and the Texas Higher Education Coordinating Board, which has been approved by the commission
to provide basic licensing courses.
(3) Accredited college or university--An institution of
higher education that is accredited or authorized by the Southern
Association of Colleges and Schools, the Middle States Association
of Colleges and Schools, the New England Association of Schools
and Colleges, the North Central Association of Colleges and Schools,
the Northwest Commission on Colleges and Universities, the Western
Association of Schools and Colleges, or an international college
or university evaluated and accepted by a United States accredited
college or university.
(4) Active--A license issued by the commission that meets
the current requirements of licensure and training as determined by the
commission.
(5) Administrative Law Judge (ALJ)--An administrative
law judge appointed by the chief administrative law judge of the State
Office of Administrative Hearings.
(6) Agency--A law enforcement unit or other entity,
whether public or private, authorized by Texas law to appoint a person
licensed or certified by the commission.
(7) Appointed--Elected or commissioned by an agency as
a peace officer, reserve or otherwise selected or assigned to a position
governed by the Texas Occupations Code, Chapter 1701, without regard to pay or employment status.
(8) Background investigation--An [A pre-employment
background] investigation into an applicant's personal history that
meets or exceeds the commission-developed questionnaire or personal
[/]history statement.
(9) Basic licensing course--Any current commission developed course that is required before an individual may be licensed by the
commission.
(10) Certified copy--A true and correct copy of a document
or record certified by the custodian of records of the submitting entity.
(11) Chief administrator--The head or designee of a law enforcement agency.
(19) [(18)] Community [Court-ordered community] supervision--Any court-ordered community supervision or probation resulting from a deferred adjudication or conviction by a court of competent
jurisdiction. However, this does not include supervision resulting from
a pretrial diversion.
(20) [(19)] Diploma mill--An entity that offers for a fee
with little or no coursework, degrees, diplomas, or certificates that may
be used to represent to the general public that the individual has successfully completed a program of secondary education or training.
(21) [(20)] Distance education--Study, at a distance, with
an educational provider that conducts organized, formal learning opportunities for students. The instruction is offered wholly or primarily
by distance study, through virtually any media. It may include the use
of: videotapes, DVD, audio recordings, telephone and email communications, and Web-based delivery systems.
(22) [(21)] Duty ammunition--Ammunition required or
permitted by the agency to be carried on duty.
(23) [(22)] Executive director--The executive director of
the commission or any individual authorized to act on behalf of the
executive director.
(24) [(23)] Experience--Includes each month, or part
thereof, served as a peace officer, reserve, jailer, telecommunicator, or
federal officer. Credit may, at the discretion of the executive director,
be awarded for relevant experience from an out-of-state agency.
Commission--The Texas Commission on Law En-
(25) [(24)] Family Violence--In this chapter, has the meaning assigned by Chapter 71, Texas Family Code.
(13) Commissioned--Has been given the legal power to act
as a peace officer or reserve, whether elected, employed, or appointed.
(26) [(25)] Field training program--A program intended to
facilitate a transition from the academic setting to the performance of
the general duties of the appointing agency.
(12)
forcement.
(14) Commissioners--The nine commission members appointed by the governor.
(15) Contract jail--A correctional facility, operated by a
county, municipality or private vendor, operating under a contract
with a county or municipality, to house inmates convicted of offenses
committed against the laws of another state of the United States, as
provided by Texas Government Code, §511.0092.
(16) Contract Jailer--A person licensed as a Jailer in a Contract Jail or employed by an agency outside of a County Jail whose employing agency provides services inside of a County Jail which would
require the person to have a Jailer License.
(17) [(16)] Contractual training provider--A law enforcement agency or academy, a law enforcement association, alternative
delivery trainer, distance education, academic alternative, or proprietary training provider that conducts specific education and training
under a contract with the commission.
(18) [(17)] Convicted--Has been adjudged guilty of or has
had a judgment of guilt entered in a criminal case that has not been set
aside on appeal, regardless of whether:
(A) the sentence is subsequently probated and the person is discharged from probation;
(B) the charging instrument is dismissed and the person
is released from all penalties and disabilities resulting from the offense;
or
(C) the person is pardoned, unless the pardon is expressly granted for subsequent proof of innocence.
(27) [(26)] Firearms--Any handgun, shotgun, precision rifle, patrol rifle, or fully automatic weapon that is carried by the individual officer in an official capacity.
(28) [(27)] Firearms proficiency--Successful completion of
the annual firearms proficiency requirements.
(29) [(28)] Fit for duty review--A formal specialized examination of an individual, appointed to a position governed by the
Texas Occupations Code, Chapter 1701, without regard to pay or employment status, to determine if the appointee is able to safely and/or
effectively perform essential job functions. The basis for these examinations should be based on objective evidence and a reasonable basis
that the cause may be attributable to a medical and/or psychological
condition or impairment. Objective evidence may include direct observation, credible third party reports; or other reliable evidence. The
review should come after other options have been deemed inappropriate in light of the facts of the case. The selected Texas licensed medical
doctor or psychologist, who is familiar with the duties of the appointee,
conducting an examination should be consulted to ensure that a review
is indicated. This review may include psychological and/or medical
fitness examinations.
(30) [(29)] High School Diploma--An earned high school
diploma from a United States high school, an accredited secondary
school equivalent to that of United States high school, or a passing
score on the general education development test indicating a high
school graduation level. Documentation from diploma mills is not
acceptable.
(31) [(30)] Home School Diploma--An earned diploma
from a student who predominately receives instruction in a general
elementary or secondary education program that is provided by the
PROPOSED RULES
October 30, 2015
40 TexReg 7577
parent, or a person in parental authority, in or through the child's home.
(Texas Education Code §29.916)
(48) [(46)] Placed on probation--Has received an adjudicated or deferred adjudication probation for a criminal offense.
(32) Honorably Retired Peace Officer--An unappointed
person with a Texas Peace Officer license who has a cumulative total
of 15 years of full-time service as a Peace Officer. An Honorably
Retired Peace Officer does not carry any Peace Officer authority.
(49) [(47)] POST--State or federal agency with jurisdiction
similar to that of the commission, such as a peace officer standards and
training agency.
(33) [(31)] Individual--A human being who has been born
and is or was alive.
(50) [(48)] Precision rifle--Any rifle with a frame mounted
optical sighting device greater than 5 power that is carried by the individual officer in an official capacity.
(34) [(32)] Jailer--A person employed or appointed as a
jailer under the provisions of the Local Government Code, §85.005,
or Texas Government Code §511.0092.
(51) [(49)] Proprietary training contractor--An approved
training contractor who has a proprietary interest in the intellectual
property delivered.
(35) [(33)] Killed in the line of duty--A death that is the
directly attributed result of a personal injury sustained in the line of
duty.
(52) [(50)] Public security officer--A person employed or
appointed as an armed security officer identified under the provisions
of the Texas Occupations Code, §1701.001.
(36) [(34)] Law--Including, but not limited to, the constitution or a statute of this state, or the United States; a written opinion
of a court of record; a municipal ordinance; an order of a county commissioners' court; or a rule authorized by and lawfully adopted under a
statute.
(53) [(51)] Reactivate--To make a license issued by the
commission active after a license becomes inactive. A license becomes inactive at the end of the most recent unit or cycle in which
the licensee is not appointed and has failed to complete legislatively
required training.
(37) [(35)] Law enforcement academy--A school operated
by a governmental entity which may provide basic licensing courses
and continuing education under contract with the commission.
(54) [(52)] Reinstate--To make a license issued by the commission active after disciplinary action or failure to obtain required continuing education.
(38) [(36)] Law enforcement automobile for training--A
vehicle equipped to meet the requirements of an authorized emergency
vehicle as identified by Texas Transportation Code §546.003 and
§547.702.
(55) [(53)] Reserve--A person appointed as a reserve law
enforcement officer under the provisions of the Texas Occupations
Code, §1701.001.
(39) [(37)] Lesson plan--A plan of action consisting of a
sequence of logically linked topics that together make positive learning
experiences. Elements of a lesson plan include: measurable goals and
objectives, content, a description of instructional methods, tests and
activities, assessments and evaluations, and technologies utilized.
(40) [(38)] License--A license required by law or a state
agency rule that must be obtained by an individual to engage in a particular business.
(41) [(39)] Licensee--An individual holding a license issued by the commission.
(42) [(40)] Line of duty--Any lawful and reasonable action,
which an officer identified in Texas Government Code, Chapter 3105
is required or authorized by rule, condition of employment, or law to
perform. The term includes an action by the individual at a social, ceremonial, athletic, or other function to which the individual is assigned
by the individual's employer.
(43) [(41)] Moral character--The propensity on the part of a
person to serve the public of the state in a fair, honest, and open manner.
(44) [(42)] Officer--A peace officer or reserve identified
under the provisions of the Texas Occupations Code, §1701.001.
(45) [(43)] Patrol rifle--Any magazine-fed repeating rifle
with iron/open sights or with a frame mounted optical enhancing sighting device, 5 power or less, that is carried by the individual officer in
an official capacity.
(46) [(44)] Peace officer--A person elected, employed, or
appointed as a peace officer under the provisions of the Texas Occupations Code, §1701.001.
(47) [(45)] Personal Identification Number (PID)--A
unique computer-generated number assigned to individuals for identification in the commission's electronic database.
40 TexReg 7578
October 30, 2015
Texas Register
(56) [(54)] School marshal--A person employed and appointed by the board of trustees of a school district or the governing
body of an open-enrollment charter school under Texas Code of Criminal Procedure, Article 2.127 and in accordance with and having the
rights provided by Texas Education Code, §37.0811.
(57) [(55)] Self-assessment--Completion of the commission created process, which gathers information about a training or
education program.
(58) [(56)] Separation--An explanation of the circumstances under which the person resigned, retired, or was terminated,
reported on the form currently prescribed by the commission, in
accordance with Texas Occupations Code, §1701.452.
(59) [(57)] SOAH--The State Office of Administrative
Hearings.
(60) [(58)] Successful completion--A minimum of:
(A)
70 percent or better; or
(B) C or better; or
(C) pass, if offered as pass/fail.
(61) [(59)] TCLEDDS--Texas Commission on Law Enforcement Data Distribution System.
(62) [(60)] Telecommunicator--A person employed as
a telecommunicator under the provisions of the Texas Occupations
Code, §1701.001.
(63) [(61)] Training coordinator--An individual, appointed
by a commission-recognized training provider, who meets the requirements of §215.9 of this title.
(64) [(62)] Training cycle--A 48-month period as established by the commission. Each training cycle is composed of two
contiguous 24-month units.
(65) [(63)] Training hours--Classroom or distance education hours reported in one-hour increments.
forcement, 6330 E. Highway 290, Suite 200, Austin, Texas
78723-1035.
(66) [(64)] Training program--An organized collection of
various resources recognized by the commission for providing preparatory or continuing training. This program includes, but is not limited to,
learning goals and objectives, academic activities and exercises, lesson
plans, exams, skills training, skill assessments, instructional and learning tools, and training requirements.
The repeal is proposed under Texas Occupations Code
Authority, and §1701.159, Active and Inactive Peace Officers.
(67) [(65)] Training provider--A governmental body, law
enforcement association, alternative delivery trainer, or proprietary entity credentialed by or authorized under a training provider contract
with the commission to provide preparatory or continuing training for
licensees or potential licensees.
(68) [(66)] Verification (verified)--The confirmation of the
correctness, truth, or authenticity of a document, report, or information
by sworn affidavit, oath, or deposition.
(b) The effective date of this section is February 1, 2016.
[February 1, 2014.]
to adopt.
The repeal as proposed is in compliance with Texas Occupations
Code §1701.151, General Powers of the Commission; Rulemaking Authority and §1701.159, Active and Inactive Peace Officers.
§211.5. Licensee Lists.
to adopt.
2015.
TRD-201504278
Kim Vickers
Executive Director
Texas Commission on Law Enforcement
♦
2015.
TRD-201504277
Kim Vickers
Executive Director
♦
♦
♦
♦
37 TAC §211.7
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §211.7, concerning Meeting Dates and
Procedures. Subsection (a) removes the commission meeting
requirements which gives the presiding officer flexibility to call
meetings as needed. Subsections (b) and (c) are amended for
relettering. New subsection (c) reflects the effective date. Subsection (d) has been relettered as new subsection (c).
♦
37 TAC §211.5
Texas Commission on Law Enforcement or in the Texas Register office,
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §211.5, concerning Licensee Lists. The repealed section removes redundant information that is already
stated in statute.
This repeal is necessary to remove redundant information that
is already stated in statute.
each year of the first five years the repeal as proposed will be
in effect, there may be little to no effect on state or local governments as a result of administering this repeal.
five years, the repeal as proposed will be in effect, there will be a
positive benefit to the public by removing redundant information.
This amendment is necessary to give the presiding officer more
flexibility in scheduling meetings.
in effect, there will be no effect on state or local governments as
a result of administering this section.
five years the section as proposed will be in effect, there will be a
positive benefit to the public by adding flexibility in the scheduling
of meetings.
no anticipated cost to small businesses, individuals, or both as
a result of the proposed section.
Comment on the proposal may be submitted electronically
78723-1035.
five years the repeal as proposed will be in effect, there will be
result of the proposed repeal.
Authority, and §1701.058, Meetings.
Vickers, Executive Director, Texas Commission on Law En-
The amendment as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission;
Rulemaking Authority and §1701.058, Meetings.
PROPOSED RULES
October 30, 2015
40 TexReg 7579
§211.7.
Meeting Dates and Procedures.
[(a) The commission will comply with the open meetings law
and may hold quarterly meetings throughout each calendar year, time
and place to be determined by the presiding officer and executive director, in March, June, September, and December, unless:]
[(1) the date, and location is altered by vote of the commissioners; or]
[(2) more frequent meetings are called by the presiding
officer on the presiding officer's own motion or upon the written request
of five voting commissioners.]
(a) [(b)] At least once every two years, a regular or special
meeting will receive public comment on training and standards for officers, jailers, and telecommunicators.
(b) [(c)] Each meeting will be conducted by the presiding officer or, in the absence of the presiding officer, by the assistant presiding
officer, the secretary, the most senior commissioner, or another commissioner selected by vote, in that order.
(c) [(d)] The effective date of this section is February 1,
2016.[March 1, 2001.]
to adopt.
2015.
TRD-201504279
Kim Vickers
Executive Director
♦
♦
♦
78723-1035.
The repeal is proposed under Texas Occupations Code,
Authority, and Texas Government Code §2001.028, Notice of
Proposed Law Enforcement Rules.
Code §1701.151, General Powers of the Commission; Rulemaking Authority, and Texas Government Code §2001.028, Notice of
§211.13. Notice of Commission Rulemaking.
to adopt.
Filed with the Office of the Secretary of State on October 12
2015.
TRD-201504280
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §211.13
The Texas Commission on Law Enforcement (Commission) proposes new §211.13, concerning Notice of Commission Rulemaking. This new rule conforms with Texas Government Code
§2001.028.
This new rule is necessary to conform with Texas Government
Code §2001.028.
37 TAC §211.13
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §211.13, concerning Notice of Commission
Rulemaking. This repeal is being replaced by a new §211.13.
This repeal is necessary to conform with Texas Government
Code §2001.028.
a result of administering this subsection.
a positive benefit to the public by conforming with Texas Government Code §2001.028.
five years the repeal as proposed will be in effect, there will be a
positive benefit to the public by conforming to Texas Government
Code §2001.028.
78723-1035.
a result of the proposed repeal.
The new rule is proposed under Texas Occupations Code
Authority, and Texas Government Code §2001.028, Notice of
40 TexReg 7580
October 30, 2015
Texas Register
The new rule as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission;
Rulemaking Authority and Texas Government Code, §2001.028,
Notice of Proposed Law Enforcement Rules.
§211.13. Notice of Commission Rulemaking.
(a) When required by Texas Government Code Chapter 2001,
the commission will notify each law enforcement agency of adopted
rules.
(b)
The effective date of this section is February 1, 2016.
§211.16. Establishment of an Appointing Entity.
(a) On or after September 1, 2009, an entity authorized by
statute or by the constitution to create a law enforcement agency or police department and commission, appoint, or employ peace officers that
first creates a law enforcement agency or police department and first
begins to commission, appoint, or employ peace officers shall make
application to the commission.
(b) On creation of the law enforcement agency or police department, and as part of the application process, the entity shall submit
to the commission the [current agency number,] application form, any
associated application fee, and information regarding:
to adopt.
(1) the need for the law enforcement agency or police department in the community;
(2) the funding sources for the law enforcement agency or
police department;
2015.
(3) the physical resources available to officers;
TRD-201504281
Kim Vickers
Executive Director
♦
♦
(4) the physical facilities that the law enforcement agency
or police department will operate, including descriptions of the evidence room, dispatch area, and public area;
(5) law enforcement policies of the law enforcement
agency or police department, including policies on:
(A)
♦
use of force;
(B) vehicle pursuit;
37 TAC §211.16
(C) professional conduct of officers;
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §211.16, concerning Establishment of
an Appointing Entity. Subsection (b) is amended to remove the
reference to the current agency number as that number is assigned only after the application has been approved. Subsection (c) is amended to accurately reflect the reference to the Local Government Code. Subsection (f) is amended to reflect the
effective date of the changes.
These amendments are necessary to correct the application requirement and the reference to the Local Government Code.
in effect, there will be a positive benefit to the public by providing
the public with competent law enforcement agencies.
result of the proposed section.
78723-1035.
Authority, and §1701.163, Information Provided by Commissioning Entities.
The rule amendment as proposed is in compliance with Texas
Occupations Code §1701.151, General Powers of the Commission; Rulemaking Authority, and §1701.163, Information Provided by Commissioning Entities.
(D)
domestic abuse protocols;
(E)
response to missing persons;
(F)
supervision of part-time officers;
(G)
impartial policing; and
(H)
fitness for duty.
(6) the administrative structure of the law enforcement
agency or police department;
(7)
liability insurance; and
(8)
any other information the commission requires [by
rule].
(c) An entity authorized by Local Government Code,
§361.022 [§511.0092] to operate a correctional facility to house
inmates, in this state, convicted of offenses committed against the
laws of another state of the United States, and appoint jailers requiring
licensure by the commission, may make application for an agency
number by submitting the current agency number application form,
any associated application fee, and a certified copy of the contract
under which the facility will operate.
(d) A political subdivision wanting to establish a consolidated
emergency telecommunications center and appoint telecommunicators,
as required by Texas Occupations Code, §1701.405, may make application for an agency number by submitting the current agency number
application form, any associated application fee and a certified copy of
the consolidation contract.
(e) The Texas Department of Criminal Justice - Pardon and Parole Division, a community supervision and corrections department, or
a juvenile probation department may make application for an agency
number if seeking firearms training certificates for parole officers, community supervision and corrections officers, or juvenile probation of-
PROPOSED RULES
October 30, 2015
40 TexReg 7581
ficers by submitting the current agency number application form and
any associated application fee.
[March 1, 2008.]
(f) The effective date of this section is February 1, 2016.
[January 1, 2012.]
to adopt.
to adopt.
2015.
2015.
TRD-201504282
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §211.25
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §211.25, concerning Date of Appointment. Subsection (a) is amended to include telecommunicators
to the list of licensees. Subsection (b) reflects the effective date.
This amendment is necessary to add telecommunicators to the
licensee list.
a positive benefit to the public by adding telecommunicators to
the licensee list.
78723-1035.
Authority, §1701.152, Rules Relating to Hiring Date of Peace Officer, and §1701.405, Telecommunicators.
Rulemaking Authority; §1701.152, Rules Relating to Hiring Date
Of Peace Officer; and §1701.405, Telecommunicators.
§211.25. Date of Appointment.
(a) If a proper report of appointment is received by the commission for the appointment as a peace officer, [and/or] county jailer,
or telecommunicator, the commission shall accept the date of appointment that is reported to the commission by the appointing agency.
40 TexReg 7582
October 30, 2015
Texas Register
TRD-201504283
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §211.29
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §211.29, concerning Responsibilities
of Agency Chief Administrators. Subsection (c) removes the
cross-reference to Subchapter L of the Texas Occupations Code,
Chapter 1701. Subsection (q) reflects the effective date.
This amendment is necessary to remove the cross-reference to
Subchapter L of the Texas Occupations Code, Chapter 1701.
a positive benefit to the public by removing a cross-reference.
78723-1035.
Authority; §1701.303, License Application; Duties of Appointing
Entity; §1701.551, Criminal Penalty for Appointment or Retention of Certain Persons; §1701.552, Criminal Penalty for Appointment of Person Not Certified for Investigative Hypnosis;
and §1701.553, Criminal Penalty for Appointment or Retention
of Persons with Certain Convictions.
Rulemaking Authority; §1701.303, License Application; Duties of
Appointing Entity; §1701.551, Criminal Penalty for Appointment
or Retention of Certain Persons; §1701.552, Criminal Penalty for
Appointment of Person Not Certified for Investigative Hypnosis;
and §1701.553, Criminal Penalty for Appointment or Retention
of Persons with Certain Convictions.
§211.29. Responsibilities of Agency Chief Administrators.
(a) An agency chief administrator is responsible for making
any and all reports and submitting any and all documents required of
that agency by the commission.
(b) An individual who is appointed or elected to the position
of the chief administrator of a law enforcement agency shall notify
the Commission of the date of appointment and title, through a form
prescribed by the Commission within 30 days of such appointment.
(c) An agency chief administrator must comply with the appointment and[/or] retention requirements under [Subchapter L of the]
Texas Occupations Code, Chapter 1701.
(d) An agency chief administrator must report to the commission within 30 days, any change in the agency's name, physical location, mailing address, electronic mail address, or telephone number.
(e) An agency chief administrator must report, in a standard
format, incident-based data compiled in accordance with Texas Occupations Code §1701.164.
(f) Line of duty deaths shall be reported to the commission in
current peace officers' memorial reporting formats.
(g) An agency chief administrator has an obligation to determine that all appointees are able to safely and effectively perform the
essential job functions. An agency chief administrator may require a
fit for duty review upon identifying factors that indicate an appointee
may no longer be able to perform job-related functions safely and effectively. These factors should be based on objective evidence and a
reasonable basis that the cause may be attributable to a medical or psychological condition or impairment.
(h) An agency must provide training on employment issues
identified in Texas Occupations Code §1701.402 and field training.
(i) An agency must provide continuing education training required in Texas Occupations Code §1701.351 and §1701.352.
(j) Before an agency appoints any licensee to a position requiring a commission license it shall complete the reporting requirements
of Texas Occupations Code §1701.451.
(k) An agency appointing a person who does not hold a commission license must file an application for the appropriate license with
the commission.
(l) An agency must notify the commission electronically following the requirements of Texas Occupations Code §1701.452, when
a person under appointment with that agency resigns or is terminated.
(m) An agency chief administrator must comply with orders
from the commission regarding the correction of a report of resignation/termination or request a hearing from SOAH.
(n) An agency shall notify the commission electronically
within 30 days, when it receives information that a person under
appointment with that agency has been arrested, charged, indicted,
or convicted for any offense above a Class C misdemeanor, or for
any Class C misdemeanor involving the duties and responsibilities of
office or family violence.
(o) Except in the case of a commission error, an agency that
wishes to report a change to any information within commission files
about a licensee shall do so in a request to the commission, containing:
(1) the licensees name, date of birth, last four digits of the
social security number, or PID;
(p) An agency chief administrator may not appoint an applicant subject to pending administrative action based on:
(1) enrollment or licensure ineligibility; or
(2) statutory suspension or revocation.
(q) The effective date of this section is February 1, 2016.
[January 17, 2013.]
to adopt.
2015.
TRD-201504284
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §211.35
The Texas Commission on Law Enforcement (Commission)
proposes new §211.35, concerning Tuition Reimbursement
for Commission Employees. This new rule is necessary to
comply with a new legislative requirement for all state agencies
concerning approval of tuition reimbursement.
This new rule is necessary to comply with HB 3337 (84R).
a positive benefit to the public by ensuring that reimbursement
will first be approved by the executive director.
78723-1035.
Authority; Texas Government Code §656.047, Payment of
Program Expenses; and §656.048, Rules Related to Training
and Education.
Rulemaking Authority; Texas Government Code §656.047, Payment of Program Expenses; and §656.048, Rules Related to
Training and Education.
(2)
the requested change; and
(3)
the reason for the change.
§211.35. Tuition Reimbursement for Commission Employees.
PROPOSED RULES
October 30, 2015
40 TexReg 7583
(a) Before a Commission employee may receive reimbursement for tuition, the reimbursement must be approved by the Executive
Director.
(b)
§215.9. Training Coordinator.
(a) A training coordinator must hold a valid instructor license
or certificate and must be a full-time paid employee.
(b) The training coordinator must:
to adopt.
lines:
(2) prepare, maintain, and submit the following reports
within the time frame specified:
(1)
2015.
ensure compliance with commission rules and guide-
(A)
TRD-201504285
Kim Vickers
Executive Director
♦
♦
♦
(ii)
(B)
self-assessment reports as required by the commis-
sion;
(C) a copy of advisory board minutes during an on-site
37 TAC §215.9
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §215.9, concerning Training Coordinator. Subsection (b)(2)(D) creates additional options for posting of
training calendars. Subsection (b)(3)(B)(i) - (v) defines minimum
requirement of training files. Subsection (b)(3)(J) added training
files to the retention period. Subsection (e) reflects the effective
date.
(D) training calendars-schedules must be available for
review and [or] posted on the internet, or another public venue, no later
than 30 days prior to the beginning of each calendar quarter or academic
semester. A continually updated and posted (live) calendar will meet
this requirement;
(E)
a positive benefit to the public by defining the posting of a training
calendar and requirements of training files.
78723-1035.
Authority, and §1701.251, Training Programs; Instructors.
Rulemaking Authority, and §1701. 251, Training Programs; Instructors.
Texas Register
any other reports or records as requested by the
commission;
(3) be responsible for the administration and conduct of
each course, including those conducted at ancillary sites, and specifically:
This amendment is necessary to define the posting of a training
calendar and requirements of training files.
October 30, 2015
within 30 days of completion of continuing ed-
ucation course;
evaluation;
CHAPTER 215. TRAINING AND
EDUCATIONAL PROVIDERS
40 TexReg 7584
reports of training:
(i) basic licensing course shall be submitted prior to
students attempting a licensing exam; and
(A)
appointing and supervising qualified instructors;
(B) maintaining course schedules and training files. At
a minimum, training files shall contain: [course files, including lesson
plans;]
(i)
complete lesson plan;
(ii) clear learning objectives;
(iii) instructor biography indicating subject matter
expertise and teaching experience;
(iv)
approved class roster and original sign-in sheet;
(v)
course evaluation;
and
(C) enforcing all admission, attendance, retention, and
other standards set by the commission and approved by the advisory
board;
(D) securing and maintaining all facilities necessary to
meet the inspection standards of this section;
(E) controlling the discipline and demeanor of each student and instructor during class;
(F) distributing a current version of the Texas Occupations Code, Chapter 1701 and commission rules to all students at the
time of admission to any course that may result in the issuance of a
license;
(G) distributing learning objectives to all students at the
beginning of each course;
(H) ensuring that all learning objectives are taught and
78723-1035.
(I) proctoring or supervising all examinations to ensure
fair, honest results; and
Authority, and §1701.254, Risk Assessment and Inspections.
evaluated;
(J) maintaining training files, records of tests, and other
evaluation instruments for a period of five years.
(4) receive all commission notices on behalf of the training
provider and forward each notice to the appointing authority; and
(5) attend or have a designee attend each academy coordinator's workshop conducted by the commission. No person may serve
as a representative for more than one provider per conference. Each
representative must be affiliated with the training provider.
(c) If the position of training coordinator becomes vacant,
upon written request from the chief administrator of the training
provider the commission may, at the discretion of the executive
director, waive the requirements for a period not to exceed six months.
(d) Upon written request from the chief administrator of a
training provider that does not have a full-time paid staff, the commission may, at the discretion of the executive director, waive the
requirements in subsection (a) of this section.
(e) The effective date of this section is February 1, 2016.
[November 1, 2014.]
to adopt.
Rulemaking Authority, and §1701.254, Risk Assessment and Inspections.
§215.13. Risk Assessment.
(a) A training provider may be found at risk and placed on
at-risk probationary status if:
(1) for those providing licensing courses, the passing rate
on a licensing exam for first attempts for any three consecutive state
fiscal years[, beginning with state fiscal year 2007 (September 1, 2006
through August 31, 2007)] is less than 80 percent of the students attempting the licensing exam;
(2) courses taught by academic alternative providers are
not conducted in compliance with Higher Education Program Guidelines accepted by the commission;
(3) commission required learning objectives are not taught;
(4)
(5) examination and other evaluative scoring documentation is not on file;
2015.
lesson plans for classes conducted are not on file;
(6)
the training provider submits false reports to the com-
(7)
the training provider makes repeated errors in report-
mission;
TRD-201504286
Kim Vickers
Executive Director
♦
♦
ing;
(8) the training provider does not respond to commission
requests for information;
(9) the training provider does not comply with commission
rules or other applicable law;
♦
(10) the training provider does not achieve the goals identified in its application for a contract;
37 TAC §215.13
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §215.13, concerning Risk Assessment.
Subsection (a)(1) removes redundant information. Subsection
(h) reflects the effective date.
This amendment is necessary to remove redundant information.
(11) the training provider does not meet the needs of the
officers and law enforcement agencies served; or
(12) the commission has received sustained complaints or
evaluations from students or the law enforcement community concerning the quality of training or failure to meet training needs for the service area.
(b) A training provider may be found at risk and placed on
at-risk probationary status if:
(1) the contractor provides licensing courses and fails to
comply with the passing rates in subsection (a)(1) of this section;
(2)
lesson plans for classes conducted are not on file;
(3) examination and other evaluative scoring documentation is not on file;
(4) the provider submits false reports to the commission;
(5)
the provider makes repeated errors in reporting;
(6) the provider does not respond to commission requests
for information;
PROPOSED RULES
October 30, 2015
40 TexReg 7585
(7) the provider does not comply with commission rules or
other applicable law;
(8) the provider does not achieve the goals identified in its
application for a contract;
(9) the provider does not meet the needs of the officers and
law enforcement agencies served; or
evaluations from students or the law enforcement community concerning the quality of training or failure to meet training needs for the service area.
2015.
TRD-201504287
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Executive Director
♦
♦
♦
(c) An academic alternative provider may be found at risk and
placed on at-risk probationary status if:
CHAPTER 217. ENROLLMENT, LICENSING,
APPOINTMENT, AND SEPARATION
(1) the academic alternative provider fails to comply with
the passing rates in subsection (a)(1) of this section;
37 TAC §217.1
(2) courses are not conducted in compliance with Higher
Education Program Guidelines accepted by the commission;
(3)
the commission required learning objectives are not
(4)
the program submits false reports to the commission;
(5)
the program makes repeated errors in reporting;
taught;
(6) the program does not respond to commission requests
for information;
(7) the program does not comply with commission rules or
other applicable law;
(8) the program does not achieve the goals identified in its
application for a contract;
(9) the program does not meet the needs of the students and
law enforcement agencies served; or
evaluations from students or the law enforcement community concerning the quality of education or failure to meet education needs for the
service area.
(d) If at risk, the chief administrator of the sponsoring organization, or the training coordinator, must report to the commission in
writing within 30 days what steps are being taken to correct deficiencies and on what date they expect to be in compliance.
(e) The chief administrator of the sponsoring organization, or
the training coordinator, shall report to the commission the progress
toward compliance within the timelines provided in the management
response as provided in subsection (d) of this section.
(f) The commission shall place providers found at-risk on probationary status for one year. If the provider remains at-risk after a
12-month probationary period, the commission shall begin the revocation process. If a provider requests a settlement agreement, the commission may enter into an agreement in lieu of revocation.
(g) A training or educational program placed on at-risk probationary status must notify all students and potential students of their
at-risk status.
(h) The effective date of this section is February 1, 2016.
[February 1, 2014.]
to adopt.
40 TexReg 7586
October 30, 2015
Texas Register
proposes an amendment to §217.1, concerning Minimum Standards for Enrollment and Initial Licensure. Subsection (b)(7)
raises the standards for licensure for offenses involving family
violence. If the individual was convicted or placed on community supervision, then the individual is barred from licensure.
Subsection (j) reflects the effective date.
This amendment is necessary to raise the standards for licensure.
five years the section as proposed will be in effect, there will
be a positive benefit to the public by raising the standards for
licensure.
78723-1035.
§1701.151, General Powers of the Commission; Rulemaking Authority; §1701.251, Training Programs; Instructors;
§1701.255, Enrollment Qualifications; §1701.307, Issuance
of Officer or County Jailer License; §1701.3071, Issuance of
Telecommunicator License; §1701.3075, Qualified Applicant
Awaiting Appointment; §1701.310, Appointment of County
Jailer; Training Required; §1701.311, Provisional License
for Workforce Shortage; §1701.312, Disqualification: Felony
Conviction or Placement on Community Supervision; and
§1701.405, Telecommunicators.
The amendment as proposed is in compliance with Texas
Occupations Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.251, Training Programs;
Instructors; §1701.255, Enrollment Qualifications; §1701.307,
Issuance of Officer or County Jailer License; §1701.3071,
Issuance of Telecommunicator License; §1701.3075, Qualified
Applicant Awaiting Appointment; §1701.310, Appointment
of County Jailer; Training Required; §1701.311, Provisional
License for Workforce Shortage; §1701.312, Disqualification:
Felony Conviction or Placement on Community Supervision;
and §1701.405, Telecommunicators.
§217.1. Minimum Standards for Enrollment and Initial Licensure.
(a) In order for an individual to enroll in any basic licensing
course the provider must have on file documentation that the individual
meets eligibility for licensure and:
(1)
a high school diploma;
(2)
a high school equivalency certificate; or
(3) for the basic peace officer training course, an honorable
discharge from the armed forces of the United States after at least 24
months of active duty service;
(b) The commission shall issue a license to an applicant who
meets the following standards:
(1)
age requirement:
(A) for peace officers and public security officers, is 21
years of age; or 18 years of age if the applicant has received:
(i) an associate's degree; or 60 semester hours of
credit from an accredited college or university; or
(ii) has received an honorable discharge from the
armed forces of the United States after at least two years of active service;
(B) for jailers and telecommunicators is 18 years of age;
(2)
minimum educational requirements:
(A) has passed a general educational development
(GED) test indicating high school graduation level; or
(B) holds a high school diploma;
(3) is fingerprinted and is subjected to a search of local,
state and U.S. national records and fingerprint files to disclose any criminal record;
(4) has never been on court-ordered community supervision or probation for any criminal offense above the grade of Class B
misdemeanor or a Class B misdemeanor within the last ten years from
the date of the court order;
(5) is not currently charged with any criminal offense for
which conviction would be a bar to licensure;
(6) has never been convicted of an offense above the grade
of a Class B misdemeanor or a Class B misdemeanor within the last ten
years;
(7) has never been convicted or placed on community supervision in any court of an offense involving family violence as defined under Chapter 71, Texas Family Code;
(8) for peace officers, is not prohibited by state or federal
law from operating a motor vehicle;
(9) for peace officers, is not prohibited by state or federal
law from possessing firearms or ammunition;
(10)
has been subjected to a background investigation;
(11) examined by a physician, selected by the appointing or
employing agency, who is licensed by the Texas Medical Board. The
physician must be familiar with the duties appropriate to the type of
license sought and appointment to be made. The appointee must be
declared by that professional, on a form prescribed by the commission,
within 180 days before the date of appointment by the agency to be:
(A) physically sound and free from any defect which
may adversely affect the performance of duty appropriate to the type
of license sought;
(B) show no trace of drug dependency or illegal drug
use after a blood test or other medical test; and
(C) for the purpose of meeting the requirements for initial licensure, an individual's satisfactory medical exam that is conducted as a requirement of a basic licensing course may remain valid
for 180 days from the individual's date of graduation from that academy, if accepted by the appointing agency;
(12) examined by a psychologist, selected by the appointing, employing agency, or the academy, who is licensed by the Texas
State Board of Examiners of Psychologists. This examination may also
be conducted by a psychiatrist licensed by the Texas Medical Board.
The psychologist or psychiatrist must be familiar with the duties appropriate to the type of license sought. The individual must be declared
by that professional, on a form prescribed by the commission, to be
in satisfactory psychological and emotional health to serve as the type
of officer for which the license is sought. The examination must be
conducted pursuant to professionally recognized standards and methods. The examination process must consist of a review of a job description for the position sought; review of any personal history statements; review of any background documents; at least two instruments,
one which measures personality traits and one which measures psychopathology; and a face to face interview conducted after the instruments have been scored. The appointee must be declared by that professional, on a form prescribed by the commission, within 180 days
before the date of the appointment by the agency;
(A) the commission may allow for exceptional circumstances where a licensed physician performs the evaluation of psychological and emotional health. This requires the appointing agency to
request in writing and receive approval from the commission, prior to
the evaluation being completed; or
(B) the examination may be conducted by qualified persons identified by Texas Occupations Code §501.004. This requires the
appointing agency to request in writing and receive approval from the
commission, prior to the evaluation being completed; and
(C) for the purpose of meeting the requirements for initial licensure, an individual's satisfactory psychological exam that is
conducted as a requirement of a basic licensing course may remain
valid for 180 days from the individual's date of graduation from that
academy, if accepted by the appointing agency;
(13) has never received a dishonorable or other discharge
based on misconduct which bars future military service;
(14) has not had a commission license denied by final order
or revoked;
(15) is not currently on suspension, or does not have a surrender of license currently in effect;
(16) meets the minimum training standards and passes the
commission licensing examination for each license sought;
(17) is a U.S. citizen.
(c) For the purposes of this section, the commission will construe any court-ordered community supervision, probation or conviction for a criminal offense to be its closest equivalent under the Texas
Penal Code classification of offenses if the offense arose from:
PROPOSED RULES
October 30, 2015
40 TexReg 7587
(1)
another penal provision of Texas law; or
(2) a penal provision of any other state, federal, military or
foreign jurisdiction.
(d) A classification of an offense as a felony at the time of
conviction will never be changed because Texas law has changed or
because the offense would not be a felony under current Texas laws.
(e)
ments:
A person must meet the training and examination require(1) training for the peace officer license consists of:
(A)
the current basic peace officer course(s);
(B) a commission recognized, POST developed, basic
law enforcement training course, to include:
(i) A person who fails to comply with the standards set forth
in this section shall not accept the issuance of a license and shall not
accept any appointment. If an application for licensure is found to be
false or untrue, it is subject to cancellation or recall.
(j) The effective date of this section is February 1, 2016.
[November 1, 2014.]
to adopt.
(i) out of state licensure or certification; and
(ii) submission of the current eligibility application
2015.
and fee; or
(C) a commission approved academic alternative program, taken through a licensed academic alternative provider and at
least an associate's degree.
(2) training for the jailer license consists of the current basic county corrections course(s) or training recognized under Texas Occupations Code §1701.310;
(3) training for the public security officer license consists
of the current basic peace officer course(s);
(4) training for telecommunicator license consists of
telecommunicator course; and
(5) passing any examination required for the license sought
while the exam approval remains valid.
(f) The commission may issue a provisional license, consistent
with Texas Occupations Code §1701.311, to an agency for a person to
be appointed by that agency. An agency must submit all required applications currently prescribed by the commission and all required fees
before the individual is appointed. Upon the approval of the application, the commission will issue a provisional license. A provisional
license is issued in the name of the applicant; however, it is issued to
and shall remain in the possession of the agency. Such a license may
neither be transferred by the applicant to another agency, nor transferred by the agency to another applicant. A provisional license may
not be reissued and expires:
(1)
12 months from the original appointment date;
(2)
on leaving the appointing agency; or
(3) on failure to comply with the terms stipulated in the
provisional license approval.
(g) The commission may issue a temporary jailer license, consistent with Texas Occupations Code §1701.310. An agency must submit all required applications currently prescribed by the commission
and all required fees before the individual is appointed. Upon the approval of the application, the commission will issue a temporary jailer
license. A temporary jailer license expires:
(1)
the commission and all required fees before the individual is appointed.
Upon the approval of the application, the commission will issue a temporary telecommunicator license. A temporary telecommunicator license expires 12 months from the original appointment date.
12 months from the original appointment date; or
(2) on completion of training and passing of the jailer licensing examination.
(h) The commission may issue a temporary telecommunicator license, consistent with Texas Occupations Code §1701.405. An
agency must submit all required applications currently prescribed by
40 TexReg 7588
October 30, 2015
Texas Register
TRD-201504288
Kim Vickers
Executive Director
♦
CHAPTER 218.
♦
♦
CONTINUING EDUCATION
37 TAC §218.9
proposes an amendment to §218.9, concerning Continuing
Firearms Proficiency Requirements. Subsection (c)(1) removes
misnomer language. Subsection (f) reflects the effective date.
This amendment is necessary to remove the phrase "including
at least five rounds of ammunition."
a positive benefit to the public by removing unnecessary information.
78723-1035.
Authority; §1701.308, Weapons Proficiency; and §1701.355,
Continuing Demonstration of Weapons Proficiency.
Rulemaking Authority; §1701.308, Weapons Proficiency; and
§1701.355, Continuing Demonstration of Weapons Proficiency.
§218.9.
(a)
cer shall:
(f) The effective date of this section is February 1, 2016.
[February 1, 2014.]
Continuing Firearms Proficiency Requirements.
Each agency or entity that employs at least one peace offi-
(1) require each peace officer that it employs to successfully complete the current firearms proficiency requirements at least
once each calendar year for each type of firearm carried;
(2) designate a firearms proficiency officer to be responsible for the documentation of annual firearms proficiency. The documentation for each officer shall include:
(A)
date of qualification;
(B) identification of officer;
(C)
firearm manufacturer, model;
(D)
results of qualifying; and
2015.
TRD-201504289
Kim Vickers
Executive Director
♦
♦
37 TAC §218.11
(3) keep on file and in a format readily accessible to the
commission a copy of all records of this proficiency.
The annual firearms proficiency requirements shall in-
clude:
(1) an external inspection by the proficiency officer, range
officer, firearms instructor, or gunsmith to determine the safety and
functioning of the weapon(s);
(2) a proficiency demonstration in the care and cleaning of
the weapon(s) used; and
(3) a course of fire that meets or exceeds the minimum standards.
(c) The minimum standards for the annual firearms proficiency
course of fire shall be:
(1) handguns - a minimum of 50 rounds, [including at least
five rounds of ammunition,] fired at ranges from point-blank to at least
15 yards with at least 20 rounds at or beyond seven yards, including at
least one timed reload;
(2) shotguns - a minimum of five rounds of ammunition
fired at a range of at least 15 yards;
(3) precision rifles - a minimum of 20 rounds of ammunition fired at a range of at least 100 yards; however, an agency may, in
its discretion, allow a range of less than 100 yards but not less than 50
yards if the minimum passing percentage is raised to 90;
(4) patrol rifles - a minimum of 30 rounds of ammunition
fired at a range of at least 50 yards, including at least one timed reload;
however, an agency may, in its discretion, allow a range of less than 50
yards but not less than 10 yards if the minimum passing percentage is
raised to 90;
(5) fully automatic weapons - a minimum of 30 rounds of
ammunition fired at ranges from seven to at least 10 yards, including
at least one timed reload, with at least 25 rounds fired in full automatic
(short bursts of two or three rounds), and at least five rounds fired semiautomatic, if possible with the weapon.
