Adopted Sections An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 1. ADMINISTRATION Part II. Texas Ethics Commission Chapter 6. Internal Operations Subchapter A. Commission Meeting Rules 1 TAC sec.sec.6.1-6.7, 6.9-6.12, 6.31-6.35, 6.71, 6.81 The Texas Ethics Commission adopts new sec.sec.6.1-6.7, 6.9-6.12, 6.31-6.35, 6.71, and 6.81 previously proposed under sec.sec.1.1, 1.3, 1.5, 1.7, 1.9, 1.11, 1. 13, 1.23, 1.25, 1.27, 1.29, 1.31, 1.43, 1.45, 1.47, 1.49, 1.51, 1.71, and 1.81, respectively, with changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1491). These sections affect the conduct and administration of Texas Ethics Commission meetings. The change in section numbers is due to an inadvertent filing of the above sections under section numbers previously assigned to the Governor's Office. These sections will provide the commission with guidelines and a framework within which the commission will operate, particularly in its conduct of public hearings and meetings. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article, 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules with respect to its authorized actions and operations of the agency. sec.6.1. Officers of the Commission. The officers of the commission shall consist of a chairperson and a vice chairperson elected by a majority vote from the commission. The chairperson and the vice chairperson shall serve a one year term. sec.6.2. Chairperson and Vice Chairperson. The chairperson of the commission or the vice chairperson, in the absence of the chairperson, shall preside at all meetings of the commission. While presiding, the chairperson shall direct the order the subcommittees and persons to chair subcommittees, recognize persons to be heard at hearings, set time limits, and take other actions to clarify issues and preserve order. sec.6.3. Executive Director. The executive director shall attend commission meetings at the pleasure of the commission and serve as liaison between the commission and the public. sec.6.4. General Counsel. The general counsel shall attend commission meetings at the pleasure of the commission and provide legal advice to the commission and executive director and perform any duties delegated by the executive director. sec.6.5. Meetings, Application of the Open Meetings Act, the Open Records Act, Opportunities to Appear, and Access. (a) The commission shall meet at least once quarterly and at other times at the call of the chairperson. All meetings shall be conducted in accordance with Texas Civil Statutes, Article 6252-17, (Vernon's Supplement 1991), the Texas Open Meetings Act, and Texas Civil Statutes, Article 6252-9d.1, the statute governing the Texas Ethics Commission. (b) The Open Meetings Act does not apply to the processing, preliminary review, informal hearing, or resolution of sworn complaints or motions. In addition, the Open Records Act does not apply to documents or any additional evidence relating to the processing, preliminary review, informal hearing, or resolution of sworn complaints or motions. (c) The commission shall develop and implement policies that provide the public with a reasonable opportunity to appear before the commission and to speak on issues under the general jurisdiction of the commission. (d) The commission shall prepare and maintain a written plan that describes how a person who does not speak English, or who has a physical, mental or developmental handicap may be provided with reasonable access to commission proceedings. sec.6.6. Called Meetings. In the event of a called meeting, the executive director shall notify all commissioners of the meeting a reasonable amount of time in advance by mailing them a notice of called meeting. Commissioners may add items to the agenda by following the same procedure for placing matters on the agenda as set forth for regular meetings. sec.6.7. Transcripts and Minutes. (a) All official acts of the commission which are subject to the Open Records Act shall be evidenced by written record. Such proceedings shall also be electronically recorded. The executive director may arrange for a reporter or designate a person to prepare minutes reflecting all actions taken by the commissioners present. Summaries of the electronic records may serve as minutes. Such writings shall be open to the public in accordance with the Texas Open Records Act, Texas Civil Statutes, Article 6252-17a. (b) Official action of the commission shall not be bound or prejudiced by any informal statement or opinion made by a commissioner or employees of the commission. sec.6.8. Agenda. The agenda shall consist of agenda items prepared by staff prior to commission meetings and hearings. Notice of all items to be considered shall be filed with the secretary of state's office as required by statute. sec.6.9. Conduct and Decorum. Conduct and decorum shall be maintained and enforced by the presiding officer. Every party, witness, attorney, or other representative shall comport himself in all proceedings with proper dignity, courtesy, and respect for the commission and all other parties. Attorneys and other representatives of parties shall observe high standards of ethical behavior. sec.6.10. Registration Form. The executive director shall provide registration forms for commission meeting and hearings. Any person desiring to comment on any agenda item must complete a registration form. sec.6.11. Quorum. Five commissioners must be present in order to have a quorum for a commission meeting. sec.6.12. Request for Action by the Commission. Any person who desires to have a matter placed on the agenda for action by the commission shall make such request in writing directed to the executive director at least 15 days prior to the date set for the regular meeting of the commission. In matters other than contested cases, the applicant shall provide along with the request in writing 10 copies of all information, data, or other material which the person desires the commission to consider. In the event it is not possible to make a written request 15 days in advance of the scheduled meeting, a written request may be made to the executive director or chairperson requesting emergency action by the commission. sec.6.31. Placing Matters on the Agenda. (a) At the request of any two commissioners, the executive director shall place an item(s) on the agenda if it complies with the posting requirements specified by law. If only one commissioner submits either an oral or written request to place an item(s) on the agenda, the chairperson shall review that request and make a determination whether to place that item on the agenda for the commission's consideration. (b) The chairperson or executive director shall determine, after receiving a written request for action by a member of the general public, whether the matter shall be heard at the time requested, having due regard for the nature and complexity of the matter to be presented. (c) In no event shall any requested matter be placed on the agenda of the commission for its regular meeting at a time later than 10 days prior to the date on which such meeting is scheduled unless the chairperson, or vice chairperson in the event of the inability of the chairperson to act, acting on the advice of the executive director, determines that an unforeseeable emergency situation exists requiring immediate action by the commission. (d) A notice shall be submitted stating why an emergency exists requiring the commission to act and the nature of the emergency. sec.6.32. Public Hearing. A public hearing shall be conducted if required by law or requested by a commissioner. The preliminary review and the informal hearings process mandated by Texas Civil Statutes, Article 6252-9d.1, are not subject to the Open Meetings Act, nor the Open Records Act and are not open to the public. sec.6.33. Submission to the Commission without Prior Public Hearing. If a matter which is not a contested case within the meaning of the Administration Procedure and Texas Register Act, sec.3(2), is brought before the commission without prior public hearing, and if the notice of the matter has been posted according to the Texas Open Meetings Act, the commission may: (1) hear and decide the matter with such time limitations on oral presentations as the commission deems necessary; or (2) continue the matter for further hearing before the commission. sec.6.34. Public Appearance. (a) Any person wishing to speak, testify, or offer evidence before the commission shall begin by stating his or her name and the name of any person or entity represented, if any. The person shall state his or her position in respect to the issue briefly and concisely. The person's statement shall be supported by such facts as will assist the commission in arriving at a decision concerning the matter under consideration. Statistics or facts submitted to the commission shall be written, typed, or printed. Briefs submitted shall be subject to any procedural restrictions imposed by the commission. (b) Any testimony presented by a member of the public must be taken by the commission under oath. Arguments not readily deducible from facts before the commission, or which merely criticize persons shall be avoided. (c) Persons appearing before the commission are subject to examination by commissioners and/or by the staff of the commission. sec.6.35. Order of Commission Meetings. (a) The chairperson shall call the meeting to order. (b) The chairperson shall request the executive director, or a person designated by the executive director to call the roll. (c) The commission shall consider the adoption of the minutes from the previous meeting. (d) After approval of the minutes from the last meeting, the chairperson shall open the floor to the commissioners for comments. After the commissioners have made their comments, the chairperson shall open the floor for comments or reports by the executive director. (e) Following comments from the commissioners and the executive director, the chairperson shall swear in persons wishing to address the commission. Those persons shall address the commission under the topic of "Public Comment Session." (f) Following the public comment session, the chairperson shall direct the executive director to present the first item on the agenda. (g) The executive director may present the agenda item or have a staff member make the presentation. (h) Before a vote is taken on any item, the chairperson may open the floor for discussion. (i) If the floor is open for discussion, the chairperson shall recognize persons wishing to speak or testify in a manner allowing equal opportunity for representation on all sides of an issue, and shall regulate the order for the discussion of items. (j) Upon completion of presentations and public comments, if any, the commission upon motion of one of the commissioners, shall take action necessary to dispose of the item. sec.6.71. Voting at Commission Meetings. (a) The commission, by record vote of six commissioners, shall adopt rules to administer laws under its jurisdiction. (b) The commission, by record vote of five commissioners, may take action on other matters requiring a vote of the commission. sec.6.81. Appeal of a Ruling from the Chair. The presiding officer, the chairperson or the vice chairperson in the absence of the chairperson, has the authority and duty to make necessary rulings on questions of parliamentary law. However, any commissioner has the right to appeal from the decision by the chairperson on such a question. The question shall then be removed from the chairperson and vested in the commission for final decision after a motion has been made, seconded, and a majority of the commissioners present have voted in the affirmative. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208355 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 463-5800 Chapter 9. Advisory Opinions 1 TAC sec.sec.9.1, 9.3, 9.5, 9.7 The Texas Ethics Commission adopts new sec.sec.9.1, 9.3, 9.5, and 9.7, without changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 2319). These sections affect the administration and issuance of ethics advisory opinions by the Texas Ethics Commission. These sections will provide the commission with guidelines and a framework within which the commission will process requests for ethics advisory opinions. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the authorized actions and operations of the agency, including the processing and issuance of ethics advisory opinions. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208351 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: March 31, 1992 For further information, please call: (512) 463-5800 Chapter 10. Practice and Procedure Subchapter C. Sworn Complaints 1 TAC sec.sec.10.111, 10.113, 10.115, 10.117, 10.119, 10.131, 10. 133, 10.135, 10.137 The Texas Ethics Commission adopts new sec.sec.10.111, 10.113, 10.115, 10.117, 10.119, 10.131, 10.133, 10.135, and 10.137, previously proposed under sec.sec.3. 111, 3.113, 3.115, 3.117, 3.119, 3.131, 3.133, 3.135, and 3.137, respectively, with changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1493). The changes were not substantive; however, the sections have been renumbered. These sections set forth the rules and procedure concerning the filing of complaints alleging violations of statutes, and rules and regulations administered by the Texas Ethics Commission. The change in section numbers is due to an inadvertent filing of the above sections under section numbers previously assigned to the Governor's Office. These sections will provide the public with guidelines and necessary requirements to effectuate the filing of a complaint with the commission during the sworn complaint process. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the filing, processing, and resolution of complaints filed with the commission alleging violations of law, and rules and regulations administered by the commission. sec.10.111. