The Texas Commission of Licensing and Regulation ("Commission") adopts amendments to existing rules at 16 Texas Administrative Code, §§71.10, 71.22, 71.70, 71.80, and 71.90, a new rule at 16 TAC §71.20, and the repeal of rules at 16 TAC §71.21 and §71.25, regarding the regulation of warrantors of vehicle protection products as published in the May 26, 2006, issue of the Texas Register (31 TexReg 4307). Sections 71.10, 71.22, 71.80, new rule §71.20, and the repeal of §71.21 and §71.25 are adopted without changes from the rules as purposed and will not be republished. Section 71.70 and §71.90 are adopted with changes from the rules as proposed.

The amendments, new rule, and repeal result from the Department's review of the administrative rules at 16 TAC, Chapter 71. Pursuant to Texas Government Code, §2001.039, the Department reviewed the rules to determine if the rules should be repealed, readopted, or readopted with changes. The Department's review determined that the reasons for initially adopting the rules continue to exist but that changes to the rules should be proposed through the rulemaking process to clarify statutory and rule requirements and to bring the rules more in line with current law and Department procedure. On February 2, 2006, the Commission adopted the rule review, readopting the rules in Chapter 71 without changes, but with the intent that rule changes would be proposed based on the Department's review. The adoption updates rule provisions in light of statutory requirements, makes technical changes and clarifications to the rules, and reorganizes provisions for greater clarity and readability.

The notice of the proposed amendments, new and repealed rules was published in the May 26, 2006, issue of the Texas Register and distributed to persons internal and external to the agency. The public comment period closed on June 26, 2006, and the Department received one public comment, which is discussed below. The rules are adopted with certain changes from the rules as proposed.

In §71.10, the term "nonpublic information" is expanded to "nonpublic personal information" because the latter is the term that is used in Texas Occupations Code, Chapter 2306. The definition of the term is reorganized to be more readable, and some minor clarifying language is added. Additionally, to enhance the protection of consumer privacy, social security numbers are added to the list of items that are considered nonpublic personal information. Texas Occupations Code, §2306.204(f) states, "The commission shall adopt rules governing how a warrantor shall protect nonpublic personal information provided by a consumer to the warrantor." Pursuant to that statutory provision, the Commission has adopted rules that generally prohibit warrantors from disclosing nonpublic personal information. Because of the confidential nature of an individual's social security number, the Department believes it necessary to add the protection of this type of information to the rules.

New §71.20 incorporates registration and renewal requirements from §71.21 and §71.25, which are proposed for repeal. The wording of subsection (a) is expanded to make clear that a warrantor must hold a current registration. This added language makes subsection (c) of §71.25, which prohibits a person with an expired registration from performing work requiring registration, unnecessary.

Section 71.22(a) is amended to require that a reimbursement insurance policy used as financial security by a warrantor include the "Vehicle Protection Product Warrantor Texas Endorsement" prescribed by the executive director or equivalent language. The endorsement includes provisions that, under Texas Occupations Code, Chapter 2306, must be stated in the policy. The rule is necessary to ensure that the policy includes the statutorily-required language. The added language of subsection (b) specifies that a resolution of a parent corporation's board of directors constitutes sufficient written proof that the parent corporation has agreed to guarantee the liabilities and obligations of an applicant or registrant.

A new subsection (g) is added to §71.70 to clarify that a registrant must maintain financial security. This provision makes clear that the registrant not only must establish financial security at the time of registration but must maintain financial security throughout its registration. Several technical corrections are also made to the section. The Department received an oral comment from the National Vehicle Protection Association indicating that §71.70 should make clear that warrantors are not prohibited from disclosing nonpublic personal information in response to a subpoena or court order. The Department agrees with the comment. In response to this comment, language is added to §71.70 at subsections (e) and (f) to clarify that disclosures required by law or to comply with a subpoena or court order do not violate the rule. Also based on the comment, language is added to clarify that disclosures to the Department do not violate the rule.

In §71.80 the fee structure for registrants is reorganized by separating the initial registration fee, which is set at the lowest fee level of $500, from the renewal fees, which are based on the number of warranties under which the warrantor became obligated during the preceding twelve months. The fee for a duplicate or amended registration certificate is lowered to $25, which is consistent with the amount the Department charges for that service in other programs. The amount should be sufficient to cover the Department's costs in providing the service.

Technical corrections are made to §71.90. Additionally, the rule is adopted with a change from the rule as proposed. The reference to Title 16, Texas Administrative Code, Chapter 60, which contains general provisions for sanctions and penalties, is a relevant legal citation and therefore is not deleted. Only the redundant words "of this title" are deleted.