(d)
firearm.
to adopt.
♦
(E) course(s) of fire;
(b)
(e) The executive director may, upon written agency request,
waive a peace officer's demonstration of weapons proficiency based on
a determination that the requirement causes a hardship.
The minimum passing percentage shall be 70 for each
proposes new §218.11, concerning Child Safety Check Alert
List Training. This new rule is necessary to reflect legislative
changes.
This new rule is necessary to reflect legislative changes from HB
2053 (84R).
positive benefit to the public by providing training and knowledge
regarding the child safety check list.
78723-1035.
Authority, and §1701.262, Training Program Relating to Child
Safety Check Alert List, as passed under HB 2053 (84R).
Rulemaking Authority, and §1701.262, Training Program Relating to Child Safety Check Alert List, as passed under HB 2053
(84R).
§218.11. Child Safety Check Alert List Training.
(a) An education and training program on the Texas Crime Information Center's child safety check alert list will include instruction
relating to:
PROPOSED RULES
October 30, 2015
40 TexReg 7589
(1) the procedures for placing a child or other person on the
child safety check alert list;
(2) the manner in which an officer should interact with a
child or other person on the child safety check alert list whom the officer
locates; and
(3) the procedures for removing a child or other person
from the child safety check alert list.
(b) The training program will be made available to employees
in the child protective services division of the Department of Family
and Protective Services, including caseworkers, supervisors, and special investigators.
(c)
to adopt.
2015.
TRD-201504290
Kim Vickers
Executive Director
♦
♦
♦
CHAPTER 219. PRELICENSING, REACTIVATION, TESTS, AND ENDORSEMENTS
37 TAC §219.1
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §219.1, concerning Eligibility to Take
State Examinations. Subsection (c) clarifies the minimum enrollment and licensure language. Subsection (i) reflects the effective date.
This amendment is necessary to clarify language concerning enrollment and licensure.
a positive benefit to the public by clarifying language.
Comment on the proposal may be submitted electronically to
[email protected] or in writing to Mr. Kim Vickers, Executive Director, Texas Commission on Law Enforcement
6330, E. Highway 290, Suite 200, Austin, Texas 78723-1035.
Authority, and §1701.304, Examination.
40 TexReg 7590
October 30, 2015
Texas Register
Rulemaking Authority, and §1701.304, Examination.
§219.1. Eligibility to Take State Examinations.
(a) An individual may not take a licensing exam for a license
they actively hold.
(b) To be eligible to take a state licensing exam, an individual
must:
(1) have successfully completed a commission-approved
basic licensing course or academic alternative program;
(2) meet the requirements for reactivation if the individual
is currently licensed;
(3) meet the requirements for reinstatement if the individual is currently licensed;
(4) meet the requirements if an individual is an out of state
peace officer, federal criminal investigator, or military; or
(5) be eligible to take the county corrections licensing exam as provided in Texas Occupations Code, Chapter 1701,
§1701.310.
(c) To maintain eligibility to attempt a licensing exam the applicant must meet the minimum [basic licensing enrollment] standards
for enrollment and initial licensure.[; or if previously licensed, meet
minimum initial licensing standards.]
(d) An eligible examinee will be allowed three attempts to pass
the examination. All attempts must be completed within 180 days from
the completion date of the licensing course. Any remaining attempts
become invalid on the 181st day from the completion date of the licensing course, or if the examinee passes the licensing exam. If an attempt
is invalidated for any other reason, that attempt will be counted as one
of the three attempts.
(e) The examinee must repeat the basic licensing course for
the license sought if:
(1) the examinee fails all three attempts to pass the licensing exam;
(2) the examinee fails to complete all three attempts within
180 days from the completion date of the licensing course; or
(3) the examinee is dismissed from an exam for cheating.
If dismissed from an exam for cheating, all remaining attempts are invalidated.
(f) An examinee that is required to repeat a basic licensing
course under the provisions in subsection (e) of this section will not
be allowed to repeat an academic alternative program.
(g) If an individual is not licensed within 2 years from the date
of their successful completion of the licensing exam, the basic licensing
course must be repeated.
(h) When applicable and in addition to this section, school
marshal licenses are subject to the requirements of Chapter 227 of this
title.
(i) The effective date of this section is February 1, 2016.
[February 1, 2014.]
to adopt.
2015.
2015.
TRD-201504291
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Executive Director
TRD-201504293
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Executive Director
♦
♦
♦
♦
♦
♦
37 TAC §219.11
37 TAC §219.11
The Texas Commission on Law Enforcement (Commission) proposes new §219.11, concerning Reactivation of a License. This
new rule conforms to statutory amendments concerning the reactivation of a license.
proposes the repeal of §219.11, concerning Reactivation of
a License. The repealed section was replaced with new rule
§219.11.
This new rule is necessary to conform with HB 872 (84R) and
incorporates the former honorably retired reactivation provision.
This repeal is necessary to comply with HB 872 (84R) which
addresses reactivation requirements for individuals holding an
inactive peace officer license. Due to the new requirements, a
more streamlined rule was developed to ensure clarification of
the reactivation process. It also incorporates honorably retired
reactivation.
five years, the repeal as proposed will be in effect, there will
be a positive benefit to the public by clarifying the reactivation
process.
78723-1035.
This repeal is proposed under Texas Occupations Code
Authority; §1701.316, Reactivation of Peace Officer License;
and §1701.3161, Reactivation of Peace Officer License: Retired
Peace Officers.
The repeal as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission;
Rulemaking; §1701.316, Reactivation of Peace Officer License;
Peace Officers.
positive benefit to the public by lessening the time restrictions for
certain inactive peace officer licensees to return to public service.
78723-1035.
Peace Officers.
Rulemaking Authority; §1701.316, Reactivation of Peace Officer License; and §1701.3161, Reactivation of Peace Officer License: Retired Peace Officers.
§219.11. Reactivation of a License.
(a) The commission will place all licenses in an inactive status
at the end of the most recent training unit or cycle in which the licensee:
(1) was not appointed at the end of the unit or cycle; and
(2)
§219.11.
(b)
did not meet continuing education requirements.
The holder of an inactive license is unlicensed for all pur-
poses.
Reactivation of a License.
to adopt.
(c) This section includes any permanent peace officer qualification certificate with an effective date before September 1, 1981.
PROPOSED RULES
October 30, 2015
40 TexReg 7591
(d) The requirements to reactivate a license for a person with
less than 10 years of full-time service are:
(1)
(3)
If less than two years from last appointment:
(A)
(B)
quirements; and
meet current licensing standards;
successfully complete continuing education re-
(C) make application and submit any required fee(s) in
the format currently prescribed by the commission.
(2)
(D)
(A)
(B) successfully complete continuing education requirements, and, if applicable, a supplemental peace officer training
course;
(C) make application and submit any required fee(s);
and
(D)
(3) If more than five years but less than ten years from last
appointment:
(A)
course and a skills assessment course;
(C)
make application and submit any required fee(s);
pass the reactivation exam.
(f) Unless exempted by Texas Occupations Code Section
1701.356, the requirements to reactivate a license for an honorably
retired peace officer are:
pass the licensing exam.
course and a skills assessment course;
and
(D)
If more than five years from last appointment:
(A)
If two years but less than five years from last appoint-
ment:
pass the reactivation exam.
(1)
(2)
meet current continuing education requirements; and
(3)
make application and submit any required fee(s).
(g) School marshal licenses are subject to the reactivation and
renewal procedures related to school marshals under of Chapter 227 of
this title.
(h) The effective date of this section is February 1, 2016.
to adopt.
2015.
and
(D) pass the licensing exam.
(4)
Ten years or more from last appointment:
(A)
meet current enrollment standards;
(B)
(C) successfully complete the applicable basic licens-
TRD-201504312
Kim Vickers
Executive Director
♦
ing course;
(D) make application and submit any required fee(s);
and
(E)
pass the licensing exam.
(e) The requirements to reactivate a license for a person with
10 years but less than 15 years of full-time service are:
(1)
If less than two years from last appointment:
(A)
(B) successfully complete continuing education requirements; and
(2)
ment:
(A)
course;
and
40 TexReg 7592
October 30, 2015
Texas Register
♦
♦
37 TAC §219.13
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §219.13, concerning Retired Peace Officer
Reactivation. The repealed section was consolidated into new
rule §219.11.
This repeal is necessary to consolidate all reactivation processes
into one rule.
five years, the repeal as proposed will be in effect, there will
be a positive benefit to the public by consolidating peace officer
reactivation.
78723-1035.
Peace Officers.
78723-1035.
Authority, and §1701.315, License Requirements for Persons
with Military Special Forces Training.
Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.316, Reactivation of Peace Officer License;
Peace Officers.
Rulemaking Authority, and §1701.315, License Requirements
for Persons with Military Special Forces Training.
§219.13.
§219.25. License Requirements for Persons with Military Special
Forces Training.
(a) In this section, "special forces" means a special forces component of the United States armed forces, including:
Retired Peace Officer Reactivation.
to adopt.
(1) the United States Army Special Forces;
2015.
TRD-201504294
Kim Vickers
Executive Director
♦
♦
(2)
the United States Navy SEALs;
(3)
the United States Air Force Pararescue;
(4) the United States Marine Corps Force Reconnaissance;
and
(5) any other component of the United States Special Operations Command approved by the commission.
(b) An applicant qualifies [The commission shall adopt rules
to allow an applicant to qualify] to take the basic licensing [an] examination [described by Texas Occupations Code, §1701.304] if the
applicant:
♦
37 TAC §219.25
proposes amendments to §219.25, concerning License Requirements for Persons with Military Special Forces Training.
The proposed amendments update the qualifications to take
the state licensing examination outlined in subsection (b). New
licensing standards are added as subsection (b)(1) and the
subsequent paragraphs are amended and renumbered. The
proposed amendments remove service time restrictions from
subsection (b)(2). New subsection (b)(3) adds a special forces
training course and eliminates the need for the individual to
show proof of completion. New subsection (b)(4) is amended
for grammatical change. Subsections (c) and (d) are removed
because of redundancy. Subsection (e) is relettered as subsection (c) and reflects the new effective date.
These amendments are necessary to streamline the licensing
process for persons with military special forces training.
a positive benefit to the public by lessening the time restrictions
for military special forces to begin public service.
(1) meets minimum licensing standards;
(2) [(1)] has provided military service records documenting that the applicant has served in the special forces [for 2 continuous
years within the 4 years prior to application];
(3) [(2)] [has] successfully completes [completed] a
[special forces] training course developed for special forces veterans;
and [and provides to the commission documentation verifying completion of the course;]
(4) [(3)] completes a supplemental peace officer training
course.[; and]
[(4) completes any other training required by the commission after the commission has reviewed the applicant's military training.]
[(c) Commission rules adopted under subsection (b) of this
section shall include rules:]
[(1) to determine acceptable forms of documentation that
satisfy the requirements of subsection (b) of this section;]
[(2) under which the commission may waive any other license requirement for an applicant described by subsection (b) of this
section based on other relevant military training the applicant has received, as determined by the commission, including intelligence or
medical training; and]
PROPOSED RULES
October 30, 2015
40 TexReg 7593
[(3) to establish an expedited application process for an applicant described by subsection (b) of this section.]
[(d) The commission shall review the content of the training
course for each special forces component described by subsection (a)
of this section and in adopting rules under subsection (b) of this section specify the training requirements an applicant who has completed
that training course must complete and the training requirements from
which an applicant who has completed that training course is exempt.]
(c) [(e)] The effective date of this section is February 1,
2016.[February 1, 2014.]
to adopt.
2015.
TRD-201504319
Kim Vickers
Executive Director
♦
CHAPTER 221.
♦
♦
PROFICIENCY CERTIFICATES
This repeal as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission;
Rulemaking Authority, and §1701.402, Proficiency Certificates.
§221.3. Peace Officer Proficiency.
to adopt.
2015.
TRD-201504295
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §221.3
The Texas Commission on Law Enforcement (Commission) proposes new §221.3, concerning Proficiency Certificates. This
new rule condenses the Peace Officer, Jailer, and Telecommunicator Proficiency requirements into one rule.
37 TAC §221.3
This new rule is necessary to condense the Peace Officer, Jailer,
and Telecommunicator Proficiency requirements into one rule.
proposes the repeal of §221.3, concerning Peace Officer Proficiency. The repealed section is replaced with new rule §221.3,
which combines Peace Officer, Jailer, and Telecommunicator
Proficiency Certificates into one rule.
a positive benefit to the public by condensing similar rules.
This repeal is necessary to condense the Peace Officer, Jailer,
Comment on the proposal may be submitted electronically to
6330 E. Highway 290, Suite 200, Austin, Texas 78723-1035.
five years, the repeal as proposed will be in effect, there will be
Authority; §1701.402, Proficiency Certificates; and §1701.405,
Telecommunicators.
78723-1035.
Authority, and §1701.402, Proficiency Certificates.
40 TexReg 7594
October 30, 2015
Texas Register
Rulemaking Authority; §1701.402, Proficiency Certificates; and
§1701.405, Telecommunicators.
§221.3. Proficiency Certificates.
(a) To qualify for a basic, intermediate, advanced, or master
proficiency certificate, an applicant must meet all current proficiency
requirements set by the commission.
to adopt.
2015.
♦
TRD-201504320
Kim Vickers
Executive Director
♦
♦
TRD-201504296
Kim Vickers
Executive Director
♦
♦
37 TAC §221.13
♦
37 TAC §221.5
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §221.5, concerning Jailer Proficiency. The
repealed section was replaced with new rule §221.3, which combines Peace Officer, Jailer, and Telecommunicator Proficiency
Certificates into one rule.
78723-1035.
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §221.13, concerning Emergency Telecommunications Proficiency. The repealed section was replaced
with new rule §221.3, which combines Peace Officer, Jailer, and
Telecommunicator Proficiency Certificates into one rule.
78723-1035.
Authority, and §1701.405, Telecommunicators.
Rulemaking Authority and §1701.405, Telecommunicators.
Authority, and §1701.402, Proficiency Certificates.
§221.13. Emergency Telecommunications Proficiency.
Code §1701.151, General Powers of the Commission; Rulemaking Authority and §1701.402, Proficiency Certificates.
to adopt.
§221.5.
2015.
Jailer Proficiency.
to adopt.
2015.
TRD-201504297
Kim Vickers
Executive Director
PROPOSED RULES
October 30, 2015
40 TexReg 7595
♦
♦
♦
37 TAC §221.43
2015.
proposes new §221.43, concerning School-Based Law Enforcement Proficiency Certificate. This new rule is necessary to
reflect legislative changes.
TRD-201504321
Kim Vickers
Executive Director
This new rule is necessary to reflect legislative changes from HB
2684 (84R).
be a positive benefit to the public by having highly trained and
qualified individuals holding this proficiency certificate.
78723-1035.
Authority; §1701.262, Training for School District Peace Officers
and School Resource Officers, as passed by HB 2684 (84R);
§1701.263, Education and Training Program for School District
Peace Officers and School Resource Officers; and Texas Education Code §37.0812, Training Policy: School District Peace
Officers and School Resource Officers.
Rulemaking Authority; §1701.262, Training for School District
Peace Officers and School Resource Officers, as passed by
HB 2684 (84R); §1701.263, Education and Training Program for
School District Peace Officers and School Resource Officers;
and Texas Education Code §37.0812, Training Policy: School
District Peace Officers and School Resource Officers.
§221.43. School-Based Law Enforcement Proficiency Certificate.
(a) To qualify for a school-based law enforcement proficiency
certificate, an applicant must complete a course approved by the commission under Texas Occupations Code §1701.262.
(b) School district peace officers and school resource officers
providing law enforcement at a school district with an enrollment of
30,000 or more students must obtain a school-based law enforcement
proficiency certificate within 120 days of the officer's commission or
placement in the district or campus of the district.
(c)
to adopt.
♦
CHAPTER 223.
♦
♦
ENFORCEMENT
37 TAC §223.1
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §223.1, concerning License Action and
Notification. Subsection (a) removes redundancies appearing in
other existing rules and proposed amendments. Subsection (b)
is relettered as subsection (a) and removes unnecessary wording. New (a)(3) adds the last known address provision, providing
more efficient and accurate notifications to licensees. Subsection (c) is relettered to (b). New subsection (c) reflects the effective date.
This amendment is necessary to remove the redundancy and to
add provisions to provide more efficient and accurate notifications to licensees.
a positive benefit to the public by removing the redundancy and
to add provisions to provide more efficient and accurate notifications to licensees.
five years the section as proposed will be in effect there will be
78723-1035.
Authority.
Rulemaking Authority.
§223.1. License Action and Notification.
[(a) The commission shall revoke or suspend a license, place
on probation a person whose license has been suspended, or reprimand
a license holder for a violation of:]
[(1) Texas Occupations Code, Chapter 1701;]
[(2) the reporting requirements provided by Articles 2.132
and 2.134, Code of Criminal Procedure; or]
40 TexReg 7596
October 30, 2015
Texas Register
[(3)
a commission rule.]
(a) [(b)] The holder of a commission issued license or certificate can [must] be sent notice of any hearing, or other action or matter
before the commission at:
(1) the address of the agency shown in commission records
to have the holder under current or last appointment;
(2) the address shown on the Texas driver's license record
of the holder; [or]
(3)
the last known address on record with the commission;
or
78723-1035.
Authority, and §1701.505, Administrative Procedure.
The amendment as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission; Rulemaking Authority, and §1701.505, Administrative Procedure.
(4) [(3)] any other address requested by the holder in a written request to the executive director.
(b) [(c)] An action by the commission to deny, suspend, or
revoke one license operates [will, if so pled, also operate] against any
other commission license or certificate held by the same person.
(c) [(d)] The effective date of this section is February 1, 2016.
[January 14, 2010.]
to adopt.
2015.
TRD-201504322
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.3
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §223.3, concerning Answer Required.
Amendments to subsections (a) - (e) remove redundancies appearing in other existing rules and proposed amendments. Subsection (a) removes unnecessary wording. Relettered subsection (e) reflects the effective date.
This amendment is necessary to remove redundancies appearing in other existing rules and proposed amendments and removes unnecessary wording.
a positive benefit to the public by removing redundancies and
unnecessary wording.
§223.3. Answer Required.
(a) In order to preserve the right to a hearing as described under
this subchapter, an [in §223.1 of this chapter (relating to License Action and Notification), a person whose license the executive director
proposes to deny, cancel, suspend, or revoke must file an answer either
consenting to the penalty recommended by the executive director in
his petition, or requesting a contested case hearing. An] answer must
be filed not later than 20 days after the date the respondent is provided
with notice of the executive director's petition or notice of violation.
Failure to file a timely answer may result in the issuance of a default
order.
(b) The answer [described in subsection (a) of this section]
may be in the form of a general denial as that term is used in the district
courts of the State of Texas.
(c) [If a respondent fails to file a timely answer as required by
subsection (a) of this section, the executive director may recommend
to the commission that it enter a default order against the respondent.
The executive director may support the motion with documentary evidence, including affidavits, exhibits and pleadings, and oral testimony,
as may be appropriate to demonstrate that the respondent received the
petition and failed to file a timely answer. The commission will consider motions for default orders at its quarterly commission meetings.
If the executive director moves for issuance of a default order under this
section, it is not necessary to set the matter for hearing under §223.7 of
this chapter (relating to Contested Cases and Hearings).] The commission may grant the default order [requested by the executive director,]
or refer the case [may order the case referred] to SOAH for a contested
case hearing.
(d) If a person files a timely answer as required by [subsection
(a) of] this section, but fails to appear at the contested case hearing after
receiving timely and adequate notice, the executive director may move
for default judgment against the respondent as provided by SOAH rules
[rule, 1 Texas Administrative Code, §155.55].
[(e) Upon issuance of a default order by the commission, notice shall be provided to the respondent in accordance with §223.1 of
this chapter (relating to License Action and Notification).]
(e) [(f)] The effective date of this section is February 1, 2016.
[March 1, 2002.]
to adopt.
2015.
TRD-201504323
PROPOSED RULES
October 30, 2015
40 TexReg 7597
Kim Vickers
Executive Director
♦
♦
Kim Vickers
Executive Director
♦
♦
♦
♦
37 TAC §223.5
37 TAC §223.5
The Texas Commission on Law Enforcement (Commission) proposes new §223.5, concerning Contested Cases and Hearings.
This new rule consolidates and recodifies contested case procedures.
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.5, concerning Filing of Documents. The
repealed section is recodified into new rule §223.5.
This new rule is necessary to consolidate and recodify contested
case procedures.
This repeal is necessary to combine several rules into one to
simplify the process.
positive benefit to the public by simplifying the rules on contested
cases and hearings.
78723-1035.
Authority; §1701.505, Administrative Procedure; and Texas
Government Code §2001.004, Requirement to Adopt Rules of
Practice and Index Rules, Orders, and Decisions.
Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.505, Administrative Procedure; and Texas
§223.5. Filing of Documents.
to adopt.
2015.
a positive benefit to the public by streamlining wording regarding
contested case procedures.
78723-1035.
Rulemaking Authority; §1701.505, Administrative Procedure;
and Texas Government Code §2001.004, Requirement to Adopt
Rules of Practice and Index Rules, Orders, and Decisions.
§223.5. Contested Cases and Hearings.
(a) Contested cases, hearings and appeals will be conducted
pursuant to the Administrative Procedure Act, Texas Government
Code, Chapter 2001.
(b) The commission may consider exceptions or briefs filed
within 20 days after a party's notification of a proposal for decision.
Responses are due within 15 days after exceptions are filed.
(c) All or part of the proceedings of a contested case will be
transcribed upon the written request of a party with cost to that party,
unless the executive director provides otherwise.
(d) Any party who appeals a final decision must pay all preparation costs for the original or certified copy of the record of any proceeding to be submitted to the court.
TRD-201504298
(e)
parties.
40 TexReg 7598
October 30, 2015
Texas Register
The commission may assess transcript costs to one or more
(f)
to adopt.
to adopt.
2015.
2015.
TRD-201504299
Kim Vickers
Executive Director
TRD-201504324
Kim Vickers
Executive Director
♦
♦
♦
♦
♦
♦
37 TAC §223.9
37 TAC §223.7
proposes the repeal of §223.7, concerning Contested Cases
and Hearings. The repealed section is recodified into new rule
§223.5.
cases and hearings.
78723-1035.
Authority; §1701.505, Administrative Procedure, and Texas
proposes the repeal of §223.9, concerning Place and Nature
of Hearings. The repealed section is recodified into new rule
§223.5.
cases and hearings.
78723-1035.
§223.9. Place and Nature of Hearings.
§223.7. Contested Cases and Hearings.
to adopt.
PROPOSED RULES
October 30, 2015
40 TexReg 7599
2015.
TRD-201504301
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.11
TRD-201504302
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.14
The Texas Commission on Law Enforcement (Commission) proposes new §223.14, concerning Construction of Other Laws.
This new rule recodifies previous rules related to criminal dispositions.
This new rule is necessary to recodify previous rules related to
criminal dispositions.
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.11, concerning Proposal for Decision
and Exceptions or Briefs. The repealed section is recodified into
new rule §223.5.
a positive benefit to the public by simplifying the rules on criminal
dispositions.
cases and hearings.
78723-1035.
Comments on the proposal may be submitted electronically to
6330 E. Highway 290, Suite 200, Austin, Texas 78723-1035.
Authority, and §1701.312, Disqualification: Felony Conviction
or Placement on Community Supervision.
Rulemaking Authority, and §1701.312, Disqualification: Felony
Conviction or Placement on Community Supervision.
§223.14. Construction of Other Laws.
(a) A criminal disposition under the law of Texas, another
state, federal, military, tribal, or foreign jurisdiction, will be construed
under the closest equivalent under the Texas Penal Code classification
of offenses.
(b) A classification of an offense as a felony at the time of
conviction will never be changed because Texas law has changed or
because the offense would not be a felony under current Texas laws.
§223.11. Proposal for Decision and Exceptions or Briefs.
to adopt.
(c)
to adopt.
2015.
2015.
TRD-201504325
40 TexReg 7600
October 30, 2015
Texas Register
Kim Vickers
Executive Director
Kim Vickers
Executive Director
♦
♦
♦
♦
♦
♦
37 TAC §223.15
37 TAC §223.15
The Texas Commission on Law Enforcement (Commission) proposes new §223.15, concerning License Suspension. This new
rule recodifies the previous rules related to license suspension.
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.15, concerning Suspension of License.
The repealed section is recodified into new rule §223.15.
This repeal is necessary to recodify into a new rule.
a positive benefit to the public by rewriting the rule on license
suspension.
78723-1035.
Authority; §1701.1524, Rules Relating to Consequences of
Criminal Conviction or Deferred Adjudication; §1701.312, Disqualification: Felony Conviction or Placement on Community
Supervision; and §1701.4521, License Suspension for Officer
Dishonorably Discharged.
Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.1524, Rules Relating to Consequences of
Criminal Conviction or Deferred Adjudication; §1701.312, Disqualification: Felony Conviction or Placement on Community Supervision; and §1701.4521, License Suspension for Officer Dishonorably Discharged.
§223.15.
Suspension of License.
to adopt.
2015.
TRD-201504303
license suspension.
Mr. Beauchamp also has determined that for each year of the
first five years the section as proposed will be in effect, there
will be a positive benefit to the public by simplifying the rules on
license suspension.
first five years the section as proposed will be in effect, there will
be no anticipated cost to small businesses, individuals, or both
as a result of the proposed section.
78723-1035.
Authority; §1701.1524, Rules Relating to Consequences of
Criminal Conviction or Deferred Adjudication; §1701.312, Disqualification: Felony Conviction or Placement on Community
Supervision; and §1701.4521, License Suspension for Officer
Dishonorably Discharged.
Rulemaking Authority; §1701.1524, Rules Relating to Consequences of Criminal Conviction or Deferred Adjudication;
§1701.312, Disqualification: Felony Conviction or Placement on
Community Supervision; and §1701.4521, License Suspension
for Officer Dishonorably Discharged.
§223.15. License Suspension.
(a) Unless revocation is required, the commission may suspend a license or certificate for violating any provision of the Texas
Occupations Code, Chapter 1701 or commission rule.
(b) The license of a person charged with a felony and placed
on community supervision shall be suspended for thirty years.
(c) The license of a person convicted or placed on community
supervision for any offense above the grade of Class C misdemeanor
may be suspended for 10 years.
(d) A suspension based on a Class A misdemeanor shall be at
least 120 days.
PROPOSED RULES
October 30, 2015
40 TexReg 7601
(e) A suspension based on a Class B misdemeanor shall be at
least 60 days.
(f) The license of a person who fails to comply with legislative
continuing education requirements may be suspended:
(1)
up to 90 days for first-time noncompliance;
(2)
up to 180 days for second-time noncompliance; and
(3)
one year for third-time noncompliance.
(g) The commission may suspend the license of a person who
has previously received two written reprimands from the commission.
(h) Factors the commission may consider in determining a
term of suspension include:
(1)
the seriousness of the conduct resulting in the arrest;
(2)
the required mental state of the disposition offense;
(3) whether the disposition offense contains an element of
actual or threatened bodily injury or coercion against another person
under the Texas Penal Code or the law of the jurisdiction where the
offense occurred;
(4) the licensee's previous violations of commission
statutes or rules;
(5) actual or potential harm to public safety, including personal injury and property damage, resulting from the conduct resulting
in the arrest;
(6)
aggravating evidence existing in a particular case; and
(7)
evidence used in rebuttal to mitigating factors.
(i) A suspension can begin no sooner than the date of the
statute or rule violation.
(j) A suspension or probation may be ordered to run concurrently or consecutively with any other suspension or probation.
(k)
to adopt.
first five years, the repeal as proposed will be in effect, there will
be a positive benefit to the public by consolidating rules.
first five years the repeal as proposed will be in effect, there will
be no anticipated cost to small business, individuals, or both as
78723-1035.
§1701.151, General Powers of the Commission; Rulemaking Authority; §1701.1524, Rules Relating to Consequences
of Criminal Conviction or Deferred Adjudication; §1701.302,
Certain Elected Law Enforcement Officers; License Required;
for Officer Dishonorably Discharged. .
The repeal as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission;
§1701.302, Certain Elected Law Enforcement Officers; License
Required; §1701.312, Disqualification: Felony Conviction or
Placement on Community Supervision; and §1701.4521, License Suspension for Officer Dishonorably Discharged.
§223.16. Suspension of License for Constitutionally Elected Officials.
to adopt.
2015.
TRD-201504327
Kim Vickers
Executive Director
♦
♦
♦
2015.
TRD-201504304
Kim Vickers
Executive Director
♦
37 TAC §223.16
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.16, concerning Suspension of License
for Constitutionally Elected Officials. This repealed section is
consolidated in new §223.15.
This repeal is necessary to consolidate in new §223.15.
40 TexReg 7602
October 30, 2015
Texas Register
♦
♦
37 TAC §223.16
The Texas Commission on Law Enforcement (Commission) proposes new §223.16, concerning Probation and Mitigating Factors. This new rule recodifies the previous rules related to license
suspension.
license suspension.
a positive benefit to the public by simplifying the rules on license
suspension.
78723-1035.
The new rule is proposed under Texas Occupations Code, Chapter 1701, §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.1524, Rules Relating to Consequences
of Criminal Conviction or Deferred Adjudication; §1701.312, Disqualification: Felony Conviction or Placement on Community Supervision; and §1701.4521, License Suspension for Officer Dishonorably Discharged.
for Officer Dishonorably Discharged.
§223.16. Probation and Mitigating Factors.
(a) The commission may consider probating a suspension term
or issue a written reprimand based on proof of the following mitigating
factors:
(1) the licensee's history of compliance with the terms of
court-ordered community supervision;
(2) the licensee's post-arrest continuing rehabilitative efforts not required by the terms of community supervision;
(3)
the licensee's post-arrest employment record; and
(4) the type and amount of any post-arrest, non-court ordered restitution made by the licensee.
(b) The commission may impose reasonable terms of probation, including:
(c)
(1)
continued employment requirements;
(2)
special reporting conditions;
(3)
special document submission conditions;
(4)
voluntary duty requirements; or
(5)
any other reasonable term of probation.
(4)
(d)
revoked.
A suspended license remains suspended until:
(1) the term of suspension has expired and the term of
court-ordered community supervision has been completed; and
(2) a written request for reinstatement has been received
from the licensee and accepted by the commission; or
(3) the remainder of the suspension is probated and the license is reinstated.
(e)
to adopt.
2015.
TRD-201504328
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.17
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §223.17, concerning Reinstatement of
a License. Cross-references have been removed from subsections (a), (b), (b)(1)(A) and (B), (b)(2)(A) and (D), and (b)(3)(A)
and (E). Subsection (c) reflects the effective date.
This amendment is necessary to remove redundant cross-references.
be a positive benefit to the public by removing redundant crossreferences.
78723-1035.
A probated or suspended license remains as such until:
(1)
the term of suspension has expired;
(2)
all other terms of probation have been fulfilled; and
(3) a written request for reinstatement has been received
and accepted by the commission from the licensee unless the probation
has been revoked by the commission for violation of probation; or
Authority; §1701.501, Disciplinary Action; and §1701.502,
Felony Conviction or Placement on Community Supervision.
The amendment as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.501, Disciplinary Action; and
PROPOSED RULES
October 30, 2015
40 TexReg 7603
§1701.502, Felony Conviction or Placement on Community Supervision.
§223.17. Reinstatement of a License.
(a) To reinstate a suspended or probated license for a licensee
that meets current training requirements and has continually maintained [the] legislatively required continuing education [provided in
§217.11 of this title] for the duration of the suspension or probation, a
licensee must:
(1) make application for reinstatement in the format currently prescribed by the commission; and
(2)
submit any required fee(s).
(b) A licensee that does not meet current training requirements, or has failed to continually maintain the legislatively required
continuing education [provided in §217.11 of this title] for the duration
of the suspension or probation, must meet the following requirements:
(1)
If less than two years from last appointment held:
(A) meet [the] current licensing standards [as provided
in §217.1 of this title];
(B) successfully complete [the] legislatively required
continuing education [as provided in §217.11 of this title]; and
(2)
ment held:
(A) meet [the] current licensing standards [as provided
in §217.1 of this title];
(B) successfully complete a supplementary peace officer training course approved by the commission;
the format currently prescribed by the commission; and
(D) pass the licensing exam [as provided in §219.1 of
this title].
(3)
If five years or more from last appointment held:
(A)
meet [the] current enrollment standards [in §217.23
of this title];
(B) meet [the] current licensing standards [in §217.1 of
this title];
(C) successfully complete the basic licensing course for
the license sought;
(D) make application and submit any required fee(s) in
the format currently prescribed by the commission; and
(E)
pass the licensing exam [as provided in §219.1 of
this title].
(c) The effective date of this section is February 1, 2016. [July
12, 2012.]
to adopt.
2015.
40 TexReg 7604
October 30, 2015
Texas Register
TRD-201504329
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.18
The Texas Commission on Law Enforcement (Commission) proposes new §223.18, concerning Suspension Following Felony
Arrest. The proposed rule allows the commission to suspend
the license of an appointed person arrested or indicted for certain felony offenses. The rule is necessary to protect the safety
and welfare of the public and the integrity of the profession by
preventing licensed felony arrestees from engaging in the duties
of peace officers, jailers, and telecommunicators during the pendency of a criminal disposition.
This new rule is necessary to protect the safety and welfare of
the public and the integrity of the profession.
each year of the first five years the section as proposed will be in
effect, there may be an effect on state or local governments as
a result of administering this section due to the removal of some
of their Commission licensed workforce.
positive benefit to the public by ensuring that the public is served
by highly trained and ethical law enforcement personnel.
78723-1035.
Authority, and Texas Government Code §2001.054, Licenses.
Rulemaking Authority, and Texas Government Code §2001.054,
Licenses.
§223.18. Suspension Following Felony Arrest.
(a) The commission may suspend the license of a person arrested or indicted for a felony offense which would constitute an immediate peril to the public health, safety or welfare if the person were
to remain licensed during the pendency of criminal proceedings.
(b) By virtue of their nature, the following felony arrests constitute immediate peril:
(1) Sexual offenses;
(2) Assaultive offenses; and
(3) Offenses directly relating to the duties and responsibilities of any related office held by that person.
(c) In determining whether any other felony arrest creates an
immediate peril to the public health, safety or welfare, factors the commission may consider include:
(1)
the seriousness of the conduct resulting in the arrest;
(2)
the required mental state of the alleged offense;
(3) whether the alleged offense contains an element of actual or threatened bodily injury or coercion against another person under the Texas Penal Code or the law of the jurisdiction where the offense occurred;
(4) the licensee's previous violations of commission
statutes or rules;
(5) actual or potential harm to public safety resulting from
the conduct resulting in the arrest; and
(6)
aggravating circumstances existing in a particular case.
(d) If an offense constitutes immediate peril, the commission
will notify the person of the summary suspension order and the intention to initiate proceedings, if applicable, upon final disposition of
criminal proceedings.
(e) If a person does not receive notice of the intent to initiate
proceedings within 30 days of the commission's order, the person may
appeal to the Travis County district court.
(f) A person may request a hearing regarding the summary suspension within 20 days after the summary suspension order is received.
Otherwise, the license remains suspended until final disposition of the
case.
(g)
to adopt.
2015.
TRD-201504331
Kim Vickers
Executive Director
♦
♦
Mr. Beauchamp has also determined that for each year of the
first five years, the repeal as proposed will be in effect, there will
be a positive benefit to the public by rewriting the rule on license
revocation.
first five years the repeal as proposed will be in effect, there will
be no anticipated cost to small business, individuals, or both as
78723-1035.
Authority; §1701.4521, License Suspension for Officer Dishonorably Discharged; §1701.501, Disciplinary Action; and
§1701.502, Felony Conviction or Placement on Community
Supervision.
Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.4521, License Suspension for Officer
Dishonorably Discharged; §1701.501, Disciplinary Action; and
§1701.502, Felony Conviction or Placement on Community Supervision.
§223.19. Revocation of License.
to adopt.
2015.
TRD-201504305
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.19
The Texas Commission on Law Enforcement (Commission) proposes new §223.19, concerning License Revocation. This new
rule recodifies the previous rules related to license revocation.
♦
37 TAC §223.19
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.19, concerning Revocation of License.
The repealed section is recodified into new rule §223.19.
This repeal is necessary to recodify into a new rule.
license revocation.
first five years the section as proposed will be in effect, there
will be a positive benefit to the public by simplifying the rules on
license revocation.
first five years the section as proposed will be in effect, there will
PROPOSED RULES
October 30, 2015
40 TexReg 7605
be no anticipated cost to small businesses, individuals, or both
as a result of the proposed section.
78723-1035.
§1701.502, Felony Conviction or Placement on Community
Supervision.
Rulemaking Authority; §1701.4521, License Suspension for Officer Dishonorably Discharged; §1701.501, Disciplinary Action;
and §1701.502, Felony Conviction or Placement on Community
Supervision.
§223.19. License Revocation.
(a) The license of a person convicted of a felony shall be immediately revoked.
(b) The license of a person convicted or placed on community
supervision for an offense directly related to the duties and responsibilities of any related office held by that person may be revoked. In
determining whether an offense directly relates to such office, the commission will consider:
(1)
the nature and seriousness of the crime;
(2) the relationship of the crime to the purpose for requiring
a license for such office;
(3) the extent to which a license might offer an opportunity
to engage in further criminal activity of the same type as that in which
the person previously had been involved; and
(4) the relationship of the crime to the ability, capacity, or
fitness required to perform the duties and discharge the responsibilities
of such office.
(c) The license of a person convicted or placed on community
supervision for any offense involving family violence shall be revoked.
(d) The license of a person who is noncompliant for the third
time in obtaining continuing education shall be revoked.
(e) The license of a person who has received a dishonorable or
other discharge based on misconduct which bars future military service
shall be revoked.
(f) The license of a person who has made, submitted, caused
to be submitted, or filed a false or untruthful report to the commission
may be revoked.
(g) The license of a person who has been found to be in unauthorized possession of any commission licensing examination or portion of a commission licensing examination, or a reasonable facsimile
shall be revoked.
(h) Revocation permanently bars the person from any future
licensing or certification by the commission.
(i) A revoked license cannot be reinstated unless the licensee
provides proof of facts supporting the revocation have been negated,
such as:
40 TexReg 7606
October 30, 2015
Texas Register
(1) the felony conviction has been reversed or set aside on
direct or collateral appeal, or a pardon based on subsequent proof of
innocence has been issued;
(2) the dishonorable or bad conduct discharge has been upgraded to above dishonorable or bad conduct conditions; or
(3) the report alleged to be false or untruthful was found to
be truthful.
(j) During the direct appeal of any appropriate conviction, a
license may be revoked pending resolution of the mandatory direct appeal. The license will remain revoked unless and until the holder proves
that the conviction has been set aside on appeal.
(k) The holder of any revoked license may informally petition the executive director for reinstatement of that license based upon
proof by the licensee that the facts supporting the revocation have been
negated.
(l) If granted, the executive director shall inform the commissioners of such action no later than at their next regular meeting.
(m) If denied, the holder of a revoked license may petition the
commission for a hearing to determine reinstatement based upon the
same proof.
(n) The effective date of this section is February 1, 2016.
to adopt.
2015.
TRD-201504332
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §223.20
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.20 concerning Revocation of License
for Constitutionally Elected Officials. The repealed section is
consolidated into new §223.19.
This repeal is necessary to consolidate into new §223.19.
a positive benefit to the public by consolidating rules.
78723-1035.
§1701.502, Felony Conviction or Placement On Community
Supervision.
Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.4521, License Suspension for Officer
Dishonorably Discharged; §1701.501, Disciplinary Action; and
§1701.502, Felony Conviction or Placement On Community Supervision.
78723-1035.
Authority; §1701.506, Appeal; and Texas Government Code,
Chapter 2001, Administrative Procedure Act.
Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.506, Appeal; and Texas Government Code,
Chapter 2001, Administrative Procedure Act.
§223.21. Appeal.
to adopt.
§223.20.
cials.
2015.
Revocation of License for Constitutionally Elected Offi-
to adopt.
TRD-201504307
Kim Vickers
Executive Director
2015.
♦
TRD-201504306
Kim Vickers
Executive Director
♦
♦
CHAPTER 227.
♦
♦
SCHOOL MARSHALS
37 TAC §227.1
The Texas Commission on Law Enforcement (Commission) proposes amendment to §227.1, concerning School District Responsibilities. The rule title is amended. Subsection (a)(3) and
(4) and subsections (b) and (c) amend the rule to include public
junior college. Subsection (d) reflects the effective date.
♦
37 TAC §223.21
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §223.21, concerning Appeal. The repealed
section is recodified in new rule §223.5.
This repeal is necessary to be recodified in a new rule.
a positive benefit to the public by simplifying the rule on appeals.
This amended rule is necessary to reflect legislative changes
from SB 386 (84R).
a positive benefit to the public by allowing public junior colleges
to appoint school marshals.
78723-1035.
Authority; §1701.260, Training for Holders of License to Carry
Handgun; Certification for Eligibility for Appointment as School
PROPOSED RULES
October 30, 2015
40 TexReg 7607
Marshal; Texas Education Code §51.220, Public Junior College
School Marshals; and Texas Code of Criminal Procedure,
§2.127, School Marshals.
The amendment as proposed is in compliance with Texas Occupations Code §1701.151, General Powers of the Commission; Rulemaking Authority; §1701.260, Training for Holders of
License to Carry Handgun; Certification for Eligibility for Appointment as School Marshal; Texas Education Code §51.220, Public Junior College School Marshals; and Texas Code of Criminal
Procedure, §2.127, School Marshals.
§227.1. Appointing Entity Responsibilities [School District Responsibilities].
(a) A school district or public junior college shall:
(1) submit and receive approval for an application to appoint a person as a school marshal;
(2) upon authorization, notify the commission using approved format prior to appointment;
(3) report to the commission, within seven days, when a
person previously authorized to act as a school marshal is no longer
employed with the school district or public junior college;
(4) report to the commission, within seven days, when a
person previously authorized to act as a school marshal is no longer
authorized to do so by the school district, public junior college, commission standards, another state agency, or under other law; and
(5) immediately report to the commission a school marshal's violation of any commission standard, including the discharge
of a firearm carried under the authorization of this chapter outside of a
training environment.
(b) A school district or public junior college shall not appoint
or employ an ineligible person as a school marshal.