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Act-Texas Civil Statutes, Article 6252-9d.1 (Vernon's Supplement 1992). Complainant-Any person who files a sworn complaint with the Texas Ethics Commission. Respondent-Any person who is alleged to have committed a violation of a rule adopted by or a law administered and enforced by the Texas Ethics Commission. sec.10.113. General Requirements of a Sworn Complaint. A sworn complaint must be in writing and under oath and must state on its face an allegation that, if true, constitutes a violation of a rule adopted by or a law administered and enforced by the Texas Ethics Commission. (1) A sworn complaint must set forth the following in simple, concise, and direct statements: (A) the name and street or mailing address of the complainant; (B) the name, position or title, and address, if known, of each respondent; (C) the nature of the alleged violation, including if possible the specific rule or provision of law alleged to have been violated; (D) a statement of facts alleged to constitute the violation and the dates or period of time in which the alleged violation occurred; (E) all documents or other material available to the complainant that are relevant to the allegation, a list of all documents or other material within the knowledge of the complainant and available to the complainant that are relevant to the allegation but that are not in the possession of the complainant, including, if known, the location of the documents, and a list of all documents or other material within the knowledge of the complainant that are unavailable to the complainant and that are relevant to the complaint, including, if known, the location of the documents. (2) The complaint must be accompanied by an affidavit stating that the information contained in the complaint is true and correct or that the complainant has good reason to believe and does believe that the violation occurred. An affidavit based on information and belief must state the source and basis of the information and belief. The complainant must swear to the facts by oath or affirmation before a notary or other authorized official. sec.10.115. Availability and use of Sworn Complaint. (a) Availability. The Texas Ethics Commission has prescribed a sworn complaint form to be used by persons filing complaints. The form is available at the Texas Ethics Commission, 1101 Camino La Costa, Austin, Texas 78752. (b) Use of sworn complaint form. A person filing a sworn complaint should use the sworn complaint form prescribed by the Texas Ethics Commission. A sworn complaint filed with the Texas Ethics Commission on a form not prescribed by the commission will be sufficient provided the sworn complaint is legible, substantially adopts the format of the prescribed form, and otherwise complies with the Act, sec.1.15 and the commission rules. sec.10.117. Identification of the Complainant. (a) Name. The name of the complainant is sufficient if the full first and last name and middle initial, if any, is disclosed. (b) Address. The address of the complainant is sufficient if the home, business street, or mailing address is disclosed, provided, however, that the address must be one where certified or registered mail, restricted delivery, return receipt requested may be sent to the complainant. sec.10.119. Identification of the Respondent. (a) Name. The name of the respondent is sufficient if the full first and last name and middle initial, if any, is disclosed. (b) Position or title. The position or title of the respondent is sufficient if the information discloses the capacity in which the respondent is alleged to have committed the violation (e.g. lobbyist, candidate, officeholder) and in the event more than one person holds a similar position or title, the information further specifically identifies the particular position or title held by the respondent. In the event the respondent does not hold a title or position or if the alleged violation consists of the respondent's failure to hold a position required by law, such as failure to register as a lobbyist, the complaint is sufficient if the sworn complaint taken as a whole discloses the circumstances under which the respondent is subject to a rule adopted by or a law administered and enforced by the Texas Ethics Commission. (c) Address. The address of the respondent must be provided, if known by the complainant. (d) Multiple respondents. In the event the complaint names two or more respondents, identifying information required by the Act, sec.1.15, and these rules must be listed separately as to each respondent. sec.10.131. Nature of Violation. (a) General rule. A description of the nature of an alleged violation shall consist of a short, concise statement of the commission rule or provision of law alleged to have been violated. The complaint should, if possible, specifically identify the relevant rule or provision of law. However, a description is sufficient if the relevant rule or provision of law can reasonably be ascertained from the description and from the statement of facts required by the Act, sec.1.15(b)(4), and these rules. (b) Erroneous designation. A description of the nature of an alleged violation that erroneously designates a specific rule or provision of law is nonetheless sufficient if the correct designation can reasonably be ascertained as provided in these rules and if the commission determines that the erroneous designation is not calculated to mislead the respondent. sec.10.133. Statement of Facts. (a) General rule. A description of the facts constituting an alleged violation must state facts which, if true, establish each element of a violation and must provide sufficient detail to reasonably place the respondent on notice of the rule or provision of law violated, of the manner and means by which the violation allegedly occurred, and to afford the respondent an opportunity to prepare a response. (b) Dates. A description of the facts must, if possible, disclose the specific date(s) on which the alleged violation occurred. If the complainant is unable to provide specific dates, the complaint must disclose a specific period of time in which the alleged violation occurred. In either event, the statement of facts must disclose that the alleged violation occurred subsequent to December 31, 1991. (c) Documents. The statement of facts may adopt by reference the content of documents that are attached to and made a part of the complaint. However, the statement of facts must reasonably identify those portions of the document that are relevant to the alleged violation. sec.10.135. Relevant Documents or Other Material. (a) Relevance. For purposes of this rule, a document or other material is relevant if the document or material has a tendency to make the existence of any fact that is of consequence to the alleged violation more probable or less probable than it would be without the document or other material. (b) Documents or other material in possession of complainant. The complaint must describe or should attach duplicates of all documents or other materials that are relevant to the allegation and that are in the possession of the complainant, including duplicates of records that are in the possession of the complainant. (c) Documents or other material not in the possession of complainant. The complaint must list all documents or other material within the knowledge of the complainant that are relevant to the allegation but are not in the possession of the complainant. The list must describe the document or material with sufficient detail to disclose its relevance. The list must also describe the location of the document, if known. sec.10.137. Affidavit. (a) Form. The complaint must be verified. The form of the verification is sufficient if the complaint is based on oath or affirmation before a notary public or other person authorized by law to administer oaths. (b) Contents of oath or affirmation. The oath or affirmation must either state that the factual allegations in the complaint are true and correct or that the allegations are based on information and belief. (c) Basis for oath or affirmation. An oath or affirmation stating that the allegations are true and correct must be based on personal knowledge. An oath or affirmation based on information and belief may be based on personal knowledge or information gained from other sources. (d) Oath or affirmation based on information and belief. An oath or affirmation based on information and belief must state the source and basis of the information. The complaint sufficiently identifies the source of the information if the source, in the case of an individual, is named or identified by position, and in the case of documents if the nature of the document is described. The complaint sufficiently identifies the basis of the information if the complaint states the substance of the information received. A complaint is sufficient if it is based in part on an anonymous source, provided, however, that additional facts are stated that independently corroborate the source. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208354 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 463-5800 Subchapter B. Forms 1 TAC sec.10.211 The Texas Ethics Commission adopts new sec.10.211, previously proposed as sec.3.211, with changes to the proposed text as published in the February 21, 1992, issue of the Texas Register (17 TexReg 1443). The warning, "This document is confidential. Unauthorized disclosure may subject a person to criminal penalties and civil liability pursuant to Texas Civil Statutes, Article, 6252- 9b.1, sec.1.21, (Vernon's Supplement 1992)." has been deleted, and the section has been renumbered. This section sets forth the form to be used by persons filing a complaint alleging violations of any statutes, rule, or regulation administered or regulated by the Texas Ethics Commission. The warning was deleted because it was determined that it may prevent persons from filing complaints, and the confidentiality provisions in the statute are directed at the commission and not the public. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public and the commission with the necessary form to file a sworn complaint before the Texas Ethics Commission. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the filing, processing, and resolution of complaints filed with the commission alleging violations of law, and rules and regulations administered by the commission. sec.10.211. Sworn Complaint and Affidavit. The Texas Ethics Commission adopts by reference the sworn complaint and affidavit form prescribed by the commission on January 20, 1992, as amended on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208357 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: February 21, 1992 For further information, please call: (512) 463-5800 1 TAC sec.sec.10.213, 10.215, 10.217, 10.219 The Texas Ethics Commission adopts new sec.sec.10.213, 10.215, 10.217, and 10. 219, previously proposed under sec. sec.3.213, 3.215, 3.217, and 3.219, respectively, with changes to the proposed text as published in the February 21, 1992, issue of the Texas Register (17 TexReg 1443). The warning, "This document is confidential. Unauthorized disclosure may subject a person to criminal penalties and civil liability pursuant to Texas Civil Statutes, Article 6252- 9d.1, sec.1.21, (Vernon's Supplement 1992)." has been deleted, and the section numbers have been renumbered. These sections set forth the forms to be used by the Texas Ethics Commission when processing sworn complaints filed before the commisison for providing notice in the complaint procedure. The warning was deleted because it was determined that it may prevent persons from filing complaints, and the confidentiality provisions in the statute are directed at the commission and not the public. The change in the section numbers is due to an inadvertent filing of the above sections under a section numbers previously assigned to the Governor's Office. These sections will provide the public and the commission with the necessary forms to initiate and process a sworn complaint before the Texas Ethics Commission. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the filing, processing, and resolution of complaints filed with the commission alleging violation of laws, rules, and regulations administered by the commission. sec.10.213. Notice of Compliance. The Texas Ethics Commission adopts by reference the notice of compliance form authorized by the commission on January 20, 1992, as amended on June 4, 1992. This form is published by and made available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711- 2070. sec.10.215. Notice of Noncompliance. The Texas Ethics Commission adopts by reference the notice of noncompliance form authorized by the commission on January 20, 1992, as amended on June 4, 1992. This form is published by and made available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711- 2070. sec.10.217. Notice of Failure to Comply as to Form. The Texas Ethics Commission adopts by reference the notice of failure to comply as to form authorized by the commission on January 20, 1992, as amended on June 4, 1992. This form is published by and made available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. sec.10.219. Notice is Dismissal for Noncompliance and Failure to Resubmit. The Texas Ethics Commission adopts by reference the notice of dismissal for noncompliance and failure to resubmit authorized by the commission on January 20, 1992, as amended on June 4, 1992. The form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208356 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: February 21, 1992 For further information, please call: (512) 463-5800 Chapter 20. Campaign Financing Subchapter B. Reporting Forms 1 TAC sec.20.3 The Texas Ethics Commission adopts new sec.20.3, previously proposed as sec.5.2, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 601). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, and minor changes as to form. This section sets forth the form for filing the appointment of general-purpose committee campaign treasurer in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. General-Purpose Committee Campaign Treasurer. The Texas Ethics Commission adopts by general-purpose committee campaign treasurer form prescribed by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208240 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.5 The Texas Ethics Commission adopts new sec.20.5, previously proposed as sec.5.3, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 601). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and section renumbering. This section sets forth the form for filing the appointment of candidate's campaign treasurer in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. candidate's Campaign Treasurer. The Texas Ethics Commission adopts by reference the treasurer form prescribe by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208241 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.7 The Texas Ethics Commission adopts new sec.20.7, previously proposed as sec.5.4, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 601). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the form for filing the appointment of specific-purpose committee's campaign treasurer in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. Specific-Purpose Committee Campaign Treasurer. The Texas Ethics Commission adopts by specific-purpose committee campaign treasurer form prescribed by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208242 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.9 The Texas Ethics Commission adopts new sec.20.9, previously proposed as sec.5.5, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 602). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the form for designating a final report by a candidate of officeholder in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.9. Designation of Final Report By Candidate. The Texas Ethics Commission adopts by the reference the designation of final report by candidate form prescribed by the commission on June 4, 1992. This form is available from Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208244 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.11 The Texas Ethics Commission adopts new sec.20.11, previously proposed as sec.5.6, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 602). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the form for designating a final report and affidavit of dissolution by a specific-purpose committee in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.11. Designation of Final Report/Affidavit of Dissolution by Specific- Purpose Committee. The Texas Ethics Commission adopts by reference the designation of final report/affidavit of dissolution by specific-purpose committee campaign form prescribed by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208245 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.13 The Texas Ethics Commission adopts new sec.20.13, previously proposed as sec.5.7, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 602). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the form for use as an affidavit of dissolution for a general-purpose committee in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.13. Affidavit of Dissolution For General-Purpose Committee. The Texas Ethics Commission adopts by reference the affidavit of dissolution of general- purpose committee form prescribed by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208246 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.15 The Texas Ethics Commission adopts new sec.20.15, previously proposed as sec.5.8, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 602). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form and the renumbering of the section. This section sets forth the proper form use as the general-purpose committee's monthly sworn report of contributions and expenditures in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.15. General-Purpose Committee Monthly Sworn Report of Contributions and Expenditures. The Texas Ethics Commission adopts by reference the general- purpose committee monthly sworn report of contributions and expenditures form prescribed by the commission of June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208247 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.17 The Texas Ethics Commission adopts new sec.20.17, previously proposed as sec.5.9, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 603). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the proper form for use as the general-purpose committee's sworn report of contributions and expenditures in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.17. General-Purpose Committee Sworn Report of Contributions and Expenditures. The Texas Ethics Commission adopts by reference the general- purpose committee sworn report of contributions and expenditures form prescribed by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208248 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.19 The Texas Ethics Commission adopts new sec.20.19, previously proposed as sec.5.10, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 603). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the proper form for use as the specific-purpose committee's sworn report of contributions and expenditures in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.19. Specific-Purpose Committee Sworn Report of Contributions and Expenditures. The Texas Ethics Commission adoptsby reference the specific- purpose committee sworn report of contributions and expenditures form prescribed by the commission on June 4, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208237 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.21 The Texas Ethics Commission adopts new sec.20.21, previously proposed as sec.5.11, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 603). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form and the renumbering of the new section. This section sets forth the proper form for use as the specific-purpose committee's sworn report of contributions and expenditures in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with the Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.21. Candidate/Officeholder Sworn Report of Contributions and Expenditures. The Texas Ethics Commission adopts by reference the candidate/officeholder sworn report of contributions and expenditures form prescribed by the commission on January 13, 1992. This form is published by and made available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208350 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.23 The Texas Ethics Commission adopts new sec.20.23, previously proposed as sec.5.12, with changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 775). The changes were not substantive; they reflect the addition of page numbers, corrections of typographical errors, minor changes as to form, and the renumbering of the section. This section sets forth the proper form for use as the notice of intent to file monthly sworn report of contributions and expenditures or intent to revert to the regular filing schedule to be filed in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission and the various filing authorities in processing it. Errors as to cite, spelling, and pagination have been corrected. The change in the section number is due to an inadvertent filing of the above section under a section number previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with the Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.23. Notice of Intent to File Monthly Sworn Reports of Contributions and Expenditures or Intent to Revert to the Regular Filing Schedule. The Texas Ethics Commission adopts by reference the notice of intent to file monthly sworn reports of contributions and expenditures or intent to revert to the regular filing schedule form prescribed by the commission on January 13, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208359 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-5800 Subchapter C. Rules Concerning Reports 1 TAC sec.sec.20.31, 20.33, 20.35 The Texas Ethics Commission adopts new sec.sec.20.31, 20.33, and 20.35, previously proposed under sec.5.21, 5.23, and 5.25, respectively, with changes to the proposed text as published in the March 10, 1992, issue of the Texas Register (17 TexReg 1797). The changes were not substantive; however, the sections have been renumbered. These sections concern the reporting the names of certain persons who benefit from a direct campaign expenditure; the filing of a report after a special legislative session; and officeholder accounts. These sections set forth the exceptions and requirements relating to the filing of reports pursuant to Title 15 of the Texas Election Code. The change in section numbers is due to an inadvertent filing of the above sections under sections numbers previously assigned to the Governor's Office. These sections will provide the public with guidelines in filling out reports required by Title 15 of the Texas Election Code. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the filing of reports mandated by Title 15 of the Texas Election Code. sec.20.31. Exception Concerning the Reporting by Certain Specific-Purpose Committees the Name of Each Candidate or Officeholder Benefiting from a Direct Campaign Expenditure. A specific-purpose committee which supports a candidate or officeholder for statewide office; a district office filled by voters of more than one county; state senator; state representative; or the State Board of Education is not required to report the name and the office sought or held by the candidate or officeholder who benefits from a direct campaign expenditure under the Texas Election Code, sec.254.031(a)97). sec.20.33. Filing of Report After Special Legislative Session. A sworn report of contributions required to be filed by the Texas Election Code, sec.254.0391, is not required to be filed if no contributions were accepted during the applicable filing period. sec.20.35. Officeholder Accounts. Officeholders who maintain officeholder and campaign contributions in bank accounts must deposit the officeholder contributions in only those accounts containing campaign contributions. The Texas Election Code, sec.253.040, does not require all officeholder and campaign contributions to be deposited in one bank account. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208353 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: March 10, 1992 For further information, please call: (512) 463-5800 Chapter 30. Personal Financial Disclosure Subchapter A. Disclosure Statements Expenditures Previously Reported 1 TAC sec.30.3 The Texas Ethics Commission adopts new sec.30.3, previously proposed as sec.7.3, with changes to the proposed text as published in the March 10, 1992, issue of the Texas Register (17 TexReg 1797). No substantive changes were made; however the section has been renumbered. This section excludes those persons who file certain disclosure reports pursuant to the Texas Election Code, Title 15, from having to file the same information under Texas Civil Statutes, Article 6252-9b. The change in the section number is due to an inadvertent filing of other sections affecting this section under section numbers previously assigned to the Governor's Office. This section will provide a duplication of filing and reporting of information by those state offices and employees required to file the same information under two different reporting statutes. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the administration of Texas Civil Statutes, Article 6252-9b, and the Texas Election Code, Title 15. sec.30.3. Expenditures Reported under Title 15 of the Texas Election Code. Any person who has reported the receipt of conference transportation, meals, or lodging expenses permitted under the Texas Penal Code, sec.36.07, on that person's candidate's sworn report of contributions and expenditures form filed pursuant to the Texas Election Code, Title 15, is not required to again list that information on that person's financial statement filed pursuant to Texas Civil Statutes, Article 6252-9b. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208352 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: March 10, 1992 For further information, please call: (512) 463-5800 Financial Statement 1 TAC sec.30.51 The Texas Ethics Commission adopts new sec.30.51, previously proposed as sec.7.51, with changes to the proposed text as published in the Janaury 28, 1992, issue of the Texas Register (17 TexReg 603). No substantive changes were made; however, the section has been renumbered as indicated above. This section establishes the form to be used by certain state officers and employees who must file personal financial statements with the Texas Ethics Commission pursuant to Texas Civil Statutes, Article 6252-9b. The change in the section number is due to an inadvertent filing of other sections affecting this section under section numbers previously assigned to the Governor's Office. This section will provide a format for state officers and employees who are required to file personal financial statements with the commission. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the administration of Texas Civil Statutes, Article 6252-9b. sec.30.51. Financial Statement. The Texas Ethics Commission adopts by reference the financial statement form prescribed by the commission on January 13, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208239 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 Chapter 40. Registration and Regulation of Lobbyists 1 TAC sec.40.34 The Texas Ethics Commission adopts new sec.40.34, previously proposed as sec.10.34, with changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 604). The changes were not substantive; however, the section has been renumbered, as indicated above. This section set forth the form for filing the lobbyist activity report with the Texas Ethics Commission as mandated by the Texas Government Code, Chapter 305. The change in the section number is due to an inadvertent filing of other sections under section under section numbers previously assigned to the Governor's Office. This section will provide the public with the form for filing that information required to be disclosed by Chapter 305 of the Government Code. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the administration of Chapter 305 of the Texas Government Code. sec.40.34. Lobbyist Activity Report. The Texas Ethics Commission adopts by reference the Lobbyist Activity Report form prescribed by the commission on January 13, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208238 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 6, 1992 Proposal publication date: January 28, 1992 For further information, please call: (512) 463-5800 1 TAC sec.40.35 The Texas Ethics Commission adopts new sec.40.35, previously proposed as sec.10.35, with changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 775). The changes were not substantive; however, the section has been renumbered. This section sets forth the form for filing the lobbyists termination report with the Texas Ethics Commission as mandated by the Texas Government Code, Chapter 305. The change in the section numbers previously assigned to the Governor's Office. This section will provide the public with the form for terminating the filing of information required to be disclosed by Chapter 305 of the Government Code. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the administration of Chapter 305 of the Texas Government Code. sec.40.35. Lobbyist Termination Notice. The Texas Ethics Commission adopts the Lobbyist Termination Notice Form prescribed by the commission on January 13, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 4, 1992. TRD-9208358 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: July 7, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-5800 TITLE 19. EDUCATION Part II. Texas Education Agency Chapter 101. Assessment Assessment of Minimum Skills 19 TAC sec.sec.101.1-101.8 The Texas Education Agency adopts the repeals of sec. sec.101.1-101.8, concerning assessment, without changes to the proposed text as published in the May 1, 1992, issue of the Texas Register (17 TexReg 3120). The chapter is being repealed in accordance with the sunset review process mandated by the 71st Legislature in Senate Bill 1. The State Board of Education (SBOE) has reviewed the old chapter and is adopting a new Chapter 101 in a separate submission. No comments were received regarding adoption of the repeals. The repeals are adopted under Senate Bill 1, sec.2.25, 71st Legislature, Sixth Called Session, which authorizes the SBOE to review all rules, other than portions of Chapter 75, under 19 TAC, relating to public education. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208260 Criss Cloudt Coordinator, Policy Planning and Evaluation Texas Education Agency Effective date: July 7, 1992 Proposal publication date: May 1, 1992 For further information, please call: (512) 463-9701 19 TAC sec.sec.101.1-101.6 The Texas Education Agency adopts new sec.sec.101.1-101.6, concerning assessment. Section 101.1 is adopted with changes to the proposed text as published in the May 1, 1992, issue of the Texas Register (17 TexReg 3118). Sections 101.2-101.6 are without changes and will not be republished. The new chapter is being adopted in accordance with the sunset review process mandated by the 71st Legislature in Senate Bill 1. The change in sec.101.(c) expands the responsibility of the State Board of Education (SBOE) for developing and approving criterion-referenced assessment instruments. The new chapter provides districts guidelines for administering the Texas Assessment of Academic Skills (TAAS) and the Norm-referenced Assessment Program for Texas (NAPT). Comments received at two public hearings concerning Chapter 101 were considered before the new sections were proposed in the Texas Register. No comments were received regarding the new sections as proposed in the Texas Register. The new sections are adopted under the Texas Education Code, Chapter 21, Subchapter O, which provides the State Board of Education with the authority to adopt a statewide student assessment plan. sec.101.1. General Provisions. (a) The State Board of Education shall adopt an interim plan for assessment that will remain in effect until the requirement for the Texas Education Code, sec.21.5512, regarding the development of a statewide assessment program that is primarily performance-based, are fully implemented. This interim plan will serve as a transition between the assessment plan required under the Texas Education Code, sec.21.551, and the plan to be developed under the Texas Education Code, sec.21.5512. (b) Spanish-version criterion-referenced assessment instruments in reading, written, and mathematics will continued to be administered to appropriate Grade 3 students in the fall of each school year until other measures have been developed for determining language proficiency and/or skills in Spanish at the elementary school level. (c) For each criterion-referenced assessment instrument developed under the Texas Education Code, Chapter 21, Subchapter O, the State Board of Education shall approve the essential elements upon which the assessment instruments are based, adopt the objective to be assessed, established the standards for satisfactory performance, and approve the assessment instruments based on the recommendations of the commissioner of education. (d) The commissioner of education may specify other testing periods as needed for the administration of assessment instruments in compliance with the Texas Education Code, Chapter 21, Subchapter O. (e) Each school district shall administer assessment instruments to its students in accordance with procedures established by the commissioner of education and procedures set forth in the applicable test administration materials, and shall assist with field tests and other activities necessary to implement the requirements of the Texas Education Code, Chapter 21, Subchapter O. (f) The superintendent or chief administrative officer in each school district shall be responsible for coordinating all local assessment activities, including: (1) scheduling testing times on all affected campuses in accordance with the testing periods designated by the commissioner of education: (2) administering the assessment instruments to the appropriate students; (3) ensuring the maintenance of security; and (4) ensuring that all assessment instruments are administered in accordance with procedures established by the commissioner of education. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208259 Criss Cloudt Coordinator, Policy Planning and Evaluation Texas Education Agency Effective date: July 7, 1992 Proposal publication date: May 1, 1992 For further information, please call: (512) 463-9701 Chapter 109. Budgeting, Accounting, and Auditing Subchapter D. Adoptions by Reference 19 TAC sec.109.61 The Texas Education Agency adopts an amendment to sec.109.61, concerning Bulletin 679, the financial accounting manual for school districts and regional education service centers, without changes to the proposed text as published in the April 7, 1992, issue of the Texas Register (17 TexReg 2452). The amendment is necessary to include Change 26 to Bulletin 679. Change 26 clarifies definitions of account codes, updates federal program rules and regulations, adds sections relating to public school accounting procedures, and corrects minor technical errors. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Education Code, sec.11.29, which directs the commissioner of education to adopt annually an operating budget for the Foundation School Program, the Central Education Agency, and other programs for which the State Board of Education are responsible. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208261 Criss Cloudt Coordinator, Policy Planning and Evaluation Texas Education Agency Effective date: July 7, 1992 Proposal publication date: April 17, 1992 For further information, please call: (512) 463-9701 Chapter 149. Education Personnel Development Subchapter E. Centers for Professional Development and Technology 19 TAC sec.149.91 The Texas Education Agency adopts new sec.149.91, concerning centers for professional development and technology, without changes to the proposed text as published in the May 1, 1992, issue of the Texas Register (17 TexReg 3121). The new section is necessary to afford entities involved in teacher preparation maximum flexibility while maintaining rigorous outcomes-based accountability. The new section outlines requirements for establishment and funding of centers for professional development and technology through institutions of higher education with approved teacher education programs. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Education Code, sec.13.050, which provides the State Board of Education with the authority to develop the process for the establishment of centers for professional development. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208262 Criss Cloudt Coordinator, Policy Planning and Evaluation Texas Education Agency Effective date: July 7, 1992 Proposal publication date: May 1, 1992 For further information, please call: (512) 463-9701 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 1. General Administration Subchapter F. Summary Procedures for Routine Matters 28 TAC sec.sec.1.702-1.705 The State Board of Insurance of the Texas Department of Insurance adopts amendments to 28 TAC sec.sec.1.702-1.705 concerning activities which have been designated for summary procedure disposition pursuant to the Insurance Code, Article 1.33, with changes to the proposed text as published in the December 13, 1991, issue of the Texas Register (16 TexReg 7152). These changes include deletion of summary procedures relating to auto consent to rate and deletion of summary procedures relating to fire and allied lines because these procedures are no longer necessary with the enactment of House Bill 2 by the 72nd Legislature which amended the rating statutes. The adoption of the amendments is needed for more efficient and expeditious processing of filings for automobile individual risk submissions, which are individual filings regarding unusual risks for which there is no applicable manual rate or classification. The amendments will eliminate the time-consuming process of securing an order from the State Board of Insurance for approval of each submission by delegating such approval to the Deputy Commissioner for Casualty Insurance. Adoption of these amendments will also conform the pertinent sections to the Insurance Code, as amended by House Bill 2 enacted by the 72nd Legislature. One amendment deletes existing 28 TAC sec.1.702(3) regarding auto consent to rate, because changes to the Insurance Code no longer permit such a procedure. Another amendment adds to 28 TAC sec.1.702 a new paragraph (3), adding individual risk submissions to the list of activities for which summary procedure disposition is allowed. Another amendment deletes existing 28 TAC sec.1.703(2)(A), regarding auto consent to rate, because changes to the Insurance Code no longer permit such a procedure. Another amendment adds sec.1. 703(2)(A), which makes the deputy commissioner of casualty insurance responsible for auto individual risk submissions. Three other amendments delete existing 28 TAC sec.1.702(7) relating to rates in excess of maximum for fire and allied lines insurance, existing 28 TAC sec.1.702(8) relating to highly protected risk rating plans for fire and allied lines, and existing 28 TAC sec.1.702(9) relating to review of cases where no promulgated rates are provided for fire and allied lines, and all references to these three deleted subsections have also been deleted. These three subsections are deleted because these types of rates are no longer applicable under the new rating systems enacted under House Bill 2. The amendments also correct a typographical error, and re-number the list of activities and make other changes of an editorial nature in adding to or deleting from the list of activities which come under the sections as amended. No comments were received regarding adoption of the amendments. The amendments are adopted under the Insurance Code, Articles 1.33, 5.01, and 1.04, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The Insurance Code, Article 1.33 permits the State Board of Insurance, by rule, to create a summary procedure and designate agency activities that are routine to be handled through delegation by deputy commissioner and other personnel as the board may designate. Article 5.01 authorizes the board to alter or amend any and all automobile rates. Article 1.04(b) authorizes the board to determine rules in accordance with the laws of this state. Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5 authorize and require each state agency to adopt rules of practice setting forth the nature and requirement of available procedures, and prescribe the procedures for adoption of rules by a state administrative agency. The adopted amendments affect regulation through summary procedures under the Insurance Code, Article 1.33. sec.1.702. Designated Activities. The following statutorily prescribed applications are designated for summary procedure disposition. (1) Life, accident, or health insurance, health maintenance organization, or prepaid legal services forms or filings. Filings of life, accident, or health insurance policy form applications respecting approval or disapproval, but not withdrawal of approval, made pursuant to the Insurance Code, Article 3.42, filings of health maintenance organization evidence of coverage respecting approval ordisapproval, but not withdrawal of approval, made pursuant to the Insurance Code, Article 20A.09, filings by health maintenance organizations for which approval is required under the Insurance Code, Article 20A.04(b), and filings of prepaid legal services forms respecting approval or disapproval but not withdrawals of approval pursuant to the Insurance Code, Article 5.13-1 and Chapter 23. (2) Licenses. Filings of application or renewal for agents and adjusters licenses pursuant to the Insurance Code, Articles 1.14-2, 3.75, 9.35-9.38, 9.41- 9.43, 9.56, 20A. 15, 21.07, 21.07-1, 21.07-2, 21.07-3, 21.07-4, 21.09, 21.11, 21.14, and 23.23, and insurance premium finance licenses pursuant to the Insurance Code, Article 24.03. (3) Auto individual risk submissions. Applications to change rates, forms, or deductibles for motor vehicle insurance on an individual risk basis pursuant to the Insurance Code, Article 5.01. (4) Subchapter B, (a) rates. Average (a) rate applications filed for the types of insurance specified in the Insurance Code, Articles 5.13 and 5.15-1, pursuant to the Insurance Code, Article 5.15. (5) Subchapter B, excess rate or umbrella. Excess rate or umbrella applications for the types of insurance specified in the Insurance Code, Article 5.13, filed pursuant to the Insurance Code, Article 5.15. (6) Subchapter B, consent to rate. Applications to charge a rate or premium greater than the standard rate or premium approved by the board for the types of insurance specified in the Insurance Code, Article 5.13, pursuant to the Insurance Code, Article 5.15(d). (7) Excess inland marine. Applications to write regulated lines under the Insurance Code, Article 5.53, at rates in excess of the standard and uniform rates that have been approved by the board pursuant to the Insurance Code, Article 5.53. sec.1.703. Delegation. The State Board of Insurance hereby delegates to the following deputy commissioners administration over the filings designated in paragraphs (1)-(3) of this section. (1) Deputy commissioner for life insurance is responsible for sec.1.702(1) of this title (relating to Designated Activities) life, accident, and health insurance, health maintenance organization or pre-paid legal services forms or filings and sec.1.702(2) of this title (relating to Designated Activities) certain licenses. (2) Deputy commissioner of casualty insurance is responsible for all of the following filings: (A) sec.1.702(3) of this title (relating to Designated Activities), auto individual risk submissions; (B) sec.1. 