(c) For five years, the school district or public junior college
must retain documentation that the district and person has met all requirements under law in a format readily accessible to the commission.
This requirement does not relieve a school district or public junior college from retaining all other relevant records not otherwise listed.
amended to include public junior college. Subsection (c) reflects
the effective date.
from SB 386.
78723-1035.
§227.3. School Marshal Licensing and Reporting Requirements.
(d) The effective date of this section is February 1, 2016.
[February 1, 2014.]
(a) To be eligible for appointment as a school marshal, an applicant shall:
to adopt.
training;
2015.
TRD-201504333
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §227.3
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §227.3, concerning School Marshal
Licensing and Reporting Requirements. Subsection (b)(1) is
40 TexReg 7608
October 30, 2015
Texas Register
(1)
successfully complete all prerequisite commission
(2)
pass the state licensing exam;
(3)
district; and
be employed and appointed by an authorized school
(4)
cal fitness.
meet all statutory requirements, including psychologi-
(b) Once appointed, a school marshal shall:
(1) immediately report to the commission and school district any circumstance which would render them unauthorized to act as
a school marshal by virtue of their employment with the school district
or public junior college, failure to meet the standards of the commission, another state agency, or under law;
(2) immediately report to the commission any violation of
applicable commission standards, including any discharge of a firearm
carried under the authorization of this chapter outside of training environment; and
(3) comply with all requirements under law, including
Texas Education Code, §37.0811.
(c) The effective date of this section is February 1, 2016.
[February 1, 2014.]
to adopt.
2015.
♦
(b) The training program must be preapproved and conducted
by commission staff or approved provider. The training program shall
include 80 hours of instruction designed to:
(1) emphasize strategies for preventing school shootings
and for securing the safety of potential victims of school shootings;
(2) educate a trainee about legal issues relating to the duties
of peace officers and the use of force or deadly force in the protection
of others;
TRD-201504335
Kim Vickers
Executive Director
♦
§227.5. School Marshal Training Entities.
(a) A school marshal training program is open to any employee
of a school district, open-enrollment charter school, or public junior
college who holds a license to carry a [concealed] handgun issued under
Texas Government Code, Chapter 411, Subchapter H.
(3) introduce the trainee to effective law enforcement
strategies and techniques;
(4)
♦
improve the trainee's proficiency with a handgun; and
(5) enable the trainee to respond to an emergency situation
requiring deadly force, such as a situation involving an active shooter.
37 TAC §227.5
The Texas Commission on Law Enforcement (Commission) proposes an amendment to §227.5, concerning School Marshal
Training Entities. Subsection (a) is amended to include public
junior colleges. Subsection (c) reflects the effective date.
from SB 386 (84R).
78723-1035.
(c) The effective date of this section is February 1, 2016.
[February 1, 2014.]
to adopt.
2015.
TRD-201504336
Kim Vickers
Executive Director
♦
♦
♦
37 TAC §227.9
proposes an amendment to §227.9, concerning License Action.
Subsection (a) and subsection (b)(1) are amended to remove
the term "concealed" in response to legislative changes.
This amended rule reflects legislative changes from HB 910
(84R).
a positive benefit to the public by ensuring no school marshals
remain licensed when ineligible.
PROPOSED RULES
October 30, 2015
40 TexReg 7609
78723-1035.
§227.9. License Action.
(a) The commission shall immediately revoke a school marshal license if the license holder's ability to carry a [concealed] handgun has been suspended or revoked by the Texas Department of Public
Safety.
(b) A person whose school marshal license is revoked may obtain recertification by:
(1) furnishing proof to the commission that the person's
[concealed] handgun license has been reinstated; and
(2) completing initial training to the satisfaction of the
commission staff, paying the fee for the training, and demonstrating
psychological fitness on the psychological examination.
(c) If a school marshal license holder violates any commission
standard, the commission shall immediately suspend the license for ten
years. Mitigating factors are inapplicable to a suspension action under
this chapter.
(d) The effective date of this section is February 1, 2016.
[February 1, 2014.]
to adopt.
2015.
TRD-201504337
Kim Vickers
Executive Director
♦
♦
♦
The Texas Commission on Law Enforcement (Commission) proposes the repeal of §227.11, concerning Confidentiality of Information. This is redundant information that is already in statute.
October 30, 2015
78723-1035.
This repeal is proposed under Texas Occupations Code
Authority, and §1701.260, Training for Holders of License to
Carry Handgun; Certification for Eligibility for Appointment as
School Marshal.
Rulemaking Authority, and §1701.260, Training for Holders
of License to Carry Handgun; Certification for Eligibility for
Appointment as School Marshal.
§227.11. Confidentiality of Information.
to adopt.
2015.
TRD-201504308
Kim Vickers
Executive Director
♦
♦
♦
PART 15. TEXAS FORENSIC SCIENCE
COMMISSION
CHAPTER 651. DNA, CODIS, FORENSIC
ANALYSIS, AND CRIME LABORATORIES
37 TAC §227.11
40 TexReg 7610
This repeal is necessary to comply with SB 386 and SB 996
(84R), which address the confidentiality of information on school
marshals.
Texas Register
The Texas Forensic Science Commission ("Commission") proposes amendments to 37 Texas Administrative Code §§651.1,
651.3 - 651.11 and 651.101 - 651.105 to correct references to
the Texas Department of Public Safety ("DPS") and internal rule
citations. The Commission also proposes the repeal of §651.12.
The amendments and the repeal are necessary to update rule
language to reflect the transfer of the rules from Title 37, Part
1, Chapter 28 to new Part 15, Chapter 651. The transfer was
made in accordance with Senate Bill 1287, which was passed in
the 84th Legislative Session.
Fiscal Note. Leigh Tomlin, Associate General Counsel, has determined that for each year of the first five years the proposed
amendments and repeal will be in effect, there will be no fiscal impact to state or local governments as a result of the enforcement
or administration of the proposal. There will be no anticipated
effect on local employment or the local economy as a result of
the proposal.
Public Benefit/Cost Note. Ms. Tomlin has also determined that
for each year of the first five years the proposed amendments
and repeal are in effect, the anticipated public benefit will be accurate and updated rules.
(d) Statutory Commission [DPS] accreditation. A laboratory
may apply to the Commission [director] for [statutory DPS] accreditation if accreditation is required for evidence admissibility under Code
of Criminal Procedure, Article 38.35.
§651.3. Recognition Process.
The Commission [director] shall recognize an accrediting body under
this section if the Commission [director] determines that the accrediting
body:
(1) issues an accreditation that is accepted throughout the
relevant scientific community and appropriate or available to a laboratory;
(2) has established adequate accreditation criteria reasonably likely to ensure trustworthy forensic analysis;
Economic Impact Statement and Regulatory Flexibility Analysis
for Small and Micro Businesses. As required by the Government
Code §2006.002(c) and (f), Ms. Tomlin has determined that the
proposed amendments and repeal will not have an adverse economic effect on any small or micro business because there are
no anticipated economic costs to any person who is required to
comply with the rules as proposed.
(3) requires a periodic competency audit or review of the
personnel, facilities, and procedures employed by a laboratory to conduct a forensic analysis; and
Takings Impact Assessment. Ms. Tomlin has determined that
no private real property interests are affected by this proposal
and that this proposal does not restrict or limit an owner's right
to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under the Government Code
§2007.043.
§651.4. List of Recognized Accrediting Bodies.
(a) The Commission [director] recognizes the accrediting bodies in this subsection, subject to the stated discipline or subdiscipline
limitations:
Request for Public Comment. The Texas Forensic Science
Commission invites comments on the proposal from any member of the public. Please submit comments to Leigh Tomlin,
1700 North Congress Avenue, Suite 445, Austin, Texas 78701
or [email protected].
Comments must be received by
November 29, 2015 to be considered by the commission.
SUBCHAPTER A.
ACCREDITATION
37 TAC §§651.1, 651.3 - 651.11
Statutory Authority. The amendments are proposed under Tex.
Code Crim. Proc. art 38.01 §4-d.
Cross reference to statute. The proposal affects 37 TAC §§651.1
- 651.11.
§651.1.
Purpose.
(a) Generally. This subchapter contains the Texas Forensic
Science Commission (Commission) [director's] rules adopted under
Government Code, §411.0205, that govern:
(1) the recognition of an accrediting body by the
Commission [director]; and
(2) the accreditation of an individual laboratory or other
entity by the Commission [director].
(b) Accreditation sequence.
To be accredited by the
Commission [director] under this subchapter, a laboratory must first
be accredited by a recognized accrediting body.
(c) Source of evidence predicate. The Code of Criminal Procedure, Article 38.35, requires Commission [DPS] accreditation of an
individual laboratory or other entity for admission of evidence or testimony if the laboratory or entity conducts a forensic analysis of physical
evidence for use in a criminal proceeding.
(4) withholds, grants, or withdraws its accreditation of a
laboratory based on its own determination of a reasonable likelihood
of meaningful corrective action for each deficiency noted during the
periodic audit or review.
(1) American Board of Forensic Toxicology (ABFT)--recognized for accreditation of toxicology discipline only.
(2) American Society of Crime Laboratory Directors, Laboratory Accreditation Board (ASCLD/LAB)--recognized for accreditation of all disciplines which are eligible for accreditation under this
subchapter.
(3) ANSI-ASQ National Accreditation Board (ANAB) formerly known as Forensic Quality Services (FQS and FQS-I) or National Forensic Science Technology Center (NFSTC)--recognized for
accreditation of all disciplines which are eligible for accreditation under this subchapter.
(4) Substance Abuse and Mental Health Services Administration of the Department of Health and Human Services
(HHS/SAMSHA) [(HHS/SAMHA)], formerly known as the National
Institute on Drug Abuse of the Department of Health and Human
Services (HHS/NIDA)--recognized for accreditation of toxicology
discipline in the subdiscipline of Urine Drug Testing for all classes of
drugs approved by the accrediting body.
(5) College of American Pathologists (CAP)--recognized
for accreditation of toxicology discipline.
(6) American Association for Laboratory Accreditation
(A2LA)--recognized for accreditation of all disciplines which are
eligible for accreditation under this chapter.
(b) If an accrediting body is recognized under subsection (a) of
this section and the recognized body approves a new discipline, subdiscipline, or procedure, the Commission [director] may temporarily
recognize the new discipline, subdiscipline, or procedure. A temporary approval shall be effective for 120 days.
§651.5. Disciplines and Subdisciplines Subject to Commission
[DPS] Accreditation.
(a) 'Forensic analysis'/recognized accreditation. This section
describes a discipline or subdiscipline that involves forensic analysis
PROPOSED RULES October 30, 2015
40 TexReg 7611
for use in a criminal proceeding and for which accreditation is available
from a recognized accrediting body.
by the Code of Criminal Procedure, Article 38.35, or by this subchapter based on their nature.
(b) By entire discipline. A laboratory may apply [to the director] for Commission [DPS] accreditation for one or more of the following disciplines:
(1) This paragraph describes a discipline, subdiscipline, or
procedure that is excluded from the definition of forensic analysis or
otherwise exempted by the Code of Criminal Procedure, Article 38.35,
and for which no recognized accreditation is appropriate or available.
A laboratory may not apply for Commission [to the director for DPS]
accreditation for:
(1)
controlled substances;
(2)
toxicology;
(3)
biology;
(4)
firearms/toolmark;
(5)
questioned documents;
(6)
(A)
(B) latent print examination;
(C) digital evidence (including computer forensics, audio, or imaging); or
trace evidence; or
(7) other discipline if approved by a recognized accrediting
body and the Commission [director].
(c) Limited to subdiscipline. A laboratory may apply [to the
director] for Commission [DPS] accreditation limited to one or more
of the following subdisciplines:
(1) under the controlled substances discipline, subdiscipline may include controlled substances marihuana, precursor
analysis, and clandestine laboratory analysis;
(2) under the toxicology discipline, subdiscipline may include forensic toxicology, urine drug testing, and blood alcohol analysis;
(3) under the biology discipline, subdiscipline may include
biology, serology, and DNA;
(4) under the firearms/toolmark discipline, subdiscipline
may include: firearms, ballistics, and toolmarks;
(5) under the questioned documents discipline, subdiscipline may include questioned documents, handwriting, and ink analysis (including forensic handwriting comparison);
(6) under the trace evidence discipline, subdiscipline may
include: fire debris, explosives, fibers, gun shot residue, glass, hairs,
paint, filaments, and unknown substances; and
(7) other discipline and its related subdiscipline if accredited by a recognized accrediting body and the Commission [director].
(d) A laboratory may choose to assign a particular subdiscipline to a different administrative section or unit in the laboratory. For
example, the subdiscipline of impression evidence, including footwear,
tiretrack, and similar impression evidence, may be administratively assigned by the laboratory to its trace evidence section, firearms section,
or questioned document section. The Commission [director] deems
impression evidence to be a subdiscipline of several disciplines under
this subchapter, including trace evidence, firearms/toolmark, or questioned documents.
(e) If an accreditation for a subdiscipline is accompanied by
the term 'only' or a similar notation, the Commission [director] will
deem the accreditation to exclude other subdisciplines in that discipline.
(f) Accreditation of a confirmation test procedure does not
carry automatic accreditation of an associated field, spot, screening, or
other presumptive test.
§651.6. Disciplines, Subdisciplines, and Procedures to Which Statutory Commission [DPS] Accreditation Does Not Apply.
This section describes disciplines, subdisciplines, or procedures excluded from the definition of forensic analysis or otherwise exempted
40 TexReg 7612
October 30, 2015
breath specimen testing under Transportation Code,
Chapter 724;
Texas Register
(D) an examination or test excluded by rule under Government Code, §411.0205(c).
(E) the portion of an autopsy conducted by a medical
examiner or other forensic pathologist who is a licensed physician.
(2) This paragraph describes a discipline, subdiscipline, or
procedure that does not normally involve forensic analysis of physical
evidence for use in a criminal proceeding and for which recognized
accreditation is inappropriate or unavailable. A laboratory may not
apply for Commission [to the director for DPS] accreditation for:
(A)
forensic photography;
(B) non-criminal paternity testing;
(C)
urine, or tissue;
non-criminal testing of human or nonhuman blood,
(D) a crime scene search team (whether or not associated with an accredited laboratory) if the team does not engage in forensic analysis because it only engages in the location, identification, collection, or preservation of physical evidence and the activity is not integral to an expert examination or test;
(E) other evidence processing or handling that is excluded under §651.2(2) [§28.142(2)] of this title (relating to Definitions); or
(F) other discipline or subdiscipline so determined by
the Commission [director].
§651.7. Disciplines, Subdisciplines, and Procedures Exempt from
Statutory Commission [DPS] Accreditation.
(a) This section describes a discipline, subdiscipline, or procedure that is 'forensic analysis' but is not subject to accreditation by one
or more recognized accrediting bodies.
(b) Even though a discipline or subdiscipline is forensic analysis, the Commission [director] has determined that no accreditation is
appropriate or available from a recognized accrediting body for the following disciplines, subdisciplines, or procedures and a laboratory may
not apply for Commission [to the director for DPS] accreditation for:
(1) sexual assault examination of the person;
(2) forensic anthropology, entomology, or botany;
(3) environmental testing;
(4) facial or traffic accident reconstruction;
(5) serial number restoration;
(6) polygraph examination;
(7) voice stress, voiceprint, or similar voice analysis;
(8)
forensic hypnosis;
(9)
statement analysis;
(10)
(a) Issuance and renewal. The Commission [director] may issue provisional accreditation under this section that is non-renewable
for that discipline, subdiscipline, or procedure.
profiling; or
(11) other discipline or subdiscipline so determined by
the Commission [director], including those identified and listed at the
Commission's [department's] website.
(c) A request for exemption shall be submitted in writing to
the Commission [director].
§651.8.
Full Commission [DPS]Accreditation.
(a) Issuance and renewal. The Commission [director] may issue or renew accreditation under this section.
(b) Application. An applicant for full Commission [DPS]
accreditation shall complete and submit to the Commission [director]
a current Laboratory Accreditation Form [form LAB-5] and attach
copies of the following:
(1) an accreditation certificate and letter of notification of
accreditation from a recognized accrediting body; and
(2) each document provided by the recognized accrediting
body that identifies the discipline or subdiscipline for which the laboratory has received accreditation and any limitation or restriction regarding that accreditation.
(c) Additional information. The Commission [director] may
require additional information to properly evaluate the application either as part of the original application or as supplemental information.
(d)
Reports to the Commission [director].
(1) If accredited by ASCLD/LAB, a laboratory shall provide the Commission [director] with a copy of each Annual Accreditation Review Report. If accredited by another recognized accrediting body, a laboratory shall provide the Commission [director] with
a copy of each equivalent annual accreditation assessment document.
The copy shall be submitted to the Commission [director] at the same
time that it is due to the recognized accrediting body.
(2) A laboratory shall provide the Commission [director]
with a copy of correspondence and each report or communication between the laboratory and the recognized accrediting body. The laboratory shall submit the copy to the Commission [director] no later than 30
days after the date the laboratory receives or transmits the correspondence, report, or communication.
(3) A laboratory that discontinues a specific forensic discipline or subdiscipline:
(A) if known beforehand, should submit written notification to the Commission [director] at least 30 days before the effective
date of the discontinuation; or
(B) if unknown beforehand, shall submit written notification to the Commission [director] at least 5 business days after the
effective date of the discontinuation.
(e) Federal forensic laboratories. A federal forensic laboratory is deemed to be accredited by the Commission [director] without
application provided that the laboratory is accredited by a recognized
accrediting body as provided under §651.4 [§28.144] of this title (relating to List of Recognized Accrediting Bodies). A laboratory deemed
accredited is not subject to the reporting requirements of this subchapter or the processes provided under Subchapter B [J] of this chapter
(relating to Complaints, Special Review, and Administrative Action).
§651.9.
(b) Application. An applicant for provisional Commission
[DPS] accreditation shall complete and submit to the Commission
[director] a current Laboratory Accreditation Form [form LAB-5]
as referenced in §651.8(b) [§28.148(b)] of this title (relating to Full
Commission [DPS] Accreditation) and attach copies of the following:
(1) the application for accreditation by a recognized accrediting body;
(2) the initial audit, inspection, or review report from an independent auditor based on the standards of the recognized accrediting
body;
(3) a full response in writing to the initial audit, inspection,
or review report described in paragraph (2) of this subsection; and
body that identifies the discipline or subdiscipline for which the laboratory seeks accreditation.
(c) Provisional-Interim. If a laboratory is in good standing
with its accrediting body and has made application to renew or replace
its accreditation, the laboratory may apply for Provisional Commission
[DPS] Accreditation if necessary to cover a period between times that
it qualifies for full Commission [DPS] accreditation. For this Provisional Commission [DPS] Accreditation, the laboratory may complete
and submit to the Commission [director] a current Laboratory Accreditation Form [form LAB-5] as referenced in §651.8(b) [28.148(b)] of
this title and attach copies of the following:
(1) the application for accreditation by a recognized accrediting body; and
body that identifies the discipline or subdiscipline for which the laboratory seeks accreditation.
(d) Additional information. The Commission [director] may
require additional information to properly evaluate the application either as part of the original application or as supplemental information.
(e)
Reports to the Commission [director].
(1) The laboratory shall request that the recognized accrediting body provide the Commission [director] with a copy of each audit,
inspection, or review report conducted before full Commission [DPS]
accreditation.
(2) A laboratory shall provide the Commission [director]
with a copy of correspondence and each report or communication between the laboratory and the recognized accrediting body. The laboratory shall submit the copy to the Commission [director] no later than 30
days after the date the laboratory receives or transmits the correspondence, report, or communication.
(3) A laboratory that discontinues a specific forensic discipline, subdiscipline, or procedure shall submit written notification to
the Commission [director] at least 30 days before the effective date of
the discontinuation.
(f) Second sample required. A laboratory with provisional
Commission [DPS] accreditation under this section must:
(1) preserve one or more separate samples of the physical
evidence for use by the defense attorney or use under order of the convicting court; and
Provisional Commission [DPS] Accreditation.
PROPOSED RULES
October 30, 2015
40 TexReg 7613
(2) agree to preserve, and preserve those samples until all
appeals in the criminal case are final.
the Texas Forensic Science Commission or in the Texas Register office,
§651.10. Accreditation Term.
(a) Normal term. The normal term for Commission [DPS] accreditation:
Statutory Authority. The repeal is proposed under Tex. Code
Crim. Proc. art 38.01 §4-d.
(1) begins on the date of issuance of the initial Commission
[DPS] accreditation letter; and
(2) extends until withdrawn by the recognized accrediting
body or by the Commission [director] under §651.11 [§28.164] of this
title (relating to Automatic Withdrawal of Commission [DPS] Accreditation).
(b) Provisional term.
(2) If a currently accredited laboratory is in the process
of renewing or replacing its accreditation from a recognized accrediting body, prior to the end of its term, and applies for provisional
Commission [DPS] accreditation, the term of that provisional accreditation may not exceed six (6) months.
(c) Limited term. A laboratory, including an out of state, federal, or private laboratory, may request Commission [DPS] accreditation for a term less than the term normally available under this subchapter.
§651.11. Automatic Withdrawal of Commission [DPS] Accreditation.
The Commission [director] shall automatically withdraw:
(1) the full Commission [DPS] accreditation for a laboratory, discipline, or subdiscipline at the date and time that the recognized
accrediting body withdraws its relevant laboratory, discipline, or subdiscipline accreditation; or
(2) the provisional Commission [DPS] accreditation for a
laboratory, discipline, or subdiscipline at the date and time that the recognized accrediting body notifies the Commission [director] that the
laboratory has withdrawn its application for the relevant laboratory,
discipline, or subdiscipline accreditation.
to adopt.
2015.
TRD-201504378
Leigh Tomlin
Associate General Counsel
Texas Forensic Science Commission
♦
§651.12. Consent to Cooperate with the Texas Forensic Science
Commission.
to adopt.
October 30, 2015
2015.
TRD-201504393
Leigh Tomlin
♦
♦
♦
SUBCHAPTER B. COMPLAINTS, SPECIAL
REVIEW, AND ADMINISTRATIVE ACTION
37 TAC §§651.101 - 651.105
Statutory Authority. The amendments are proposed under Tex.
Code Crim. Proc. art 38.01 §4-d.
Cross reference to statute.
§§651.101 - 651.105.
The proposal affects 37 TAC
§651.101. Complaint Process.
(a) Question or complaint. If the Commission [director] learns
of a fact, circumstance, or complaint that raises a question about the integrity or trustworthiness of a laboratory, or a procedure, examination,
or test conducted by the laboratory since the date of application for
Commission [DPS] accreditation, the Commission [director] may take
any of the following actions:
(1) communicate further with the source of the complaint
to assess the appropriateness of further action;
(2) refer the matter to the laboratory's director for evaluation, audit, correction, or other appropriate action;
(3) initiate an audit under §651.102 [§28.162] of this title
(relating to Unscheduled Audit);
(4)
issue a letter to the laboratory:
(A)
of the matter;
demanding an immediate response and explanation
(B) demanding that the laboratory permit or arrange for
an immediate inspection or audit of the matter; or
(C) explaining the action to be taken by the
Commission [director] in the matter;
(5) notify or refer the matter to a law enforcement agency
or prosecutor and recommend appropriate criminal action;
♦
37 TAC §651.12
40 TexReg 7614
The proposal affects 37 TAC
(1) A laboratory or its discipline or subdiscipline that applies for accreditation from a recognized accrediting body may apply
to the Commission [director] for [a] provisional [DPS] accreditation in
accordance with §651.9 [§28.139] of this title (relating to Provisional
Commission [DPS] Accreditation) for a term not to exceed one year
from the date the Commission [director] issues the accreditation unless formally extended for good cause by the Commission [director].
♦
Cross reference to statute.
§651.12.
Texas Register
(6) refer the matter to a district judge and recommend appropriate action to convene a court of inquiry under Code of Criminal
Procedure, Chapter 52; and
[(7) refer the matter to the Texas Forensic Science Commission; and]
(7) [(8)] any other actions deemed appropriate by the
Commission [director].
(b) Source and scope. A question or complaint may be raised
by any source, including an individual, entity, or audit. The scope of
any action taken or proposed by the Commission [director] under this
section shall be determined by the Commission [director], based on the
nature of the question or complaint.
(c) Records. The Commission [director] may maintain a public record of a laboratory's accreditation or approval status.
(1) The Commission [director] may maintain on the public
record a notation of an action taken under this subchapter, including a
question, complaint, or audit.
(2) A question, complaint, or audit is public information
when in the possession of the Commission [director].
§651.102.
Unscheduled Audit.
(a) If the Commission [director] determines that there is reasonable cause to believe that a laboratory has failed to maintain quality
assurance standards as provided under the laboratory's specific policy
required by its recognized accrediting body or the FBI DNA Quality
Assurance Audit Document, or has violated any rule in this chapter,
the Commission [director] may take appropriate action, including one
or more of the following:
(1) direct the laboratory to conduct an internal audit and
implement appropriate corrective action;
(2) order the laboratory to obtain, at its own expense,
a special external audit by an auditor approved by the laboratory's recognized accrediting body and provide that report to the
Commission [director] within a reasonable time frame determined by
the Commission [director] not to exceed 60 days from the date of the
order;
(3) notify the laboratory that further testing is not approved
by the Commission [DPS];
(4) initiate an evaluation of continued accreditation under
Subchapter A [I] of this chapter (relating to Accreditation); or
[(5) provide appropriate compliance information to the
Texas Forensic Science Commission and/or any entity that may be
responsible for oversight of the laboratory; or]
(b) A proposed corrective action plan under this section must
fully address each non-compliance finding and identify corrective action that meets or exceeds the standards:
(1) required by the laboratory's recognized accrediting
body; and
(2) approved by the Commission [director].
(c) The Commission [director] shall promptly review a proposed corrective action plan and take the following action:
(1) approve the corrective plan if it meets the requirements
of this section; or
(2) decline to approve the corrective plan and identify necessary revisions to the plan.
(d) The Commission [director] shall notify the laboratory of
approval or disapproval of the audit response. If disapproved, the
Commission [director] shall notify the laboratory of required corrective action, and the laboratory shall implement the corrective action
in a timely manner specified in the notification, except as provided by
subsection (e) of this section.
(e) A laboratory shall implement and complete an approved
corrective action plan described in subsection (d) of this section,
unless the laboratory demonstrates good cause for extension to the
Commission [director] before the due date for completion.
§651.104. Withdrawal of Commission [DPS] Accreditation.
The Commission [director] may withdraw [DPS] accreditation for a
laboratory, discipline, or subdiscipline if the laboratory:
(1)
violates this chapter;
(2) fails to respond meaningfully within five business days
to a letter issued by the Commission [director] under this subchapter;
(3) fails to timely submit an audit required under this subchapter; or
(4) fails to allow or substantially interferes with an inspection or audit conducted under this subchapter.
§651.105. Review by the Commission [Director].
(a) Reconsideration. A laboratory that has been ordered to
take action under this subchapter may request reconsideration by the
Commission [director] in writing within 15 days of the order.
(b) An audit under this subchapter [subsection] shall comply
with minimum standards for audits or inspections as established by the
Commission [director of the department's Crime Laboratory Service].
(b) Reinstatement. An accredited laboratory that has had
Commission [DPS] accreditation withdrawn automatically under
§651.11 [§28.151] of this title (relating to Automatic Withdrawal
of Commission [DPS] Accreditation) may have its accreditation
reinstated by the Commission [director] if the laboratory shows that
it presently meets or exceeds the quality assurance standards required
by the laboratory's recognized accrediting body.
(c) The Commission [director of the department] may enter an
accredited laboratory at any reasonable time to conduct an inspection
or audit under this chapter.
to adopt.
§651.103.
(5) [(6)] any other actions deemed appropriate by the
Commission [director].
Corrective Action Plan.
(a) If a laboratory is subject to an unscheduled audit that has
resulted in a finding of non-compliance, the laboratory shall propose a
corrective action plan and submit the plan to the Commission [director]
within 30 days from the date that the laboratory receives the audit results. If the laboratory has been notified that further testing is not approved, the plan should identify the date that the laboratory intends to
reinstate approved testing.
2015.
TRD-201504380
Leigh Tomlin
PROPOSED RULES
October 30, 2015
40 TexReg 7615
CHAPTER 80. MANUFACTURED HOUSING
SUBCHAPTER A. CODES, STANDARDS,
TERMS, FEES AND ADMINISTRATION
10 TAC §80.3
The Texas Department of Housing and Community Affairs withdraws proposed amendments to §80.3 which appeared in the
May 1, 2015, issue of the Texas Register (40 TexReg 2365).
2015.
TRD-201504384
Joe A. Garcia
Executive Director, Manufactured Housing Division
Effective date: October 16, 2015
♦
SUBCHAPTER E.
2015.
10 TAC §80.73
TRD-201504382
Joe A. Garcia
♦
♦
♦
ENFORCEMENT
2015.
♦
SUBCHAPTER C. LICENSEES' RESPONSIBILITIES AND REQUIREMENTS
10 TAC §§80.30, 80.32, 80.36
withdraws proposed amendments to §§80.30, 80.32, and 80.36
which appeared in the May 1, 2015, issue of the Texas Register
(40 TexReg 2365).
TRD-201504387
Joe A. Garcia
♦
♦
♦
SUBCHAPTER G. STATEMENTS OF
OWNERSHIP AND LOCATION
10 TAC §80.90
2015.
TRD-201504383
Joe A. Garcia
♦
SUBCHAPTER D.
10 TAC §80.41
♦
♦
LICENSING
♦
2015.
TRD-201504389
Joe A. Garcia
WITHDRAWN RULES
October 30, 2015
40 TexReg 7617
♦
♦
♦
♦
TITLE 43. TRANSPORTATION
MOTOR VEHICLES
DISTRIBUTION
SUBCHAPTER D. FRANCHISED DEALERS,
MANUFACTURERS, DISTRIBUTORS, AND
CONVERTERS
43 TAC §215.102
The Texas Department of Motor Vehicles withdraws proposed
amendments to §215.102 which appeared in the June 19, 2015,
issue of the Texas Register (40 TexReg 3754).
2015.
TRD-201504355
David D. Duncan
General Counsel
Texas Department of Motor Vehicles
40 TexReg 7618
October 30, 2015
Texas Register
♦
♦
SUBCHAPTER E. GENERAL DISTINGUISHING NUMBERS
43 TAC §215.133
The Texas Department of Motor Vehicles withdraws the proposed repeal of §215.133 which appeared in the June 19, 2015,
2015.
TRD-201504356
David D. Duncan
General Counsel
Texas Department of Motor Vehicles
♦
♦
♦
TITLE 1. ADMINISTRATION
Section 20.66 affects Title 15 of the Election Code.
PART 2. TEXAS ETHICS COMMISSION
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
CHAPTER 20. REPORTING POLITICAL
CONTRIBUTIONS AND EXPENDITURES
SUBCHAPTER B. GENERAL REPORTING
RULES
Filed with the Office of the Secretary of State on October 7, 2015.
1 TAC §20.66
(Editor's Note: The Texas Ethics Commission filed the following notice
of adoption for publication in the October 23, 2015, issue of the Texas
Register. Due to a Texas Register staff error, the notice was omitted
from the October 23 issue. The delayed date of publication does not
change the effective date of the adopted rule.)
TRD-201504197
Natalia Luna Ashley
Executive Director
Texas Ethics Commission
Proposal publication date: August 28, 2015
♦
♦
♦
The Texas Ethics Commission (the commission) adopts new
Texas Ethics Commission Rule §20.66, relating to the term
"discount" for purposes of Title 15 of the Election Code. The
new rule is adopted without changes to the proposed text as
published in the August 28, 2015, issue of the Texas Register
(40 TexReg 5390). The rule will not be republished.
PART 12. COMMISSION ON STATE
EMERGENCY COMMUNICATIONS
Under Title 15 of the Election Code, a contribution is defined as
"a direct or indirect transfer of money, goods, services, or any
other thing of value and includes an agreement or other obligation incurred, whether legally enforceable or not, to make a
transfer." Section 251.001(2), Election Code. Texas Ethics Commission Rule §20.1(8) clarifies that an in-kind contribution is "a
contribution of goods, services, or any other thing of value, except money, and includes an agreement made or other obligation
incurred, whether legally enforceable or not, to make such a contribution." Additionally, Texas Ethics Commission Rule §20.1(3)
clarifies that a contribution "does not include a transfer for consideration of any thing of value pursuant to a contract that reflects
the usual and normal business practice of the vendor." The new
rule defines the term discount and clarifies when a discount constitutes a political contribution.
adopts amended §252.8, relating to the establishment and governance of CSEC's Emergency Communications Advisory Committee. The proposed amended section is being adopted without
changes to the proposed text as published in the June 5, 2015,
The public benefit will be clarity in the commission's rules regarding the meaning of discount under the campaign finance laws
and the circumstances in which a discount is or is not a political contribution. There will not be an effect on small businesses.
There is no anticipated economic cost to persons who are required to comply with the adopted rule.
No written comments were received on the adopted rule.
Section 20.66 is adopted under Texas Government Code
§571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.
The laws administered and enforced by the commission include
Title 15 of the Election Code.
CHAPTER 252. ADMINISTRATION
1 TAC §252.8
The amendment to §252.8 changes the date that the ECAC is
abolished, unless renewed, to September 1, 2020. CSEC has
determined that the purposes for which the statutory advisory
committee was established remain, and will likely continue to
remain through the end of fiscal year 2020.
No comments were received by CSEC on the proposed adopted
section.
The amended section is adopted under Health and Safety
Code §771.051(a)(1), (2), (4), (7), (8), (9), (10), §771.0511, and
§771.052; Government Code Chapter 2110.
No other statutes, articles or codes are affected by the adoption.
2015.
TRD-201504358
ADOPTED RULES October 30, 2015 40 TexReg 7619
Patrick Tyler
General Counsel
Effective date: November 4, 2015
Proposal publication date: June 5, 2015
♦
♦
♦
TITLE 7. BANKING AND SECURITIES
PART 1.
TEXAS
FINANCE COMMISSION OF
CHAPTER 3. STATE BANK REGULATION
SUBCHAPTER B. GENERAL
7 TAC §3.36, §3.37
The Finance Commission of Texas (commission), on behalf
of the Texas Department of Banking (the department), adopts
amendments to §3.36, concerning annual assessments and
specialty examination fees, and §3.37, concerning the calculation of annual assessment for banks. The amendments are
adopted without changes to the proposed text as published in
the September 4, 2015, issue of the Texas Register (40 TexReg
5599) and will not be republished.
Amendments to §3.36 revise the section to conform to changes
in §3.37 concerning the manner in which assessments applicable to state banks are calculated. Amendments to §3.37 increase the amount of each bank's annual assessment to offset
increased operational costs of the department, beginning with
the quarterly installment due in March 2016. In addition, assessment rates are to be adjusted for inflation beginning in September 2017.
The assessment system for state banks, set forth in §3.36 and
§3.37, determines how much each state bank must pay for supervision by the department. This system has advantages for
both the department and state banks, in that it allows banks to
calculate and accrue for the amounts due to the department in
support of its supervisory functions; provides an equitable structure by which banks pay for the costs of supervision; allows
the department to more accurately predict and manage its cash
flows; allows the department to more adequately provide for and
schedule necessary staff training; and avoids the inordinate accumulation of excess funds.
Section 3.36 provides that each bank's assessment is calculated
annually effective September 1 of each year and is paid to the
department by electronic payment/ACH transfer in quarterly installments to be debited effective September 15, December 15,
March 15, and June 15 of each year, or by other means if directed by the department. Section 3.37 provides a table that
specifies calculations and rates for assessment fees and sets
out the steps for calculating a bank's annual assessment as described in §3.36. As reflected in the table, a state bank's assessment is calculated on the basis of its assessable assets using
two factors: the base assessment amount and the marginal assessment rate applicable to the bank's assessable asset group.
In addition, the department levies a surcharge on a bank that
requires increased supervisory resources, currently reflected by
the bank's assigned examination frequency.
40 TexReg 7620 October 30, 2015
Texas Register
The adopted increase in bank assessments will support bank
supervision functions and will not subsidize other regulatory responsibilities of the department. The increased revenue will permit the department to uphold the professional standards that the
Texas banking industry deserves and has come to expect by
providing its examiners the tools and training needed to effectively regulate an increasingly complex banking industry for the
foreseeable future. Further, the Department possesses bilateral
authority in regulatory matters under its cooperative bank examination agreements with the Federal Deposit Insurance Corporation and with the Federal Reserve Bank of Dallas. Retaining this
stature requires the Department to maintain staff and processes
that equal or exceed federal standards. The department has a
solid history of fiscal responsibility and will continue to carefully
and prudently evaluate the amount of funds needed to fulfill the
department's statutory responsibilities.
As amended, §3.37(a) the marginal assessment rates reflect increases of 12 percent for assessable asset groups 1-9, and by
14.75 percent for assessable asset groups 10-14 (assessable
assets in excess of $10 billion). The base assessment amounts
are also increased as a result because each base assessment
amount is the sum of the assessments applicable to all lower-tier
assessable asset groups. In addition, the factor determining
whether a surcharge is to be applied will no longer be based
on a bank's assigned examination frequency, but instead will be
based on a bank's CAMELS composite rating as determined at
the bank's most recent examination. The CAMELS score is a
numerical rating assigned by supervisors to reflect their assessment of the overall financial condition of a bank and in fact is a
major determinant of examination frequency. The score ranges
from 1 (low risk) to 5 (high risk). As amended, a CAMELS composite rating of 1 or 2 will generate an assessment multiplier of
1.0, meaning there is no additional surcharge. A CAMELS composite rating of 3, 4 or 5 will generate an assessment multiplier
of 2.0, meaning a surcharge equal to the calculated assessment
is applied, and the total billable annual assessment would be
double that applicable to a similar-sized bank with a CAMELS
composite rating of 1 or 2. Finally, a bank with assessable assets of $500 million or less and a CAMELS composite rating of
1 or 2 will apply a multiplier of 0.875.
Amended §3.37(b) will automatically escalate marginal assessment rates annually based on the percentage change in an inflation index, beginning September 1, 2017. The inflation index
is the Gross Domestic Product Implicit Price Deflator (GDPIPD),
published quarterly by the Bureau of Economic Analysis, United
States Department of Commerce. Effective each September 1,
the marginal assessment rates (and the derivative base assessment amounts) set forth in §3.37(a) will be revised upward (or
downward) by an amount equal to the percentage change in the
GDPIPD index values from the first quarter value of the previous
calendar year to the first quarter value of the current calendar
year (the previous March-to-March period).
An increase in the GDPIPD will automatically increase marginal assessment rates, but it will not necessarily result in a
proportionate increase in annual assessments. As provided by
§3.36(g), the department may periodically forgive a portion of
assessments otherwise due in a year when the additional funds
are not needed to fund the department's operations, specifically
with respect to bank and trust supervision.
Section §3.36 is amended primarily to conform to and be consistent with changes in §3.37(a). However, with respect to the
fiscal year beginning September 1, 2015, new paragraph (4) of
§3.36(d) will require the last two quarterly installments of the fiscal year to be based on the new assessment rates.
The Department received no comments regarding the proposed
amendments.
The amended sections are adopted pursuant to Finance Code,
§31.003(a)(4) and §31.106, which authorize the commission to
adopt rules necessary or reasonable to recover the cost of supervision and regulation by imposing and collecting ratable and
equitable fees. As required by Finance Code, §31.003(b), the
commission considered the need to promote a stable banking
environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive
position of state banks with regard to national banks and other
depository institutions in this state consistent with the safety and
soundness of state banks and the state bank system, and allow
for economic development in this state.
2015.
CHAPTER 6.
DISTRICTS
♦
As adopted, §6.1 states the purpose of the chapter and clarifies
that establishing a banking development district does not affect
requirements applicable to reinvestment zones and tax abatement agreements pursuant to the Tax Increment Financing Act
or the Property Redevelopment and Tax Abatement Act (Government Code, Chapters 311 and 312, respectively). Section
6.2 provides definitions applicable to the chapter. Definitions in
the statute are repeated for ease of use.
Content requirements for an application are set forth in adopted
§6.3, and §6.4 sets out how an application will be processed.
Adopted §6.5 sets out the criteria for the designation of a banking
development district, consisting of the five, statutorily required
factors from Finance Code, §279.052(b), and two additional factors. The two additional factors are the physical size and cohesiveness of the proposed district, and the history of a lack of
banking services in the proposed district.
Finally, §6.6 imposes a minimal reporting requirements on the
local government applicant in order to permit the commission to
"monitor" the program as required by Finance Code, §279.051.
The only required notice would inform the commission when a financial institution opens or closes a branch in an approved banking development district.
TRD-201504365
Catherine Reyer
General Counsel
Proposal publication date: September 4, 2015
♦
(within the Office of the Governor) to adopt rules regarding the
criteria for the designation of banking development districts. (Finance Code, §279.102, imposes the same requirement on the
Texas Credit Union Commission.) The commission must initially
adopt these rules not later than January 1, 2016, see Acts 2015,
84th Legislature, R.S., Chapter 967, §2.
The Department received one comment regarding the proposed
sections, pointing out that Texas law does not require a financial
institution or a credit union to be federally insured in order to
qualify as a depository, contrary to the language proposed for the
definitions set forth in §6.2(5) and (8). The Department agrees
and has modified those definitions for adoption. In addition, a
typographical error was corrected in §6.3(b)(3) by removing a
duplicate phrase.
♦
BANKING DEVELOPMENT
7 TAC §§6.1 - 6.6
new §§6.1 - 6.6, concerning banking development districts. Section 6.1 and §§6.4 - 6.6 are adopted without changes to the proposed text as published in the September 4, 2015, issue of the
Texas Register (40 TexReg 5602). Section 6.2 and §6.3 are
adopted with nonsubstantive changes and will be republished.
Finance Code, Chapter 279, requires the commission to administer and monitor a banking development district program to encourage the establishment of branches of financial institutions in
areas where there is a demonstrated need for banking services.
Chapter 279 became effective on September 1, 2015, see Acts
2015, 84th Legislature, R.S., Chapter 967, §1. The Texas Credit
Union Commission is similarly required to administer and monitor a credit union development district program to encourage the
establishment of branches of credit unions in areas where there
is a demonstrated need for such services.
Under Finance Code, Chapter 279, a local government may apply for the designation of a banking or credit union development
district if a financial institution or credit union is participating and
intends to apply to open a branch in a proposed development
district at the time the local government submits the application.
Finance Code, §279.052, requires the commission, in consultation with the Texas Economic Development and Tourism Office
The new rules are adopted pursuant to Finance Code,
§279.052(a), which requires the commission to adopt rules to
implement Subchapters B and D of Chapter 279 with respect
to financial institutions in banking development districts. As
required by Finance Code, §279.052(b), the commission consulted with the Texas Economic Development and Tourism
Office regarding the criteria for the designation of banking
development districts.
§6.2.
Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise:
(1) "Alternative providers" means check cashers, licensed
money transmitters, licensed lenders, and licensed residential mortgage
lenders.
(2) "Banking services" include deposit taking, check-cashing, and origination of residential mortgages, commercial mortgages,
or other secured or unsecured consumer or commercial loans.
(3) "Branch" means a full-service main office or branch office of a financial institution or credit union.
(4)
"Commission" means the Finance Commission of
(5)
"Credit union" means a state or federal credit union.
Texas.
(6) "Department" means the Texas Department of Banking.
(7) "District" means a banking development district under
this chapter.
(8) "Financial institution" means a state or national bank,
a state or federal savings bank, or a state or federal savings and loan
association.
(9) "Local government" means a municipality or county.
§6.3. Application Requirements.
(a) Basic application. A local government, in conjunction with
a financial institution, may submit an application to the commission
for the designation of a proposed banking development district, as provided by §6.4 of this title (relating to Submission and Processing of
Application). The application must include the following information
to the extent available:
(1) identification of the local government applicant and evidence of the approval of the application by its governing body;
(2) identification of the participating financial institution
by type and name, and identification of its primary state and/or federal regulator;
(3) a description of the geographic area comprising the proposed district, including a map that identifies the borders of the proposed district;
(4) a compilation and explanation of the population demographics included within the proposed district, including the number
of residents and the percentage of the population that can be described
as comprised of, for example, elderly (age 64 and over), disabled,
non-English speaking, and identifiable racial, ethnic or other minorities;
(2) indications of community support or opposition for the
application, as evidenced by letters from entities such as local chambers
of commerce, local businesses, community-based organizations, nonprofit organizations, government officials, or community residents; and
(3) such other information that the applicant believes will
demonstrate that the proposed district meets the standards set forth in
§6.5 of this title (relating to Criteria for Approval).
2015.
TRD-201504362
Catherine Reyer
General Counsel
♦
♦
♦
BANKING
CHAPTER 33.
BUSINESSES
MONEY SERVICES
7 TAC §33.4
(5) a compilation and explanation of economic indicators
pertinent to the proposed district, to the extent available, including per
capita annual income, median household annual income, unemployment data, percentage of the population at or below the poverty level,
and percentage of the population receiving public assistance within the
proposed district;
new §33.4, concerning payment processors. The section is
adopted without changes to the proposed text as published in
5605). The rule will not be republished.
(6) a description of the type and nature of commercial businesses located in the proposed district, including the number and percentage of which constitute small business, as that term is defined by
Government Code §2006.001(2);
The new rule excludes from money services business (MSB)
licensure two types of payment processors that might otherwise be required to obtain money transmission licenses under
Finance Code Chapter 151. The new rule clarifies regulatory
requirements and allows the department to more efficiently
enforce the Texas Money Services Act (Act).
(7) a compilation and summary of significant business developments within the past three years, including corporate restructurings, plant closings, other business closings, and recent or proposed
business openings or expansions;
(8) the location, number, and proximity of sites where
banking services are available in or near the proposed district, including branches of financial institutions and credit unions, and
deposit-taking ATMs other than those located at branches;
(9) a compilation and description of alternate providers in
the proposed district;
(10) a description of the anticipated impact that additional
banking services would have on potential economic development
within the proposed district.
(b) Optional information. An application for designation of a
banking development district may also include:
(1) a description of other local government and community
initiatives proposed to be undertaken and coordinated with establishment of the proposed district;
Texas Register
Finance Code §151.003(10) authorizes the commission to
adopt rules that exclude from licensing any person, transaction,
or class of persons or transactions on a finding that licensing the
person or transaction is not necessary to achieve the purposes
of the Act. The purposes of the Act, as expressed in Finance
Code §151.102, are to preserve and protect the safety and
soundness of MSBs, to protect the interests of purchasers
of money services, and to protect against money laundering
and similar financial crimes. The department has found that
regulation of the payment processors described in the new rule
is not necessary to achieve these aims.
New §33.4 expands and clarifies two exclusions that already exist under Texas law. First, Finance Code §151.003(7) excludes a
person acting as an intermediary on behalf of a license holder to
assist in transmitting funds after they are received by the license
holder. The rationale behind this exclusion is that because regulation of the license holder is designed to achieve the goals of
the Act with respect to the entire transaction, additional regulation of any intermediaries is unnecessary. New §33.4(c) extends this reasoning to payment processors acting on behalf of
a non-license-holder that has been excluded or exempted from
licensing. The rationale behind this provision is that the reasons
a person selling money services does not need a license - for
example, because the person is a bank and is therefore already
heavily regulated - extend to any intermediaries acting on that
person's behalf.
Second, as expressed in the department's Legal Opinion 14-01,
a payment processor who is appointed in a written contract as a
merchant's agent to receive payments is not conducting money
transmission. That is because under the common law doctrine
of agency, payment to the merchant is complete upon receipt
of funds by the agent. New §33.4(d) expands the application of
Legal Opinion 14-01 to some situations where there is no explicit agency appointment in a contract. Provided that the requirements of new §33.4(d) are met, under Texas common law
the processor is an agent of the merchant even absent an express contractual appointment. Consequently, under those circumstances neither the payment processor nor the merchant is
conducting money transmission. Essentially then, new §33.4(d)
merely codifies existing Texas law.
The Department received no comments regarding the proposed
section.
The new rule is adopted pursuant to Finance Code §151.102
which authorizes the commission to adopt rules to administer and enforce Chapter 151, and pursuant to Finance Code
§151.003(10) which authorizes the commission to adopt rules
that exclude from licensing a person, transaction, or a class of
persons or transactions.
Finance Code §151.003 and §151.302 are affected by the new
section.
2015.
TRD-201504370
Catherine Reyer
General Counsel
♦
♦
7 TAC §80.203(b)(2) contains the advertising requirements of
residential mortgage loans offered by or through a mortgage
company or originator. As amended, §80.203(b)(2) will more
closely resemble the advertising requirements of residential
mortgage loans offered by or through mortgage bankers or
originators contained in 7 TAC §81.203(b)(2).
7 TAC §80.204(b) lists the mortgage applications books and
records that must be maintained by each company or originator.
As amended §80.204(b) will incorporate the integrated disclosure requirements of TILA/RESPA effective October 3, 2015.
The Department did not receive any comments regarding the
proposed amendments.
The amendments are adopted pursuant to Finance Code
§11.306, which authorizes the Finance Commission to adopt
residential mortgage loan origination rules as provided by Chapter 156 and under §156.102, which provides that the Finance
Commission may adopt rules to ensure compliance with Chapter 156, to carry out the intentions of the federal Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 and to adopt
rules regarding the books and records required to be kept.
2015.
SAVINGS AND MORTGAGE LENDING
7 TAC §§80.201, 80.203, 80.204
7 TAC §80.201(a) formerly required that whenever a conditional
qualification was provided to a mortgage applicant, written confirmation of conditional qualification was required to include the
information in Form A, Figure: 7 TAC §80.201(a). As amended,
§80.201(a) will clarify that whenever a conditional qualification
is provided to prospective mortgage applicants as well as to
mortgage applicants, written confirmation of conditional qualification shall include the information in Form A, Figure: 7 TAC
§80.201(a).
♦
CHAPTER 80. TEXAS RESIDENTIAL
MORTGAGE LOAN COMPANIES
SUBCHAPTER C. DUTIES AND
RESPONSIBILITIES
of the Department of Savings and Mortgage Lending (the department), adopts amendments to §80.201 concerning loan status
forms, §80.203 concerning advertising, and §80.204 concerning
books and records, without changes to the proposed text as published in the September 4, 2015, issue of the Texas Register (40
TexReg 5606).
TRD-201504376
Ernest C. Garcia
General Counsel
Texas Department of Savings and Mortgage Lending
♦
♦
♦
CHAPTER 81. MORTGAGE BANKERS
AND RESIDENTIAL MORTGAGE LOAN
ORIGINATORS
SUBCHAPTER C. DUTIES AND
RESPONSIBILITIES
7 TAC §§81.200, 81.201, 81.204
of the Department of Savings and Mortgage Lending (the department), adopts amendments to §81.200, concerning required disclosures, §81.201, concerning loan status forms, and §81.204,
concerning books and records, without changes to the proposed
text as published in the September 4, 2015, issue of the Texas
Register (40 TexReg 5607).
7 TAC §81.200(a) requires an originator to provide a Texas Mortgage Banker Disclosure Notice to a residential mortgage loan
applicant and the form notice formerly referred to §157.007 of the
Mortgage Banker Registration and Residential Mortgage Loan
Originator License Act, Chapter 157, Texas Finance Code. Section 157.007 was previously renumbered as §157.0021, therefore the Texas Mortgage Banker Disclosure Notice as amended
will now refer to §157.0021.
7 TAC §81.201 formerly required that whenever a conditional
qualification was provided to a mortgage applicant, written confirmation of conditional qualification was to include the information
in Form A, Figure: 7 TAC §81.201(a). As amended, §81.201(a)
will clarify that whenever a conditional qualification is provided
to prospective mortgage applicants as well as to mortgage applicants, written confirmation of conditional qualification shall include the information in Form A, Figure: 7 TAC §81.201(a).
7 TAC §81.204(b) lists the mortgage applications books and
records that must be maintained by each originator. As
amended §81.204(b) will incorporate the integrated disclosure
requirements of TILA/RESPA effective October 3, 2015.
The Department did not receive any comments regarding the
proposed amendments.
The amendments are adopted pursuant to Texas Finance Code
§157.0023, which provides that the Finance Commission may
adopt rules necessary to implement or fulfill the purpose of Chapter 157, as well as rules and forms for use by mortgage bankers,
and to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.
2015.
TRD-201504377
Ernest C. Garcia
General Counsel
Texas Department of Savings and Mortgage Lending
♦
♦
♦
PART 5. OFFICE OF CONSUMER
CREDIT COMMISSIONER
INSTALLMENT SALES
The Finance Commission of Texas (commission) adopts amendments to 7 TAC Chapter 84, concerning Motor Vehicle Install-
Texas Register
ment Sales. The commission adopts the majority of the amendments to Chapter 84 (specifically, §§84.102, 84.801, 84.805, and
84.807) without changes to the proposed text as published in
5608).
The commission adopts the amendments to §§84.802, 84.808,
and 84.809 with changes to the proposed text as published in
5608). These changes are being made in order to incorporate
suggested comments, as discussed in the following paragraph.
The commission received three written comments on the proposal related to Chapter 84 from the following organizations:
the American Financial Services Association, the Texas Automobile Dealers Association, and the Texas Independent Automobile Dealers Association. The first commenter offered a suggested model clause regarding collection contacts. The latter
two commenters generally supported the amendments but requested clarification regarding the disclosure of the inspection
fee as contained in §84.808 and §84.809. The commission's
response to the three official comments is included after the purpose discussion regarding §84.808.
In general, the purpose of the amendments governing plain
language contract provisions is to implement changes resulting
from the commission's review of Chapter 90 under Texas Government Code, §2001.039, along with corresponding revisions
to §86.101 and the plain language rules in Chapter 84, concerning Motor Vehicle Installment Sales. The adopted amendments
revise plain language non-standard contract submission procedures relating to readability levels, typefaces, and font sizes.
Additionally, the amendments provide updated references to
state and federal law and make technical corrections.
In Chapter 84, amendments have been made to §84.102, concerning Definitions, and to the following sections in Subchapter
H, concerning Retail Installment Sales Contract Provisions:
§§84.801, 84.802, 84.805, 84.807, 84.808, and 84.809. In
Chapter 86, amendments are contained in §86.101, concerning
Consumer Notifications.
The majority of the adopted amendments center on changes
made throughout several sections of rule text, as well as multiple figures, in order to provide consistency throughout the plain
language rules. In the following paragraphs, most of the amendments will be outlined on an issue-by-issue basis. First, a basic
statement of the rule issue will be provided. Second, the purpose and background of the changes will be described. And
third, a list of the relevant provisions containing amendments
related to that rule issue will be provided. Additionally, certain
amendments isolated to one or a small number of rules will be
discussed on a section-by-section basis, as appropriate.
In §84.102, the agency's acronym "OCCC," which stands for
Office of Consumer Credit Commissioner, has been adopted
as a new defined term in §84.102(12) to allow appropriate use
throughout the chapter. The remaining definitions have been
renumbered accordingly.
Section 84.801 is the purpose section that outlines the purpose
of the plain language contract provisions in Subchapter H, which
are applicable to motor vehicle retail installment sales contracts.
The term "commissioner" is being replaced with "OCCC." The
agency believes that the use of "OCCC" will provide better clarity
to the rules when the context calls for action by the agency, as
opposed to the commissioner specifically.
The agency's non-standard contract submission procedure has
been revised in order to provide more efficiency and clarity. In
§84.802(b), the certification of readability includes amendments
adding a list of the typefaces and font sizes used in the contract, as well as the Flesch-Kincaid Grade Level score of the
contract. Since the proposal, technical corrections have been
made to §84.802(b).
The filing requirements in §84.802(c) contain amendments
requiring submission in both Microsoft Word and PDF format.
Paper filings or other formats will not be accepted under the
new submission procedure.
New provisions contained in
§84.802(c)(4) set the maximum Flesch-Kincaid Grade Level
score for Chapter 348 retail installment contracts, which is
grade 11. This grade level requirement will help ensure that
agreements are readable and accessible to consumers. The
agency's experience indicates that contracts can be drafted to
comply with the rule's requirements.
Section 86.101 outlines the consumer notifications that must
be provided on all Chapter 345, 347, and 348 contracts. In
accordance with instructions from the Texas Department of
Information Resources, the OCCC has updated its website and
e-mail address with the "texas.gov" extension: occc.texas.gov
and [email protected]. In order to provide
consumers with the best contact information for the agency,
this adoption amends several provisions and figures with the
OCCC's updated contact information.
Other revisions have been made to the text of the consumer notice to provide more clarity to consumers regarding the role of the
OCCC in resolving complaints. Previously, this notice has been
referenced in the rules as the "Complaints and inquiries notice"
or the "Consumer credit commissioner notice." To continue the
use of the agency's acronym and provide consistency throughout
the rules, this consumer notice has been relabeled as the "OCCC
Notice." Adopted amendments to §86.101(a) also require creditors and lenders to include a statement that consumers can contact the phone number for questions or complaints, and allow
creditors to include one or more of the following: mailing address, fax number, website, or e-mail.
Changes to update references to the notice with the new
label ("OCCC Notice") are contained in the following provisions: §§84.805(a), 84.807(19), and 84.808(19). Adopted
revisions to update the text of the OCCC Notice are contained in
§84.808(19). Additionally, figure §84.809(b) contains the OCCC
Notice as revised for this adoption.
The rules often cite other state and federal law, federal regulations, as well as refer to other sections within Title 7 of the Texas
Administrative Code. Since the last review of the plain language
rules, state laws have been added or revised, certain federal
regulations have been relocated, and the Consumer Financial
Protection Bureau (CFPB) has been created and assumed the
duties of other federal agencies. The amendments include revisions to update existing citations, provide more accurate or specific citations, remove obsolete citations, or provide new or revised language in accordance with other law.
Revisions to update legal citations and references are included
in the following provisions: §84.808(8)(E), (9)(C) - (D) (deleted),
(37), (40)(B), (41) - (43), and §84.809(c). Certain provisions
have been renumbered or relettered accordingly.
Amendments are contained in §84.808(8) and the accompanying figures relating to inspection fees on a motor vehicle retail
installment sales contract. Under a recent amendment to Texas
Transportation Code, §548.509, the Texas Department of Motor Vehicles (TxDMV) or a county assessor-collector will collect
the portion of the inspection fee paid to the state. This amendment is implemented by TxDMV's "Two Steps, One Sticker" program. Under this program, the proof of registration and proof of
inspection have been combined into one sticker, effective March
1, 2015. In figures 7 TAC §84.808(8)(A) and §84.808(8)(B), an
optional disclosure has been updated to remove a reference to
the seller keeping $7 of the inspection fee, because this amount
does not apply to all counties. In these same figures, the word
"and/or" has been replaced with "and" in the section on government license and registration fees. New subparagraph (E) in
§84.808(8) specifies how creditors should disclose the inspection fee in the itemization of amount financed. This provision explains that the creditor may use either of two methods. First, under clause (i), the creditor may include the entire inspection fee in
the "Government vehicle inspection fees" section, with the separate amounts paid to the state and the inspection station documented immediately below this section. Second, under clause
(ii), the creditor may include the portion remitted to the state in
the "Government license and registration fees" section, and the
portion remitted to the inspection station in the "Government vehicle inspection fees" section.
Two commenters requested that the accompanying figures include graphics showing how to separately disclose the portion
of the inspection fee paid to the state and the portion paid to the
inspection station. In response to these comments, the separate
disclosures of these amounts have been added to figures 7 TAC
§84.808(8)(A) and §84.808(8)(B), and conforming changes are
contained in the model contract at figure 7 TAC §84.809(b).
One of these commenters expressed concern that "if a licensee/creditor includes an inspection fee, or a portion of the
inspection fee, in the 'Government license and registration fees'
itemized charge line on the retail installment contract, even
if it is the portion remitted to the state, and then itemizes the
portion of the inspection fee that is maintained or remitted to the
inspection station in the 'Government vehicle inspection fees
section,' that the inclusion of any inspection fee in a license and
registration fee line will be misinforming the consumer and may
be, at best, confusing to both the buyer and to the seller."
The commission disagrees with this comment. The state
collects its portion of the inspection fee at registration and in
connection with registration, so it is not misleading to include
this portion in the "registration fees" line. This portion of the
fee is disclosed on the title application receipt, together with
other fees collected at registration. The agency also understands that TxDMV has recognized the approach described in
§84.808(8)(E)(ii) as a valid method of disclosing the inspection
fee. In addition, both §84.808(8) of the rule text and the official
commentary to Regulation Z, 12 C.F.R. part 226, supp. I, para.
18(c)2., part 1026, supp. I, para. 18(c)2., provide that creditors
have "considerable flexibility" in disclosing amounts on the
itemization of amount financed. Disclosing the state's portion
of the fee in the "registration fees" line is consistent with this
flexibility. Of course, creditors must ensure that all disclosed
amounts are accurate and that the retail buyer is not charged
twice for the same fee.
Additional amendments are included throughout §84.808 to provide technical corrections for motor vehicle retail installment contracts. Amendments are contained in figure 7 TAC §84.808(7),
the Truth in Lending Act disclosure for motor vehicle retail installment sales contracts, to update references to earnings methods.
Outdated provisions regarding documentary fees charged before August 1, 2010, have been deleted from §84.808(9)(C) - (E).
Clarifying language has been added to §84.808(10) regarding
how to disclose a downpayment. Since the proposed version, a
change has been made to §84.808(10) to specify that the dollar amount of the downpayment must be included in the total of
payments if the deferred downpayment amount is disclosed in
the payment schedule. A statement providing a maximum insurance deductible for required property insurance has been added
to figure 7 TAC §84.808(11). Conforming changes regarding insurance have been made to the model clause at §84.808(25).
Clarifying changes have been made to §84.808(16)(A) to specify that the finance charge for the add-on method is calculated on
an annual basis and is not the same as the annual percentage
rate. Clarifying changes have been made to §84.808(16)(B) - (C)
to specify that the contract rate disclosure should be provided in
transactions where sales tax is deferred. A clarifying change has
been made to §84.808(23) to specify that the clause on interest
on the matured amount applies to contracts using the scheduled
installment earnings method or the sum of the periodic balances
method. A clarifying change has been made to §84.808(34)(E)
to specify that the 10-day period to provide the notice of disposition applies when the creditor sells the vehicle at a public or
private sale, in accordance with Texas Business and Commerce
Code, §§9.610 - 9.612. Conforming changes are contained in
the model contract at figure 7 TAC §84.809(b).
One commenter requested that the model contract for motor vehicle retail installment contracts include a statement about servicing and collection contacts. The Telephone Consumer Protection Act, 47 U.S.C. §227(b)(1)(A) - (B), generally prohibits creditors and other persons from calling a residential telephone line
using an automatic telephone dialing system or an artificial or
prerecorded message without the prior express consent of the
called party. Based on this requirement, the commenter suggested adding the following model clause: "Servicing and Collection Contacts: I agree that you may try to contact me in writing, by e-mail, or using prerecorded/artificial voice messages,
text messages, and automatic telephone dialing systems, as the
law allows. I also agree that you may try to contact me in these
and other ways at any address or telephone number I provide
you, even if the telephone number is a cell phone number or the
contact results in a charge to me."
In response to this comment, new §84.808(37) includes the following model clause for servicing and collection contact: "You
may try to contact me at any mailing address, e-mail address, or
phone number I give you, as the law allows. You may try to contact me in writing (including mail, e-mail, and text messages) and
by phone (including prerecorded or artificial voice messages and
automatic telephone dialing systems)." A conforming change is
contained in the model contract at figure 7 TAC §84.809(b). The
commission disagrees with the commenter's suggestion to include the phrase "even if the telephone number is a cell phone
number or the contact results in a charge to me." The Texas Debt
Collection Act, Texas Finance Code, §392.302(d), prohibits debt
collectors from "causing a person to incur a long distance telephone toll, telegram fee, or other charge by a medium of communication without first disclosing the name of the person making
the communication." In addition, the Consumer Financial Protection Act, 15 U.S.C. §5531(a), and the Fair Debt Collection
Practices Act, 15 U.S.C. §1692f, prohibit creditors and debt collectors from engaging in unfair practices to collect debts. Unfair
practices may include "[c]ausing charges to be made to any person for communications by concealment of the true purpose of
Texas Register
the communication. Such charges include, but are not limited to,
collect telephone calls and telegram fees." 15 U.S.C. §1692f(5).
If the model clause included the commenter's suggested phrase,
this could be read as a waiver of the prohibition on unfair practices. For this reason, the model clause does not include the
phrase "even if the telephone number is a cell phone number or
the contact results in a charge to me." The rule does not prohibit
creditors from contacting consumers' cell phones, but creditors
must ensure that they do not engage in unfair, abusive, or illegal
practices.
New §84.808(38) specifies that the creditor may charge a returned check fee up to $30, as authorized under Texas Business
and Commerce Code, §3.506. New §84.808(41)(B) contains a
model clause for commercial vehicle retail installment contracts,
specifying that Texas Finance Code, Chapter 353 applies to the
transaction. Additional technical changes and updates to citations are included throughout §84.808. Conforming changes are
contained in the model contract at figure 7 TAC §84.809(b).
The remaining amendments adopted throughout the rules relate
to improvements in consistency, clarity, grammar, punctuation,
and formatting. Any rules not included in this adoption will be
maintained in their current form.
All new non-standard contracts submitted on or after the
amendments' effective date will have to be submitted under the
amended submission requirements, and will have to contain
clauses that comply with the amended rules (including the
updated OCCC notification). However, the agency will allow
a delayed implementation period for certain licensees. For
those licensees utilizing the model contracts, the prior model
language is acceptable and the agency will permit licensees to
use the prior model language (without a non-standard contract
submission) until December 31, 2016, to deplete supplies of
existing forms during a 13-month transition period after the
anticipated effective date of the rules. If licensees submitted
compliant non-standard contracts under the prior rules, the
agency will permit them to continue using these contracts until
December 31, 2016. If licensees intend to continue using
non-standard contracts, they must ensure that they submit an
updated non-standard contract in compliance with the amended
requirements by December 31, 2016. The agency encourages
licensees to submit the updated contracts earlier. Starting January 1, 2017, licensees may no longer use contracts submitted
under the prior rules. At any time, if the agency determines that
a non-standard contract submitted under prior rules contains
a substantive violation (e.g., an excessive late charge), it may
order the licensee to resubmit the contract. If the contract is
resubmitted on or after the amendments' effective date, it will
have to comply with the amended requirements.
SUBCHAPTER A.
GENERAL PROVISIONS
7 TAC §84.102
The amendments are adopted under Texas Finance Code,
enforce Title 4 of the Texas Finance Code.
All of the plain language amendments are adopted under Texas
adopt rules governing the form of contracts for a loan under
Chapter 342, a retail installment transaction under Chapter 348,
or a home equity loan regulated by the Office of Consumer Credit
Commissioner.
The amendments regarding the OCCC notice are adopted under
Texas Finance Code, §14.104, which requires that a written contract of an authorized lender subject to the OCCC's regulation
must contain the name, mailing address, and telephone number
of the office. The OCCC believes that a modernized interpretation of §14.104 would include the agency's updated website and
email address.
The amendments concerning motor vehicle contracts are
adopted under Texas Finance Code, §348.513 which grants
the commission the authority to adopt rules to enforce the
motor vehicle installment sales chapter. Additionally, §348.513
also authorizes the commission to modify the standard form
required by §348.0091 to conform to the provisions of the Truth
in Lending Act or a regulation issued under authority of that Act.
The statutory provisions affected by the adopted amendments
are contained in Texas Finance Code, Chapter 348.
2015.
♦
§84.802. Non-Standard Contract Filing Procedures.
(a) Non-standard contracts. A non-standard contract is a contract that does not use the model contract provisions. Non-standard
contracts submitted in compliance with the provisions of Texas Finance
Code, §341.502(c) will be reviewed to determine that the contract is
written in plain language.
(b) Certification of readability. Contract filings subject to this
chapter must be accompanied by a certification signed by an officer
of the creditor or the entity submitting the form on behalf of the creditor. The certification must state that the contract is written in plain
language and that the contract can be easily understood by the average
consumer. The certification must state that the contract is printed in an
easily readable font and type size, including a list of the typefaces used
in the contract, the font sizes used in the contract, and the Flesch-Kincaid Grade Level score of the contract. The OCCC will prescribe the
form of the certification.
(c) Filing requirements. Contract filings must be identified as
to the transaction type. Contract filings must be submitted in accordance with the following requirements:
(1) Microsoft Word format. One copy must be submitted
in a Microsoft Word format with the document having either a .doc or
.docx extension. The Flesch-Kincaid Grade Level score of the contract
must be based on the Microsoft Word readability statistics function for
the Microsoft Word version of the contract.
TRD-201504397
Leslie L. Pettijohn
Commissioner
♦
are contained in Texas Finance Code, Chapter 348.
(2) PDF format. One copy must be submitted in a PDF
format so that the contract may be visually reviewed in its entirety.
(3) No other formats permitted. The OCCC will not accept
paper filings or any other unlisted formats for non-standard contract
filings.
♦
SUBCHAPTER H. RETAIL INSTALLMENT
SALES CONTRACT PROVISIONS
(4) Maximum Flesch-Kincaid score.
The maximum
Flesch-Kincaid Grade Level score for a Chapter 348 contact filing is
grade 11.
7 TAC §§84.801, 84.802, 84.805, 804.807 - 804.809
Commissioner.
email address.
The amendments concerning motor vehicle contracts are
adopted under Texas Finance Code, §348.513 which grants
the commission the authority to adopt rules to enforce the
motor vehicle installment sales chapter. Additionally, §348.513
also authorizes the commission to modify the standard form
required by §348.0091 to conform to the provisions of the Truth
in Lending Act or a regulation issued under authority of that Act.
(d) Contact person. One person must be designated as the contact person for each filing submitted. Each submission must provide the
name, address, phone number, and if available, the email address and
fax number of the contact person for that filing. If the contracts are
submitted by anyone other than the company itself, the contracts must
be accompanied by a dated letter which contains a description of the
anticipated users of the contracts and designates the legal counsel or
other designated contact person for that filing.
(e) Commercial vehicle. Pursuant to Texas Finance Code,
§341.502(a), a motor vehicle retail installment sales contract involving
a commercial vehicle does not have to be submitted in accordance
with this section.
§84.808. Model Clauses.
The following model clauses provide the plain language equivalent of
provisions found in contracts subject to Texas Finance Code, Chapter
348.
(1) Identification of parties. This information identifies the
parties to the contract.
(A) The model identification clause lists the name and
address of the creditor, the date of the contract, and the name and address of the buyer. At the creditor's option, a creditor may include an
account number or contract number. The model clause reads:
Figure: 7 TAC §84.808(1)(A) (No change.)
(B) The Buyer is referred to as "I" or "me." The Seller
is referred to as "you" or "your."
(2) Assignment of contract. The model clause regarding
assignment of contract reads: "This contract may be transferred by the
Seller."
(3) Buyer's affirmation and promise to pay. The model
clause regarding buyer's affirmation and promise to pay reads: "The
credit price is shown below as the "Total Sales Price." The "Cash Price"
is also shown below. By signing this contract, I choose to purchase
the motor vehicle on credit according to the terms of this contract. I
agree to pay you the Amount Financed, Finance Charge, and any other
charges in this contract. I agree to make payments according to the
Payment Schedule in this contract. If more than one person signs as
a buyer, I agree to keep all the promises in this agreement even if the
others do not."
(4) Inspection acknowledgment. The model clause regarding inspection acknowledgment reads: "I have thoroughly inspected,
accepted, and approved the motor vehicle in all respects."
(5) Identification of motor vehicle. The motor vehicle
identification information provision should contain the following
information about the motor vehicle: the seller's stock number; the
manufacturer's year model; the manufacturer's make; the manufacturer's model type or number; the vehicle identification number; the
license plate number (if applicable); a new/used designation; and the
primary purpose designation. The primary purpose designation may
be used to determine whether the vehicle was purchased primarily for
commercial purposes or primarily for personal, family or household
purposes. Unless the retail seller or holder has actual knowledge
that the representation is not true, the retail seller or holder may rely
upon the representation made in the primary purpose designation, as
permitted by Texas Finance Code, §348.0015(b). The seller's stock
number and the license number are both optional; the omission will
not make a contract non-standard. The motor vehicle identification
information provision may include additional information about the
vehicle including, odometer reading, color, the designation as a heavy
commercial vehicle, and key code. If the creditor includes this additional information about the motor vehicle, the change will not make
the provision a non-standard provision. The model clause regarding
identification of the motor vehicle reads:
Figure: 7 TAC §84.808(5) (No change.)
(6) Trade-in vehicle description. The model clause regarding trade-in vehicle description reads:
(7) Truth in Lending Act disclosure. The model clause regarding Truth in Lending Act disclosure reads:
Figure: 7 TAC §84.808(7)
(8) Itemization of amount financed. The creditor drafting
the contract is given considerable flexibility regarding the itemization
of amount financed disclosure so long as the itemization of amount
financed disclosure complies with the Truth in Lending Act. As an example, a creditor may disclose the manufacturer's rebate either as: a
component of the downpayment; or a deduction from the cash price of
the motor vehicle. The model contract provision for the itemization of
the amount financed discloses the manufacturer's rebate as a component
of the downpayment. If the creditor elected to disclose the manufacturer's rebate as a deduction from the cash price of the motor vehicle,
the cash price component of the itemization of amount financed would
be amended to reflect the dollar amount of the manufacturer's rebate
being deducted from the cash price of the motor vehicle.
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(A) The model clause regarding itemization of amount
financed-sales tax advance reads:
Figure: 7 TAC §84.808(8)(A)
(B) The model clause regarding itemization of amount
financed-sales tax deferred reads:
Figure: 7 TAC §84.808(8)(B)
(C) Plate transfer fee. Under Texas Transportation
Code, §502.453, the creditor may charge under the itemization of
amount financed a $5.00 fee for transferring license plates and receiving new registration insignia. The creditor may document the plate
transfer fee in the Other Charges section with the following language:
"to State for Plate Transfer Fee."
(D) Compliance fee prohibited. Under Texas Transportation Code, §503.0631(f), the creditor is prohibited from assessing
an itemized charge under the itemization of amount financed for costs
associated with complying with the temporary tag database.
(E) Inspection fee. Under Texas Transportation Code,
§548.509, at the time of registration, the Texas Department of Motor
Vehicles or a county assessor-collector will collect a portion of the inspection fee to be remitted to the state. The creditor may disclose the
inspection fee by either of the following methods:
(i) including the entire inspection fee in the "Government vehicle inspection fees" section, with the amounts paid to the
state and the inspector documented immediately below this section
with the following language: "to state $________" and "to inspection
station $________"; or
(ii) including the portion remitted to the state in the
"Government license and registration fees" section, and the portion remitted to the inspection station in the "Government vehicle inspection
fees" section.
(9)
Documentary fee.
(A) The following notice satisfies the requirements of
Texas Finance Code, §348.006 if printed in type that is boldfaced, capitalized, underlined, or otherwise set out from surrounding written material so as to be conspicuous and within reasonable proximity to the
place at which the fee is disclosed. The model clause is contained in the
Itemization of Amount Financed. The documentary fee clause reads:
"A documentary fee is not an official fee. A documentary fee is not
required by law, but may be charged to buyers for handling documents
relating to the sale. A documentary fee may not exceed a reasonable
amount agreed to by the parties. This notice is required by law."
(B) The following notices are sufficient Spanish translations of the documentary fee disclosure required by Texas Finance
Code, §348.006. The Spanish translation may read:
(i) "Un honorario de documentación no es un honorario ofícial. Un honorario de documentación no es requerido por la ley,
pero puede ser cargada al comprador como gastos de manejo de documentos relacionados con una venta. Un honorario de documentación
no puede exceder una cantidad razonable acordada por las partes. Esta
notifícación es requerida por la ley."; or
(ii) "Un cargo documental no es un cargo ofícial. La
ley no exige que se imponga un cargo documental. Pero éste podría cobrarse a los compradores por el manejo de la documentación en relación
con la venta. Un cargo documental no puede exceder una cantidad razonable acordada por las partes. Esta notifícación se exige por ley."
(10) Deferred downpayments. The creditor has considerable flexibility in disclosing the deferred downpayments. The model
provision discloses the deferred downpayments by placing the infor-
mation, the due date and dollar amount of the deferred downpayments,
in several boxes. If a creditor uses this model provision, the creditor
would enter the due date and dollar amount of each deferred downpayment in the appropriate boxes. As an alternative to this model provision, a creditor may disclose the deferred downpayments in the Payment Schedule of the Amount Financed in the federal disclosure box.
If a creditor elects this option, the due date and the dollar amount of the
deferred downpayment must be shown. If the total amount of the deferred downpayment is not satisfied by the date of the second regularly
scheduled installment, the deferred downpayment must be included in
the Payment Schedule. As another alternative, the creditor may disclose the deferred downpayment amount in the Payment Schedule. If
the deferred downpayment amount is disclosed in the Payment Schedule, then the dollar amount of the deferred downpayment must be included in the Total of Payments. The model clause regarding deferred
downpayments reads:
(11) Required physical damage insurance. The creditor
may choose to omit the statement of the retail buyer's right to obtain
substitute coverage from another source. The model clause regarding
required physical damage insurance reads:
Figure: 7 TAC §84.808(11)
(12) Optional insurance coverages and debt cancellation
agreement.
(A) The model clause regarding optional insurance coverages and debt cancellation agreement reads:
(B) A retail seller at its option may create a separate
disclosure for the authorization of the debt cancellation agreement.
(13) Optional credit life and accident and health insurance.
The model clause regarding optional credit life and accident and health
insurance reads:
(14) Liability insurance. If liability insurance coverage is
not included in the contract, any of the following notices are sufficient
to satisfy the requirements of Texas Finance Code, §348.205 if printed
in a size equal to at least 10-point type that is boldfaced, capitalized,
underlined, or otherwise set out from surrounding written material so
as to be conspicuous:
(A) "THIS CONTRACT DOES NOT INCLUDE
INSURANCE COVERAGE FOR PERSONAL LIABILITY AND
PROPERTY DAMAGE CAUSED TO OTHERS."
(B) "UNLESS A CHARGE FOR LIABILITY INSURANCE IS INCLUDED IN THE ITEMIZATION OF AMOUNT FINANCED, LIABILITY INSURANCE COVERAGE FOR BODILY
INJURY AND PROPERTY DAMAGE CAUSED TO OTHERS IS
NOT INCLUDED IN THIS CONTRACT."
(C) "UNLESS A CHARGE FOR LIABILITY INSURANCE IS INCLUDED IN THE ITEMIZATION OF AMOUNT
FINANCED, ANY INSURANCE REFERRED TO IN THIS CONTRACT DOES NOT INCLUDE COVERAGE FOR PERSONAL
LIABILITY AND PROPERTY DAMAGE CAUSED TO OTHERS."
(15) Prohibition against oral modifications. The contract
may include a provision barring oral modifications of the contract. A
unilateral change to a contract may nevertheless occur as prescribed by
the procedures in Texas Finance Code, Chapter 349, Subchapter C. The
model clause regarding prohibition against oral modifications reads:
(A) Regular transaction using sum of the periodic balances method.
(i) Sales tax advance. At the creditor's option a creditor may choose one of the following model clauses regarding sales tax
advance:
(I) "You figure the Finance Charge using the
add-on method as defined by the Texas Finance Commission Rule.
Add-on Finance Charge is calculated on the full amount of the unpaid
principal balance and added as a lump sum to the unpaid principal
balance for the full term of the contract." Or
(II) "The Finance Charge will be calculated by
using the add-on method. Add-on Finance Charge is calculated on the
full amount of the unpaid principal balance and added as a lump sum
to the unpaid principal balance for the full term of the contract. The
add-on Finance Charge is calculated at a rate of $____ per $100.00 per
year. This rate is not the same as the Annual Percentage Rate."
(ii) Deferred sales tax. The model clause regarding
deferred sales tax reads: "The Finance Charge will be calculated by
using the add-on method. Add-on Finance Charge is calculated on the
full amount of the unpaid principal balance subject to a finance charge
and added as a lump sum to the unpaid principal balance subject to a
Finance Charge for the full term of the contract. The add-on Finance
Charge is calculated at a rate of $____ per $100.00 per year. This rate
is not the same as the Annual Percentage Rate."
(B) True daily earnings method.
advance:
(I) "You figure the Finance Charge using the true
daily earnings method as defined by the Texas Finance Code. Under the
true daily earnings method, the Finance Charge will be figured by applying the daily rate to the unpaid portion of the Amount Financed for
the number of days the unpaid portion of the Amount Financed is outstanding. The daily rate is 1/365th of the Annual Percentage Rate. The
unpaid portion of the Amount Financed does not include late charges
or returned check charges." Or
(II) If a retail seller requires a retail buyer to purchase credit life or credit accident and health insurance and the sales tax
is not deferred, the contract rate disclosure should read: "The contract
rate is _____%. This contract rate may not be the same as the Annual
Percentage Rate. You will figure the Finance Charge by applying the
true daily earnings method as defined by the Texas Finance Code to the
unpaid portion of the principal balance. The daily rate is 1/365th of the
contract rate. The unpaid principal balance does not include the late
charges or returned check charges."
(ii) Deferred sales tax: If sales tax is deferred, the
contract rate disclosure should read: "The contract rate is _____%.
This contract rate may not be the same as the Annual Percentage Rate.
You will figure the Finance Charge by applying the true daily earnings
method as defined by the Texas Finance Code to the unpaid portion
of the principal balance subject to a Finance Charge. The daily rate is
1/365th of the contract rate. The unpaid principal balance subject to a
finance charge does not include the late charges, sales tax, or returned
check charges."
(C)
Scheduled installment earnings method.
advance:
(16) Finance charge earnings methods:
(I) "You figure the Finance Charge using the
scheduled installment earnings method as defined by the Texas Finance Code. Under the scheduled installment earnings method, the
Finance Charge is figured by applying the daily rate to the unpaid
portion of the Amount Financed as if each payment will be made on
its scheduled payment date. The daily rate is 1/365th of the Annual
Percentage Rate. The unpaid portion of the Amount Financed does
not include late charges or returned check charges." Or
(II) If a retail seller requires a retail buyer to purchase credit life or credit accident and health insurance and the sales tax
is not deferred, the contract rate disclosure should read: "The contract
rate is _____%. This contract rate may not be the same as the Annual Percentage Rate. You will figure the Finance Charge by applying
the scheduled installment earnings method as defined by the Texas Finance Code to the unpaid portion of the principal balance. You based
the Finance Charge, Total of Payments, and Total Sale Price as if all
payments were made as scheduled. The unpaid principal balance does
not include the late charges or returned check charges."
(ii) Deferred sales tax. If sales tax is deferred, the
contract rate disclosure should read: "The contract rate is _____%.
This contract rate may not be the same as the Annual Percentage Rate.
You figured the Finance Charge by applying the scheduled installment
earnings method as defined by the Texas Finance Code to the unpaid
portion of the principal balance subject to a Finance Charge. You based
the Finance Charge, Total of Payments, and Total Sale Price as if all
payments were made as scheduled. The unpaid principal balance subject to a Finance Charge does not include the late charges, sales tax, or
returned check charges."
(17) Consumer warning. The following notices satisfy the
requirements of Texas Finance Code §348.102(d) if printed in at least
10-point type that is boldfaced, capitalized, underlined, or otherwise
set out from surrounding written material so as to be conspicuous.
(A) For contracts using the sum of the periodic balances
method (Rule of 78s) or the scheduled installment earnings method, the
notice may read:
(i) "NOTICE TO THE BUYER--I WILL NOT
SIGN THIS CONTRACT BEFORE I READ IT OR IF IT CONTAINS
ANY BLANK SPACES. I AM ENTITLED TO A COPY OF THE
CONTRACT I SIGN. UNDER THE LAW, I HAVE THE RIGHT
TO PAY OFF IN ADVANCE ALL THAT I OWE AND UNDER
CERTAIN CONDITIONS MAY OBTAIN A PARTIAL REFUND OF
THE FINANCE CHARGE. I WILL KEEP THIS CONTRACT TO
PROTECT MY LEGAL RIGHTS." Or
(ii) "NOTICE TO THE BUYER--THE BUYER
SHOULD NOT SIGN THIS CONTRACT BEFORE READING IT
OR IF IT CONTAINS ANY BLANK SPACES. THE BUYER IS ENTITLED TO A COPY OF THE SIGNED CONTRACT. UNDER THE
LAW, THE BUYER HAS THE RIGHT TO PAY OFF IN ADVANCE
ALL THAT THE BUYER OWES AND UNDER CERTAIN CONDITIONS MAY OBTAIN A PARTIAL REFUND OF THE FINANCE
CHARGE. THE BUYER SHOULD KEEP THIS CONTRACT TO
PROTECT ITS LEGAL RIGHTS."
(B) For contracts using the true daily earnings method,
the notice may read: "NOTICE TO THE BUYER--I WILL NOT
SIGN THIS CONTRACT BEFORE I READ IT OR IF IT CONTAINS
ANY BLANK SPACES. I AM ENTITLED TO A COPY OF THE
CONTRACT I SIGN. UNDER THE LAW, I HAVE THE RIGHT TO
PAY OFF IN ADVANCE ALL THAT I OWE AND UNDER CERTAIN CONDITIONS MAY SAVE A PORTION OF THE FINANCE
CHARGE. I WILL KEEP THIS CONTRACT TO PROTECT MY
LEGAL RIGHTS."
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(18) Buyer's acknowledgment of contract receipt.
(A) The following acknowledgments conform to the requirements of Texas Finance Code, §348.112 if they appear directly
above the place for the buyer's signature in at least 10-point type that is
boldfaced, capitalized, underlined, or otherwise set out from surrounding written material so as to be conspicuous. A creditor may choose
the most appropriate option:
(i) If the buyer's signature is dated. If this clause
is chosen, the copy must be mailed within a reasonable period of
time. A reasonable period of time would ordinarily be three days,
excluding Sundays and holidays. The model acknowledgment may
read: "I AGREE TO THE TERMS OF THIS CONTRACT. WHEN
I SIGN THE CONTRACT, I WILL RECEIVE THE COMPLETED
CONTRACT. IF NOT, I UNDERSTAND THAT A COPY WILL BE
MAILED TO ME WITHIN A REASONABLE TIME."
(ii) If the buyer's signature is not dated. The model
acknowledgment may read: "I AGREE TO THE TERMS OF THIS
CONTRACT. I CONFIRM THAT BEFORE I SIGNED THIS CONTRACT, YOU GAVE IT TO ME, AND I WAS FREE TO TAKE IT
AND REVIEW IT. I RECEIVED THE COMPLETED CONTRACT
ON ___________ (MO.) (DAY) (YR.)."
(iii) If the buyer's signature is not dated. If this
clause is chosen, the copy must be mailed within a reasonable period
of time. The model acknowledgment may read: "I SIGNED THIS
CONTRACT ON _________ AND A COPY WILL BE MAILED TO
ME WITHIN A REASONABLE TIME."
(iv) If the buyer's signature is not dated but the contract contains the date of the transaction. The model acknowledgment may read: "I AGREE TO THE TERMS OF THIS CONTRACT
AND ACKNOWLEDGE RECEIPT OF A COMPLETED COPY OF
IT. I CONFIRM THAT BEFORE I SIGNED THIS CONTRACT, YOU
GAVE IT TO ME, AND I WAS FREE TO TAKE IT AND REVIEW
IT."
(B) Acceptance of contract receipt. The model clause
regarding acceptance of contract receipt reads:
Figure: 7 TAC §84.808(18)(B) (No change.)
(19) OCCC notice. The following notice satisfies the requirements of Texas Finance Code, §14.104 and §86.101 of this title
(relating to Consumer Notifications). The telephone number of the retail seller, creditor, or holder may be printed in conjunction with the
name and address of the retail seller, creditor, or holder elsewhere on
the contract or agreement provided the notice required by Texas Finance Code, §14.104 is amended to direct the reader's attention to the
area of the contract where the telephone number may be found. The
OCCC notice reads: "For questions or complaints about this contract,
contact (insert name of creditor) at (insert creditor's phone number and,
at creditor's option, one or more of the following: mailing address,
fax number, website, e-mail address). The Office of Consumer Credit
Commissioner (OCCC) is a state agency, and it enforces certain laws
that apply to this contract. If a complaint or question cannot be resolved by contacting the creditor, consumers can contact the OCCC
to file a complaint or ask a general credit-related question. OCCC
address: 2601 N. Lamar Blvd., Austin, Texas 78705. Phone: (800)
538-1579. Fax: (512) 936-7610. Website: occc.texas.gov. E-mail:
[email protected]."
(20) Finance charge refund method. If a contract uses the
finance charge refunding method of the sum of the periodic balances or
the scheduled installment earnings method, the finance charge refund
provision reads: "If I prepay in full, I may be entitled to a refund of
part of the Finance Charge." On contracts using the true daily earnings
method, this finance charge refund provision should not be disclosed
because it is not applicable.
(A)
Contracts using the sum of the periodic balances
method.
(i) Name of method. The model clause to identify
the method of refunding finance charge reads: "You will figure the Finance Charge refund by using the sum of the periodic balances method
as defined by the Texas Finance Commission rule."
(ii) Optional description of method. The creditor
may include the following additional description of the method. The
model clause reads: "You will figure the Finance Charge refund using the sum of the periodic balances method as defined by the Texas
Finance Commission rule. The Finance Charge Refund will be computed upon the entire Finance Charge minus the Acquisition Cost. I
will not get a refund if it is less than $1.00."
(iii) Optional description of method for use in contracts for heavy commercial vehicles. At the creditor's option, a contract for a heavy commercial vehicle, as defined in the Texas Finance
Code, may include the following description of the method. The model
clause reads: "You will figure the Finance Charge refund using the sum
of the periodic balances method as defined by the Texas Finance Commission rule. The Finance Charge refund will be computed based upon
the entire Finance Charge calculated using the sum of the periodic balances method. Then you will subtract the Acquisition Cost from that
amount. I will not get a refund if it is less than $1.00."
(B) Contracts using the scheduled installment earnings
method.
(i) Name of method. The model clause to identify
the method of refunding finance charge reads: "You will figure the
Finance Charge refund by the scheduled installment earnings method
as defined by the Texas Finance Commission rule."
(ii) Optional description of method. The creditor
may include the following additional description of the method: "You
will figure my refund by deducting earned finance charges from the Finance Charge. You will figure earned finance charges by applying a
daily rate to the unpaid principal balance as if I paid all my payments
on the date due. If I prepay between payment due dates, you will figure
earned finance charges for the partial payment period. You do this by
counting the number of days from the due date of the prior payment
through the date I prepay. You then multiply that number of days times
the daily rate. The daily rate is 1/365th of the Annual Percentage Rate.
You will also add the acquisition cost of $25 (or $150 for a heavy commercial vehicle) to the earned finance charge. I will not get a refund if
it is less than $1.00."
(C) Flexible contract forms designed to accommodate
alternative methods. Creditors may use a flexible contract form with
alternative earnings methods, so long as the method used on a particular contract is permissible for that contract. The following clause illustrates one way that this flexibility may be accomplished: "You will
figure the Finance Charge refund using the sum of the periodic balances
method as defined by the Texas Finance Commission rule if: this contract is a Regular Payment Contract as defined by the Texas Finance
Commission rule, and this contract does not have a term greater than
61 months. If this contract is not a Regular Payment Contract or if it
has a term greater than 61 months, you will figure the Finance Charge
refund using the scheduled installment earnings method as defined by
the Texas Finance Commission rule. I will not get a refund if it is less
than $1.00."
(21) Application of payments. In this provision, the term
"finance charge" should not be construed to have the same meaning as
Finance Charge as defined by the Truth in Lending Act. A default or
late charge is considered to be a finance charge under Texas law; therefore, a default or late charge can be charged and collected as part of the
earned finance charge. At the creditor's option the creditor may modify the application of payments language by adding "and late charges"
following the phrase "earned but unpaid finance charge." The model
clause reads:
(22) Effect of early and late payments. For contracts using
the true daily earnings method, the model clause reads: "You based the
Finance Charge, Total of Payments, and Total Sale Price as if all payments were made as scheduled. If I do not timely make all my payments
in at least the correct amount, I will have to pay more Finance Charge
and my last payment will be more than my final scheduled payment. If
I make scheduled payments early, my Finance Charge will be reduced
(less). If I make my scheduled payments late, my Finance Charge will
increase."
(23) Interest on matured amount. For contracts using the
scheduled installment earnings method or the sum of the periodic balances method, the model provision for interest on any matured amount
at any rate permitted by law reads: "If I don't pay all I owe when the
final payment becomes due, or I do not pay all I owe if you demand
payment in full under this contract, I will pay an interest charge on the
amount that is still unpaid. That interest charge will be the higher rate
of 18% per year or the maximum rate allowed by law, if that rate is
higher. The interest charge for this amount will begin the day after the
final payment becomes due." In this provision, the maximum rate allowed by law refers to the rate found in Texas Finance Code, Chapter
303.
(24) Balloon payments. If the contract has a balloon payment, the creditor must include a provision in the contract that allows
the buyer to refinance the balloon payment over time. The provision
must comply with Texas Finance Code, §348.123. The model provision for defining the balloon payment reads: "A balloon payment is a
scheduled payment more than twice the amount of the average of my
scheduled payments, other than the downpayment, that are due before
the balloon payment."
(A) Paying the balloon payment. If a retail installment
contract contains a balloon payment that is the final payment, the contract must also provide the right for the retail buyer to pay the balloon payment. The model provision for paying the amount of the final
scheduled balloon payment reads: "I can pay all I owe when the balloon payment is due and keep my motor vehicle."
(B) Balloon payment alternatives. If the retail installment contract contains the right for a retail buyer to refinance a balloon
installment, the contract provision to refinance the installment must
comply with either clause (i) or (ii) of this subparagraph. A contract
under clause (ii) of this subparagraph must also contain the right of the
retail buyer to sell the motor vehicle back to the holder or the retail
seller.
(i) The model clause to describe a buyer's right to refinance a balloon installment under Texas Finance Code, §348.123(a),
when applicable reads: "If I buy the motor vehicle primarily for personal, family, or household use, I can enter into a new written agreement to refinance the balloon payment when due without a refinancing
fee. If I refinance the balloon payment, my periodic payments will not
be larger or more often than the payments in this contract. The annual
percentage rate in the new agreement will not be more than the Annual Percentage Rate in this contract. This provision does not apply
if my Payment Schedule has been adjusted to my seasonal or irregular
income."
(ii) If the contract contains a balloon payment and
the seller intends Texas Finance Code, §348.123(b)(5) to apply to the
contract:
(I) Special right to refinance balloon payment
under Texas Finance Code, §348.123(b)(5)(B)(iii). The model clause
reads: "I can enter into a new agreement to refinance my last installment if I am not in default. I can refinance at an annual percentage
rate up to 5 points greater than the Annual Percentage Rate shown in
this contract. The rate will not be more than applicable law allows.
The new agreement will allow me to refinance the last installment for
at least 24 months with equal monthly payments. You and I can also
agree to refinance the last installment over another time period or on a
different payment schedule."
(II) Repurchase option. If the contract includes
a balloon payment, the creditor must draft a provision addressing the
repurchase option.
(25) Agreement to keep motor vehicle insured. The model
clause regarding agreement to keep the motor vehicle insured reads:
"I agree to have physical damage insurance covering loss or damage
to the motor vehicle for the term of this contract. The insurance must
cover your interest in the vehicle. The insurer must be authorized to
do business in Texas." The creditor may include one or both of the
following optional provisions:
(A) "The insurance must include collision coverage and
either comprehensive or fire, theft, and combined additional coverage."
(B) "The maximum deductible is $________."
(26) Creditor's right to purchase required insurance if buyer
fails to keep motor vehicle insured. The model clause regarding agreement to allow the creditor to purchase required insurance if the buyer
fails to keep the motor vehicle insured reads: "If I fail to give you proof
that I have insurance, you may buy physical damage insurance. You
may buy insurance that covers my interest and your interest in the motor vehicle, or you may buy insurance that covers your interest only. I
will pay the premium for the insurance and a finance charge at the contract rate. If you obtain collateral protection insurance, you will mail
notice to my last known address shown in your file."
(27) Physical damage insurance proceeds. The model
clause regarding physical damage insurance proceeds reads: "I must
use physical damage insurance proceeds to repair the motor vehicle,
unless you agree otherwise in writing. However, if the motor vehicle
is a total loss, I must use the insurance proceeds to pay what I owe
you. I agree that you can use any proceeds from insurance to repair
the motor vehicle, or you may reduce what I owe under this contract.
If you apply insurance proceeds to the amount I owe, they will be
applied to my payments in the reverse order of when they are due. If
my insurance on the motor vehicle or credit insurance doesn't pay all I
owe, I must pay what is still owed. Once all amounts owed under this
contract are paid, any remaining proceeds will be paid to me."
(28) Returned insurance premiums and service contract
charges. The contract may authorize a creditor to apply charges
returned to the creditor for canceled insurance, service contract,
and extended warranty charges to the buyer's obligation under the
agreement as permitted by law, regardless of whether or not the buyer
is in default under the contract.
(A) The model clause for contracts using the true daily
earnings method reads: "If you get a refund on insurance or service
contracts, or other contracts included in the cash price, you will subtract
it from what I owe. Once all amounts owed under this contract are paid,
any remaining refunds will be paid to me."
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(B) For contracts using the scheduled installment earnings or sum of the periodic balances methods, the creditor may substitute the following clause: "If you get a refund of insurance or service
contract charges, you will apply it and the unearned finance charges on
it in the reverse order of the payments to as many of my payments as
it will cover. Once all amounts owed under this contract are paid, any
remaining refunds will be paid to me."
(29) Application of credits. The model clause regarding
application of credits reads: "Any credit that reduces my debt will apply to my payments in the reverse order of when they are due, unless
you decide to apply it to another part of my debt. The amount of the
credit and all finance charge or interest on the credit will be applied to
my payments in the reverse order of my payments."
(30) Transfer of rights. The seller does not have a duty to
disclose the terms on which a contract or a balance under a contract
is acquired, including any discount or difference between the rates,
charges, or balance under the contract and the rates, charges, or balance
acquired as provided by Texas Finance Code, §348.301. The model
clause regarding transfer of rights reads: "You may transfer this contract to another person. That person will then have all your rights, privileges, and remedies."
(31) Grant of security interest in collateral. The model
clause regarding a description of a security interest granted in a typical
motor vehicle installment sale reads:
(32) Agreements regarding use and transfer of motor vehicle. The contract may contain a provision prohibiting a buyer from
transferring any interest in the motor vehicle without the creditor's written permission, requiring the buyer to notify the seller of change of
address, or prohibiting the removal of the motor vehicle from Texas.
The transfer fee limitation establishes the maximum fee that a creditor
could contract for, charge, or collect for transferring the buyer's equity
in the motor vehicle to another party. If desired, a creditor may amend
the model provision to reflect a lower transfer fee amount. The model
clause concerning agreements regarding the use and transfer of the motor vehicle reads: "I will not sell or transfer the motor vehicle without
your written permission. If I do sell or transfer the motor vehicle, this
will not release me from my obligations under this contract, and you
may charge me a transfer of equity fee of $25 ($50 for a heavy commercial vehicle). I will promptly tell you in writing if I change my address
or the address where I keep the motor vehicle. I will not remove the
motor vehicle (Optional: motor vehicle or other collateral) from Texas
for more than 30 days unless I first get your written permission."
(33) Care of motor vehicle. The contract may obligate the
buyer to keep the motor vehicle free of liens and encumbrances, require the buyer to keep the motor vehicle in good working order and
repair, or prohibit the buyer from allowing the motor vehicle to be exposed to seizure, confiscation, or other involuntary transfer. The model
clause regarding care of the motor vehicle reads: "I agree to keep the
motor vehicle free from all liens and claims except those that secure
this contract. I will timely pay all taxes, fines, or charges pertaining
to the motor vehicle. I will keep the motor vehicle in good repair. I
will not allow the motor vehicle to be seized or placed in jeopardy, or
use it illegally. I must pay all I owe even if the motor vehicle is lost,
damaged or destroyed. If a third party takes a lien or claim against or
possession of the motor vehicle, you may pay the third party any cost
required to free the motor vehicle from all liens or claims. You may
immediately demand that I pay you the amount paid to the third party
for the motor vehicle. If I do not pay this amount, you may repossess
the motor vehicle and add that amount to the amount I owe. If you do
not repossess the motor vehicle, you may still demand that I pay you,
but you cannot compute a finance charge on this amount."
(34) Default rights and repossession provisions. This paragraph details agreements allowing acceleration of the buyer's obligation upon the buyer's default or upon the creditor's determination of insecurity as permitted by Texas Business and Commerce Code, §1.309.
The following provisions are samples of model clauses regarding some
of the default rights and remedies of a creditor in a typical motor vehicle installment sale transaction:
(G) Cancellation of optional insurance or service contracts. The model clause regarding cancellation of optional insurance
or service contracts reads: "This contract may contain charges for insurance or service contracts or for services included in the cash price.
If I default, I agree that you can claim benefits under these contracts to
the extent allowable, and terminate them to obtain refunds of unearned
charges to reduce what I owe or repair the motor vehicle."
(A) Acceleration and default. The model clause regarding acceleration and default reads:
(35) Acceleration, waiver of notice of intent to accelerate,
and notice of acceleration. A model clause regarding the holder's
right to accelerate maturity of the contract and to waive the buyer's or
co-buyer's common law right to notice of intent to accelerate, notice
of acceleration, or both reads: "If I default, or you believe in good
faith that I am not going to keep any of my promises, you can demand
that I immediately pay all that I owe. You don't have to give me notice
that you are demanding or intend to demand immediate payment of
all that I owe."
(B) Late charge. The model clause regarding late
charge reads: "I will pay you a late charge as agreed to in this contract
when it accrues."
(C) Repossession. At the creditor's option, a creditor
may choose one of the following model provisions pertaining to repossession. The model clauses regarding repossession read:
(i) "If I default, you may repossess the motor vehicle
from me if you do so peacefully. If any personal items are in the motor
vehicle, you can store them for me and give me written notice at my
last address shown on your records within 15 days of discovering that
you have my personal items. If I do not ask for these items back within
31 days from the day you mail or deliver the notice to me, you may
dispose of them as applicable law allows. Any accessory, equipment,
or replacement part stays with the motor vehicle." In this provision, the
term "peacefully" is intended to have the same meaning as "without
breaching the peace," as determined by the Texas courts, and as found
under clause (ii) of this subparagraph. Or
(ii) "If I default, you may repossess the motor vehicle from me if you do so without breaching the peace. If any personal
items are in the motor vehicle, you can store them for me and give me
written notice at my last address shown on your records within 15 days
of discovering that you have my personal items. If I do not ask for these
items back within 31 days from the day you mail or deliver the notice
to me, you may dispose of them as applicable law allows. Any accessory, equipment, or replacement part stays with the motor vehicle."
(D) Buyer's right to redeem. The model clause regarding buyer's right to redeem reads: "If you take my motor vehicle, you
will tell me how much I have to pay to get it back. If I do not pay you to
get the motor vehicle back, you can sell it or take other action allowed
by law. My right to redeem ends when the motor vehicle is sold or you
have entered into a contract for sale or accepted the collateral as full or
partial satisfaction of a contract."
(E) Disposition of motor vehicle. The model clause regarding disposition of the motor vehicle reads: "If I don't pay you to
get the motor vehicle back, you can sell it or take other action allowed
by law. If you sell the motor vehicle in a public or private sale, you
will send me notice at least 10 days before you sell it. You can use the
money you get from selling it to pay allowed expenses and to reduce
the amount I owe. Allowed expenses are expenses you pay as a direct
result of taking the motor vehicle, holding it, preparing it for sale, and
selling it. If any money is left, you will pay it to me unless you must
pay it to someone else. If the money from the sale is not enough to pay
all I owe, I must pay the rest of what I owe you plus interest. If you
take or sell the motor vehicle, I will give you the certificate of title and
any other document required by state law to record transfer of title."
(F) Collection costs. The model clause regarding collection costs reads: "If you hire an attorney who is not your employee
to enforce this contract, I will pay reasonable attorney's fees and court
costs as the applicable law allows."
(36) Refund upon acceleration. For contracts using the
sum of the periodic balances or scheduled installment earnings methods, the model clause regarding the buyer's right to a finance charge
refund upon acceleration of the contract reads: "If you demand that I
pay you all that I owe, you will give me a credit of part of the Finance
Charge as if I had prepaid in full."
(37) Servicing and collection contact. The Telephone Consumer Protection Act, 47 U.S.C. §227(b)(1)(A) - (B), generally prohibits creditors and other persons from calling a residential telephone
line using an automatic telephone dialing system or an artificial or prerecorded message without the prior express consent of the called party.
The model clause for servicing and collection contact reads: "You may
try to contact me at any mailing address, e-mail address, or phone number I give you, as the law allows. You may try to contact me in writing
(including mail, e-mail, and text messages) and by phone (including
prerecorded or artificial voice messages and automatic telephone dialing systems)."
(38) Dishonored check fee. Under Texas Business and
Commerce Code, §3.506, the holder of a payment device (including a
check) may charge a processing fee up to $30 if the payment device
is dishonored. The model clause for a dishonored check fee reads: "I
agree to pay you a fee of up to $30 for a returned check. You can add
the fee to the amount I owe or collect it separately."
(39) Integration and severability.
(A) The contract may include an integration clause indicating that the parties to the contract intend it to be the final written
expression of their agreement. The model clause regarding integration
reads: "This contract contains the entire agreement between you and
me relating to the sale and financing of the motor vehicle."
(B) The contract may also include a severability clause
providing that the invalidity of any portion of the contract does not
render invalid other parts of the contract that would otherwise be valid.
The model clause regarding severability reads: "If any part of this contract is not valid, all other parts stay valid."
(40) No waiver and limitations on creditor's rights and
usury savings.
(A) A model clause to prevent a creditor's delay in enforcing rights under the contract from affecting a waiver of those rights
reads: "If you don't enforce your rights every time, you can still enforce
them later."
(B) A provision establishing limitations on the creditor's rights reads: "You will exercise all of your rights in a lawful way."
(C) The model clause regarding usury savings reads: "I
don't have to pay finance charge or other amounts that are more than the
law allows. This provision prevails over all other parts of this contract
and over all your other acts."
(41) Applicable law.
(A) General model clause. A model clause to establish
the law that will apply to the contract reads: "Federal law and Texas
law apply to this contract."
(B) Additional clause for commercial vehicles. Under
Texas Finance Code, §353.009(b), if a commercial vehicle retail installment sales contract does not state that Texas Finance Code, Chapter 353 applies, then the contract is subject to Texas Finance Code,
Chapter 348. In a commercial vehicle retail installment sales contract,
the creditor may include the following clause to specify that Chapter
353 applies: "Chapter 353 of the Texas Finance Code applies to this
contract."
(42) Warranty disclaimer. The disclaimer of express and
implied warranties should be set out from the surrounding text so that
the disclosure is conspicuous. A disclaimer of express and implied
warranties, such as the following, is permitted by Texas Business and
Commerce Code, §2.316, and reads: "Unless the seller makes a written warranty, or enters into a service contract within 90 days from the
date of this contract, the seller makes no warranties, express or implied,
on the motor vehicle, and there will be no implied warranties of merchantability or of fitness for a particular purpose. This provision does
not affect any warranties covering the motor vehicle that the motor vehicle manufacturer may provide."
(43) Preservation of consumer's claims and defenses
notice. This notice only applies if the motor vehicle financed in the
contract was purchased for personal, family, or household use. The
preservation of consumer's claims and defenses notice disclosure
should be set out from the surrounding text so that the disclosure is in
all capitals, boldfaced and in at least 10-point type. The preservation
of consumer's claims and defenses notice, as required by the Federal
Trade Commission's Holder in Due Course Rule, 16 C.F.R. §433.2,
reads: "NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT
CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES
WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER
OF GOODS OR SERVICES OBTAINED PURSUANT HERETO
OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER
BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY
THE DEBTOR HEREUNDER. This provision applies to this contract
only if the motor vehicle financed in the contract was purchased for
personal, family, or household use."
(44) Used car buyer's guide. The used car buyer's guide
disclosure should be set out from the surrounding text so that the disclosure is conspicuous. The disclosure should be prefaced by the words
"In this box only, the word "you" refers to the Buyer." The used car
buyer's guide disclosure, as required by the Federal Trade Commission's Used Car Rule, 16 C.F.R. Part 455, reads:
(A) "Used Car Buyer's Guide. The information you see
on the window form for this vehicle is part of this contract. Information
on the window form overrides any contrary provisions in the contract
of sale."
(B) Spanish Translation: "Guía para compradors de vehículos usados. La información que ve en el formulario de la ventanilla
para este vehículo forma parte del presente contrato. La información
del formulario de la ventanilla deja sin efecto toda disposición en contrario contenida en el contrato de venta."
Texas Register
(45) Negotiability and assignment. The disclosure of the
negotiability of the contract should be placed on the front side of the
contract and may read:
(A) "The Annual Percentage Rate may be negotiated
with the Seller. The Seller may assign this contract and retain its right
to receive a part of the Finance Charge";
(B) "The rates of this contract are negotiable. The seller
may assign or otherwise sell this contract and receive a discount or
other payment for the difference between the rate, charges, or balance";
or
(C) "A customer may obtain their own financing. The
finance charge may be negotiable. The dealership may assign the retail
installment contract. There is no duty to disclose the terms for the sale
of this contract (for example, price paid to retail seller to purchase retail
installment contract)."
§84.809.
Permissible Changes.
(a) Creditors may make the following types of changes to the
model clauses and the model contracts and may still be eligible for the
defenses provided by Texas Finance Code, §349.101:
(1) Deleting inapplicable disclosures;
(2) Using a line for the consumer to initial, rather than a
checkbox;
(3) Adding a signature line to the insurance disclosures to
reflect joint policies;
(4) Substituting another term for "buyer," "seller," or "creditor" that has the same meaning, or use of pronouns such as "you," "we,"
and "us" or "it";
(5) Changing the person of the pronouns to refer to the
seller as "I" or "me" and the buyer as "you" or "your";
(6) Substituting the word "vehicle" for the term "motor vehicle";
(7) Presenting the model clauses in any order, and combining or further segregating the model clauses;
(8) Inserting descriptive headings or number provisions;
(9) Changing the case of a word if otherwise permitted by
the Texas Finance Code;
(10) Omitting references to different provisions for heavy
commercial vehicles where the creditor elects to treat buyers of heavy
commercial vehicles under the rules applicable to other vehicles;
(11) Moving provisions from one side of the form to the
other and directing the buyer to see the other side, or placing all of the
provisions on the same side of the form; or
(12) Changing any provision to comply with federal law.
(b) A sample model motor vehicle retail installment sales contract is presented in the following example.
Figure: 7 TAC §84.809(b)
(c) A contract may include other provisions that are not prohibited by law, but the contract including the other provisions must be
submitted to the OCCC under §84.802 of this title (relating to NonStandard Contract Filing Procedures).
(d) Nothing in this regulation prohibits a contract from including provisions that provide more favorable results for the buyer than
those that would result from the use of a model clause.
2015.
TRD-201504399
Leslie L. Pettijohn
Commissioner
♦
♦
e-mail address.
are contained in Texas Finance Code, Chapters 345, 347, and
348.
♦
CHAPTER 86. RETAIL CREDITORS
SUBCHAPTER A. REGISTRATION OF RETAIL
CREDITORS
7 TAC §86.101
The Finance Commission of Texas (commission) adopts
amendments to 7 TAC Chapter 86, concerning Retail Creditors.
Amendments are being adopted in §86.101, concerning Consumer Notifications. The commission adopts the amendments
to §86.101 without changes to the proposed text as published in
5616).
In general, the purpose of the amendments governing plain
language contract provisions is to implement changes resulting
from the commission's review of Chapter 90 under Texas Government Code, §2001.039, along with corresponding revisions
to §86.101 to update the agency's contact information.
Section 86.101 outlines the consumer notifications that must
be provided on all Chapter 345, 347, and 348 contracts. In
accordance with instructions from the Texas Department of
Information Resources, the Office of Consumer Credit Commissioner (OCCC) has updated its website and e-mail address with
the "texas.gov" extension: occc.texas.gov and [email protected]. In order to provide consumers with the
best contact information for the agency, this adoption amends
several provisions and figures with the OCCC's updated contact
information.
use of the agency's acronym and provide consistency throughout
the rules, this consumer notice has been relabeled as the "OCCC
Notice." Adopted amendments to §86.101(a) also require creditors and lenders to include a statement that consumers can contact the phone number for questions or complaints, and allow
creditors to include one or more of the following: mailing address, fax number, website, or e-mail. The remaining amendments relate to improvements in clarity and formatting, by providing taglines to both subsections of §86.101.
The commission received no written comments in response to
the proposed amendments to §86.101.
2015.
TRD-201504396
Leslie L. Pettijohn
Commissioner
♦
♦
♦
CHAPTER 90. CHAPTER 342, PLAIN
LANGUAGE CONTRACT PROVISIONS
The Finance Commission of Texas (commission) adopts amendments to 7 TAC Chapter 90, concerning Chapter 342, Plain Language Contract Provisions. The commission also adopts new 7
TAC §90.703, which was repealed and replaced.
The commission adopts the majority of the amendments to
Chapter 90 (specifically, §§90.101 - 90.103, 90.105, 90.201
- 90.204, 90.301, 90.302, 90.401, 90.402, 90.404, 90.501,
90.502, 90.504, 90.601, 90.602, 90.604, 90.701, the repeal
of 90.703, and new 90.703) without changes to the proposed
text as published in the September 4, 2015, issue of the Texas
The commission adopts the amendments to §§90.104, 90.303,
90.304, 90.403, 90.503, and 90.603 with changes to the proposed text as published in the September 4, 2015, issue of the
Texas Register (40 TexReg 5618). These changes are being
made in order to make technical corrections and provide further
clarification related to high-cost mortgage loans.
The commission received no written comments in response to
the proposed amendments to Chapter 90.
In general, the purpose of the amendments, repeal and new
rule governing plain language contract provisions is to implement
changes resulting from the commission's review of Chapter 90
under Texas Government Code, §2001.039. Corresponding revisions to §86.101 and the plain language rules in Chapter 84,
concerning Motor Vehicle Installment Sales, are being adopted
separately in this issue of the Texas Register.
The adopted amendments revise plain language non-standard
contract submission procedures relating to readability levels,
typefaces, and font sizes. The rule changes also update plain
language contracts to conform with federal TILA-RESPA integrated disclosures, including a new rule that was repealed and
replaced. Additionally, the amendments provide updated references to state and federal law and make technical corrections.
The adopted changes affect the rules listed, as contained in
the following subchapters of Chapter 90: Subchapter A, concerning General Provisions (§§90.101 - 90.105); Subchapter
B, concerning Secured Consumer Installment Loans (Chapter 342, Subchapter E) (§§90.201 - 90.204); Subchapter C,
concerning Signature Loans (Chapter 342, Subchapter F)
(§§90.301 - 90.304); Subchapter D, concerning Second Lien
Home Equity Loans (Chapter 342, Subchapter G) (§§90.401
- 90.404); Subchapter E, concerning Second Lien Purchase
Money Loans (Chapter 342, Subchapter G) (§§90.501 - 90.504);
Subchapter F, concerning Second Lien Home Improvement
Contracts (Chapter 342, Subchapter G) (§§90.601 - 90.604);
and Subchapter G, concerning Spanish Disclosures (§90.701
and §90.703).
The notice of intention to review 7 TAC Chapter 90 was published
in the July 17, 2015, issue of the Texas Register (40 TexReg
4707). The commission received no comments in response to
that notice.
The majority of the adopted amendments center on changes
made throughout several sections of rule text, as well as multiple figures, in order to provide consistency throughout the plain
language rules. In the following paragraphs, most of the amendments will be outlined on an issue-by-issue basis. First, a basic
statement of the rule issue will be provided. Second, the purpose and background of the changes will be described. And
third, a list of the relevant provisions containing amendments
related to that rule issue will be provided. Additionally, certain
amendments isolated to one or a small number of rules will be
discussed on a section-by-section basis, as appropriate.
In §90.101(6), the agency's acronym "OCCC," which stands for
Office of Consumer Credit Commissioner, has been adopted as
a new defined term to allow appropriate use throughout the chapter. The remaining definitions have been renumbered accordingly.
In Chapter 90, each subchapter contains a purpose section that
outlines the purpose of the particular plain language contract provisions provided in that subchapter. In each respective purpose
section, the term "commissioner" is being replaced with "OCCC."
The agency believes that the use of "OCCC" will provide better
clarity to the rules when the context calls for action by the agency,
as opposed to the commissioner specifically. The following rules
include amendments to replace "commissioner" with "OCCC":
§§90.201, 90.301, 90.401, 90.501, and 90.601.
The agency's non-standard contract submission procedure has
been revised in order to provide more efficiency and clarity. In
§90.104(b), the certification of readability includes amendments
adding a list of the typefaces and font sizes used in the contract, as well as the Flesch-Kincaid Grade Level score of the
contract. To provide consistency, the list of easily readable typefaces and use of the typeface "Times New Roman" instead of
"Times" has been revised in §90.103 to match the language in
current §84.103. Since the proposal, technical corrections have
been made to §90.104(b).
Texas Register
The filing requirements in §90.104(c) contain amendments
requiring submission in both Microsoft Word and PDF format.
Paper filings or other formats will not be accepted under the
new submission procedure.
New provisions contained in
§90.104(c)(4) set the maximum Flesch-Kincaid Grade Level
scores for each type of contract submitted, which are as follows:
grade 8 for Chapter 342, Subchapter F loans; grade 9 for
Chapter 342, Subchapter E loans; and grade 10 for Chapter
342, Subchapter G loans. These grade level requirements will
help ensure that agreements are readable and accessible to
consumers. The agency's experience indicates that contracts
can be drafted to comply with these requirements.
Section 90.105 specifies the consumer notices for Chapter
342 contracts. In accordance with instructions from the Texas
Department of Information Resources, the OCCC has updated
its website and e-mail address with the "texas.gov" extension:
occc.texas.gov and [email protected]. In
order to provide consumers with the best contact information
for the agency, this adoption amends several provisions and
figures with the OCCC's updated contact information.
use of the agency's acronym and provide consistency throughout the rules, this consumer notice has been relabeled as the
"OCCC Notice." In addition, an amendment to §90.105(b)(1) requires the lender to include its phone number in the OCCC notice
of each Chapter 342 loan contract. This is similar to the phone
number requirement that already exists under §86.101 for contracts under Chapters 345, 347, and 348. The new provision
adopted in §90.105(b)(6) specifies that the phone number may
be included in a portion of the contract other than the OCCC notice, as long as the reader's attention is directed to the area of
the document where the phone number may be found. Adopted
amendments to §90.105(b)(1) also require creditors and lenders
to include a statement that consumers can contact the phone
number for questions or complaints, and allow creditors to include one or more of the following: mailing address, fax number,
website, or e-mail.
Changes to update references to the notice with the new label
("OCCC Notice") are contained in the following provisions:
§§90.105 (rule title), 90.202(23), 90.203(b)(24), 90.302(22),
90.303(b)(21), 90.402(a)(21), 90.403(b)(21), 90.502(a)(21),
90.503(b)(21), 90.602(a)(2)(X), (4)(Y), and 90.603(c)(24),
(e)(25). Certain provisions have been renumbered or relettered
accordingly.
Adopted revisions to update the text of the OCCC Notice are contained in the following provisions: §§90.105(b), 90.203(b)(24),
90.303(b)(21), 90.403(b)(21), 90.503(b)(21), and 90.603(c)(24),
(e)(25). Certain provisions have been renumbered or relettered
accordingly.
The following figures contain the OCCC Notice as revised for this
adoption: §§90.204(a)(7) - (8), 90.304(a)(7) - (9), 90.404(a)(8),
90.504(a)(8), and 90.604(a)(14), (16). Certain figures have been
renumbered or relettered accordingly.
The rules often cite other state and federal law, federal regulations, as well as refer to other sections within Title 7 of the Texas
Administrative Code. Since the last review of the plain language
rules, state laws have been added or revised, certain federal
regulations have been relocated, and the Consumer Financial
Protection Bureau (CFPB) has been created and assumed the
duties of other federal agencies. The amendments include revisions to update existing citations, provide more accurate or specific citations, remove obsolete citations, or provide new or revised language in accordance with other law.
Revisions to update legal citations and references are included
in the following provisions: §§90.102, 90.303(b)(3), 90.402(c),
90.403(b)(1)(A), (b)(3)(B), (c)(1)(P), 90.404(a)(7), 90.502(c),
90.503(b)(1)(A), (b)(3)(B), (c)(1)(O), 90.504(a)(7), 90.602(b),
90.603(b)(12), (c)(1)(A), (c)(5)(B), (c)(26), (d)(20), (e)(1)(A),
(e)(5)(B), (f)(1)(P), 90.604(a)(1), (a)(12), 90.701(a) - (b), and
90.703. Additionally, citations have been added to or updated
in the following figures: §§90.404(a)(8) - (9), 90.504(a)(8) - (9),
and 90.604(a)(14), (16) - (17). Certain provisions have been
In §90.203(b)(5) regarding contracts under Subchapter E of
Chapter 342, a clarifying change has been made to specify
that the clause on interest on the matured amount applies to
contracts using the scheduled installment earnings method of
the sum of the periodic balances method.
The rate bracket amounts for loans governed by Subchapter E
of Texas Finance Code, Chapter 342 are adjusted on an annual
basis. In order to direct the reader to the most recent rate
bracket amounts, the following sentence has been added to
§90.203(b)(7): "The model finance charge earnings and refund
method clauses include rate bracket amounts that are updated
annually in the Texas Credit Letter." Conforming changes to
update the rate bracket amounts for Subchapter E loans are
contained in the following figures: §90.203(b)(7)(A), (b)(7)(C),
and (b)(7)(E). The amounts included in the figures reflect those
published in the March 3, 2015, issue of the Texas Register, and
the amounts are applicable to loans made July 1, 2015 to June
30, 2016. In addition, the phrase "per year" has been added
to figure §90.203(b)(7)(A) after "$100.00" in two instances to
provide clarification.
Amendments throughout §90.303 provide model provisions for
Chapter 342, Subchapter F loan contracts using the scheduled
installment earnings method and the true daily earnings method.
The amendments implement Texas Finance Code, §342.260,
enacted by the Texas Legislature in 2013. New §90.303(b)(2)(B)
provides the promise to pay for contracts using the true daily
earnings method. New §90.303(b)(5)(B) provides the model
prepayment clause for contracts using the true daily earnings
method, stating that the borrower can make any payment early.
New §90.303(b)(6)(C) - (D) include the finance charge earnings
and refund method provisions for contracts using the scheduled
installment earnings and true daily earnings methods. These
amendments include provisions on the order in which the lender
will apply payments, in accordance with Texas Finance Code,
§342.260(d), as well as a statement that the acquisition charge
will be collected on a straight-line basis in accordance with
7 TAC §83.606(i)(2). Since the proposed version, clarifying
language has been added to §90.303(b)(4) to specify that the
after maturity interest clause applies to contracts using the
add-on method or the scheduled installment earnings method.
In addition, since the proposed version, clarifying language
has been added to §90.303(b)(7) to specify that the deferment
clause applies to contracts using the add-on method or the
scheduled installment earnings method.
Additional amendments throughout §90.303 specify that current
provisions apply to contracts using the add-on method. A new
model Subchapter F contract using the scheduled installment
earnings method, and incorporating the model provisions, has
been added as figure 7 TAC §90.304(a)(8). Since the proposed
version, the model deferment clause has been added to the
contract at figure 7 TAC §90.304(a)(8), and a technical correction has been made to the language on after maturity interest.
A new model Subchapter F contract using the true daily earnings method, and incorporating the model provisions, has been
added as figure 7 TAC §90.304(a)(9).
Amendments throughout Chapter 90 add the lender's Nationwide Mortgage Licensing System & Registry (NMLS) ID number
to the model contracts for Subchapter G secondary mortgages.
A recent amendment to Regulation Z, 12 C.F.R. §1026.36(g),
requires promissory notes and security documents in mortgage
transactions to include the following items: the lender's NMLS
ID number, the name of the individual residential mortgage loan
originator, and the originator's NMLS ID number. The official
commentary to 12 C.F.R. §1026.36(g) explains that the lender
may omit its NMLS ID if it does not have an NMLS ID and is not
legally required to obtain one.
The lender's NMLS ID, the originator's name, and the originator's NMLS ID have been added to the following model
provisions that currently include the lender's contact information:
§§90.403(b)(1)(A), (c)(1)(D), 90.503(b)(1)(A), (c)(1)(D), and
90.603(b)(2)(C), (c)(1)(A), (d)(2)(C), (e)(1)(A), (f)(1)(C). Conforming changes have been made to the model contracts in the
figures accompanying the following provisions: §§90.404(a)(8) (9), 90.504(a)(8) - (9), and 90.604(a)(13) - (17). New provisions
have been added in the following sections to describe permissible changes allowed under Regulation Z, 12 C.F.R. §1026.36(g)
and the official commentary to that section: §§90.404(a)(7),
90.504(a)(7), and 90.604(a)(12). Certain provisions have been
Amendments throughout Chapter 90 have been made to ensure conformity with the TILA-RESPA integrated disclosures
required under recent amendments to Regulation Z, 12 C.F.R.
§§1026.19, 1026.37, and 1026.38. One of the integrated disclosures is the Closing Disclosure, a form that integrates and
replaces the HUD-1 settlement statement required under the
Real Estate Settlement Procedures Act and the final Truth in
Lending Act disclosure. The Consumer Financial Protection
Bureau (CFPB) has adopted model forms for the Closing Disclosure, which must be provided to the consumer at least three
days before consummation of the loan. The new requirements
will go into effect on October 3, 2015.
Four types of changes have been made to ensure conformity
with the TILA-RESPA integrated disclosures. First, the box
containing the final TILA disclosure has been removed from
the Subchapter G model contracts, because this disclosure
has been replaced with the CFPB's Closing Disclosure, which
must be provided separately. Second, the payment schedule
that is currently in the final TILA disclosure has been moved
into the promise to pay. Third, the statement that there is no
prepayment penalty, which is currently in the final TILA disclosure, has been moved into the provisions on the finance charge
earnings and refund method. Fourth, in the model provisions for
promissory notes for home improvement loans, the description
of the property subject to the lien has been moved into the
provision on security for payment. The following provisions
and accompanying figures relating to the final TILA disclosure
have been deleted: §§90.402(a)(2) - (3), 90.403(b)(2) - (3),
90.502(a)(2) - (3), 90.503(b)(1) - (3), 90.602(2)(B) - (C), (4)(B) -
(C), and 90.603(c)(2) - (3), (e)(2) - (3). Certain provisions have
been renumbered or relettered accordingly. Amendments and
new figures are contained in the following sections to add the
payment schedule to the promise to pay: §§90.403(b)(2)(C),
90.503(b)(2)(C), and 90.603(c)(4)(C), (e)(4)(C). Amendments
to the following provisions and accompanying figures add a
statement that there is no prepayment penalty: §§90.403(b)(6),
90.503(b)(6), and 90.603(c)(8), (e)(8). Amendments to the
following provisions add the property description to the clause
on security for payment: §90.603(c)(2) and (e)(2). Conforming
changes have been made to the model contracts in the figures accompanying the following provisions: §§90.404(a)(8),
90.504(a)(8), and 90.604(a)(14), (16). New provisions are
included in the following sections to specify that the model
provisions are separate from the TILA-RESPA integrated disclosures: §§90.402(c), 90.502(c), and 90.603(b).
Amendments throughout Chapter 90 have been adopted to ensure conformity with the provision on late charges for high-cost
mortgage loans in Regulation Z, 12 C.F.R. §1026.34(a)(8). Regulation Z limits the late charge for high-cost mortgage loans to
4% of the amount of the payment past due. This is less than
the 5% limitation that generally applies to secondary mortgage
loans under Texas Finance Code, §342.302(e). Amendments
to the following provisions describe the late charge limitation
for high-cost mortgages, in addition to the general limitation:
§§90.403(b)(3), 90.503(b)(3), and 90.603(c)(5), (e)(5). While the
proposed amendments stated that the late charge for high-cost
mortgage loans is "4% of the scheduled payment," the adopted
amendments specify that the late charge is "4% of the amount
of the payment past due," to more closely conform to the requirement in Regulation Z, 12 C.F.R. §1026.34(a)(8)(i). Conforming changes have been made to the model contracts in the
figures accompanying the following provisions: §§90.404(a)(8),
90.504(a)(8), and 90.604(a)(14), (16).