702(4) of this title (relating to Designated Activities), Subchapter B, (a) rates; (C) sec.1.702(5) of this title (relating to Designated Activities), Subchapter B, excess or umbrella; and (D) sec.1.702(6) of this title (relating to Designated Activities), Subchapter B, consent to rate. (3) Deputy commissioner of property insurance is responsible for filings under sec.1.702(7) of this title (relating to Designated Activities), inland marine excess rate. sec.1.704. Summary Procedure; Notice (a) Actual notice for proposed negative action. In the case of proposed negative action with regard to any delegated activity designated under sec.1.702 of this title (relating to Designated Activities), parties directly involved shall be given actual notice at least five days in advance of the action proposed. Actual notice means notice by mail addressed to the last known address of the applicant, or, if the applicant is represented by an attorney, to the applicant's attorney of record. No notice is required in the case of affirmative action with regard to designated activities. (b) Notice of decision. For sec.1.702(1) and (3)-(7) of this title (relating to Designated Activities), the appropriate deputy commissioner shall record any decision by causing the appropriate filing, application, or form to be stamped either "approved by" or "disapproved by" (name of the appropriate deputy) deputy commissioner of insurance (appropriate division) and the date and by causing the decision to be recorded by a like stamp of a file copy, by a microfilm or microfiche copy, or by recording said decision in the agency's computer files and causing said stamped filing, application, or form to be mailed to the applicant. For sec.1. 702(2) of this title (relating to Designated Activities), the appropriate deputy commissioner shall indicate a positive decision by causing the appropriate license to be mailed to the applicant, and by causing the decision to be recorded in the agency's computer files. Notice of any proposed negative decision with respect to sec.1.702(2) of this title (relating to Designated Activities) shall be in accordance with subsection (a) of this section. sec.1.705. Review. (a) Any person affected by any action under paragraph (1) or paragraph (2) of sec.1.703 of this title (relating to Delegation), may petition the commissioner for a hearing to review the matter. The petition shall contain an identification of the matter complained of and a petitioner's statement, including a rebuttal of the deputy commissioner's decision with sufficient particularity to inform the commissioner and any interested persons of the petitioner's reasons and arguments. The petition shall be filed with the hearings reporter. The review shall be de novo pursuant to the Administrative Procedure and Texas Register Act. Any further relief sought is governed by the Insurance Code, Article 1.04. (b) Any person affected by any action under paragraphs (3)-(7) of sec.1.702 of this title (relating to Designated Activities), may petition the State Board of Insurance for a hearing to review the matter. The petition shall contain an identification of the matter complained of and a petitioner's statement, including a rebuttal of the deputy commissioner's decision with specific particularity to inform the board and any interested persons of the petitioner's reasons and arguments. The petition shall be filed with the chief clerk, State Board of Insurance. The review shall be de novo pursuant to the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 15, 1992. TRD-9208234 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 6, 1992 Proposal publication date: December 13, 1991 For further information, please call: (512) 463-6327 Chapter Life, Accident, and Health Insurance and Annuities Subchapter GG. Minimum Reserve Standards for Individual and Group Accident and Health Insurance 28 TAC sec.sec.3.7001-3.7010 State Board of Insurance of the Texas Department of Insurance adopts new sec.sec.3.7001-3.7010, concerning minimum reserve standards for individual and group accident and health insurance. Sections 3.7003, 3.7004, 3.7006, and 3.7007 are adopted with changes to the proposed text as published in the December 13, 1991, issue of the Texas Register (16 TexReg 7155). Sections 3.7001, 3.7002, 3.7005, and 3.7008-3.7010 are adopted without changes and will not be republished. 3.7001-3.7010 concern the minimum reserve standards for individual and group accident and health insurance. The sections set forth standards for claim reserves, premium reserves, and contract reserves. The adoption includes several changes to the proposed text for the reasons stated in this paragraph. This adoption includes a change to sec.3.7003(b) to eliminate inconsistency with the Insurance Code, Article 6.01. The change to sec.3.7004(a) deletes subparagraph (A) and adds language to paragraphs (1) and (2) to clarify the types of coverages that generate contract reserves. Section 3.7004(b)(1)(B) has been deleted and subsequent subparagraphs renumbered appropriately. The subparagraph was deleted because it had consisted only of a drafting note. Section 3.7004(b)(1)(C) has been changed to allow the use of termination rates in calculating contract reserves for return of premium or other deferred cash benefits. Section 3.7004(b)(1)(D) has been changed to provide that the reserve method for long-term care insurance is the two-year full preliminary term. The change also clarifies that riders are accorded the same two-year full preliminary term method as contracts based on issue date. Changes were made to the compliance dates in sec.3.7006(a)(1)(A)(i)(I) and (II), and language was added to subclause (III) and a new subclause (IV) to allow adequate time to implement the new morbidity tables. Changes were also made to the compliance dates provided in sec.3.7006(a)(2)(A)(i) and (ii). Section 3.7006(b)(2) was changed to reflect a more appropriate valuation interest rate in calculating reserves for group disability income benefits which do not have contract reserves. The change to sec.3.7006(c) permits the use of other mortality tables, if appropriate, for the type of benefits and approved by the commissioner. The term "level premium" has been deleted from sec.3.7007 (relating to Glossary of Technical Terms Used) since this term has been removed from the sections. The definition of "qualified actuary" in sec.3.7007 has been changed to require expertise in health insurance valuation. 3.7001-3.7010 will provide strengthened reserve standards for individual and group accident and health insurance coverage. The requirements for premium reserves contain standards for unearned premium reserves and provide treatment of special situations. The requirements for claim reserves address claim reserve methods and prescribe minimum standards for the use of interest, morbidity, or other contingencies in the calculation of claim reserves. The requirements for contract reserves specify the types of coverages that may generate contract reserves and prescribe the minimum standards for the establishment of these reserves including morbidity, interest, termination rates, and reserve method. Contracts issued prior to the effective date of these sections are not subject to the contract reserve requirements set out in these sections unless such contracts relate to blocks of business purchased on or after the effective date of these sections. suggested that there is no statutory authority, in particular for contract reserves, for the proposed sections and the financial solvency of many insurers would be threatened. A commenter mentioned that Article 21.39, which is a basis stated for the proposed sections, contained a caption at one time that made it clear that the article only pertained to claims which have already been incurred. The commenter added that the wording in Article 21.39 relating to the adoption "of each current formula" does not contemplate requirements for morbidity and other assumptions which the proposed sections address. Another commenter stated that its company maintains unearned premium reserves and normal claim reserves and has never experienced any years where the reserves were not adequate to cover the liabilities. The company issues only group dental coverage. Other commenters expressed support in general for the sections as proposed with the exception of recommended changes. sec.3. 7002(b)(1)(B)-One commenter suggested modifying subsection (b)(1)(B) to allow an insurer to use its own morbidity experience for disability income claim reserves for claims from duration of disablement of three to five years versus the two years currently in this provision. The commenter believes this change to be appropriate to allow insurers more flexibility to set appropriate termination rates for the early durations due to varying degrees of underwriting, case management, and claim review. Suggestions similar to this one were made, except that the suggestion was to use an insurer's own experience, but only for group disability income claims from duration of disablement to up to five years. Such a change was supported by commenters on the basis that different recovery patterns are produced among insurers in the first five years due to variations in particular benefit management practices. Additionally, it was urged that some groups may be large enough to negotiate reserve credits based on their own credible experience. The commenters proposed that such experience should be used only with the approval of the commissioner and that such experience should be credible. Commenters recommended this section be reworded to language similar to that which is found in the reserving standards regulation for the State of Maine. Section 3. 7003-One commenter argued that is contrary to statute, in that it would require unearned premium reserves beyond those required by the Insurance Code, Article 6.01, and that it exceeds the statutory terms of Article 6.01. One commenter asserted that this section does not allow for a reinsurance credit as authorized by Article 6.01(2). Article 6.01 relates to calculation of reserve on fire insurance. Section 3.7004-One commenter claimed that there is no statutory basis for the contract reserves requirement in sec.3.7004. The commenter asserted that the Insurance Code is silent as to any contract reserve or other similar reserve. The commenter also argued that Article 21.39 does not support a requirement for contract reserves because it fails to set forth any standards, guidelines, or criteria for any reserve for future losses or claims occurring after the statement date, or for contract reserves of any kind. Section 3.7004(a)-One commenter expressed concern that the language is inadequate to make it clear that a company would not have to set up contract reserves for a product that is priced on an annual renewable term (ART) type basis. ART type pricing can be interpreted as pricing for a premium which is sufficient to cover claims only for the current year and nothing for future years' claims. Commenters asserted that the contract reserve requirements were not clear enough as to the coverages that were expected to generate contract reserves. Section 3.7004(b)(1)(B)-Commenters suggested that this subparagraph be deleted since it is basically a drafting note. One commenter recommended that, if it were not deleted, it should be changed to "(2) Premium Variations" and moved to follow subparagraph (b)(1)(F). Section 3.7004(b)(1)(D)-Commenters felt that the use of termination rates in calculating contract reserves as prescribed in this subparagraph should also be allowed for return of premium or other deferred cash benefits. Section 3.7004(b)(1)(E)-Commenters recommended that the qualifying phrase "two-year" be deleted from the third sentence of this subparagraph because the sentence makes a statement that is relevant to any preliminary term method and not just to a two-year preliminary term method. Commenters recommended a special provision for return of premium or other deferred cash benefits to specify when "one-year" versus "two-year" full preliminary term shall be applied. One commenter expressed concern over the use of the one-year full preliminary term method in this subparagraph for long-term care insurance. The commenter stated that the current tax law requires that tax reserves for long-term care policies be calculated on a two-year preliminary reserve basis and requested that Texas delay the use of a one-year full preliminary term method until the industry has resolved this issue. The commenter recommended that the compliance date for requiring a one-year full preliminary term method for long-term care insurance be consistent with the Maine regulations which use a compliance date of December 31, 1993. A one-year full preliminary term method will produce higher reserves, especially at the earlier durations, than a two-year full preliminary term method. Another commenter recommended leaving the reserve method for long-term care insurance as two-year preliminary term and recommended that language be provided to make it clear that riders would follow the two-year preliminary term method based on the date of issue. Section 3.7006(a)(1)(A)(i)-Commenters requested more flexibility be provided in the timing of when to use the prescribed morbidity tables for individual disability health insurance contracts. Section 3.7006(a)(2)(A)(i)- Commenters recommended that changes comparable to those recommended in sec.3.7006(a)(1)(A)(i) be made to paragraph (2)(A)(i). One commenter expressed concern that the compliance date of January 1, 1990 for the required use of the 1987 Commissioners Group Disability Income Table (87CGDT) was retroactive and did not allow enough lead time to implement. The commenter requested that the compliance date for the use of this table be changed to January 1, 1993. Section 3.7006(a)(2)(A)(ii)-A commenter requested that the compliance date for the use of the 1987 Commissioners Group Disability Income Table (87CGDT) for claim reserves for group disability income benefits be changed from January 1, 1990 to January 1, 1993 to allow enough lead time to implement the use of this table. Section 3.7006(b)(2) -Commenters requested that this paragraph be altered to provide for a different maximum rate of interest in calculating claim reserves for policies not requiring contract reserves. Commenters asserted that the funding of claim reserves for a number of policies not requiring contract reserves utilize a rate of interest which is closer to that used in the valuation of single-premium immediate annuities. The proposed maximum rate of interest was the maximum rate permitted by law in the valuation of single- premium immediate annuities issued on the same date as the claim incurral date, reduced by one percentage point. Commenters specifically referenced group disability income products as examples of products needing such a change. One commenter recommended that the maximum interest rate for claim reserves on policies not requiring contract reserves simply be equal to the maximum rate requested above without the reduction of one percentage point. Section 3.7006(c) -Commenters urged that other mortality tables should be allowed in the calculation of contract reserves instead of allowing only the use of a mortality table permitted by law for the valuation of whole life insurance. Commenters stated that other mortality tables may be more appropriate, depending on the product, and that such tables should be permitted if acceptable to the commissioner. Section 3.7007-One commenter felt that the definition of "qualified actuary" should be restated so that non-members of the American Academy of Actuaries might still qualify by meeting other standards. Another commenter suggested that the definition of "qualified actuary" should be made to require expertise in health insurance valuation. Section 3.7009-One commenter suggested that placement of this section in the proposed rules is odd, since it contains non-supplementary material and follows a section which contains supplementary material. The commenter suggested combining sec.3.7009 into sec.3.7005 since each relates to multiple company situations. American Academy of Actuaries Committee on State Health Issues, the Health Insurance Association of America (HIAA), the Travelers Insurance Company, and UNUM Life Insurance Company of America commented in favor of the proposed sections with some recommended changes. Provident American Insurance Company, Transport Life Insurance Company, and the Texas Legal Reserve Officials Association (TLROA) commented against the proposed sections. UniLife Insurance Company filed a letter which neither supported or opposed the proposed sections. department disagrees with the comments that the proposed rules lack statutory authority, especially with respect to requirements for holding contract reserves. The Insurance Code, Articles 3.28 and 21.39 provide clear statutory authority for the sections. Section 2A of Article 3.28 was enacted by the 72nd Legislature in House Bill 2. Section 2A authorizes the board to state the requirement, substance, and scope of actuarial opinions to ensure reserves "are computed appropriately and are based on assumptions which satisfy contractual provisions." It also gives rulemaking authority to the board. Section 2A(a)(2) applies the requirements "to all business in force including individual and group health insurance plans, in form and substance as specified by Board rule and acceptable to the Commissioner." Article 21.39 requires the State Board of Insurance to adopt the current NAIC formula for establishing reserves applicable to each line of insurance and requires all companies writing the line of insurance to which each NAIC formula is applicable to establish reserves to comply with the formula. In addition, Article 21.39 requires insurers to establish certain reserves. The contract reserve requirements in the sections are reasonable and appropriate. Contract reserves reflect premiums which are priced to fund incurred claims beyond the current year. It is appropriate that such funding for future years' claims be accounted for in the form of a liability or contract reserve. If contract reserves are not put up, as required under these proposed sections, then these products will either have difficulty in meeting future claims or the company will effectively overcharge policyholders through rate increases if the amount that should have been set aside in contract reserves is not there when needed. The costs of calculating contract reserves are perceived to be necessary costs of doing business for such products. The department is of the opinion that the adopted sections will not threaten the financial solvency of any insurer who is setting up appropriate reserves which reflect the pricing and guarantees in its products. Section 3.7002(b)(1)(B)-The department disagrees with the recommendation that an insurer be allowed to use its own morbidity experience for individual disability income claim reserves, for claims from duration of disablement of three to five years, instead of the two-year requirement currently in this subparagraph. The two-year standard for individual disability income claim reserves has been in effect for a number of years in other states. The agency believes that, even though the two-year requirement for group disability income claim reserves is a relatively new requirement for other states, a change in claim duration from two years to five years from disablement for the use of an insurer's own experience, as suggested, is not appropriate at this time. A credibility standard should be developed in order to provide guidance and consistency in approving such experience in place of the prescribed morbidity standard in the proposed sections. The department suggests to the commenters that one appropriate forum to present this issue for further study and development would be the Life and Health Actuarial Task Force of the NAIC, in which Texas is an active participant. Section 3.7003-The department agrees with the comments that the unearned premium reserve could exceed what Article 6.01 would require, and has made revisions to the section so that it is consistent with Article 6.01. The agency agrees reinsurance credit is not provided for in subsection (b) but it is provided for in sec.3. 7005, relating to reinsurance. Section 3.7004-The board has relied upon clear and sufficient statutory authority to adopt these sections, including contract reserves, as previously discussed. In addition to the points set out in that discussion, Article 1.11(c), as added by House Bill 2, 72nd Legislature, requires a qualified actuary to state his or her opinion "relating to policy reserves and other actuarial items for life, accident and health and annuities, or loss and loss adjustment expense reserves for property and casualty risks, as described in the NAIC Annual Statement instructions as appropriate for the type of risks insured." The 1991 Annual Statement blanks require for all companies writing accident and health insurance a statement of reserves "additional" to premium and claims reserves. The annual statements for Chapter 3 companies, Chapter 11 companies, fraternals, and stipulated premium companies require "active life" reserves including reserves which are "additional" to premium and claim reserves. Contract reserves are synonymous with "additional" reserves. Section 3.7004(a)-The department has made changes to clarify the types of coverages for which contract reserves are considered. The agency has also provided a specific exemption to make it clear that contract reserves are not required when pricing does not reflect incurred claims for future years when the insurer is allowed to raise rates. Section 3. 7004(b)(1)(B)-The department agrees with comments to delete this subparagraph as this is basically a drafting note and does not add substance to the proposed rules. The subparagraph has been deleted and subparagraphs (C)-(F), which follow, have been changed to subparagraphs (B)-(E), respectively. Section 3.7004(b)(1)(D)-The department concurs with the comments and has changed the second sentence of this subparagraph accordingly. Section 3.7004(b) (1)(E)-The department concurs with comments that the "two-year" qualifier should be deleted from the third sentence of this subparagraph. The inclusion of the phrase "two- year was inadvertent and not in line with the intent of the proposed sections. The third sentence applies to all preliminary term methods, not just the two- year preliminary term method. The department also agrees with comments to leave the reserve method for long-term care insurance as two-year preliminary term and to provide language to clarify that riders would follow the two-year preliminary term method based on the date of issue. The department disagrees with other comments to this subparagraph requesting that return of premium or other deferred cash benefits be reserved on either the one-year or two-year preliminary term method depending on whether the benefits are available either before or after the 20th year. This proposed change is currently being studied by the Life and Health Actuarial Task Force of the NAIC in which Texas is an active participant. Further study is appropriate for this proposed change. Section 3.7006(a)(1)(A)(i)-The department agrees with the submitted comments that some adjustments are appropriate with respect to the retrospective requirements in this clause. Appropriate changes have been made to allow adequate time to implement the new morbidity tables. Section 3. 7006(a)(2)(A)(i)-The department has changed the compliance dates relating to morbidity standards for contract reserves for group disability income benefits. Section 3.7006(a)(2)(A)(ii)-The department agrees with the comments that compliance dates for this clause should be changed, and has made such changes. Section 3.7006(b)(2)-The department agrees with the comments that the use of a rate of interest used in the valuation of single premium immediate annuities (reduced by one percentage point) would be a more appropriate valuation interest rate in calculating reserves for group long-term disability benefits which do not have contract reserves and has made the recommended change. The department also concurs that the type and duration of investments for group long-term disability benefits, without contract reserves, is more similar to the type and duration of investments for single premium immediate annuities, since both products have similar payout durations and considerations. Section 3.7006(c)-The department recognizes that there may be cases where the use of a mortality table other than the mortality table permitted by law for the valuation of whole life insurance may be more appropriate for use in calculating contract reserves. One such example might be long-term care products, where the use of an annuity mortality table may be more appropriate and where the amount of contract reserves calculated would be greater. This issue is currently being considered by the Life and Health Actuarial Task Force of the NAIC, in which Texas is an active participant. Because the department agrees with the comments, it has changed the subsection accordingly. Section 3.7007-The department agrees that a "qualified actuary" should have expertise in health insurance valuation. It has therefore changed the definition of that term to include such a requirement. The department also has deleted the definition of "level premium" in conjunction with changes made in sec.3.7004(a). Section 3.7009-The department disagrees with the comment that sec.3.7009 be combined with sec.3.7005. The purchase or assumption of existing business is properly treated in sec.3.7009 as a matter independent of the Reinsurance consideration addressed in sec.3.7005. new sections are adopted under the Insurance Code, Articles 3.28, 21.39, 1.04 and 1.10, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The Insurance Code, Article 3.28, sec.2A authorizes the State Board of Insurance to state the requirement, substance, and scope of actuarial opinions in order to make sure reserves are computed appropriately and are based on assumptions which satisfy contractual provisions. Article 21.39 requires that the board adopt current formulas for establishing reserves applicable to each line of insurance as recommended by the National Association of Insurance Commissioners and also requires that all companies writing the line of insurance to which each NAIC formula is applicable establish reserves in compliance with those formulas. Article 1.04 authorizes the board to determine rules in accordance with the laws of this state for uniform application. Article 1.10(1) requires the board to see that all laws respecting insurance and insurance companies are faithfully executed. Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5, authorize and require each state agency to adopt rules of practice setting forth the nature and requirement of available procedures, and prescribe the procedures for adoption of rules by a state administrative agency. The adopted sections affect the regulation of minimum reserves for individual and group accident and health insurance coverage under the Insurance Code, Article 3.28. sec.3.7003. Premium Reserves. (a) General. (1) Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation. (2) If premiums due and unpaid are carried as an asset, such premiums must be treated as premiums in force, subject to unearned premium reserve determination. The value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums must be carried as an offsetting liability. (3) The gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation may be appropriately discounted to the valuation date and shall be held either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum. (b) Minimum standards for unearned premium reserves. (1) The minimum unearned premium reserve with respect to any contract is an amount which is not in excess of the amount or inconsistent with the methods established by the Insurance Code, Article 6.01. The minimum standard shall be the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with such premium determined on the basis of: (A) the valuation net modal premium on the contract reserve basis applying to the contract; or (B) the gross modal premium for the contract if no contract reserve applies. (2) However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. (c) Premium reserve methods generally. The insurer may employ suitable approximations and estimates, including, but not limited to, groupings, averages, and aggregate estimation, in computing premium reserves. Such approximations or estimates should be tested periodically to determine their continuing adequacy and reliability. sec.3.7004. Contract Reserves. (a) General. (1) Contract reserves are required, unless otherwise specified in paragraph (2) of this subsection for all guaranteed renewable coverages, non-cancellable coverages with guaranteed rates, long-term care coverages, and disability income coverages with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. The values specified in this subparagraph must be determined on the basis specified in subsection (b) of this section. (2) Contracts not requiring a contract reserve are as follows: (A) contracts which cannot be continued after one year from issue; (B) contracts already in force on the effective date of these standards for which no contract reserve was required under the immediately preceding standards; or (C) contracts which are not priced to provide for claims to be incurred in future years and which allow the insurer to increase premium rates in future years. (3) The contract reserve is in addition to claim reserves and premium reserves. (4) The methods and procedures for contract reserves must either be consistent with those for claim reserves for any contract, or else appropriate adjustment must be made when necessary to assure provision for the aggregate liability. The definition of the date of incurral must be the same in both determinations. (b) Minimum standards for contract reserves. (1) Basis. (A) Morbidity or other contingency. Minimum standards with respect to morbidity are those set forth in sec.3.7006 of this title (relating to Specific Standards for Morbidity, Interest, and Mortality). Valuation net premiums used under each contract must have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of insured, contract duration, and period for which gross premiums have been calculated. Contracts for which tabular morbidity standards are not specified in sec.3.7006 of this title shall be valued using tables established for reserve purposes by a qualified actuary and acceptable to the commissioner. (B) Interest. The maximum interest rate is specified in sec.3.7006 of this title. (C) Termination rates. Termination rates used in the computation of reserves shall be on the basis of a mortality table as specified in sec.3.7006 of this title except as noted in this subparagraph. Under contracts for which premium rates are not guaranteed, and where the effects of insurer underwriting are specifically used by policy duration in the valuation morbidity standard or for return of premium or other deferred cash benefits, total termination rates may be used at ages and durations where these exceed specified mortality table rates, but not in excess of the lesser of: 80% of the total termination rate used in the calculation of the gross premiums, or 8.0%. Where a morbidity standard specified in sec.3.7006 of this title is on an aggregate basis, such morbidity standard may be adjusted to reflect the effect of insurer underwriting by policy duration. The adjustments must be appropriate to the underwriting and be acceptable to the commissioner. (D) Reserve method. The minimum reserve is the reserve calculated on the two- year full preliminary term method; that is, under which the terminal reserve is zero at the first and also the second contract anniversary. The preliminary term method may be applied only in relation to the date of issue of a contract or a rider. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions (e.g., projected inflation rates) or for other reasons, are to be applied immediately as of the effective date of adoption of the adjusted basis. (E) Negative reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero. (c) Alternative valuation methods and assumptions generally. Provided the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified in subsection (b) of this section, an insurer may use any reasonable assumptions as to interest rates, termination and/or mortality rates, and rates of morbidity or other contingency. Also, subject to the preceding condition, the insurer may employ methods other than the methods stated in subsection (b) of this seciton in determining a sound value of its liabilities under such contracts, including, but not limited to, the following: the net level premium method; the one-year full preliminary term method; prospective valuation on the basis of actual gross premiums with reasonable allowance for future expenses; the use of approximations such as those involving age groupings, groupings of several years of issue, average amounts of indemnity, grouping of similar contract forms; the computation of the reserve for one contract benefit as a percentage of, or by other relation to, the aggregate contract reserves exclusive of the benefit or benefits so valued; and the use of a composite annual claim cost for all or any combination of the benefits included in the contracts valued. (d) Tests for adequacy and reasonableness of contract reserves. Annually, an appropriate review must be made of the insurer's prospective contract liabilities on contracts valued by tabular reserves, to determine the continuing adequacy and reasonableness of the tabular reserves giving consideration to future gross premiums. The insurer shall make appropriate increments to such tabular reserves if such tests indicate that the basis of such reserves is no longer adequate; subject, however, to the minimum standards of subsection (b) of this section. In the event a company has a contract or a group of related similar contracts, for which future gross premiums will be restricted by contract, insurance department regulations, or for other reasons, such that the future gross premiums reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the company shall establish contract reserves for such shortfall in the aggregate. sec.3.7006. Specific Standards for Morbidity, Interest, and Mortality. (a) Morbidity. (1) Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows. (A) Disability income benefits due to accident or sickness. (i) Contract reserves. (I) Contracts issued on or after January 1, 1965, and prior to January 1, 1987: The 1964 Commissioners Disability Table (64 CDT). The 1964 Commissioners Disability Table (64 CDT) is adopted by reference for use in the manner indicated in these sections. (II) Contracts issued on or after January 1, 1994: The 1985 Commissioners Individual Disability Tables A (85CIDA); or The 1985 Commissioners Individual Disability Tables B (85CIDB). The 1985 Commissioners Individual Disability Tables A (85CIDA) and the 1985 Commissioners Individual Disability Tables B (85CIDB) are adopted by reference for use in the manner indicated in these sections. (III) Contracts issued during the years 1987 through 1993: Optional use of either the 1964 Table or the 1985 Tables. (IV) Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A (85CIDA) or Tables B (85CIDB) as the minimum standard. The insurer may, however, elect to use the other tables with respect to any subsequent statement year. (ii) Claim reserves. The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the claim is incurred. (B) Hospital benefits, surgical benefits, and maternity benefits (scheduled benefits or fixed time period benefits only). (i) Contract reserves. (I) Contracts issued on or after January 1, 1955, and before January 1, 1982: The 1956 Intercompany Hospital-Surgical Tables. The 1956 Intercompany Hospital- Surgical Tables are adopted by reference for use as indicated in these sections. (II) Contracts issued on or after January 1, 1982: The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, page 63. Refer to the paper (in the same volume, page 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf. The 1974 Medical Expense Tables, Table A is adopted by reference for use in the manner indicated in these sections. (ii) Claim reserves. No specific standard. See subparagraph (E) of this paragraph. (C) Cancer expense benefits (scheduled benefits or fixed time period benefits only). (i) Contract reserves. Contracts issued on or after January 1, 1986: The 1985 NAIC Cancer Claim Cost Tables. The 1985 NAIC Cancer Claim Cost Tables are adopted by reference for use in the manner specified in these sections. (ii) Claim reserves. No specific standard. See subparagraph (E) of this paragraph. (D) Accidental death benefits. (i) Contract reserves. Contracts issued on or after January 1, 1965: The 1959 Accidental Death Benefits Table. The 1959 Accidental Death Benefits Table is adopted by reference for use in the manner specified in these sections. (ii) Claim reserves. Actual amount incurred. (E) Other individual contract benefits. (i) Contract reserves. For all other individual contract benefits, morbidity assumptions are to be determined as provided in the reserve standards. (ii) Claim reserves. For all benefits other than disability, claim reserves are to be determined as provided in the standards. (2) Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows. (A) Disability income benefits due to accident or sickness. (i) Contract reserves. Contracts issued prior to January 1, 1994: The same basis, if any, as that employed by the insurer as of January 1, 1994. Contracts issued on or after January 1, 1994: The 1987 Commissioners Group Disability Income Table (87CGDT). The 1987 Commissioners Group Disability Income Table (87CGDT) is adopted herein by reference. (ii) Claim reserves. For claims incurred on or after January 1, 1994: The 1987 Commissioners Group Disability Income Table (87CGDT); For claims incurred prior to January 1, 1994: Use of the 87CGDT is optional. (B) Other group contract benefits. (i) Contract reserves. For all other group contract benefits, morbidity assumptions are to be determined as provided in the reserve standards. (ii) Claim reserves. For all benefits other than disability, claim reserves are to be determined as provided in the standards. (b) Interest. (1) For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract. (2) For claim reserves, except for disability income benefits in policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date. For claim reserves on disability income benefits in policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by one percentage point. (c) Mortality. (1) Except as provided in paragraph (2) of this subsection, the mortality basis used must be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the health insurance contract. (2) Other mortality rates may be used in the calculation of the minimum reserves, if appropriate for the type of benefits and if approved by the commissioner. The request for such approval must include the proposed mortality basis and the reason that the standard specified in paragraph (1) of this subsection is inappropriate. (d) Tables. Copies of the 1964 Disability Table (64 CDT); the 1985 Commissioners Individual Disability Tables A (85CIDA); the 1985 Commissioners Individual Disability Tables B (85CIDB); the 1956 Intercompany Hospital-Surgical Tables; the 1974 Medical Expense Tables, Table A; the 1985 NAIC Cancer Claim Cost Tables; the 1959 Accidental Death Benefits Table; and the 1987 Commissioners Group Disability Income Table (87CGDT) may be obtained by contacting the Actuarial Division, Texas Department of Insurance, P.O. Box 149104, Mail Code 304-3A, Austin, Texas 78714-9104. sec.3.7007. Glossary of Technical Terms Used. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Annual-claim cost -The net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6.00 would cover expenses and profit or contingencies. Claims accrued -That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or prior to the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. This liability is sometimes referred to as a liability for "accrued" benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established. Claims reported -When an insurer has been informed that a claim has been incurred, if the date reported is on or prior to the valuation date, the claim is considered as a reported claim for annual statement purposes. Claims unaccrued -That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. This liability is sometimes referred to as a liability for unaccrued benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest), must be established. Claims unreported -When an insurer has not been informed, on or before the valuation date, concerning a claim that has been incurred on or prior to the valuation date, the claim is considered as an unreported claim for annual statement purposes. Date of disablement -The earliest date the insured is considered as being disabled under the definition of disability in the contract, based on a doctor's evaluation or other evidence. Normally this date will coincide with the start of any elimination period. Elimination period -A specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable. Gross premium-The amount of premium charged by the insurer. It includes the net premium (based on claim-cost) for the risk, together with any loading for expenses, profit, or contingencies. Group insurance -The term "group insurance" includes blanket insurance and franchise insurance and any other forms of group insurance. Long-term care insurance-Any insurance policy or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis: for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Such term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations; or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long- term care insurance shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage. Modal premium-This refers to the premium paid on a contract based on a premium term which could be annual, semi-annual, quarterly, monthly, or weekly. Thus if the annual premium is $100 and if, instead, monthly premiums of $9.00 are paid then the modal premium is $9.00. Negative reserve -Normally the terminal reserve is a positive value. However, if the values of the benefits are decreasing with advancing age or duration it could be a negative value, called a negative reserve. Preliminary term reserve method-Under this method of valuation the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserves will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium (or stream of changing valuation premiums) becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period. Present value of amounts not yet due on claims-The