Since the proposed version, clarifying language has been added
to the following sections to specify that the after maturity interest
clause applies to contracts using the scheduled installment earnings method: §§90.403(b)(4), 90.503(b)(4), 90.603(b)(6), and
90.603(e)(6).
An amendment to §90.604(a)(1) provides an updated citation to
the CFPB's model form for the right of rescission notice required
for mortgage loans under Regulation Z, 12 C.F.R. §1026.23(b).
Amendments related to Spanish disclosures are contained
in §90.701, to provide clarity regarding which forms must be
provided, and to conform to revised §90.703. Adopted new
§90.703 replaces the former version of this section, which has
been repealed. Subsection (a) provides that for a Chapter
342 loan negotiated in Spanish, the licensee must provide a
Spanish disclosure, and that the disclosure must be completed
with amounts that are accurate within the tolerances described
by Regulation Z, 12 C.F.R. Part 1026. Paragraph (1) provides
that for a Subchapter E loan, the lender may provide either a
Spanish translation of the loan contract or the "Notificación de
Crédito Al Consumidor (Préstamo a Plazos)" (a figure that has
been renumbered without changes from former §90.703(a)(2)).
Paragraph (2) provides that for a Subchapter F loan, the
lender may provide either a Spanish translation of the loan
contract or both of the following: the "Notificación de Crédito
Al Consumidor (Préstamo)" (a figure that has been renumbered without changes from former §90.703(a)(3)(A)) and the
"Conceptos Financieros" (a figure that has been renumbered
without changes from former §90.703(a)(3)(B)). Paragraph (3)
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provides that for a Subchapter G secondary mortgage loan, the
lender must provide copies of the CFPB's Spanish translations
of both the TILA-RESPA integrated disclosures. This paragraph
replaces the former provision and accompanying figure located
at §90.703(a)(4), the "Notificación de Crédito Al Consumidor
(Préstamo de Segunda Hipoteca)."
Subsection (b) provides that for a Chapter 348 transaction, the
creditor may provide a Spanish translation of the retail installment sales contract or the "Notificación de Crédito Al Consumidor (Contrato de Menudeo a Plazos para Vehículo Automotor)"
(a figure that has been renumbered without changes from former §90.703(a)(5)). Subsection (c) provides that a licensee may
delete inapplicable provisions of the model disclosures, except
for the TILA-RESPA integrated disclosures required under subsection (a)(3). In addition, the two Subchapter E loan contracts
and the three Subchapter F loan contracts include an updated
statement (in both English and Spanish) acknowledging that the
borrower received a summary of the contract in Spanish. This
statement is included in the following figures: §90.204(a)(7) - (8)
and §90.304(a)(7) - (9).
The provisions relating to Spanish disclosures are adopted under Texas Finance Code, §341.502(a-1), which provides that if
the terms of a Chapter 342 loan are negotiated in Spanish, "a
copy of a summary of those terms and other pertinent information shall be provided to the debtor in Spanish in a form identical to disclosures required for a closed-end transaction under
12 C.F.R. Section 226.18." The provisions are intended to ensure that the Spanish disclosures are in the same form as the
disclosures required under Regulation Z, which has been recodified from 12 C.F.R. Part 226 to 12 C.F.R. Part 1026.
The remaining amendments adopted throughout the rules relate
to improvements in consistency, clarity, grammar, punctuation,
and formatting. Any rules not included in this adoption will be
maintained in their current form.
All new non-standard contracts submitted on or after the
amendments' effective date will have to be submitted under the
amended submission requirements, and will have to contain
clauses that comply with the amended rules (including the
updated OCCC notification). However, the agency will allow
a delayed implementation period for certain licensees. For
those licensees utilizing the model contracts, the prior model
language is acceptable and the agency will permit licensees to
use the prior model language (without a non-standard contract
submission) until December 31, 2016, to deplete supplies of
existing forms during a 13-month transition period after the
anticipated effective date of the rules. If licensees submitted
compliant non-standard contracts under the prior rules, the
agency will permit them to continue using these contracts until
December 31, 2016. If licensees intend to continue using
non-standard contracts, they must ensure that they submit an
updated non-standard contract in compliance with the amended
requirements by December 31, 2016. The agency encourages
licensees to submit the updated contracts earlier. Starting January 1, 2017, licensees may no longer use contracts submitted
under the prior rules. At any time, if the agency determines that
a non-standard contract submitted under prior rules contains
a substantive violation (e.g., an excessive late charge), it may
order the licensee to resubmit the contract. If the contract is
resubmitted on or after the amendments' effective date, it will
have to comply with the amended requirements.
For those licensees performing mortgage transactions subject
to the federal TILA-RESPA integrated disclosures, compliance
with federal law should be completed in accordance with any
guidance or deadlines issued by the CFPB.
SUBCHAPTER A.
GENERAL PROVISIONS
(A) grade 8 for Subchapter F (signature loans);
(B)
grade 9 for Subchapter E (secured installment
loans);
7 TAC §§90.101 - 90.105
All of the plain language amendments and new rule are adopted
under Texas Finance Code, §341.502, which authorizes the
commission to adopt rules governing the form of contracts for a
loan under Chapter 342, a retail installment transaction under
Chapter 348, or a home equity loan regulated by the Office of
Consumer Credit Commissioner.
email address.
The regulated lender amendments are adopted under Texas Finance Code, §342.551 which grants the commission the authority to adopt rules to enforce the consumer loans chapter.
are contained in Texas Finance Code, Chapters 342 and 348.
§90.104. Non-Standard Contract Filing Procedures.
(a) Non-standard contracts. A non-standard contract is a contract that does not use the model contract provisions. Non-standard
contracts submitted in compliance with the provisions of Texas Finance
Code, §341.502(c) will be reviewed to determine that the contract is
written in plain language.
(b) Certification of readability. Contract filings subject to this
chapter must be accompanied by a certification signed by an officer of
the licensee or the entity submitting the form on behalf of the licensee.
The certification must state that the contract is written in plain language
and that the contract can be easily understood by the average consumer.
The certification must also state that the contract is printed in an easily
readable font and type size, including a list of the typefaces used in
the contract, the font sizes used in the contract, and the Flesch-Kincaid
Grade Level score of the contract. The OCCC will prescribe the form
of the certification.
(c) Filing requirements. Contract filings must be identified as
to the transaction type. Contract filings must be submitted in accordance with the following requirements:
(1) Microsoft Word format. One copy must be submitted
in a Microsoft Word format with the document having either a .doc or
.docx extension. The Flesch-Kincaid Grade Level score of the contract
must be based on the Microsoft Word readability statistics function for
the Microsoft Word version of the contract.
(2) PDF format. One copy must be submitted in a PDF
format so that the contract may be visually reviewed in its entirety.
(3) No other formats permitted. The OCCC will not accept
paper filings or any other unlisted formats for non-standard contract
filings.
(C) grade 10 for Subchapter G, computed by scoring the
note and security document in one continuous Microsoft Word document (home equity loans, second lien purchase money loans, and second lien home improvement contracts).
(d) Contact person. One person shall be designated as the contact person for each filing submitted. Each submission should provide
the name, address, phone number, and fax number, if available, of the
contact person for that filing. If the contracts are submitted by anyone
other than the licensee itself, the contracts must be accompanied by a
dated letter which contains a description of the anticipated users of the
contracts and designates the legal counsel or other designated contact
person for that filing.
to adopt.
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Leslie L. Pettijohn
Commissioner
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SUBCHAPTER B. SECURED CONSUMER
INSTALLMENT LOANS (SUBCHAPTER E)
7 TAC §§90.201 - 90.204
Commissioner.
email address.
(4) Maximum Flesch-Kincaid score.
The maximum
Flesch-Kincaid Grade Level scores for Chapter 342 contract filings
are:
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Leslie L. Pettijohn
Commissioner
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SUBCHAPTER C. SIGNATURE LOANS
(SUBCHAPTER F)
7 TAC §§90.301 - 90.304
Commissioner.
email address.
your address above. I will make the payments on the dates and in the
amounts shown in the Payment Schedule."
(B) For contracts using the true daily earnings method:
"I promise to pay the unpaid principal balance plus the accrued interest
to the order of you, the Lender. I will make the payments at your address above. I will make the payments on the dates and in the amounts
shown in the Payment Schedule."
(3) Late charge. The late charge model provisions in this
paragraph may be used for loans that are regular transactions under
Texas Finance Code, §342.001(2). At the licensee's option, the late
charge clause may be made applicable only to loans with more than one
installment. As other options, a licensee may include one of the model
late charge clause options, as set out in subparagraphs (A) and (B) of
this paragraph, in both single and multiple installment loans, so long as
the licensee does not collect a default charge on a single payment loan
or omit the late charge clause for loans with a single repayment. The
licensee may use one of the following late charge model provisions:
(A) Option 1: "If I don't pay all of the payment within
10 days after it is due, you can charge me a late charge. The late charge
will be 5% of the scheduled payment."; or
(B) Option 2: "If I don't pay all of the payment within
10 days after it is due, you can charge me a late charge. If the amount
financed is less than $100, the late charge will be 5% of the amount of
the installment. If the amount financed is $100 or more, the late charge
will be the greater of $10 or 5% of the amount of the installment."
(4) After maturity interest. The after maturity interest
model clause for contracts using the add-on method or the scheduled
installment earnings method reads: "If I don't pay all I owe by the date
the final payment becomes due, I will pay interest on the amount that
is still unpaid. That interest will be at a rate of 18% per year and will
begin the day after the final payment becomes due."
(5)
Prepayment clause.
The model prepayment clause
reads:
(A) For contracts using the add-on method or the scheduled installment earnings method: "I can make a whole payment early."
"I can make any payment early."
(A) Add-on method. For contracts using the add-on
method, the model finance charge earnings and refund method clause
reads: "The acquisition charge on this loan will not be refunded if I pay
off early. If I pay all I owe before the beginning of the last monthly
period, I will save part of the installment account handling charge.
You will figure the amount I save by the sum of the periodic balances
method. This method is explained in the Finance Commission rules.
You don't have to refund or credit any amount less than $1.00."
(a) Generally. These model clauses are the plain language rendition of contract clauses that have typically been stated in technical
legal terms. Nothing in this regulation prohibits a contract from including provisions that provide more favorable results for the borrower
than those that would result from the use of a model clause.
(b) Model clauses for a Chapter 342, Subchapter F signature
loan contract.
(1) Pronoun designation of parties. The model clauses refer to the Borrower as "I" or "me." The Lender is referred to as "you"
or "your."
(2) Promise to pay. The model clause for the borrower's
promise to pay reads:
(A) For contracts using the add-on method or the scheduled installment earnings method: "I promise to pay the Total of Payments to the order of you, the Lender. I will make the payments at
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(6)
Finance charge earnings and refund method.
(B) Add-on method for loans of $30 or less. At the licensee's option, the licensee may include the following model finance
charge and refund method language if the licensee makes loans of $30
or less using the add-on method: "The acquisition charge on this loan
will not be refunded if I pay off early. If this loan is for more than $30
and I pay all I owe before the beginning of the last monthly period,
I will save part of the installment account handling charge. You will
figure the amount I save by the sum of the periodic balances method.
This method is explained in the Finance Commission rules. You don't
have to refund or credit any amount less than $1.00."
(C) Scheduled installment earnings method. For contracts using the scheduled installment earnings method, the model fi-
nance charge earnings and refund method clause reads: "The annual
rate of interest is ___%. This interest rate may not be the same as the
Annual Percentage Rate. You figure the interest charge (also called
the installment account handling charge) by applying the scheduled installment earnings method as defined by the Texas Finance Code to the
unpaid principal balance. At the start of the loan, the unpaid principal balance equals the Amount Financed. The unpaid principal balance does not include the acquisition charge, the interest charge, late
charges, charges to extend a payment, or returned check fees. You calculate the Finance Charge and Total of Payments as if I will make each
payment on the day it is due. You will apply each of my payments in
this order: (1) part of the acquisition charge (figured on a straight-line
basis under Finance Commission rules), (2) late charges, (3) returned
check fees, (4) accrued interest, and (5) the unpaid principal balance.
If I pay off the loan in full early, I may save part of the interest charge.
However, you can still collect the unpaid acquisition charge, and the
acquisition charge will not be refunded. You don't have to refund or
credit any amount less than $1.00."
(D) True daily earnings method. For contracts using the
true daily earnings method, the model finance charge earnings and refund method clause reads: "The annual rate of interest is ___%. This
interest rate may not be the same as the Annual Percentage Rate. You
figure the interest charge (also called the installment account handling
charge) by applying the true daily earnings method as defined by the
Texas Finance Code to the unpaid principal balance. At the start of the
loan, the unpaid principal balance equals the Amount Financed. The
unpaid principal balance does not include the acquisition charge, the
interest charge, late charges, charges to extend a payment, or returned
check fees. You calculate the Finance Charge and Total of Payments
as if I will make each payment on the day it is due. You will apply
payments on the date they are received. This may result in a different Finance Charge or Total of Payments. You will apply each of my
payments in this order: (1) part of the acquisition charge (figured on a
straight-line basis under Finance Commission rules), (2) late charges,
(3) returned check fees, (4) accrued interest, and (5) the unpaid principal balance. If I pay off the loan in full early, you can still collect
the unpaid acquisition charge, and the acquisition charge will not be
refunded."
(7) Deferment clause. The deferment model clause for
contracts using the add-on method or the scheduled installment earnings method reads: "If I ask for more time to make any payment and
you agree, I will pay more interest to extend the payment. The extra
interest will be figured under the Finance Commission rules."
(8) Default clause. The model default clause reads: "If I
break any of my promises in this document, you can demand that I
immediately pay all that I owe. You can also do this if you in good
faith believe that I am not going to be willing or able to keep all of my
promises."
(9) Waiver of notice of intent to accelerate and waiver of
notice of acceleration clause. The model waiver of notice of intent to
accelerate and waiver of notice of acceleration clause reads: "I agree
that you don't have to give me notice that you are demanding or intend
to demand immediate payment of all that I owe."
(10) Fee for dishonored check clause. The model clause
specifies the maximum allowable dishonored check fee. The licensee
may always choose a lesser amount. The fee for dishonored check
model clause reads: "I agree to pay you a fee of up to $30 for a returned
check. You can add the fee to the amount I owe or collect it separately."
(11) Signature block. At the licensee's option, a witness
signature block may be added.
(12) Clause describing collateral.
(A) In the Truth in Lending Act disclosure box, the
model clause describing the collateral reads: "You will have a security
interest in the following described collateral ________________."
(B) At the licensee's option, if the promissory note is
unsecured, the licensee may use the following clause: "This note is
unsecured."
(13) Security agreement clause. The model clause setting
out the security agreement in case of default reads: "If I am giving
collateral for this loan, I will see the separate security agreement for
more information and agreements."
(14) Mailing of notice to borrower. The model agreement
regarding the mailing of notices to the borrower reads: "You can mail
any notice to me at my last address in your records. Your duty to give
me notice will be satisfied when you mail it."
(15) Statement of truthful information. The following
clause is sufficient as the borrower's agreement that the information
provided to the licensee is true: "I promise that all information I gave
you is true."
(16) No waiver of lender's rights. The model agreement
regarding the lender's rights reads: "If you don't enforce your rights
every time, you can still enforce them later."
(17) Modifications in writing. The model agreement requiring any change to be in writing reads: "Any change to this agreement has to be in writing. Both you and I have to sign it."
(18) Application of law. The model clause regarding the
law to be applied to the contract reads: "Federal law and Texas law
apply to this contract."
(19) Joint liability. The model joint liability agreement
reads: "I will keep all of my promises in this document. If there is
more than one Borrower, each Borrower agrees to keep all of the
promises in the loan document."
(20) Usury savings clause. The model usury savings clause
reads: "I don't have to pay interest or other amounts that are more than
the law allows."
(21) OCCC notice. Under §90.105 of this title (relating
to OCCC Notice), the following required notice must be given by licensees to let consumers know how to file complaints: "For questions or complaints about this loan, contact (insert name of lender)
at (insert lender's phone number and, at lender's option, one or more
of the following: mailing address, fax number, website, e-mail address). The lender is licensed and examined under Texas law by the
Office of Consumer Credit Commissioner (OCCC), a state agency. If
a complaint or question cannot be resolved by contacting the lender,
consumers can contact the OCCC to file a complaint or ask a general
credit-related question. OCCC address: 2601 N. Lamar Blvd., Austin,
Texas 78705. Phone: (800) 538-1579. Fax: (512) 936-7610. Website:
occc.texas.gov. E-mail: [email protected]."
(22) Security agreement. The model clause setting out the
security agreement reads: "We are entering into this security agreement
at the same time that we are entering into a loan. In exchange for the
loan referenced above, I agree to the follow terms and conditions: To
secure this loan, I give you a security interest in the collateral. The
collateral includes the property listed below, anything that becomes
attached to it, and all proceeds of the collateral. This security interest
also secures all other debt I owe you now. I understand that all collateral
that I have given to secure loans may also be used to secure this and any
other loans you may make to me. I own the collateral. I won't sell or
transfer it without your written permission. I won't allow anyone else to
have an interest in the collateral except you. I will keep the collateral
at my address shown above. I will promptly tell you in writing if I
change my address. I won't permanently remove the collateral from
Texas unless you give me written permission. I will timely pay all
taxes and license fees on the collateral. I will keep it in good repair. I
won't use the collateral illegally. Any change to this security agreement
has to be in writing. Both you and I have to sign it. Any default under
my agreements with you will be a default of this security agreement.
Federal law and Texas law apply to this security agreement. If I don't
keep any of my promises, you can take the collateral. You will only
take the collateral lawfully and without a breach of the peace. If you
take my collateral, you will tell me how much I have to pay to get it
back. If I don't pay you to get the collateral back, you can sell it or take
other action allowed by law. You will send me notice at least 10 days
before you sell it. My right to get the collateral back ends when you
sell it. You can use the money you get from selling it to pay amounts
the law allows, and to reduce the amount I owe. If any money is left,
you will pay it to me. If the money from the sale is not enough to pay
all I owe, I must pay the rest of what I owe you plus interest."
§90.304. Permissible Changes.
(a) A licensee may consider making the following types of
changes to the signature loans plain language model clauses:
(1) Adding information related to information set forth in
the model clauses that is not otherwise prohibited by law;
(2) Substituting another term for "Lender" or "Borrower"
that has the same meaning, or using pronouns such as "you," "we," and
"us";
(3) Presenting model clauses in any order, and combining
or further segregating the model clauses;
(4) Inserting descriptive headings or number provisions;
Leslie L. Pettijohn
Commissioner
♦
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♦
SUBCHAPTER D. SECOND LIEN HOME
EQUITY LOANS (SUBCHAPTER G)
7 TAC §§90.401 - 90.404
Commissioner.
email address.
(5) Changing the case of a word if otherwise permitted by
the Texas Finance Code; or
(6) Making other changes that do not affect the substance
of the disclosures.
(7) A sample model contract using the add-on method is
presented in the following example.
Figure: 7 TAC §90.304(a)(7)
§90.403.
(8) A sample model contract using the scheduled installment earnings method is presented in the following example.
Figure: 7 TAC §90.304(a)(8)
Model Clauses.
(9) A sample model contract using the true daily earnings
method is presented in the following example.
Figure: 7 TAC §90.304(a)(9)
(b) Model clauses for a Chapter 342, Subchapter G second lien
home equity loan contract.
(10) A sample model security agreement is presented in the
following example.
Figure: 7 TAC §90.304(a)(10)
(A) The model identification clause lists the account or
contract number, the name and address of the lender, the date of the
note, and the name and address of the borrower. It also lists the following items that must be included on the promissory note under Regulation Z, 12 C.F.R. §1026.36(g):
(b) A licensee has considerable flexibility to arrange the format of the model form if the revised format does not significantly adversely affect the substance, clarity, or meaningful sequence of the disclosures.
to adopt.
Identification.
(i) the lender's Nationwide Mortgage Licensing
System and Registry identification number (labeled "Creditor/Lender
NMLS ID");
(ii) the name of the individual residential mortgage
loan originator with primary responsibility for the origination (labeled
"Loan Originator"); and
(iii) the originator's Nationwide Mortgage Licensing System and Registry identification number (labeled "Loan Originator NMLS ID").
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(B) The model clause identifying the pronouns used for
the borrower and the lender reads: "A word like "I" or "me" means each
person who signs as a Borrower. A word like "you" or "your" means
the Lender or "Note Holder." The Lender is _________. The Lender
may sell or transfer this Note. The Lender or anyone who is entitled to
receive payments under this Note is called the "Note Holder." You will
tell me in writing who is to receive my payments."
(2) Promise to pay. One permissible change to the model
language for the scheduled installment earnings method would be to
allow partial prepayments of the principal during the term of the loan.
This variation on the Texas scheduled installment earnings method
would allow periodic reductions of the principal balance by partial
prepayments. This variation would allow reductions of the principal
balance that were not originally scheduled. The model clause for the
borrower's promise to pay reads: "This loan is an Extension of Credit
defined by Section 50(a)(6), Article XVI of the Texas Constitution."
(A) For contracts using the scheduled installment earnings method: "I promise to pay the Total of Payments to the order of
you. (The "principal" or "cash advance" is $________. This amount
plus interest must be paid by _________ (maturity date).) I will make
payments to you at the address above or as you direct. I will make
the payments on the dates and in the amounts shown in the Payment
Schedule."
"I promise to pay the cash advance plus the accrued interest to the order
of you. (The "principal" or "cash advance" is $________. This amount
Schedule."
(C) The model payment schedule reads:
Figure: 7 TAC §90.403(b)(2)(C)
(3) Late charge.
(A) Generally. The general model late charge provision
for contracts using the scheduled installments earnings method or the
true daily earnings method reads: "If I don't pay all of a payment within
will be 5% of the scheduled payment."
(B) High-cost mortgage loans. The model late charge
provision for high-cost mortgage loans subject to the limitation on late
charges in Regulation Z, 12 C.F.R. §1026.34(a)(8), reads: "If I don't
pay all of a payment within 15 days after it is due, you can charge me
a late charge. The late charge will be 4% of the amount of the payment
past due."
(4) After maturity interest. The model provision for after
maturity interest for contracts using the scheduled installment earnings
method reads: "If I don't pay all I owe when the final payment becomes
due, I will pay interest on the amount that is still unpaid. That interest
will be the higher of the rate of 18% per year or the maximum rate
allowed by law. That interest will begin the day after the final payment
becomes due."
(5) Prepayment clause. The model prepayment clause options read:
(A) For contracts using the scheduled installment earnings method: "I can make a whole payment early. Unless you agree
otherwise in writing, I may not skip payments. If I make a payment
early, my next payment will still be due as scheduled."
I may not skip payments. If I make a payment early, my next payment
will still be due as scheduled."
(6) Finance charge earnings and refund method. The
model provision options specifying the finance charge earnings and
refund method read:
(A) For contracts using the scheduled installment earnings method - Section 342.301 rate loans, the model language reads:
Figure: 7 TAC §90.403(b)(6)(A)
(B) For contracts using the scheduled installment earnings method with prepayments option - Section 342.301 rate loans, the
model language reads:
Figure: 7 TAC §90.403(b)(6)(B)
(C) For contracts using the true daily earnings method
- Section 342.301 rate loans, the model language reads:
Figure: 7 TAC §90.403(b)(6)(C)
specifies the maximum allowable dishonored check fee. A licensee
may always choose a lesser amount. The fee for dishonored check
model clause reads: "I agree to pay you a fee of up to $30 for a returned check. You may add the fee to the amount I owe or collect it
separately."
(8) Default clause. The model provision specifying the
conditions causing default reads:
Figure: 7 TAC §90.403(b)(8)
(9) Property insurance. The model provision regarding
property insurance reads:
Figure: 7 TAC §90.403(b)(9)
(10) Credit insurance. If single premium credit insurance
is allowable, a permissible change to the disclosure can be to offer a
single charge for the entire term of the loan. The term for the single
premium charge should be shown for the original term of the loan,
unless otherwise specified. The licensee has the option of including
language that reads: "The insurance will cancel on the date when the
total past due premiums equal or exceed (insert number) times the first
month's premium." The industry standard regarding the relationship
between total past due premiums and the first month's premium in this
equation appears to be four times. However, if a different time frame
is more appropriate, that time frame may be used. The model credit
insurance disclosure box reads:
Figure: 7 TAC §90.403(b)(10)
(11) Mailing of notices to borrower. The model provision
regarding the mailing of notices to the borrower reads: "You or I may
mail or deliver any notice to the address above. You or I may change
the notice address by giving written notice. Your duty to give me notice
will be satisfied when you mail it by first class mail."
(12) Due on sale clause, notice of intent to accelerate, and
notice of acceleration. The model provision regarding the due on sale
clause, notice of intent to accelerate, and notice of acceleration reads:
"If all or any interest in the homestead is sold or transferred without
your prior written consent, you may require immediate payment in full
of all that I owe under this Loan Agreement. You will not exercise this
option if prohibited by law. If you exercise this option, you will give me
notice of acceleration (i.e., payment of all I owe at once). This notice
will give me a period of not less than 21 days from the date of the notice
within which I must pay all that I owe under this Loan Agreement. If I
fail to pay all that I owe before the end of this period, you may use any
remedy allowed by the Loan Agreement."
"I can make any payment early. Unless you agree otherwise in writing,
(13) No waiver of lender's rights. The model provision expressing no waiver of the lender's rights reads: "If you don't enforce
your rights every time, you can still enforce them later."
(14) Collection expenses clause. The model collection expenses clause reads: "If you require me to pay all that I owe at once,
you will have the right to be paid back by me for all of your costs and
expenses in enforcing this Loan Agreement to the extent not prohibited
by law, including Section 50(a)(6), Article XVI of the Texas Constitution. These expenses include, for example, reasonable attorneys' fees.
I understand that these fees are not for maintaining or servicing this
Loan Agreement."
(15) Joint liability. The model provision providing for joint
liability reads: "I understand that you may seek payment from only
me without first looking to any other Borrower. You can enforce your
rights under this Loan Agreement solely against the homestead. This
Loan Agreement is made without personal liability against each owner
of the homestead and the spouse of each owner unless the owner or
spouse obtained this loan by actual fraud. If this loan is obtained by
actual fraud, I will be personally liable for the debt, including a judgment for any deficiency that results from your sale of the homestead
for an amount less than is owed under this Loan Agreement."
reads: "I do not have to pay interest or other amounts that are more than
the law allows."
(17) Savings clause. The model savings clause stating that
if any part of the contract is invalid, the rest remains valid reads: "If
any part of this Loan Agreement is declared invalid, the rest of the Loan
Agreement remains valid. If any part of this Loan Agreement conflicts
with any law, that law will control. The part of the Loan Agreement
that conflicts with any law will be modified to comply with the law.
The rest of the Loan Agreement remains valid."
(18) Contract supersedes prior agreements. For loan agreements exceeding $50,000, this notice must be boldfaced, capitalized,
underlined, or otherwise set out from the surrounding written material
to be conspicuous. The model integration clause providing that the contract supersedes prior agreements reads: "This written Loan Agreement
is the final agreement between you and me and may not be changed by
prior, current, or future oral agreements between you and me. There are
no oral agreements between you and me relating to this Loan Agreement. Any change to this Loan Agreement must be in writing. Both
you and I have to sign written agreements."
(19) Security document. The model provision stating that
the homestead described in the loan agreement is subject to the lien
of the security document reads: "The homestead described above by
the property address is subject to the lien of the Security Document.
I will see the separate Security Document for more information about
my rights and responsibilities."
(20) Application of law. The model clause specifying that
federal law and Texas law apply to the contract reads: "Federal law and
Texas law apply to this Loan Agreement. The Texas Constitution will
be applied to resolve any conflict between the Texas Constitution and
any other law."
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(22) Clause describing collateral. The model provision describing the collateral reads: "The homestead described above by the
property address is subject to the lien of the Security Document."
(23) Signature blocks. The licensee may also provide additional signature lines for witness signatures. The model provision
regarding signature blocks reads:
Figure: 7 TAC §90.403(b)(23)
(c) Model clauses for the security document for a Chapter 342,
Subchapter G second lien home equity loan contract.
(1) The model definitions section reads:
(A) "Loan Agreement" means the Note, Security Document, deed of trust, any other related document, or any combination
of those documents, under which you have extended credit to me.
(B) "Security Document" means this document, which
is dated ________, together with all Riders to this document.
(C) "I" or "me" means _________________________
________________, the grantor under this Security Document and the
person who signed the Note ("Borrower").
(D) "You" means _____________________________
_____________, the Lender and any holder entitled to receive payments under the Note. Your address is ________________________
_________________. Your NMLS ID is __________. You are the
beneficiary under this Security Document. The loan originator's name
is _________________________________________. The loan originator's NMLS ID is __________.
(E) "Trustee" is ______________________________.
Trustee's address is ___________________________________.
(F) "Note" means the promissory Note signed by me
and dated ______________. The Note states that the amount I owe
you is _________________ dollars (U.S. $_______) plus interest. I
have promised to pay this debt in regular Periodic Payments and to
pay the debt in full not later than ______________________________
(maturity date).
(G) "My Homestead" means the property that is described below under the heading "Transfer of Rights in the Property."
(H) "Extension of Credit" means the debt evidenced by
the Note, as defined by Section 50(a)(6), Article XVI of the Texas Constitution and all the documents executed in connection with the debt.
(I) "Riders" means all Riders to this Security Document
that I execute.
Figure: 7 TAC §90.403(c)(1)(I) (No change.)
(J) "Applicable Law" means all controlling applicable
federal, Texas and local constitutions, statutes, regulations, administrative rules, local ordinances, judicial and administrative orders (that
have the effect of law) as well as all applicable final, non-appealable
judicial opinions.
(K) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges that are imposed on me or My Homestead by a condominium association, homeowners association, or similar organization.
(L) "Electronic Funds Transfer" means any transfer of
funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, computer, or magnetic tape so as to order, instruct,
or authorize a financial institution to debit or credit an account. The
term includes point-of-sale transfers, automated teller machine transactions, transfers initiated by telephone, wire transfers, and automated
clearinghouse transfers.
(M) "Escrow Items" means those items that are described in Section ___ of this Security Document.
(N) "Miscellaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any third
party (other than proceeds paid under my insurance) for: damage or
destruction of My Homestead; condemnation or other taking of all or
any part of My Homestead; conveyance instead of condemnation; or
misrepresentations or omissions related to the value or condition of
My Homestead.
(O) "Periodic Payment" means the regularly scheduled
amount due for principal and interest under the Note plus any amounts
under this Security Document.
(P) "RESPA" means the Real Estate Settlement Procedures Act (12 U.S.C. §§2601-2617) and Regulation X (12 C.F.R. Part
1024), as amended, or any additional or successor legislation or regulation that governs the same subject matter. As used in this Security
Document, "RESPA" refers to all requirements and restrictions that
are imposed in regard to a "federally related mortgage loan" even if
the Loan Agreement does not qualify as a "federally related mortgage
loan" under RESPA.
(Q) "Successor in Interest of me" means any party that
has taken title to My Homestead, whether or not that party has assumed
my obligations under the Loan Agreement.
(R) "Ground Rents" means amounts I owe if I rented the
real property under the buildings covered by this Security Document.
Such an arrangement usually takes the form of a long-term "ground
lease."
(2) Secured agreement. The model provision regarding the
secured nature of the agreement reads: "To secure this loan, I give you
a security interest in My Homestead including existing and future improvements, easements, fixtures, attachments, replacements and additions to the property, insurance refunds, and proceeds. This security
interest is intended to be limited to the homestead property and not
other collateral, as required under the Texas Constitution."
(3) Transfer of rights in property. The model provision regarding a transfer of rights in the property reads:
Figure: 7 TAC §90.403(c)(3) (No change.)
(4) Borrower and Lender's promise. The model provision
regarding the borrower and lender's promise to comply with the terms
of the security document reads: "YOU AND I PROMISE:".
(5) Late charges and prepayment. The model provision regarding late charges and prepayment of principal and interest reads:
(6) Funds for escrow items. The model provision regarding
the funds for escrow items reads:
(7) Charges and liens. The model provision regarding
charges and liens reads:
(9) Homestead. The model provision stating that the borrower occupies the property as the borrower's homestead reads: "I now
occupy and use the property secured by this Security Document as my
Texas homestead."
(10) Preservation, maintenance, protection, and inspection
of property. The model provision regarding preservation, maintenance,
protection, and inspection of the property reads: "I will not destroy,
damage or impair My Homestead, allow it to deteriorate, or commit
waste. Whether or not I live in My Homestead, I will maintain it in
order to prevent it from deteriorating or decreasing in value due to its
condition. I will promptly repair the damage to My Homestead to avoid
further deterioration or damage unless you and I agree in writing that
it is economically unreasonable. I will be responsible for repairing or
restoring My Homestead only if you release the insurance or condemnation proceeds for the damage to or the taking of My Homestead. You
may release proceeds for the repairs and restoration in a single payment
or in a series of payments as the work is completed. I still am obligated
to complete repairs or restoration of My Homestead even if there are not
enough proceeds to complete the work. You or your agent may inspect
My Homestead. You may inspect the interior of My Homestead with
reasonable cause. You will give me notice stating reasonable cause
when or before the interior inspection occurs."
(11) Conditions causing actual fraud. The model provision
specifying the conditions causing actual fraud reads:
(12) Protection of lender's interest in property and rights
under security document. The model provision regarding the protection of the lender's interest in the property and rights under the security
document reads:
(13) Assignment of miscellaneous proceeds and forfeiture.
The model provision regarding the assignment of miscellaneous proceeds and forfeiture reads:
(14) Forbearance not a waiver. The model provision specifying that the borrower is not released from liability if the licensee
modifies the payment schedule reads: "My successors and I will not
be released from liability if you extend the time for payment or modify
the payment schedule. If I pay late, you will not have to sue me or my
successor to require timely future payments. You may refuse to extend
time for payment or modify this Loan Agreement even if I request it.
If you do not enforce your rights every time, you may enforce them
later."
(15) Joint and several liability, security document execution, successors obligated. The model provision regarding joint and
several liability and specifying that the person who signs the contract
grants ownership in the homestead and binds the person's successors
and assigns reads:
(16) Extension of credit charges. The model provision regarding the extension of credit charges reads:
(17) Delivery of notices. The model provision regarding
the delivery of notices reads: "Under the Loan Agreement, you and I
will give notices to each other in writing. Any notice under the Loan
Agreement will be considered given to me when it is mailed by first
class mail or when actually delivered to me at my address if given by
another means. You will give notice to My Homestead address unless I provide you a different address. I will notify you promptly of
any change of address. I will comply with any reasonable procedure
for giving a change of address that you provide. There will only be
one address for notice under the Loan Agreement. Notice to me will
be considered notice to all persons who are obligated under the Loan
Agreement unless Applicable Law requires a separate notice. I may
give you notice by delivering or mailing it by first class mail to the address provided by you, unless you require a different procedure. You,
however, will not receive notice under the Loan Agreement until you
actually receive it. Legal requirements governing notices subject to the
Loan Agreement will prevail over conditions in the Loan Agreement."
(18) Governing law and severability. The model provision
regarding the law governing the contract, stating that if any part of the
contract is invalid, the rest of the contract remains valid reads: "The
Loan Agreement will be governed by Texas law and federal law. If any
provision in the Loan Agreement conflicts with any legal requirement,
all non-conflicting provisions will remain effective."
(19) Rules of construction. The model provision regarding
rules of clause construction reads:
(20) Loan agreement copies. The model provision specifying that the lender will give the borrower a copy of all signed documents at the time the loan agreement is made reads: "At the time the
Loan Agreement is made, you will give me copies of all documents I
sign."
(21) Transfer of interest in property. The model provision
regarding a transfer of interest in the property reads: ""Interest in My
Homestead" means any legal or beneficial interest. This term includes
those beneficial interests transferred in a bond for deed, contract for
deed, installment sales contract or escrow agreement (the intent of
which is the transfer of title by me at a future date to a purchaser).
If any part of My Homestead is sold or transferred without your prior
written permission, you may require immediate payment of all I owe.
You will not exercise this option if disallowed by Applicable Law. If
you accelerate, you will give me notice. The notice of acceleration will
allow me at least 21 days from the date the notice is given to pay all
I owe. If I fail to timely pay all I owe, you may pursue any remedy
allowed by the Loan Agreement without further notice or demand."
(22) Borrower's right to reinstate after acceleration. The
model provision regarding the borrower's right to reinstate after acceleration reads:
(23) Sale of note, change of loan servicer, notice of
grievance, and lender's right to comply. The model provision regarding
the sale of the loan, change of loan servicer, notice of grievance, and
the lender's right to comply reads:
(24) Hazardous substances. The model provision regarding hazardous substances reads:
(25) Acceleration and remedies. The model provision regarding acceleration and remedies reads:
(26) Power of sale. The model provision regarding the
power of sale reads:
(27) Release. The model provision regarding the release
of the lien securing the loan agreement reads: "You will cancel and
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return the Note to me and give me, in recordable form, a release of
lien securing the Loan Agreement or a copy of any endorsement of
the Note and assignment of the lien to a lender that is refinancing the
Loan Agreement. I will pay only the cost of recording the release of
lien. My acceptance of the release or endorsement and assignment will
end all of your duties under Section 50(a)(6), Article XVI of the Texas
Constitution."
(28) Non-recourse liability. The model provision specifying that the loan agreement is given without personal liability against
each owner of the homestead and the spouse of each owner reads:
(29) Proceeds. The model provision specifying that the
borrower has not been required to repay another debt with the proceeds
of the loan reads: "I am not required to apply the proceeds of the Loan
Agreement to repay another debt except a debt secured by My Homestead or a debt to another lender."
(30) No assignment of wages. The model provision specifying that the borrower has not assigned wages as security for the loan
agreement reads: "I have not assigned wages as security for the Loan
Agreement."
(31) Acknowledgment of fair market value. The model
provision specifying that the licensee and the borrower have agreed
in writing to the fair market value of the homestead reads: "You and I
agreed in writing to the fair market value of My Homestead on the date
of the Loan Agreement."
(32) Trustees and trustee liability. The model provision regarding trustees and trustee liability reads:
(33) Waiver of additional collateral. The model provision
regarding the licensee's waiving additional collateral reads:
(34) Default. The model default provision reads: "Any default of my agreements with you will be a default of this Security Document."
(35) Signature blocks. The model provision regarding signature blocks reads:
(36) Non-purchase disclosure. The model provision indicating that the security document does not finance a purchase transaction should appear at the beginning of the document, below the heading
and prior to the definitions section. The model non-purchase disclosure
provision reads: "This Security Document is not intended to finance
Borrower's acquisition of the Property."
(37) Notice of confidentiality rights disclosure. The security document must incorporate a "Notice of Confidentiality Rights"
disclosure. The disclosure or notice must:
(A) appear on the top of the first page of the security
document;
(B) be in at least 12-point boldfaced type or 12-point
uppercase lettering; and
(C) be substantially similar to the required notice or disclosure under Texas Property Code, §11.008(b). The model notice
of confidentiality rights reads: "NOTICE OF CONFIDENTIALITY
RIGHTS: I MAY REMOVE OR STRIKE MY SOCIAL SECURITY
NUMBER OR MY DRIVER'S LICENSE NUMBER FROM THIS
DOCUMENT BEFORE IT IS FILED IN THE PUBLIC RECORDS."
2015.
TRD-201504403
Leslie L. Pettijohn
Commissioner
♦
♦
(B) The model clause identifying the pronouns used for
the borrower and the lender reads: A word like "I" or "me" means each
person who signs as a Borrower. A word like "you" or "your" means
the Lender or "Note Holder". The Lender is _________. The Lender
may sell or transfer this Note. The Lender or anyone who is entitled to
receive payments under this Note is called the "Note Holder." You will
tell me in writing who is to receive my payments."
♦
SUBCHAPTER E. SECOND LIEN PURCHASE
MONEY LOANS (SUBCHAPTER G)
7 TAC §§90.501 - 90.504
Commissioner.
email address.
purchase money loan contract.
(1)
Identification.
note, the name and address of the borrower, and the property address.
It also lists the following items that must be included on the promissory
note under Regulation Z, 12 C.F.R. §1026.36(g):
NMLS ID");
This variation on the scheduled installment earnings method would allow periodic reductions of the principal balance by partial prepayments.
This variation would allow reductions of the principal balance that were
not originally scheduled. The model clause options for the borrower's
promise to pay read:
Schedule."
Schedule."
Figure: 7 TAC §90.503(b)(2)(C)
(3) Late charge.
for contracts using the scheduled installment earnings method or the
past due."
(4) After maturity interest. The model clause specifies the
maximum interest rate allowed by law for after maturity interest for
contracts using the scheduled installment earnings method. A licensee
may always choose a lower rate. The model provision for after maturity
interest reads: "If I don't pay all I owe when the final payment becomes
becomes due."
refund method read:
Figure: 7 TAC §90.503(b)(6)(A)
Figure: 7 TAC §90.503(b)(6)(B)
Figure: 7 TAC §90.503(b)(6)(C)
may always choose a lesser amount. The model fee for dishonored
check provision reads: "I agree to pay you a fee of up to $30 for a returned check. You may add the fee to the amount I owe or collect it
separately."
(8) Default clause. The model provision specifying the
conditions causing default reads:
Figure: 7 TAC §90.503(b)(8)
Figure: 7 TAC §90.503(b)(9)
is offered, a permissible change to the disclosure can be to offer a single
charge for the entire term of the loan. The term for the single premium
charge should be shown for the original term of the loan, unless otherwise specified. The licensee has the option of including language
that reads: "The insurance will cancel on the date when the total past
due premiums equal or exceed (insert number) times the first month's
premium." The industry standard regarding the relationship between
total past due premiums and the first month's premium in this equation
appears to be four times. However, if a different time frame is more
appropriate, that time frame may be used. The model credit insurance
disclosure box reads:
Figure: 7 TAC §90.503(b)(10)
(11) Mailing of notices to borrower. The duty to give notice
is satisfied when it is mailed by first class mail. The model provision
regarding the mailing of notices to the borrower reads: "You or I may
mail or deliver any notice to the address above. You or I may change
the notice address by giving written notice. Your duty to give me notice
will be satisfied when you mail it."
"If all or any interest in the Property is sold or transferred without your
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prior written consent, you may require immediate payment in full of
all that I owe under this Loan Agreement. You will not exercise this
option if prohibited by law. If you exercise this option, you will give
me notice that you are demanding immediate payment of all that I owe.
This notice will give me a period of not less than 21 days from the date
of the notice within which I must pay all that I owe under this Loan
Agreement. If I fail to pay all that I owe before the end of this period,
you may use any remedy allowed by the Loan Agreement."
(13) No waiver of lender's rights. The model provision expressing no waiver of the lender's rights reads: "If you don't enforce
(14) Collection expenses clause. The model collection expenses clause reads: "If you require me to pay all that I owe at once,
you will have the right to be paid back by me for all of your costs and
by Applicable Law. These expenses include, for example, reasonable
attorneys' fees."
liability reads: "I understand that you may seek payment from only me
without first looking to any other Borrower."
Applicable Law allows."
(18) Contract supersedes prior agreements. For loan agreements exceeding $50,000, this notice must be boldfaced, capitalized,
underlined, or otherwise set out from the surrounding written material
to be conspicuous. The model integration clause providing that the contract supersedes prior agreements reads: "This written Loan Agreement
is the final agreement between you and me and may not be changed by
prior, current, or future oral agreements between you and me. There are
no oral agreements between you and me relating to this Loan Agreement. Any change to this Loan Agreement must be in writing. Both
you and I have to sign written agreements."
(19) Security document. The model provision stating
that the property described in the loan agreement is subject to the
lien of the security document reads: "In addition to the protections
given to the Note Holder under this Note, a Security Document, dated
______________, protects the Note Holder from possible losses that
might result if I do not keep the promises that I make in this Note. The
Security Document describes how and under what conditions I may
be required to make immediate payment in full of any amounts that I
owe under this Note."
Texas law apply to this Loan Agreement."
(22) Clause describing collateral. The model provision describing the collateral reads: "The collateral described above by the
property address is subject to the lien of the Security Document."
(23) Signature blocks. The licensee may also provide additional signature lines for witness signatures. The model provision
regarding signature blocks reads:
Figure: 7 TAC §90.503(b)(23)
(c) Model clauses for a security document for a Chapter 342,
Subchapter G second lien purchase money loan contract.
(1) The model definitions section reads:
(A) "Loan Agreement" means the Note, Security Document, deed of trust, any other related document, or any combination
of those documents, under which you have made a loan to me.
(B) "Security Document" means this document, which
is dated ________, together with all Riders to this document.
(C) "I" or "me" means _________________________
________________, the grantor under this Security Document and the
person who signed the Note ("Borrower").
(D) "You" means _____________________________
_____________, the Lender and any holder entitled to receive payments under the Note. Your address is ________________________
_________________. Your NMLS ID is __________. You are the
beneficiary under this Security Document. The loan originator's name
is _________________________________________. The loan originator's NMLS ID is __________.
(E) "Trustee" is ______________________________.
Trustee's address is _________________________________.
(F) "Note" means the Purchase Money Note
signed by me and dated ______________.
The Note states
that the amount I owe you is _________________ dollars (U.S.
$______) plus interest. I have promised to pay this debt in regular Periodic Payments and to pay the debt in full not later than
____________________________________ (maturity date).
(G) "Property" means the real estate that is described
below under the heading "Transfer of Rights in the Property."
(H) "Riders" means all Riders to this Security Document that I execute.
Figure: 7 TAC §90.503(c)(1)(H) (No change.)
(I) "Applicable Law" means all controlling applicable
federal, Texas and state constitutions, statutes, regulations, administrative rules, local ordinances, judicial and administrative orders (that
have the effect of law) as well as all applicable final, non-appealable
judicial opinions.
(J) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges that are
imposed on me or the Property by a condominium association, homeowners association, or similar organization.
(K) "Electronic Funds Transfer" means any transfer of
(L) "Escrow Items" means those items that are described in Section ___ of this Security Document.
(M) "Miscellaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any third party
(other than proceeds paid under my insurance) for: damage or destruction of the Property; condemnation or other taking of all or any part of
the Property; conveyance instead of condemnation; or misrepresentations or omissions related to the value or condition of the Property.
(N) "Periodic Payment" means the regularly scheduled
under this Security Document.
(O) "RESPA" means the Real Estate Settlement Procedures Act (12 U.S.C. §§2601-2617) and Regulation X (12 C.F.R. Part
1024), as amended, or any additional or successor legislation or regulation that governs the same subject matter. As used in this Security
Document, "RESPA" refers to all requirements and restrictions that
are imposed in regard to a "federally related mortgage loan" even if
the Loan Agreement does not qualify as a "federally related mortgage
loan" under RESPA.
(P) "Successor in Interest of me" means any party that
has taken title to the Property, whether or not that party has assumed
my obligations under the Loan Agreement.
(Q) "Ground Rents" means amounts I owe if I rented the
real property under the buildings covered by this Security Document.
Such an arrangement usually takes the form of a long-term "ground
lease."
(2) Secured agreement. The model provision regarding the
secured nature of the agreement reads: "To secure this Loan Agreement, I give you a security interest in the Property including existing
and future improvements, easements, fixtures, attachments, replacements and additions to the Property, insurance refunds, and proceeds."
(4) Borrower and Lender's promise. The model provision
regarding the borrower and lender's promise to comply with the terms
of the security document reads: "YOU AND I PROMISE:".
(5) Late charges and prepayment. The model provision regarding late charges and prepayment of principal and interest reads:
damage or impair the Property, allow it to deteriorate, or commit waste.
Whether or not I live in the Property, I will maintain it in order to pre-
vent it from deteriorating or decreasing in value due to its condition. I
will promptly repair the damage to the Property to avoid further deterioration or damage unless you and I agree in writing that it is economically unreasonable. I will be responsible for repairing or restoring the
Property only if you release the insurance or condemnation proceeds
for the damage to or the taking of the Property. You may release proceeds for the repairs and restoration in a single payment or in a series
of payments as the work is completed. I still am obligated to complete
repairs or restoration of the Property even if there are not enough proceeds to complete the work. If this Security Document secures a unit in
a condominium or planned unit development, I will perform all of my
obligations under the declaration or covenants creating or governing
the condominium or planned unit development, and any other relevant
document. You or your agent may inspect the Property. You may inspect the interior of the Property with reasonable cause. You will give
me notice stating reasonable cause when or before the interior inspection occurs."
(10) Protection of lender's interest in property and rights
under security document. The model provision regarding the protection of the lender's interest in the property and rights under the security
document reads:
(12) Forbearance not a waiver. The model provision specifying that the borrower is not released from liability if the licensee
modifies the payment schedule reads: "My successors and I will not
be released from liability if you extend the time for payment or modify
the payment schedule. If I pay late, you will not have to sue me or my
successor to require timely future payments. You may refuse to extend
time for payment or modify this Loan Agreement even if I request it.
If you do not enforce your rights every time, you may enforce them
later."
(13) Joint and several liability, security document execution, successors obligated. The model provision regarding joint and
several liability and specifying that the person who signs the contract
grants his ownership in the property and binds his successors and assigns reads:
(14) Extension of credit charges. The model provision for
the extension of credit charges reads:
(15) Delivery of notices. The model provision regarding
the delivery of notices reads: "Under the Loan Agreement, you and I
will give notices to each other in writing. Any notice under the Loan
Agreement will be considered given to me when it is mailed by first
class mail or when actually delivered to me at my address if given
by another means. You will give notice to the Property address unless I provide you a different address. I will notify you promptly of
any change of address. I will comply with any reasonable procedure
for giving a change of address that you provide. There will only be
one address for notice under the Loan Agreement. Notice to me will
be considered notice to all persons who are obligated under the Loan
Agreement unless Applicable Law requires a separate notice. I may
give you notice by delivering or mailing it by first class mail to the address provided by you, unless you require a different procedure. You,
however, will not receive notice under the Loan Agreement until you
actually receive it. Legal requirements governing notices subject to the
Loan Agreement will prevail over conditions in the Loan Agreement."
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(16) Governing law and severability. The model provision
regarding the law governing the contract, stating that if any part of the
contract is invalid, the rest of the contract remains valid reads: "The
Loan Agreement will be governed by Texas law and federal law. If any
provision in the Loan Agreement conflicts with any legal requirement,
all non-conflicting provisions will remain effective."
(18) Loan agreement copies. The model provision specifying that the lender will give the borrower a copy of all signed documents at the time the loan agreement is made reads: "At the time the
Loan Agreement is made, you will give me copies of all documents I
sign."
(19) Transfer of interest in property. The model provision
regarding a transfer of interest in the property reads: "Interest in the
Property" means any legal or beneficial interest. This term includes
those beneficial interests transferred in a bond for deed, contract for
deed, installment sales contract or escrow agreement (the intent of
which is the transfer of title by me at a future date to a purchaser). If
any part of the Property is sold or transferred without your prior written
permission, you may require immediate payment of all I owe. You will
not exercise this option if disallowed by Applicable Law. If you accelerate, you will give me notice. The notice of acceleration will allow
me at least 21 days from the date the notice is given to pay all I owe. If
I fail to timely pay all I owe, you may pursue any remedy allowed by
the Loan Agreement without further notice or demand.
(21) Sale of note, change of loan servicer, notice of
grievance, and lender's right to comply. The model provision regarding the sale of the loan, change of loan servicer, notice of grievance,
and the lender's right to comply reads: "A full or partial interest in the
Loan Agreement can be sold one or more times without prior notice
to me. The sale may result in a change of the company servicing or
handling the Loan Agreement. The company servicing or handling the
Loan Agreement will collect my monthly payment and will comply
with other servicing conditions required by the Loan Agreement or
Applicable Law. In some cases, the company servicing or handling
the Loan Agreement may change even if the Loan Agreement is not
sold. If the company servicing or handling the Loan Agreement is
changed, I will be given written notice of the change. The notice will
state the name and address of the new company, the address to which
my payments should be made, and any other information required by
RESPA. Any notice of acceleration and opportunity to cure under the
Loan Agreement will satisfy the notice and opportunity to address the
alleged violation provisions of this Section. No agreement between
you and me or any third party will limit your ability to comply with
your duties under the Loan Agreement and the Applicable Law. You
and I are limiting all agreements so that all current or future interest or
fees in connection with this Loan Agreement will not be greater than
the highest amount allowed by Applicable Law. You and I intend to
conform the Loan Agreement to the provisions of Applicable Law.
If any part of the Loan Agreement is in conflict with the Applicable
Law, then that part will be corrected or removed. This correction will
be automatic and will not require any amendment or new document.
Your right to correct any violation will survive my paying off the
Loan Agreement. My right to correct will override any conflicting
provision of the Loan Agreement. Your right to comply as provided
in this Section will survive the payoff of the Loan Agreement. The
provisions of this Section will supersede any inconsistent provision of
the Loan Agreement."
(24) Assignment of rents, appointment of receiver, and
lender in possession. The model provision regarding assignment of
rents, appointment of receiver, and the lender in possession reads: "As
additional security, I assign to you the rents of the Property, provided
that I have the right, prior to acceleration or abandonment of the
Property, to collect and retain the rents as they become due. Upon
acceleration or abandonment, you, by agent or by court-appointed receiver, will be entitled to enter, take possession, manage the Property,
and collect due and past due rents. All rents you or the court-appointed
receiver collect will be applied first to payment of the costs of management of the Property and collection of rents, including receiver's
fees, premiums on receiver's bonds, and reasonable attorneys' fees,
and then to the sums secured by this Security Document. You and the
receiver will be liable to account only for rents received."
(25) Power of sale. The licensee has the option to choose
wording to indicate that a Trustee's deed will convey good title to the
Property that cannot be defeated. The model provision regarding the
(26) Release. If the licensee cannot return the note to the
borrower, the licensee may provide the borrower with a discharge and
release of all obligations under the loan. The discharge must meet
the requirements of Texas Finance Code, §342.454. The model provision regarding the release of the lien securing the loan agreement
reads: "Upon payment of all that I owe under this Loan Agreement,
you will cancel and return the Note to me and give me, in recordable
form, a release of lien securing the Loan Agreement or a copy of any
endorsement of the Note and assignment of the lien to a lender that is
refinancing the Loan Agreement. If you cannot, you will provide me
with a discharge and release of all obligations under the loan. I will
pay only the cost of recording the release of lien."
(27) Lender's rights and borrower's responsibilities. The
model provision specifying that each person who signs the document is
responsible for each promise and duty in the security document reads:
(29) Default. The model default provision reads: "Any default of my agreements with you will be a default of this Security Document."
(30) Subrogation. The model provision regarding subrogation reads: "If I ask, you will use proceeds from the Loan Agreement
to pay off all valid outstanding liens against the Property. You will then
own all rights, superior titles, liens, and interests owned or claimed by
any owner or holder of an outstanding lien or debt. You own these
things whether the lien or debt is transferred to you or whether it is released by the holder upon payment."
(31) Partial invalidity. The model provision regarding
what happens if the sums secured and other charges violate applicable
law reads: "If any portion of the sums secured by this Security Docu-
ment cannot be lawfully secured, payments minus those sums will be
applied first to the portions not secured. If any charge provided for in
this Loan Agreement, separately or together with other charges that
are considered part of this Loan Agreement, violates Applicable Law,
the charge is reduced to the extent necessary to eliminate the violation.
Lender will refund the amount of interest or other charges paid to
Lender in excess of the amount permitted by Applicable Law. At
Lender's option, the amount in excess will either be refunded directly
to me or will be applied to reduce the principal of the debt."
(32) Request for notice of default and foreclosure under superior mortgages or security documents. The model provision regarding the lender and borrower's request for notice of default and foreclosure under superior mortgages or security documents reads:
(33) Signature blocks. The model provision regarding signature blocks reads:
(34) Acknowledgment. The model provision regarding the
acknowledgment reads:
document;
2015.
TRD-201504404
Leslie L. Pettijohn
Commissioner
♦
♦
♦
SUBCHAPTER F. SECOND LIEN HOME
IMPROVEMENT CONTRACTS (SUBCHAPTER
G)
7 TAC §§90.601 - 90.604
Commissioner.
email address.
home improvement loan contract for use in a transaction that does not
allow for withdrawals or multiple advances.
(1) Identification. The model identification clause reads:
Figure: 7 TAC §90.603(b)(1) (No change.)
(2)
Definitions. The model definitions section reads:
(A) "Owner" means (name of Owner), whose address
is (address of Owner, including county). If Owner and Maker are not
the same person, the word "Owner" includes Maker. "I" or "me" means
the Owner.
(B) "Contractor" means (name of Contractor), whose
address is (address of Contractor, including county) and includes those
to whom the Contractor has assigned or transferred Contractor's rights
and remedies. "You" or "your" means the Contractor.
(C) "Lender" means (name of Lender), whose address
is (address of Lender, including county) and includes those to whom
the Lender has assigned or transferred Lender's rights and remedies.
The Lender's NMLS ID is (NMLS ID of Lender). The loan originator's name is (name of loan originator with primary responsibility for
the origination). The loan originator's NMLS ID is (NMLS ID of originator).
(D) "Trustee" means (name of Trustee), whose address
is (address of Trustee, including county).
(E) "Property" means the Property at (list address of the
Property), whose legal description is (list legal description of the Property).
(F) "Work" means the construction project as agreed to
in writing between the Owner and Contractor.
(G) "Completion Date" means (date on which the Work
will be completed).
(H) "Contract" means this Texas Home Improvement
Mechanic's Lien Contract for Improvement and Power of Sale.
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(3) Construction of improvements. The model clause regarding construction of improvements reads: "You agree to furnish
and pay for all labor and material needed to complete the Work within
_____ days from the date of this Contract. The Work will be performed
on the Property in a good and workmanlike manner."
(4) Contract price. The model clause establishing the
contract price reads: "I agree to pay, or cause to be paid, to you,
or to your order, the sum of ___________________ dollars (U.S.
$_____________________) when the Work is completed."
(5) Transfer of lien. The model clause regarding the transfer of the lien reads: "You transfer to Lender all of your rights and
interests in this Contract."
(6) Completion by contractor, but not lender. The model
clause specifying that the lender is not responsible for completing the
construction reads: "You will complete the Work by the Completion
Date. Lender is not responsible for completing the Work. Lender is not
a guarantor of your performance. You will indemnify and hold Lender
harmless against all claims related to the Work."
(7) Partial lien. The model clause regarding a partial lien
reads: "If you do not complete the Work by the Completion Date in a
good and workmanlike manner, then Lender will have a valid lien for
the contract price, less the amount reasonably necessary to complete
the Work. As an alternative, Lender may choose to complete the Work
and the lien will be valid for the contract price."
(8) Changes and extras. The model clause regarding
changes and extras reads: "All labor or material furnished outside of
this Contract must be agreed upon in writing or it will be considered
as performed under the original Contract and you will receive no extra
money."
(9) Receipts and releases. The model clause regarding receipts and releases reads: "If I ask, you will give me valid receipts and
releases for the Work from any subcontractor, worker, and supplier."
(10) No work commenced. The model clause specifying
that no work has commenced prior to execution of the contract reads:
"This Contract is executed, acknowledged, and delivered before any
labor has been performed and any material has been furnished for the
Work."
(11) Trustee's duties. The model clause regarding the
trustee's duties reads:
(12) Preservation of claims and defenses. In accordance
with the Federal Trade Commission's Holder in Due Course Rule, 16
C.F.R. §433.2, it is an unfair or deceptive act or practice to take or
receive a consumer credit contract in connection with the sale or lease
of goods or services to consumers that does not include the following
notice. The notice regarding the preservation of claims and defenses
reads: "NOTICE. ANY HOLDER OF THIS CONSUMER CREDIT
OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR
WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY
THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE
DEBTOR HEREUNDER."
(13) Owner and contractor responsible. Texas Property
Code, §41.007 specifies that a home improvement contract must
contain a notice specifying that the owner and the contractor are
responsible for meeting the terms of the contract. This notice must
appear either in this contract or in the residential construction contract.
The Property Code requires that the notice must be conspicuously
printed, stamped, or typed in a font size equal to at least 10-point
boldfaced type or computer equivalent and appear next to the owner's
signature line on the contract. The wording of the notice is specified
by the Property Code, which uses the pronouns "you" and "your" to
refer to the owner. Licensees are encouraged to explain in the contract,
prior to the notice, that "you" and "your" refer to the owner in this
notice. The parties' signatures must be notarized. The licensee may
use a different notary acknowledgment without having to submit the
contract to the agency as a non-standard contract. The notice specifying that the owner and the contractor are responsible for meeting the
terms of the contract, the model explanatory clause regarding the use
of "you" and "your" in the notice, and the signature blanks read:
(14) Assignment. The parties may use a different assignment or a separate document for the assignment without having to submit the contract to the agency as a non-standard contract. The model
assignment in which the contractor transfers and assigns the lien to the
licensee reads:
document;
(c) Model clauses for a Chapter 342, Subchapter G second lien
home improvement loan promissory note for use in a transaction that
does not allow for withdrawals or multiple advances.
(1)
Identification.
note, the name and address of the borrower, the property address, the
principal amount, and the terms of payment. It also lists the following
items that must be included on the promissory note under Regulation
Z, 12 C.F.R. §1026.36(g):
NMLS ID");
(B) The model identification clause reads:
Figure: 7 TAC §90.603(c)(1)(B)
(2) Security for payment. The model clause relating to the
security for payment reads: "Liens created in the Contract secure this
Note. You will have a security interest in the following described property: (property description)"
(3) Definitions. The model definitions section reads:
the same person, the word "Owner" includes Maker.
and remedies.
(C) "Contract" means this Texas Home Improvement
Mechanic's Lien Contract for Improvement and Power of Sale dated
_________________________ between Contractor and Owner.
(D) "Property" means the Property at (list address of the
(E) "Note"
means
the
Texas
Home
Improvement Mechanic's Lien Note signed by me and dated
___________________________ and includes all amounts secured
by this Contract. The Note states that the amount I owe you is
______________ dollars (U.S. $___________________) plus
interest. I have promised to pay this debt in regular periodic payments
and to pay the debt in full not later than _________________.
Schedule."
Schedule."
Figure: 7 TAC §90.603(c)(4)(C)
(5) Late charge.
(A) Generally. The general late charge provision for
contracts using the scheduled installment earnings method or the true
daily earnings method reads: "If I don't pay all of a payment within 10
days after it is due, you can charge me a late charge. The late charge
past due."
becomes due."
refund method read:
Figure: 7 TAC §90.603(c)(8)(A)
Figure: 7 TAC §90.603(c)(8)(B)
Figure: 7 TAC §90.603(c)(8)(C)
(9) Deferment. The model provision regarding deferment
reads: "If I ask for more time to make any payment and you agree, I
will pay more interest to extend the payment. The extra interest will be
figured under the Finance Commission rules."
check provision reads: "I agree to pay you a fee of up to $30 for a
returned check. You may add the fee to the amount I owe or collect it
separately."
(11) Default. The model provision specifying the conditions causing default reads:
Figure: 7 TAC §90.603(c)(11)
Figure: 7 TAC §90.603(c)(12)
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Figure: 7 TAC §90.603(c)(13)
(14) Mailing of notices to borrower. The duty to give notice is satisfied when it is mailed by first class mail. The model provision regarding the mailing of notices to the borrower reads: "You or
I may mail or deliver any notice to the address above. You or I may
change the notice address by giving written notice. Your duty to give
(15) Statement of truthful information. The model provision specifying that the borrower gave truthful information reads: "I
promise that all information I gave you is true."
prior written consent, you may require immediate payment in full of all
that I owe under this loan agreement. You will not exercise this option
if prohibited by law. If you exercise this option, you will give me notice
that you are demanding payment of all that I owe. This notice will give
me a period of not less than 21 days from the date of the notice within
which I must pay all that I owe under this loan agreement. If I fail to
pay all that I owe before the end of this period, you may use any remedy
allowed by the loan agreement."
(17) No waiver of the lender's rights. The model provision
expressing no waiver of the lender's rights reads: "If you don't enforce
(18) Collection expenses. The model collection expenses
clause reads: "If you require me to pay all that I owe at once, you will
have the right to be paid back by me for all of your costs and expenses in
enforcing this loan agreement to the extent not prohibited by applicable
law. These expenses include, for example, reasonable attorneys' fees."
applicable law allows."
(21) Savings clause. The savings model clause stating that
any part of this loan agreement is declared invalid, the rest of the loan
agreement remains valid. If any part of this loan agreement conflicts
with any law, that law will control. The part of the loan agreement that
conflicts with any law will be modified to comply with the law. The
rest of the loan agreement remains valid."
(22) Prior agreements. For loan agreements exceeding
$50,000, this notice must be boldfaced, capitalized, underlined, or
otherwise set out from the surrounding written material to be conspicuous. The model clause stating that there are no prior agreements
between the parties regarding the loan agreement reads: "This written
loan agreement is the final agreement between you and me. It may not
be changed by prior, current, or future oral agreements between you
and me. There are no oral agreements between you and me relating
to this loan agreement. Any change to this loan agreement must be in
writing. Both you and I have to sign written agreements."
Texas law apply to this loan agreement."
(25) Collateral. The model clause regarding the collateral
reads: "The Property is subject to the Contract lien. I am responsible
for all obligations in this Note."
DEBTOR HEREUNDER."
(27) Signature blocks. Documents for a home improvement loan on a homestead must be signed at the office of the lender, an
attorney at law, or a title company. If this provision applies, the model
clause, "This document must be signed at the office of the Lender, an
attorney at law, or a title company" should appear above the signature
of the borrower. The licensee may also provide additional signature
lines for witness signatures. The model signature block reads:
Figure: 7 TAC §90.603(c)(27)
(d) Model clauses for a Chapter 342, Subchapter G second lien
home improvement loan contract for use in a transaction that allows for
withdrawals or multiple advances.
(1) Identification. The model identification clause listing
the date and the account or contract number reads:
Figure: 7 TAC §90.603(d)(1) (No change.)
the same person, the word "Owner" includes Maker. "I" or "me" means
the Owner.
and remedies. "You" or "your" means the Contractor.
The Lender's NMLS ID is (NMLS ID of Lender). The loan originator's name is (name of loan originator with primary responsibility for
the origination). The loan originator's NMLS ID is (NMLS ID of originator).
will be completed).
Mechanic's Lien Contract for Improvement, Power of Sale, and Deed
of Trust.
(I) "Note"
means
the
Texas
Home
Improvement Mechanic's Lien Note signed by me and dated
_________________________________ and includes all amounts
secured by this Contract. The Note states that the amount I
owe you is _____________________________ dollars (U.S.
$___________________) plus interest.
(J) "Loan Agreement" means the Note, Contract, and
any other related document under which Lender has made a loan to
me.
(K) "Applicable Law" means all controlling applicable
federal, state, and local law.
(L) "Tenant at Sufferance" means a person who continues to possess the Property with no current right to possess it.
(M) "Forcible Detainer" means a lawsuit to remove a
person from the Property.
amount due for principal and interest under the Note plus any amount
under this Contract.
(O) "Successor in Interest" means any party that has
taken title to the Property.
(P) "Lien" means the Mechanic's and Materialman's
Lien on the Property that results from the Contract and the Work
performed. The Lien includes all existing and future improvements,
easements, and rights in the Property.
(3) Construction of improvements. The model clause regarding construction of improvements reads: "You agree to furnish
and pay for all labor and material needed to complete the Work within
_____ days from the date of this Contract. The Work will be performed
on the Property in a good and workmanlike manner."
(4) Contract price. The model clause establishing the contract price reads: "I agree to pay, or cause to be paid, to you, or to your
order, the sum of _______________ dollars (U.S. $_______________)
when the Work is completed."
(5) Note payable to lender. The model clause specifying that the note is payable to the lender reads: "In exchange
for money from the Lender to you, I have signed a Note to the
Lender in the amount of __________________ dollars (U.S.
$__________________)."
(6) Lien to secure note. The model clause regarding security for the note reads: "To secure the amounts Lender provides to
you, and the interest payable to Lender, I give you, and you transfer to
Lender, the Lien. The Note is secured by a deed of trust, which I will
sign. The deed of trust will renew and extend the Lien created by this
Contract."
(7) Transfer of lien. The model clause regarding the transfer of the lien reads: "You transfer to Lender all of your rights and
interests in this Contract."
(8) Exceptions to conveyance and warranty. Any exceptions to conveyance and warranty should be specified in the contract.
The model clause regarding the exceptions to conveyance and warranty
reads: "The exceptions to conveyance and warranty are: (List any exceptions to conveyance and warranty.)"
(9) Completion by contractor, but not lender. The model
clause specifying that the lender is not responsible for completing the
construction reads: "You will complete the Work by the Completion
Date. Lender is not responsible for completing the Work. Lender is not
a guarantor of your performance. You will indemnify and hold Lender
harmless against all claims related to the Work."
(10) Partial lien. The model clause regarding a partial lien
reads: "If you do not complete the Work by the Completion Date in a
good and workmanlike manner, then Lender will have a valid lien for
the contract price, less the amount reasonably necessary to complete
the Work. As an alternative, Lender may choose to complete the Work
and the lien will be valid for the contract price."
(11) Changes and extras. The model clause regarding
changes and extras reads: "All labor or material furnished outside of
this Contract must be agreed upon in writing or it will be considered
as performed under the original Contract and you will receive no extra
money."
(12) Receipts and releases. The model clause regarding receipts and releases reads: "If I ask, you will give me valid receipts and
releases for the Work from any subcontractor, worker, and supplier."
(13) No work commenced. The model clause specifying
that no work has commenced prior to execution of the contract reads:
"This Contract is executed, acknowledged, and delivered before any
labor has been performed and any material has been furnished for the
Work."
(14) Owner's promises and rights. The model clause regarding the owner's promises and rights reads:
(15) Owner's duties. The model clause regarding the
owner's duties reads:
(16) Contractor's duties. The model clause regarding the
contractor's duties reads:
(17) Contractor's rights. The model clause regarding the
contractor's rights reads:
(18) Trustee's duties. The model clause regarding the
trustee's duties reads:
(19) General provisions. The model clause regarding general contract provisions reads:
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DEBTOR HEREUNDER."
(21) Owner and contractor responsible. Texas Property
Code, §41.007 specifies that a home improvement contract must
contain a notice specifying that the owner and the contractor are
responsible for meeting the terms of the contract. The notice must appear in either this contract or the residential construction contract. The
Property Code requires that the notice must be conspicuously printed,
stamped, or typed in a font size equal to at least 10-point boldfaced
type or computer equivalent and appear next to the owner's signature
line on the contract. The wording of the notice is specified by the
Property Code, which uses the pronouns "you" and "your" to refer to
the owner. Licensees are encouraged to explain in the contract, prior to
the notice, that "you" and "your" refer to the owner in this notice. The
parties' signatures must be notarized. The licensee may use a different
notary acknowledgment without having to submit the contract to the
agency as a non-standard contract. The notice specifying that the
owner and the contractor are responsible for meeting the terms of the
contract, the model explanatory clause regarding the use of "you" and
"your" in the notice, and the signature blanks read:
(22) Assignment. The parties may use a different assignment or a separate document for the assignment without having to submit the contract to the agency as a non-standard contract. The model
assignment in which the contractor transfers and assigns the lien to the
licensee reads:
document;
(e) Model clauses for a Chapter 342, Subchapter G second lien
home improvement loan promissory note for use in a transaction that
allows for withdrawals or multiple advances.
(1) Identification.
note, the name and address of the borrower, the property address, the
principal amount, and the terms of payment. It also lists the following
items that must be included on the promissory note under Regulation
Z, 12 C.F.R. §1026.36(g):
NMLS ID");
(B) The model identification clause reads:
Figure: 7 TAC §90.603(e)(1)(B)
(2) Security for payment. The model clause relating to the
security for payment reads: "The Deed of Trust and the Lien created in
the Contract secure this Note. You will have a security interest in the
following described property: (property description)"
the same person, the word "Owner" includes Maker.
and remedies.
will be completed).
of Trust.
(I) "Note" means the Texas Home Improvement Mechanic's Lien Note signed by me and dated ____________________
and includes all amounts secured by this Contract. The Note states
that the amount I owe you is _____________________ dollars (U.S.
$________________) plus interest.
(J) "Loan Agreement" means the Note, Contract, and
any other related document under which Lender has made a loan to
me.
(K) "Applicable Law" means all controlling applicable
(L) "Tenant at Sufferance" means a person who continues to possess the Property with no current right to possess it.
(M) "Forcible Detainer" means a lawsuit to remove a
person from the Property.
amount due for principal and interest under the Note plus any amount
under this Contract.
(O) "Successor in Interest" means any party that has
(P) "Lien" means the Mechanic's and Materialman's
Schedule."
Schedule."
Figure: 7 TAC §90.603(e)(4)(C)
(5)
Late charge.
for contracts using the scheduled installment earnings method or the
past due."
becomes due."
(7)
tions read:
Prepayment clause. The model prepayment clause op-
refund method read:
Figure: 7 TAC §90.603(e)(8)(A)
Figure: 7 TAC §90.603(e)(8)(B)
Figure: 7 TAC §90.603(e)(8)(C)
(9) Deferment. The model provision regarding deferment
reads: "If I ask for more time to make any payment and you agree, I
will pay more interest to extend the payment. The extra interest will be
figured under the Finance Commission rules."
check provision reads: "I agree to pay you a fee of up to $30 for a
returned check. You may add the fee to the amount I owe or collect it
separately."
(11) Default. The model provision specifying the conditions causing default reads:
Figure: 7 TAC §90.603(e)(11)
Figure: 7 TAC §90.603(e)(12)
Figure: 7 TAC §90.603(e)(13)
(14) Mailing of notices to borrower. The duty to give notice is satisfied when it is mailed by first class mail. The model provision regarding the mailing of notices to the borrower reads: "You or
I may mail or deliver any notice to the address above. You or I may
change the notice address by giving written notice. Your duty to give
(15) Statement of truthful information. The model provision specifying that the borrower gave truthful information reads: "I
promise that all information I gave you is true."
prior written consent, you may require immediate payment in full of
all that I owe under this Loan Agreement. You will not exercise this
option if prohibited by law. If you exercise this option, you will give
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me notice that you are demanding payment of all that I owe. This notice
will give me a period of not less than 21 days from the date of the notice
within which I must pay all that I owe under this Loan Agreement. If I
fail to pay all that I owe before the end of this period, you may use any
remedy allowed by the Loan Agreement."
(17) No waiver of the lender's rights. The model provision
expressing no waiver of the lender's rights reads: "If you don't enforce
(18) Collection expenses. The model collection expenses
clause reads: "If you require me to pay all that I owe at once, you
will have the right to be paid back by me for all of your costs and
by Applicable Law. These expenses include, for example, reasonable
attorneys' fees."
(20) Usury savings. The model usury savings clause reads:
"I do not have to pay interest or other amounts that are more than Applicable Law allows."
(22) Prior agreements. For loan agreements exceeding
$50,000, this notice must be boldfaced, capitalized, underlined, or
otherwise set out from the surrounding written material to be conspicuous. The model clause stating that there are no prior agreements
between the parties regarding the loan agreement reads: "This written
Loan Agreement is the final agreement between you and me. It may
not be changed by prior, current, or future oral agreements between
you and me. There are no oral agreements between you and me
relating to this Loan Agreement. Any change to this Loan Agreement
must be in writing. Both you and I have to sign written agreements."
(23) Note secured by deed of trust. The model clause stating that the note is secured by a deed of trust reads: "In addition to this
Note, the Deed of Trust protects the Note holder from losses that might
result if I do not keep the promises that I make in this Note. The Deed
of Trust describes how and under what conditions I may have to make
immediate payment of all that I owe under this Note."
(26) Collateral. The model clause regarding the collateral
reads: "The Property is subject to the Contract lien. I am responsible
for all obligations in this Note."
(27) Preservation of claims and defenses. The notice
regarding the preservation of claims and defenses reads: "NOTICE.
ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT
IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE
DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS
OR SERVICES OBTAINED PURSUANT HERETO OR WITH
THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE
DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE
DEBTOR HEREUNDER."
(28) Signature blocks. Documents for a home improvement loan on a homestead must be signed at the office of the lender, an
attorney at law, or a title company. If this provision applies, the model
clause, "This document must be signed at the office of the Lender, an
attorney at law, or a title company" should appear above the signature
of the borrower. The licensee may also provide additional signature
lines for witness signatures. The model signature block reads:
Figure: 7 TAC §90.603(e)(28)
(f) Model clauses for a Chapter 342, Subchapter G second lien
home improvement loan deed of trust for use in a transaction that allows
for withdrawals or multiple advances.
(A) "Borrower" is _________________. Borrower's
address is _____________________.
(B) "Contractor" is __________________. Contractor's address is _______________________.
(C) "Lender"
is
____________________.
Lender's address is ___________________________.
Lender's
NMLS ID is __________.
The loan originator's name is
_______________________________. The loan originator's NMLS
ID is __________.
(D) "Trustee" is ____________________.
address is _______________________.
Trustee's
(E) "I" or "me" means __________________________
______, the grantor under this Deed of Trust and the person who signed
the Note ("Borrower").
(F) "Loan Agreement" means the Contract, Note, Security Document, Deed of Trust, any other related document, or any
combination of those documents, under which Lender has made a loan
to me.
imposed on me or the Property by a condominium association, homeowners association, or similar organization.
(L) "Electronic Funds Transfer" means any transfer of
(M) "Escrow Items" means those items that are described in Section ___ of this Deed of Trust.
(N) "Miscellaneous Proceeds" means any compensation, settlement, award of damages, or proceeds paid by any third
party (other than proceeds paid under my insurance) for: damage or
destruction of the Property; condemnation or other taking of all or
any part of the Property; conveyance instead of condemnation; or
misrepresentations or omissions related to the value or condition of
the Property.
(O) "Periodic Payment" means the regularly scheduled
under this Deed of Trust.
(P) "RESPA" means the Real Estate Settlement Procedures Act (12 U.S.C. §§2601-2617) and Regulation X (12 C.F.R. Part
1024), as amended, or any additional or successor legislation or regulation that governs the same subject matter. As used in this Deed of
Trust, "RESPA" refers to all requirements and restrictions that are imposed in regard to a "federally related mortgage loan" even if the Loan
Agreement does not qualify as a "federally related mortgage loan" under RESPA.
(Q) "Successor in Interest" means any party that has
(R) "Ground Rents" means amounts I owe if I rented the
real property under the buildings covered by this Deed of Trust. Such
an arrangement usually takes the form of a long-term "ground lease."
(S) "Contract" means the Texas Home Improvement
of Trust.
(T) "Lien" means the Mechanic's and Materialman's
(G) "Deed of Trust" means this document, which is
dated ________, together with all riders to this document.
Figure: 7 TAC §90.603(f)(2) (No change.)
(H) "Note" means the Texas Home Improvement
Mechanic's Lien Note signed by me and dated ______________
and includes all amounts secured by this Contract. The Note states
that the amount I owe Lender is _________________ dollars (U.S.
$_________) plus interest.
(3) Payment of late charges and prepayment. The model
provision regarding the payment of late charges and prepayment of
principal and interest reads:
(I) "Property" means the property at (list address of the
(J) "Applicable Law" means all controlling applicable
(K) "Community Association Dues, Fees, and Assessments" means all dues, fees, assessments and other charges that are
damage, or impair the Property, allow it to deteriorate, or commit
waste. Whether or not I live in the Property, I will maintain it in
order to prevent it from deteriorating or decreasing in value due to its
condition. I will promptly repair the damage to the Property to avoid
further deterioration or damage unless Lender and I agree in writing
that it is economically unreasonable. I will be responsible for repairing
or restoring the Property only if Lender releases the insurance or
condemnation proceeds for the damage to or the taking of the Property.
Lender may release proceeds for the repairs and restoration in a single
payment or in a series of payments as the Work is completed. I still
am obligated to complete repairs or restoration of the Property even if
there are not enough proceeds to complete the Work. If this Deed of
Trust secures a unit in a condominium or planned unit development, I
will perform all of my obligations under the declaration or covenants
creating or governing the condominium or planned unit development,
and any other relevant document. Lender or Lender's agent may
inspect the Property. Lender may inspect the interior of the Property
with reasonable cause. Lender will give me notice stating reasonable
cause when or before the interior inspection occurs."
(8) Protection of lender's interest in the property and rights
under the deed of trust. The model provision regarding protection of
the lender's interest in the property and rights under the deed of trust
reads:
(10) Forbearance not a waiver. The model provision specifying that the borrower is not released from liability if the lender modifies the payment schedule reads: "If Lender doesn't enforce Lender's
rights every time, Lender can still enforce them later."
(11) Joint and several liability, deed of trust execution, successors obligated. The model provision regarding joint and several liability and specifying that the person who signs the contract grants ownership in the homestead and binds the person's successors and assigns
reads:
Applicable Law allows."
ments at the time the loan agreement is made reads: "At the time the
Loan Agreement is made, Lender will give me copies of all documents
I sign."
clause, notice of intent to accelerate and notice of acceleration reads:
"If all or any interest in the Property is sold or transferred without
Lender's prior written consent, Lender may require immediate payment
in full of all that I owe under this Loan Agreement. Lender will not exercise this option if Applicable Law prohibits. If Lender exercises this
option, Lender will give me notice that Lender is demanding payment
of all that I owe. This notice will give me a period of not less than 21
days from the date of the notice within which I must pay all that I owe
under this Loan Agreement. If I fail to pay all that I owe before the
end of this period, Lender may use any remedy allowed by the Loan
Agreement."
(18) Lender, contractor, and borrower's promises and
agreements. The model provision regarding the lender, contractor, and
borrower's promises and agreements reads: "LENDER, CONTRACTOR, AND I PROMISE AND AGREE:".
(20) Power of sale. The model provision regarding the
(22) Assignment of rents, appointment of receiver, and
lender in possession. The model provision regarding the assignment of
rents, appointment of receiver, and the lender in possession reads: "As
additional security, I assign to you the rents of the Property, provided
that you have the right, prior to acceleration or abandonment of the
Property, to collect and retain the rents as they become due. Upon
acceleration or abandonment, you, by agent or by court-appointed receiver, will be entitled to enter, take possession, manage the Property,
and collect due and past due rents. All rents you or the court-appointed
receiver collect will be applied first to payment of the cost of management of the Property and collection of rents, including receiver's fees,
premiums on receiver's bonds, and reasonable attorneys' fees, and then
to the sums secured by this Deed of Trust. You and the receiver will
be liable to account only for rents received."
(13) Mailing of notices to borrower. The duty to give notice is satisfied when it is mailed by first class mail. The model provision regarding the mailing of notices to the borrower reads: "Lender
or I may mail or deliver any notice to the address above. Lender or I
may change the notice address by giving written notice. Lender's duty
to give me notice will be satisfied when Lender mails it."
(23) Release. The model provision regarding the release
of the lien securing the loan agreement reads: "Lender will cancel and
return the Note to me and give me, in recordable form, a release of
lien securing the Loan Agreement or a copy of any endorsement of the
Note and assignment of the Lien to a Lender that is refinancing the
Loan Agreement. I will pay only the cost of recording the release of
lien."
(25) Assignment of contractor's lien, and commencement
of work. The model provision regarding the assignment of the contractor's lien and specifying that no work was commenced before the
contract was executed reads: "Contractor and I have entered into the
Contract for improvements to be made to the Property. I will perform
my duties under the Contract. Under the Contract, I gave Contractor
(16) Loan agreement copies. The model provision specifying that the lender will give the borrower a copy of all signed docu-
Texas Register
a Lien on the Property. Contractor permanently transfers the Lien and
any other interest Contractor has in the Property to Lender. As additional security, Contractor also agrees that the lien created by this Deed
of Trust has priority over the Lien. The purpose of the Note is to pay
in whole or in part the improvements to be made to the Property by the
Contractor. Contractor and I agree that the Lien is for Lender's sole benefit. Any other interest Contractor has in the Property will be merged
with the Lien, and may be enforced by Lender according to the terms
of this Deed of Trust. Contractor and I further agree that no Work was
performed or material delivered before the Contract was executed."
(26) Subrogation. The model provision regarding subrogation reads: "If I ask, Lender will use proceeds from the Loan Agreement to pay off all valid outstanding liens against the Property. Lender
will then own all rights, superior titles, liens, and interests owned or
claimed by any owner or holder of an outstanding lien or debt. Lender
owns these things whether the lien or debt is transferred to Lender or
whether it is released by the holder upon payment."
(27) Partial invalidity. The model provision regarding
what happens if the sums secured and other charges violate applicable
law reads: "If any portion of the sums secured by this Deed of Trust
cannot be lawfully secured, payments minus those sums will be
applied first to the portions not secured. If any charge provided for in
this Loan Agreement, separately or together with other charges that
are considered part of this Loan Agreement, violates Applicable Law,
the charge is reduced to the extent necessary to eliminate the violation.
Lender will refund the amount of interest or other charges paid to
Lender in excess of the amount permitted by Applicable Law. At
Lender's option, the amount in excess will either be refunded directly
to me or will be applied to reduce the principal of the debt."