reserve for "claims unaccrued" (see definition), which may be discounted at interest. Qualified actuary-An individual who: (A) is a member in good standing of the American Academy of Actuaries; (B) is familiar with the valuation requirements applicable to health insurance companies; and (C) is qualified to calculate reserves for health insurance contracts in accordance with the American Academy of Actuaries qualification standards. Reserve-Used to include all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued. An insurer under its contracts promises benefits which result in: (A) claims which have been incurred, that is, for which the insurer has become obligated to make payment, on or prior to the valuation date. On these claims, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or (B) claims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves. Terminal reserve -This is the reserve at the end of a contract year, and is defined as the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums. Unearned premium reserve-This reserve values that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Thus, if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis. Valuation net modal premium-This is the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 15, 1992. TRD-9208243 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 6, 1992 Proposal publication date: December 13, 1992 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCE AND CONSERVATION Part II. Texas Parks and Wildlife Department Chapter 57. Fisheries Permits to Sell Nongame Fish taken from Public Fresh Water 31 TAC sec.57.378 The Texas Parks and Wildlife Commission in a regularly scheduled public hearing held May 21, 1992, adopts an amendment to sec.57.378, concerning the sale of nongame fish taken from public water, without changes to the proposed text as published in the April 17, 1992, issue of the Texas Register (17 TexReg 2673). The amendments are needed to update the list of nongame fish taken from public water that may be sold with a permit, and to allow the sale of freshwater drum. An update was required to account for recent changes in scientific nomenclature. Prior to proposal of the adopted rules the department has received requests to add freshwater drum to the list. Since no evidence existed to exclude the sale of freshwater drum, that species was added to the list of species that may be sold with a permit. The amendment will not affect the ability of the department to issue permits for the sale of nongame fish taken from public water. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Parks and Wildlife Code, Chapter 67, sec.67.0041, which provides the Texas Parks and Wildlife Commission with authority to issue permits for the taking, possession, transportation, sale, and exportation of nongame species and to charge a fee for commercial activity. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 16, 1992. TRD-9208311 Paul M. Shinkawa Director, Legal Services Texas Parks and Wildlife Department Effective date: September 1, 1992 Proposal publication date: April 17, 1992 For further information, please call: 1 (800) 792-1112, ext. 4433 or (512) 389- 4433 Texas Department of Insurance Exempt Filing Notification Pursuant to the Insurance Code, Chapter 5, Subchapter L (Editor's note: As required by the Insurance Code, Article 5.96 and Article 5.97, the Register publishes notices of actions taken by the State Board of Insurance pursuant to Chapter 5, Subchapter L, of the Code. Board action taken under these articles is not subject to the Administrative Procedure and Texas Register Act. These actions become effective 15 days after the date of publication or on a later specified date. The text of the material being adopted will not be published, but may be examined in the offices of the State Board of Insurance, 333 Guadalupe, Austin.) This notification is made pursuant to the Insurance Code, Article 5.97, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. The State Board of Insurance of the Texas Department of Insurance, in a meeting held on June 15, 1992, adopted the Texas Commercial Property Rating Manual, pursuant to the Texas Insurance Code, Article 5.25. The manual establishes rating schedules to be used in the conducting of inspections of commercial buildings to establish base fire and extended coverage rates. The new manual replaces the existing rating schedules, with revisions that update the new manual to incorporate the new name of the agency as the Texas Department of Insurance. The manual has been structured in a simplified format to be more user-friendly and provides new protection codes for cities and towns and new class construction codes. In addition, Guidelines and Standards for Approval of Testing Laboratories have been incorporated into the manual for easy reference by manual users. The adoption of the manual is a beginning process to establish a more efficient and effective rating and classification system to better recognize fire protection and changing construction. These changes are to be effective 15 days after publication in the Texas Register. The notification is made pursuant to the Texas Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208387 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 8, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance, in a meeting held on June 15, 1992, has adopted on a permanent basis the Texas Dwelling Policy forms and endorsements that are considered the minimum coverage that must be provided under a dwelling insurance policy, pursuant to the Texas Insurance Code, Article 5.35. The policy forms and endorsements adopted by the board meet the minimum readability standards of a minimum score of 40 on the Flesch Reading Ease Test, as established by order of the commissioner of insurance. The policy forms and endorsements have been rewritten from conventional language to simplified easy to read language to meet readability standards and have been reformatted to provide a more user-friendly policy for insureds. New options in coverage combinations are provided under single coverage forms to eliminate the need of using separate endorsements to extend coverage under a policy. Changes made in policy provisions allow the coverage to be more consistent with other policy forms providing coverage on residential property, however, the overall coverage provided by the new policy forms are substantially the same as the coverage available under the previously approved policy forms. The new policy forms eliminate reference to short rate cancellation to provide equal treatment to both the company and the insured; incorporate provisions of the Texas Insurance Code, Article 21.49-2B (relating to Cancellation and Non Renewal of Certain Property and Casualty Policies) and Article 21.55 (relating to Prompt Payment of Claims) to eliminate the need for the attachment of mandatory endorsements; and eliminate endorsements containing obsolete provisions or coverages. These changes are to be effective 15 days after publication in the Texas Register. The notification is made pursuant to Texas Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208388 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 8, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance, in a meeting held on June 15, 1992, has adopted on a permanent basis of the Texas Farm and Ranch Policy forms and endorsements that are considered the minimum coverage that must be provided under a farm and ranch insurance policy, pursuant to the Texas Insurance Code, Article 5.35. The policy forms and endorsements adopted by the board meet the minimum readability standards of a minimum score of 40 on the Flesch Reading Ease Test, as established by order of the commissioner of insurance. The policy forms and endorsements have been rewritten from conventional language to simplified easy to read language to meet readability standards and have been reformatted to provide a more user-friendly policy for insureds. New options in coverage combinations are provided under a single coverage form to eliminate the need of using separate endorsements to extend coverage under a policy. Changes made in policy provisions allow the coverage to be more consistent with other policy forms providing coverage on residential property, however, the overall coverage provided by the new policy forms is substantially the same as the coverage available under the previously approved policy forms. The new policy forms eliminate reference to short rate cancellation to provide equal treatment to both the company and the insured; incorporate provisions of the Texas Insurance Code, Article 21.49-2B (relating to Cancellation and Non Renewal of Certain Property and Casualty Policies) and Article 21.55 (relating to Prompt Payment of Claims) to eliminate the need for the attachment of mandatory endorsements; and eliminate endorsements containing obsolete provisions or coverages. These changes are to be effective 15 days after publication in the Texas Register. The notification is made pursuant to Texas Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208389 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 8, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance, in a meeting held on June 15, 1992, has adopted on a permanent basis the Texas Farm and Ranch Owners Policy forms and endorsement that are considered the minimum coverage that must be provided under a farm and ranch owners insurance policy, pursuant to Texas Insurance Code, Article 5.35. The policy forms and endorsements meet the minimum readability standards of a minimum score of 40 on the Flesch Reading Ease Test, as established by order of the commissioner of insurance. The policy forms and endorsements adopted have been rewritten from conventional language to meet readability standards and have been reformatted to provide a more user-friendly policy for insureds. Changes made in the policy provisions allow the coverage to be more consistent with other policy forms providing coverage on residential property, however, the overall coverage provided by the new policy forms is substantially the same as the coverage available under the previously approved policy forms. The new policy forms eliminate reference to short rate cancellation to provide equal treatment to both the company and insured; incorporate provisions of the Texas Insurance Code, Article 21.49-2B (relating to Cancellation and Nonrenewal of Certain Property and Casualty Policies), Article 21.49-2D (relating to Prohibition of Certain Cancellations and Non Renewals), Article 21.55 (relating to Prompt Payment of Claims), and Article 21.56 (relating to Notice of Settlement of Liability Claims) to eliminate the need to attach separate mandatory endorsements; combines liability and property coverage into the coverage forms to eliminate the need for a separate liability endorsement; and eliminate Coverage Form FRO-C (All Risk Coverage) because of the infrequent use of the Coverage Form, but provide all risk coverage by attachment of an optional endorsement to the coverage form FRO-B (Broad Named Peril). These changes are to be effective 15 days after publication in the Texas Register. The notification is made pursuant to Texas Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208390 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 8, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance, in a meeting held on June 15, 1992, has adopted on a permanent basis the Texas Homeowners Policy forms and endorsements that are considered the minimum coverage that must be provided under a homeowners insurance policy pursuant to Texas Insurance Code, Article 5.35. The policy forms and endorsements adopted by the board meet the minimum readability standards of a minimum score of 40 on the Flesch Reading Ease Test, as established by order of the commissioner of insurance. The policy forms and endorsements adopted provide the same coverage and policy conditions as were previously approved by the board with the following exceptions. Reference to short rate cancellation has been eliminated to provide equal treatment to both the company and the insured for the cancellation of homeowners insurance policies. The new policy forms incorporate provisions of Texas Insurance Code, Articles 21.49-2B (relating to Cancellation of Certain Property and Casualty Policies), Article 21.49-2D (relating to Prohibition of Certain Cancellations and Non Renewals), Article 21.55 (relating to Prompt Payment of Claims), and Article 21.56 (relating to Notice of Settlement of Liability Claims), eliminating the need for the attachment of mandatory endorsements. This change is to be effective 15 days after publication in the Texas Register. The notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208391 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 8, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance, in a meeting held on June 15, 1992, has adopted on a permanent basis the Texas Personal Lines Manual, pursuant to the Texas Insurance Code, Article 5.101. The new Texas Personal Lines Manual contains rules, rates, and/or premiums applicable to the writing of the Texas Homeowners Policy, Texas Dwelling Policy, Texas Farm and Ranch Policy and Texas Farm and Ranch Owners Policy, and replaces the homeowners, dwelling, farm and ranch and farm and ranch owners sections of the Texas General Basis Schedules. The manual consists of a homeowners section, a dwelling section, a farm and ranch section, and a farm and ranch owners section, each of which has been reformatted and rewritten to correspond with rules necessary to write the new simplified easy to read policies. Optional credits to recognize different characteristics of a risk have been added in the homeowners and farm and ranch owners sections of the manual, providing a method of reducing premium costs for qualifying risks. In addition, obsolete rules were eliminated, existing rules were amended to simplify application, editorial changes were made, and a new $25 policy minimum premium rule was added to the dwelling and farm and ranch sections to eliminate the need for separate minimum premiums to be applied by peril. These changes are to be effective 15 days after publication in the Texas Register. The notification is made pursuant to Texas Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 17, 1992. TRD-9208392 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: July 8, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-6327