(28) Renewal and extension. The model provision regarding the renewal and extension of the note secured by the deed of trust
reads: "The Note secured by this Deed of Trust is renewed and extended, but not in extinguishment of the debt under the Contract identified in the paragraph entitled "Assignment of Contractor's Lien, Commencement of Work" and the Note."
(29) Sale of loan, change of loan servicer, notice of
grievance, and lender's right to comply. The model provision regarding the sale of the loan, change of loan servicer, notice of grievance,
and the lender's right to comply reads: "A full or partial interest in the
Loan Agreement can be sold one or more times without prior notice
to me. The sale may result in a change of the company servicing or
handling the Loan Agreement. The company servicing or handling the
Loan Agreement will collect my monthly payment and will comply
with other servicing conditions required by the Loan Agreement or
Applicable Law. In some cases, the company servicing or handling
the Loan Agreement may change even if the Loan Agreement is not
sold. If the company servicing or handling the Loan Agreement is
changed, I will be given written notice of the change. The notice will
state the name and address of the new company, the address to which
my payments should be made, and any other information required by
RESPA. Any notice of acceleration and opportunity to cure under the
Loan Agreement will satisfy the notice and opportunity to address the
alleged violation provisions of this Section. No agreement between
Lender and me or any third party will limit Lender's ability to comply
with Lender's duties under the Loan Agreement and Applicable Law.
Lender and I are limiting all agreements so that all current or future
interest or fees in connection with this Loan Agreement will not be
greater than the highest amount allowed by Applicable Law. Lender
and I intend to conform the Loan Agreement to the provisions of
Applicable Law. If any part of the Loan Agreement is in conflict
with the Applicable Law, then that part will be corrected or removed.
This correction will be automatic and will not require any amendment
or new document. Lender's right to cure any violation will survive
my paying off the Loan Agreement. My right to cure will override
any conflicting provision of the Loan Agreement. Lender's right to
comply as provided in this Section will survive the payoff of the
Loan Agreement. The provisions of this Section will supersede any
inconsistent provision of the Loan Agreement."
(31) Lender's rights and Borrower's responsibilities. The
model provision regarding the lender's rights and the borrower's responsibilities reads:
(32) Default. The model provision regarding the borrower's default reads: "Any default of my agreements with Lender
will be a default of this Deed of Trust."
(33) Request for notice of default and foreclosure under superior mortgages or deeds of trust. The model provision regarding the
lender and borrower's request for notice of default and foreclosure under superior mortgages or deeds of trust reads:
(34) Signature blocks. The parties' signatures must be notarized. The licensee may use a different notary acknowledgment without having to submit the deed of trust to the agency as non-standard.
Documents for a home improvement loan on a homestead must be
signed at the office of the lender, an attorney at law, or a title company. If this provision applies, the model clause, "This document must
be signed at the office of the Lender, an attorney at law, or a title company" should appear above the signature of the borrower. The model
provision regarding signature blocks reads:
document;
2015.
TRD-201504405
Leslie L. Pettijohn
Commissioner
♦
♦
♦
SUBCHAPTER G. SPANISH DISCLOSURES
7 TAC §90.701, §90.703
The amendments and new rule are adopted under Texas Finance Code, §11.304, which authorizes the commission to adopt
rules to enforce Title 4 of the Texas Finance Code.
All of the plain language amendments and new rule are adopted
under Texas Finance Code, §341.502, which authorizes the
commission to adopt rules governing the form of contracts for a
loan under Chapter 342, a retail installment transaction under
Chapter 348, or a home equity loan regulated by the Office of
Consumer Credit Commissioner.
email address.
The regulated lender amendments and new rule are adopted under Texas Finance Code, §342.551 which grants the commission
the authority to adopt rules to enforce the consumer loans chapter.
and new rule are contained in Texas Finance Code, Chapters
342 and 348.
2015.
♦
♦
7 TAC §90.703
The repeal is adopted under Texas Finance Code, §11.304,
which authorizes the commission to adopt rules to enforce Title
4 of the Texas Finance Code.
Commissioner.
of the office. The OCCC believes that a modernized interpreta-
The statutory provisions affected by the repeal are contained in
Texas Finance Code, Chapters 342 and 348.
2015.
TRD-201504407
Leslie L. Pettijohn
Commissioner
♦
♦
♦
PART 6. CREDIT UNION
DEPARTMENT
CHAPTER 91. CHARTERING, OPERATIONS,
MERGERS, LIQUIDATIONS
SUBCHAPTER D. POWERS OF CREDIT
UNIONS
7 TAC §91.401
The Credit Union Commission (the Commission) adopts amendments to §91.401, concerning the Purchase, Lease, or Sale of
Fixed Assets, with changes to the proposed text as published in
the July 3, 2015, issue of the Texas Register (40 TexReg 4287).
TRD-201504406
Leslie L. Pettijohn
Commissioner
♦
tion of §14.104 would include the agency's updated website and
email address.
Texas Register
The amendments change the title of the rule to "Credit Union
Ownership of Property" to better reflect the scope and purpose
of the rule. The amendments streamline and clarify definitions
of terms, reduce the requirement for credit unions to obtain prior
approval from the Department to invest in premises, explain
the standards for evaluating a request to invest in credit union
premises in an amount that exceeds the credit union's net worth,
explain that the Department may impose special conditions for
approval of such a request in order to protect the safety and
soundness of the credit union, and eliminate the specific format
requirements for the written request to the Department.
The Commission received no comments on these proposed
changes.
rules for administering Title 2, Chapter 15 and Title 3, Subtitle
D of the Texas Finance Code, and under Texas Finance Code,
§123.103, which concerns credit union powers to purchase and
sell property.
§91.401. Credit Union Ownership of Property.
(1) Equipment includes all movable furniture, fixtures,
and equipment of the credit union, its branch offices, and consolidated
credit union service organizations, including automobiles and other
vehicles, and any lien on the above.
(2) Immediate family member--a spouse or other family
member living in the same household.
(3) Premises include the cost less accumulated depreciation, of land and buildings actually owned and occupied (or to be occupied) by the credit union, its branch offices, and consolidated credit
union service organizations. This includes vaults, fixed machinery,
parking facilities, and real estate acquired and intended, in good faith,
for future expansion. It also includes capitalized leases, leasehold improvements, and remodeling costs to existing premises.
(4) Senior Management Employee--the chief executive officer, any assistant chief executive officers (e.g. vice presidents and
above) and the chief financial officer.
(b) Investment Limitations on Premises. Without the prior
written consent of the Department, a credit union may not directly or
indirectly invest an amount in excess of its net worth in premises.
(c) Restrictions on Ownership of Property. A credit union
shall not acquire premises for the principal purpose of engaging in real
estate rentals or speculation.
(d) Transactions with insiders. Without the prior approval of
a disinterested majority of the board of directors recorded in the minutes or, if a disinterested majority cannot be obtained, the prior written
approval of the commissioner, a credit union may not directly or indirectly:
(1) sell or lease an asset of the credit union to a director,
committee member, or senior management employee, or immediate
family members of such individual; or
(2) purchase or lease an asset in which a director, committee member, senior management employee, or immediate family members of such individual has an interest.
(e) Use requirement for premises. If real property or leasehold interest is acquired and intended, in good faith, for use in future
expansion, the credit union must partially satisfy the "primarily for its
own use in conducting business" requirement within five years after the
credit union makes the investment.
(f) Consent to Exceed Limitation. Generally, a credit union
need not obtain the Department's approval to invest in premises. However, prior approval is required if the total aggregate investment in
premises will exceed the credit union's net worth. A credit union shall
submit such statements and reports as the Department may require in
support of the higher investment limit.
(1) When analyzing an application for an additional investment in credit union premises, the Department will consider:
(A) Consistency with safe and sound credit union practices;
(B) The reasonableness of the amount of credit union
premises and the annual expenditures required to carry them relative to
the credit union's net worth and the nature and volume of operations;
and
(2) The Department will consider denying a request for an
additional investment in credit union premises when:
(A) The additional investment would have a material
negative effect on the credit union's earnings, capital, or liquidity; or
(B) The credit union has not demonstrated a reasonable
need for the additional investment.
(3) The Department may impose appropriate special conditions for an approval of an additional credit union premises investment, if it determines that they are necessary or appropriate to protect
the safety and soundness of the credit union or to further other supervisory or policy considerations.
2015.
TRD-201504435
Harold E. Feeney
Commissioner
Proposal publication date: July 3, 2015
♦
SUBCHAPTER H.
♦
♦
INVESTMENTS
7 TAC §91.802
The Credit Union Commission (the Commission) adopts amendments to §91.802, concerning Other Investments, without
changes to the proposed text as published in the July 3, 2015,
The amendments add definitions of certain terms, clarify and
amend existing terms in the rule, and explain the standard for
understanding terms not explicitly defined in the rule.
The amendments are adopted as a result of the Credit Union
Department's general rule review, which was conducted in accordance with Texas Government Code §2001.039.
The Commission received no comments on the proposed
changes.
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under §124.351 which
explains permitted investments.
2015.
TRD-201504438
(C) The effect of the investment on future earnings.
purposes of this section, obligor is defined as an issuer, trust, or originator of an investment, including the seller of a loan participation.
Harold E. Feeney
Commissioner
♦
♦
♦
7 TAC §91.803
The Credit Union Commission (Commission) adopts amendments to §91.803, concerning Investment Limits and Prohibitions, with nonsubstantive changes to the proposed text as
published in the July 3, 2015, issue of the Texas Register (40
TexReg 4292).
(b) Designated Depository. As a single exception to subsection (a) of this section, a credit union's board of directors may establish
the maximum aggregate deposit limit for a single financial institution
approved by the board as the credit union's designated depository. This
deposit limit shall be a percentage of net worth and must be based on
the credit union's liquidity trends and funding needs as documented
by its asset/liability management policy. This authority is contingent
upon the credit union appropriately documenting its due diligence to
demonstrate that the investments in this designated depository do not
pose a safety and soundness concern. The credit union's board of directors shall review and approve at least annually the maximum aggregate
deposit limit for its designated depository. The review shall include a
current due diligence analysis of the financial institution.
As published, the amendments reduce the limitations on investments by exempting federally-insured deposits and investments,
to the extent that those amounts are federally insured. The
amendments also clarify certain activities in the list of prohibited
activities, reduce restrictions on certain activities in the list of prohibited activities, and add certain activities to the list of prohibited
activities. As adopted, these ongoing notice requirements have
been withdrawn, reverting to the existing rule requirements. The
amendments, including some of the non-substantive changes,
also correct an erroneous citation and edit the rule for clarity and
consistency.
(A) Adjusted trading--selling an investment to a counterparty at a price above its current fair value and simultaneously purchasing or committing to purchase from the counterparty another investment at a price above its current fair value.
(C) Commercial mortgage related security--a mortgage
related security except that it is collateralized entirely by commercial
real estate, such as a warehouse or office building, or a multi-family
dwelling consisting of more than four units.
The Commission received one written comment on the proposed rule amendments. The commenter was concerned about
some technical language differences that might cause some to
be concerned about how investments insured or guaranteed
by U.S. Government sponsored enterprises would be treated
under §91.803(a), and proposed to add the word "sponsored"
before the word "enterprise". The Commission agrees with this
non-substantive change.
(c) Prohibited Activities.
(1)
Definitions.
(B) Collateralized mortgage obligation (CMO)--a
multi-class bond issue collateralized by mortgages or mortgage-backed
securities.
(D) Fair value--the price at which a security can be
bought or sold in a current, arm's length transaction between willing
parties, other than in a forced or liquidation sale.
(E) Real estate mortgage investment conduit
(REMIC)--a nontaxable entity formed for the sole purpose of holding
a fixed pool of mortgages secured by an interest in real property and
issuing multiple classes of interests in the underlying mortgages.
The commenter also suggested adding the language "including
those referred to in §91.802(c)(10)" to clarify the term U.S. Government sponsored enterprises. The Commission disagrees
that this addition will provide clarity, instead finding that this
addition is redundant and unnecessary.
(F) Residual interest--the remainder cash flows from
a CMO/REMIC, or other mortgage-backed security transaction, after
payments due bondholders and trust administrative expenses have
been satisfied.
rules for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance Code, and under §124.351 and
§124.352 which address permitted investments and limitations
on investments for credit unions.
seller.
The specific sections affected by the proposed amended rule are
Texas Finance Code, §124.351 and §124.352.
(I) Zero coupon investment--an investment that makes
no periodic interest payments but instead is sold at a discount from its
face value. The holder of a zero coupon investment realizes the rate
of return through the gradual appreciation of the investment, which is
redeemed at face value on a specified maturity date.
§91.803. Investment Limits and Prohibitions.
(a) Limitations. With the exception of deposits held by a Federal Reserve Bank, a credit union may invest no more than 50% of
its net worth with any single obligor or related obligors. This limitation also does not apply to the extent that the investment is insured
or guaranteed by the United States government, or an agency, sponsored enterprise, corporation, or instrumentality of the United States
government, or to any trust or trusts established for investing, directly
or collectively, in such securities, obligations, or instruments. For the
Texas Register
(G) Short sale--the sale of a security not owned by the
(H) Stripped mortgage-backed security--a security that
represents either the principal-only or the interest-only portion of the
cash flows of an underlying pool of mortgages or mortgage-backed
securities.
(2)
A credit union may not:
(A) Use financial derivatives for replication, or for any
purposes other than hedging;
(B)
Engage in adjusted trading or short sales;
(C) Purchase stripped mortgage backed securities;
(D) Purchase residual interests in CMOs/REMICs, or
other structured mortgage backed securities;
(E) Purchase mortgage servicing rights as an investment but may retain mortgage servicing rights on a loan originated by
the credit union and sold on the secondary market;
(F) Purchase commercial mortgage related securities of
an issuer other than a U.S. Government sponsored enterprise;
(G) Purchase any security that has the capability of becoming a first credit loss piece which supports another more senior security;
(H) Purchase a zero coupon investment with a maturity
date that is more than 10 years from the settlement date;
(I) Purchase investments whereby the underlying collateral consists of foreign receivables or foreign deposits;
(J) Purchase securities used as collateral by a safekeeping concern;
(K) Purchase exchangeable mortgage backed securities, unless they are fully compliant with the provisions outlined
in Part 703 of the National Credit Union Administration Rules and
Regulations; or
(L) Purchase securities convertible into stock at the option of the issuer.
(d) Investment pilot program.
(1) The commissioner may authorize a limited number of
credit unions to engage in other types of investment activities under
an investment pilot program. A credit union wishing to participate in
an investment pilot program shall submit a request that addresses the
following items:
(3) The commissioner may find that an investment pilot
program previously authorized is no longer a safe and prudent practice
for credit unions generally to engage in, or has become inconsistent
with applicable state or federal law, or has ceased to be a safe and prudent practice for one or more particular credit unions in light of their
financial condition or management. Upon such a finding, the commissioner will send written notice informing the board of directors of any
or all of the credit unions engaging in such a practice that the authority
to engage in the practice has been revoked or modified. When the commissioner so notifies any credit union, its directors and officers shall
forthwith take steps to liquidate the investments in question or to make
such modifications as the commissioner requires. Upon demonstration
of good cause, the commissioner may grant a credit union some definite period of time in which to arrange its affairs to comply with the
commissioner's direction. Credit unions which continue to engage in
investment practices where their authority to do so has been revoked
or modified will be deemed to be engaging in an unsound practice.
2015.
TRD-201504437
Harold E. Feeney
Commissioner
♦
♦
♦
(A) Board policies approving the activities and establishing limits on them;
7 TAC §91.805
(B) A complete description of the activities, with specific examples of how the credit union will conduct them and how they
will benefit the credit union;
The Credit Union Commission (the Commission) adopts amendments to §91.805, concerning Loan Participation Investments,
without changes to the proposed text as published in the July 3,
2015, issue of the Texas Register (40 TexReg 4294).
(C) A demonstration of how the activities will affect
the credit union's financial performance, risk profile, and asset-liability
management strategies;
(D) Examples of reports the credit union will generate
to monitor the activities;
(E) A projection of the associated costs of the activities,
including personnel, computer, audit, etc.;
(F) A description of the internal systems to measure,
monitor, and report the activities, and the qualifications of the staff
and/or official(s) responsible for implementing and overseeing the activities; and
(G) The internal control procedures that will be implemented, including audit requirements.
(2) In connection with a request to participate in an investment pilot program, the commissioner will consider the general nature
and functions of credit unions, as well as the specific financial condition and management of the applicant credit union, as revealed in the
request, examinations, or such other information as may be available
to the commissioner. The commissioner may approve the request, approve the request conditionally, approve it in modified form, or deny it
in whole or in part. A decision by the commissioner concerning participation in an investment pilot program is not appealable.
The amendments clarify permitted participation interests and
eliminate the specific limitation on aggregate investment
amounts, instead requiring credit unions to develop and follow
investment policies and agreements to ensure the soundness
of each credit union's loan participation investments.
changes.
explains permitted investments for credit unions.
7 TAC §§91.2000 - 91.2006
2015.
The Credit Union Commission (Commission) adopts Subchapter
K, §§91.2000 - 91.2006, of 7 TAC Chapter 91, concerning Credit
Union Development Districts, without changes to the proposed
text as published in the August 28, 2015, issue of the Texas
TRD-201504439
Harold E. Feeney
Commissioner
♦
SUBCHAPTER I.
DIVIDENDS
♦
♦
RESERVES AND
7 TAC §91.901
The Credit Union Commission (the Commission) adopts amendments to §91.901, concerning Reserve Requirements, without
changes to the proposed text as published in the July 3, 2015,
The amendments provide for the development of a financial plan
for credit unions that are unable to increase the dollar amount of
their net worth reserves, as required by §91.901(b)(1). The plan
would require these credit unions to develop a detailed timetable
of steps to increase their net worth ratio and ultimately achieve
compliance. The financial plan would be filed with the Department and would be enforceable as a written agreement with the
commissioner under §122.255 of the Finance Code.
changes.
explains permitted investments for credit unions.
The subchapter, entitled Credit Union Development Districts,
contains seven rules which describe the procedures for establishment of credit union development districts. (A previous
version of Subchapter K of 7 TAC Chapter 91, entitled Residential Mortgage Loan Originators Employed by a Credit Union
Subsidiary Organization, was repealed in October 2013 as a
result of provisions enacted in the 83rd Session of the Legislature.) The subchapter was proposed in response to House
Bill 1626 (HB 1626) enacted by the 84th Legislature. HB 1626
added Chapter 279 to the Texas Finance Code. HB 1626
assigned the Department the duty to administer and monitor
a credit union development district program where there is a
demonstrated need for services provided by a state or federal
credit union, and requires the Commission to adopt rules consistent with this duty not later than January 1, 2016. HB 1626
authorizes a local government to apply for the designation of
a credit union development district and authorizes a state or
federal credit union to apply to open a branch in a proposed
development district at the time the local government submits
the application. HB 1626 states that rules regarding the criteria
for the designation of credit union development districts must
be made in consultation with the Texas Economic Development
and Tourism Office (within the Office of the Governor).
§91.2000, Purpose and Scope, explains the reason for these
rules and clarifies that establishing a credit union development
district does not affect requirements applicable to reinvestment
zones and tax abatement agreements pursuant to the Tax Increment Financing Act or the Property Redevelopment and Tax
Abatement Act (Government Code, Chapters 311 and 312, respectively).
§91.2001, Definitions, defines the terms, "credit union," "district,"
and "local government."
§91.2002, Application Requirements to Establish a District, details the application requirements for local governments seeking to establish a credit union development district in conjunction
with a credit union.
§91.2003, Submission and Processing of Application, details
how an application will be processed and considered complete
and acceptable for filing.
§91.2004, Criteria for Approval of a District by the Commission,
requires the Commission to consider the five, statutorily required
factors in HB1626 in determining whether to approve a credit
union development district: (1) the location, number, and proximity of sites where services provided by a credit union are available in the proposed credit union development district, (2) consumer needs for services provided by a credit union in the proposed district, (3) the economic viability and local credit needs
of the community in the proposed district, (4) the existing commercial development in the proposed district, and (5) the impact
additional services provided by a credit union would have on potential economic development in the proposed district.
2015.
TRD-201504440
Harold E. Feeney
Commissioner
♦
♦
♦
SUBCHAPTER K. CREDIT UNION
DEVELOPMENT DISTRICTS
Texas Register
§91.2005, Monitoring, imposes minimal reporting requirements
on the local government applicant in order to permit the Commission to monitor the program as required by HB 1626. The
only required notice would inform the Department when a credit
union opens or closes a branch in an approved credit union development district.
Finally, §91.2006, Rulemaking and Amendment for this Subchapter, states that the Department will develop policies with the
Texas Economic Development and Tourism division of the Governor's Office regarding consultation for the adoption of rules for
the designation of credit union development districts.
The Commission received no comments on the proposed rules.
The rules are adopted under newly added Texas Finance Code
§279.102, which permits the Commission to adopt rules to implement the creation of credit union development districts and
the depositing of public funds in these district depositories with
respect to credit union in credit union development districts.
The specific section affected by the proposed rules is Texas Finance Code §279.102.
2015.
♦
2015.
TRD-201504436
Harold E. Feeney
Commissioner
♦
♦
♦
CHAPTER 5. COMMUNITY AFFAIRS
PROGRAMS
TRD-201504434
Harold E. Feeney
Commissioner
♦
The specific sections affected by the proposed new rule is Texas
10 TAC §5.12
"Department") adopts the repeal of §5.12 without changes to the
proposal as published in the August 14, 2015, issue of the Texas
♦
CHAPTER 97. COMMISSION POLICIES AND
ADMINISTRATIVE RULES
SUBCHAPTER C. DEPARTMENT
OPERATIONS
7 TAC §97.206
The Credit Union Commission (Commission) adopts new
§97.206, entitled Posting of Certain Contracts: Enhanced
Contract and Performance Monitoring, without changes to the
proposed text as published in the August 28, 2015, issue of the
Texas Register (40 TexReg 5403). The new rule implements
procedures for contracts for the purchase of goods or services
from private vendors.
The new rule was proposed in response to Senate Bill 20 (SB
20) enacted by the 84th Legislature. SB 20 requires each state
agency by rule to establish a procedure to identify contracts that
require enhanced contract or performance monitoring and prescribes certain reporting requirements.
The Commission received no comments on the proposed rule.
The rule is adopted under Texas Government Code §2261.253,
which requires the Commission to adopt and enforce rules providing for the Commissioner, Credit Union Department, to establish a procedure to identify each contract that requires enhanced
contract or performance monitoring and submit information on
the contract to the agency's governing body.
REASONED JUSTIFICATION. The purpose of the repeal is to
remove the existing text in order to consolidate text into one location at 10 TAC §5.10.
SUMMARY OF PUBLIC COMMENT: Comments were accepted
from August 14, 2015, through September 14, 2015. No comments were received.
STATUTORY AUTHORITY. The section is repealed pursuant to
Texas Government Code, §2306.053, which authorizes the Department to adopt rules, and §2306.094, which specifically authorizes the Department to adopt rules to govern the administration of its Community Affairs programs.
The repeal affects no other code, article, or statute.
2015.
TRD-201504425
Timothy K. Irvine
Executive Director
♦
♦
♦
♦
♦
♦
SUBCHAPTER B. COMMUNITY SERVICES
BLOCK GRANT (CSBG)
SUBCHAPTER E. WEATHERIZATION
ASSISTANCE PROGRAM GENERAL
10 TAC §§5.201, 5.203, 5.207, 5.210, 5.213, 5.214
10 TAC §5.503, §5.529
"Department") adopts amendments to 10 TAC Chapter 5, Community Affairs Programs, Subchapter B, Community Services
Block Grant, §5.201, Background and Definitions; §5.203, Distribution of CSBG Funds, §5.207, Subrecipient Performance;
§5.210, CSBG Needs Assessment, Community Action Plan, and
Strategic Plan; §5.213, Board Structure; and §5.214, Board Administrative Requirements, without changes to the proposed text
as published in the August 14, 2015, issue of the Texas Register
(40 TexReg 5119).
(the "Department") adopts amendments to 10 TAC Chapter 5,
§5.503, Definitions; and new §5.529, Program Requirements,
without changes to the proposed text as published in the August
14, 2015, issue of the Texas Register (40 TexReg 5128).
REASONED JUSTIFICATION. The purpose of the amendments
to 10 TAC §5.201 is to change the name of the subsection to
"Background and Definitions" and to add definitions specific to
the CSBG that were removed from Subchapter A, General Provisions. The purpose of the amendment to 10 TAC §5.203 is to
remove a reference to a policy that is no longer applicable to the
program. The purpose of the amendment to 10 TAC §5.207 is
to incorporate the CSBG Organizational Standards, as modified
by the Department, into the program rule. The purpose of the
amendment to 10 TAC §5.210 is to revise language to fit current
program requirements, and to incorporate the new requirement
that CSBG Eligible Entities complete a strategic plan into the program rules. The purpose of the amendment to 10 TAC §5.213
is to clarify information regarding tripartite boards. The purpose
of the amendment to §5.214 is to establish in the rules that an
advisory board established by the governing officials of a public
organization to administer the CSBG may not exercise any authority that is not designated in writing by the governing officials
of the public organization.
SUMMARY OF PUBLIC COMMENT AND STAFF RECOMMENDATIONS.
Comments were accepted from August 14, 2015, through
September 14, 2015. No comments were received.
STATUTORY AUTHORITY. The amended sections are adopted
pursuant to Texas Government Code §2306.053, which authorizes the Department to adopt rules, §2105.059, which authorizes the Department to adopt rules for block grant programs,
and Chapter 2306, Subchapter E, which authorizes the Department to administer its Community Affairs programs.
The amendments affect no other code, article, or statute.
2015.
TRD-201504427
Timothy K. Irvine
Executive Director
Texas Register
REASONED JUSTIFICATION. The purpose of the amendment
to 10 TAC §5.503 is to add Electric Baseload Measure to the
list of definitions for the Weatherization Assistance Program
("WAP"). New 10 TAC §5.529 adds general program requirements for the WAP.
SUMMARY OF PUBLIC COMMENT. Comments were accepted
from August 14, 2015, through September 14, 2015. No comments were received.
STATUTORY AUTHORITY. The amended and new section are
adopted pursuant to Texas Government Code §2306.053, which
authorizes the Department to adopt rules, and Chapter 2306,
Subchapter E, which authorizes the Department to administer
its Community Affairs programs.
The adoption affects no other code, article, or statute.
2015.
TRD-201504428
Timothy K. Irvine
Executive Director
♦
♦
♦
TITLE 16. ECONOMIC REGULATION
PART 8. TEXAS RACING
COMMISSION
CHAPTER 311. OTHER LICENSES
The Texas Racing Commission adopts amendments to 16 TAC
§311.1 and §311.104. Section 311.1 relates to occupational licenses in general and §311.104 relates to the licensure of trainers. The amendments are adopted without changes to the proposed text as published in the September 11, 2015, issue of the
Texas Register (40 TexReg 6007) and will not be republished.
The amendment to §311.1 deletes language stating that an individual who enters an animal into a race is deemed to be a participant in racing. The amendment to §311.104 allows an unlicensed trainer to enter a horse or greyhound into a race, but
also requires the trainer to obtain a license one hour prior to the
post time of the first race of the day in which the trainer intends
to race the horse or greyhound.
No comments were received regarding adoption of the amendments.
SUBCHAPTER A. LICENSING PROVISIONS
DIVISION 1. OCCUPATIONAL LICENSES
The Texas Racing Commission adopts an amendment to 16 TAC
§313.110, relating to coupled entries, without changes to the proposed text as published in the September 11, 2015, issue of the
Texas Register (40 TexReg 6008). The rule will not be republished. The amendment eliminates the $50,000 threshold for
horses with common ownership interests to run as separate betting interests in stakes races.
16 TAC §311.1
No comments were received regarding adoption of the amendment.
The amendment is adopted under Texas Revised Civil Statutes
Annotated, Article 179e, §3.02, which authorizes the Commission to adopt rules to administer the Act.
2015.
2015.
TRD-201504313
Mark Fenner
General Counsel
Texas Racing Commission
♦
♦
TRD-201504315
Mark Fenner
General Counsel
♦
♦
SUBCHAPTER B. SPECIFIC LICENSES
16 TAC §311.104
2015.
TRD-201504314
Mark Fenner
General Counsel
♦
♦
♦
CHAPTER 321. PARI-MUTUEL WAGERING
SUBCHAPTER C. REGULATION OF LIVE
WAGERING
DIVISION 2. DISTRIBUTION OF
PARI-MUTUEL POOLS
16 TAC §321.322
The Texas Racing Commission adopts new 16 TAC §321.322,
relating to the Triple Trifecta wager, without changes to the proposed text as published in the September 11, 2015, issue of the
Texas Register (40 TexReg 6008). The rule will not be republished. The new rule creates a new wager based on the correct
selection of the first three race animals, in order, in three successive races.
No comments were received regarding adoption of the amendment.
♦
CHAPTER 313. OFFICIALS AND RULES OF
HORSE RACING
SUBCHAPTER B. ENTRIES, SCRATCHES,
AND ALLOWANCES
DIVISION 1. ENTRIES
16 TAC §313.110
♦
The new rule is adopted under Texas Revised Civil Statutes Annotated, Article 179e, §3.02, which authorizes the Commission
to adopt rules to administer the Act, and §11.01, which authorizes the Commission to adopt rules to regulate pari-mutuel wagering on greyhound races and horse races.
2015.
TRD-201504317
The amendments are adopted under Texas Government Code
Chapters 404, 552, 2256, and §492.013 and §2263.004.
Mark Fenner
General Counsel
♦
♦
Cross Reference to Statutes: None.
♦
TITLE 37. PUBLIC SAFETY AND CORRECTIONS
CRIMINAL JUSTICE
CHAPTER 151. GENERAL PROVISIONS
37 TAC §151.25
The Texas Board of Criminal Justice adopts amendments to
§151.25, Texas Department of Criminal Justice Tobacco Policy,
without changes to the proposed text as published in the July 3,
2015, issue of the Texas Register (40 TexReg 4328).
The adopted amendments are necessary to add the use of vapor
products and update the formatting.
No comments were received regarding the amendments.
§492.013 and §494.010.
Cross Reference to Statutes: None.
2015.
TRD-201504381
Sharon Howell
General Counsel
Texas Department of Criminal Justice
♦
♦
♦
CHAPTER 154. PRIVATE SECTOR PRISON
INDUSTRIES PROGRAMS
37 TAC §§154.1 - 154.9, 154.11
§§154.1 - 154.9 and 154.11 in Chapter 154, concerning Private
Sector Prison Industries Programs, without changes to the
proposed text as published in the July 3, 2015, issue of the
Texas Register (40 TexReg 4330).
The adopted amendments are necessary non-substantive
changes.
§§492.0011, 492.013, 497.004(a), 497.006, 497.051, 497.0527,
497.056(a), 497.057, 497.058, 497.0581, 497.059, 497.0595,
497.0596, 497.060, 497.062, and 497.063.
2015.
TRD-201504379
Sharon Howell
General Counsel
♦
♦
Cross Reference to Statutes: Texas Labor Code §302.016.
♦
2015.
37 TAC §151.75
§151.75, Standards of Conduct for Financial Advisors and
Service Providers, without changes to the proposed text as
published in the July 3, 2015, issue of the Texas Register (40
TexReg 4329).
The adopted amendments are necessary to update the formatting.
Texas Register
TRD-201504386
Sharon Howell
General Counsel
♦
♦
♦
Adopted Rule Reviews
Accordingly, the commission finds that the reasons for initially adopting these rules continue to exist and readopts Chapter 17 in accordance
with the requirements of the Government Code, §2001.039.
Title 7, Part 2
On behalf of the Finance Commission of Texas (commission), the
Texas Department of Banking has completed the review of Texas Administrative Code, Title 7, Part 2, Chapter 15 (Corporate Activities),
in its entirety, specifically Subchapter A (§§15.1 - 15.7 and §§15.9 15.12); Subchapter B (§15.23 and §15.24); Subchapter C (§§15.41 15.44); Subchapter E (§15.81); Subchapter F (§§15.101 - 15.111 and
§§15.113 - 15.117); and Subchapter G (§15.121 and §15.122).
Notice of the review of Chapter 15 was published in the August 28,
2015, issue of the Texas Register (40 TexReg 5475). No comments
were received in response to the notice.
The commission believes the reasons for initially adopting Chapter 15
continue to exist. However, the commission has determined that certain revisions and amendments may be appropriate and necessary. Proposed amendments and revisions to Chapter 15, with discussion of the
justification for the proposed changes, will be published in the Texas
Register at a later date.
TRD-201504366
Catherine Reyer
General Counsel
♦
TRD-201504367
Catherine Reyer
General Counsel
♦
♦
♦
Texas Department of Banking has completed the review of Texas Administrative Code, Title 7, Part 2, Chapter 19 (Trust Company Loans
and Investments), in its entirety, specifically Subchapter A (§19.1);
Subchapter B (§19.21 and §19.22); and Subchapter C (§19.51).
The commission finds that the reasons for initially adopting the rules
in Subchapters B and C of Chapter 19 continue to exist. However,
the commission has determined that certain revisions and amendments
may be appropriate and necessary. Proposed amendments and revisions to Chapter 19, with discussion of the justification for the proposed
changes, will be published in the Texas Register at a later date.
With the exception of Subchapter A, §19.1, the commission finds that
the reasons for initially adopting these rules continue to exist and readopts Chapter 19 in accordance with the requirements of the Government Code, §2001.039.
♦
♦
Texas Department of Banking has completed the review of Texas
Administrative Code, Title 7, Part 2, Chapter 17 (Trust Company
Regulation), in its entirety, specifically Subchapter A (§§17.2 - 17.4);
and Subchapter B (§§17.21 - 17.23).
TRD-201504368
Catherine Reyer
General Counsel
♦
♦
♦
Texas Department of Banking has completed the review of Texas
Administrative Code, Title 7, Part 2, Chapter 21 (Trust Company
Corporate Activities), in its entirety, specifically Subchapter A (§§21.1
- 21.7 and §§21.9 - 21.12); Subchapter B (§21.23 and §21.24); Subchapter C (§21.31 and §21.32); Subchapter D (§21.41 and §21.42);
Subchapter E (§21.51); Subchapter F (§§21.61 - 21.64, §§21.67 21.70 and §§21.72 - 21.76); and Subchapter G (§21.91 and §21.92).
RULE REVIEW October 30, 2015 40 TexReg 7671
The commission received no comments in response to that notice. The
commission believes that the reasons for initially adopting the rules
contained in this chapter continue to exist.
As a result of internal review by the agency, the commission has determined that certain revisions are appropriate and necessary. Those rule
changes were published in the September 4, 2015, issue of the Texas
Register (40 TexReg 5618). The commission is concurrently adopting
the rule changes, including amendments and new rule, in Chapter 90,
as published elsewhere in this issue of the Texas Register.
Subject to the adopted rule changes in Chapter 90, the commission
finds that the reasons for initially adopting these rules continue to exist,
and readopts this chapter in accordance with the requirements of Texas
TRD-201504369
Catherine Reyer
General Counsel
♦
This concludes the review of 7 TAC Part 5, Chapter 90.
♦
TRD-201504395
Leslie L. Pettijohn
Commissioner
♦
♦
Title 7, Part 5
The Finance Commission of Texas (commission) has completed the
review of Texas Administrative Code, Title 7, Part 5, Chapter 83,
Subchapter B, concerning Rules for Credit Access Businesses, comprised of §§83.1001 - 83.1002, 83.2001 - 83.2003, 83.3001 - 83.3012,
83.4001 - 83.4007, 83.5001 - 83.5002, and 83.6001 - 83.6008, pursuant to Texas Government Code, §2001.039.
Notice of the review of 7 TAC, Part 5, Chapter 83, Subchapter B was
published in the Texas Register as required on September 11, 2015, (40
TexReg 6165). The commission received no comments in response to
that notice. Aside from the proposed repeal of §83.4004 and §83.3012,
the commission believes that the reasons for initially adopting the rules
contained in this subchapter continue to exist.
As a result of internal review by the agency, the commission has determined that certain revisions are appropriate and necessary. The commission is concurrently proposing amendments, new rules, and repeals
in Chapter 83, Subchapter B, as published elsewhere in this issue of the
Texas Register.
Subject to the proposed changes to Chapter 83, Subchapter B, the commission finds that the reasons for initially adopting these rules continue
to exist, and readopts this subchapter in accordance with the requirements of Texas Government Code, §2001.039.
This concludes the review of 7 TAC Part 5, Chapter 83, Subchapter B.
TRD-201504394
Leslie L. Pettijohn
Commissioner
♦
♦
♦
Title 7, Part 6
The Credit Union Commission (Commission) has completed its review
of Texas Administrative Code Title 7, §91.6001 (Fiduciary Duties),
§91.6002 (Fiduciary Capacities), §91.6003 (Notice Requirements),
§91.6004 (Exercise of Fiduciary Powers), §91.6005 (Exemption from
Notice), §91.6006 (Policies and Procedures), §91.6007 (Review of
Fiduciary Accounts), §91.6008 (Recordkeeping), §91.6009 (Audit),
§91.6010 (Custody of Fiduciary Assets), §91.6011 (Trust Funds),
§91.6012 (Compensation, Gifts, and Bequests), §91.6013 (Bond
Coverage), §91.6014 (Errors and Omissions Insurance), and §91.6015
(Litigation File), as published in the August 21, 2015, issue of the
Texas Register (40 TexReg 5353). The Commission proposes to
readopt these rules.
The rules were reviewed as a result of the Credit Union Department's
(Department) general rule review.
The Commission received no comments with respect to these rules.
The Department believes that the reasons for initially adopting these
rules continue to exist. The Commission finds that the reasons for
initially adopting §§91.6001, 91.6002, 91.6003, 91.6004, 91.6005,
91.6006, 91.6007, 91.6008, 91.6009, 91.6010, 91.6011, 91.6012,
91.6013, 91.6014, and 91.6015 continue to exist, and readopts these
rules without changes pursuant to the requirements of Government
Code, §2001.039.
TRD-201504431
Harold E. Feeney
Commissioner
♦
The Finance Commission of Texas (commission) has completed the
review of Texas Administrative Code, Title 7, Part 5, Chapter 90,
concerning Chapter 342, Plain Language Contract Provisions, comprised of §§90.101 - 90.105, 90.201 - 90.204, 90.301 - 90.304, 90.401
- 90.404, 90.501 - 90.504, 90.601 - 90.604, and 90.701 - 90.706,
pursuant to Texas Government Code, §2001.039.
Notice of the review of 7 TAC, Part 5, Chapter 90 was published in
the Texas Register as required on July 17, 2015, (40 TexReg 4707).
♦
Texas Register
♦
♦
♦
Title 37, Part 6
The Texas Board of Criminal Justice adopts the review of §154.10 concerning Cost Accounting Centers Policies and Procedures, in accordance with Texas Government Code §2001.039, which requires rule
review every four years.
The proposed rule review was published in the June 26, 2015, issue of
the Texas Register (40 TexReg 4225).
No comments were received regarding the rule review.
♦
Notice Concluding Annual Review of §255.4
TRD-201504391
Sharon Howell
General Counsel
♦
♦
Title 1, Part 12
The agency's reason for adopting the rule continues to exist.
♦
♦
published notice of its annual review of the definition in §255.4 of
"local exchange access line" and "equivalent local exchange access
line," in the August 14, 2015, issue of the Texas Register (40 TexReg
5161). CSEC's annual review is required by Health and Safety Code
§771.063(c).
♦
The Texas Board of Criminal Justice adopts the review of §154.12 concerning Complaint Investigations, in accordance with Texas Government Code §2001.039, which requires rule review every four years.
No comments were received regarding CSEC's notice of annual review.
The proposed rule review was published in the June 26, 2015, issue of
the Texas Register (40 TexReg 4225).
This concludes CSEC's annual review of §255.4.
No comments were received regarding the rule review.
The agency's reason for adopting the rule continues to exist.
TRD-201504392
Sharon Howell
General Counsel
CSEC has determined not to propose amendments to the definitions in
§255.4, and to leave in effect the rule as adopted in October 2007.
TRD-201504357
Patrick Tyler
General Counsel
♦
♦
♦
RULE REVIEW October 30, 2015 40 TexReg 7673
TABLES AND GRAPHICS October 30, 2015 40 TexReg 7675
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Register
Texas Control Center Services Request for Proposals
The Capital Area Council of Governments is requesting proposals from
qualified contractor(s) to provide text control center services for 34
Public Safety Answering Points that provide 911 services to residents
in CAPCOG's 10-county region - Bastrop, Blanco, Burnet, Caldwell,
Fayette, Hays, Lee, Llano, Travis and Williamson counties. Proposals
must be received by 4:00 p.m., Monday, December 7, 2015. They can
be emailed to Gregg Obuch at [email protected] or mailed to the
CAPCOG offices, 6800 Burleson Road, Bldg. 310, Suite 165, Austin,
Texas. Please put "Text Control Center RFP" in the subject of the email
or on the mailed proposal. Go to capcog.org/about-capcog/doing-business-with-capcog/ for an RFP packet and more information.
TRD-201504492
Gregg Obuch
Director of Emergency Communications
♦
♦
♦
Notice of Loan Fund Availability and Request for Applications
Pursuant to: (1) the LoanSTAR (Saving Taxes and Resources) Revolving Loan Program of the Texas State Energy Plan ("SEP") in accordance with the Energy Policy and Conservation Act (42 U.S.C. 6321,
et seq.), as amended by the Energy Conservation and Production Act
(42 U.S.C. 6326, et seq.); (2) the Oil Overcharge Restitutionary Act,
Chapter 2305 of the Texas Government Code; and (3) Title 34, Texas
Administrative Code, Chapter 19, Subchapter D Loan Program for Energy Retrofits; the Texas Comptroller of Public Accounts ("Comptroller") and the State Energy Conservation Office ("SECO") announces
its Notice of Loan Fund Availability and Request for Applications RFA
#BE-G15-2015 ("NOLFA/RFA") and invites applications from eligible
interested governmental entities for loan assistance to perform building
energy efficiency and retrofit activities.
Texas Comptroller of Public Accounts, at: 111 E. 17th St., Room
201, Austin, Texas 78774, via phone at (512) 305-8673, or by email
at [email protected]. The NOLFA/RFA Application Packet
and a sample loan agreement will be available electronically on the
Electronic State Business Daily ("ESBD") at http://esbd.cpa.state.tx.us
and on the SECO website at http://www.seco.cpa.state.tx.us/funding/
on Friday, October 30, 2015, after 10:00 a.m. Central Time ("CT").
QUESTIONS: All written questions must be received in the Issuing
Office not later than 2:00 p.m. CT on November 24, 2015. Prospective applicants are encouraged to send Questions via email to [email protected] or fax to (512) 463-3669 to ensure timely receipt.
On or about Friday, December 4, 2015, or as soon thereafter as practical, Comptroller expects to post resp

40 TexReg 7507 - Texas Secretary of State

Transcription

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