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 7. Forms 1 TAC sec.7.1 The Texas Ethics Commission adopts new sec.7.1, concerning the adoption and revision of forms filed with the commission, without changes to the proposed text as published in the July 2, 1993, issue of the Texas Register (18 TexReg 4269). The new section simplifies the procedures used by the commission in adopting and revising forms used by persons required to file documents required by the commission. The new section will allow the executive director to proscribe or revise and certify forms filed under the authority of the commission so long as certain conditions are fulfilled. This procedure will allow corrections, updates, and revisions to take place more rapidly and with greater flexibility. No public 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 of reports mandated any statute or law administered or enforced by the commission. 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 September 2, 1993. TRD-9328276 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: September 24, 1993 Proposal publication date: July 2, 1993 For further information, please call: (512) 463-5800 Chapter 20. Campaign Financing Subchapter B. Reporting Forms 1 TAC sec.sec.20.2-20.9, 20.11, 20.13, 20.15, 20.17, 20.19, 20.21, 20.23 The Texas Ethics Commission adopts the permanent repeal of sec.sec.20.2-20.9, 20.11, 20.13, 20.15, 20.17, 20.19, 20.21, and 20.23, concerning the forms used in campaign finance disclosure, without changes to the proposed text as published in the July 2, 1993, issue of the Texas Register (18 TexReg 4270). These sections are being replaced by sec.7.1, which allows the executive director to proscribe, revise, and certify new and revised forms which are filed under the authority of the commission. No public comments were received regarding adoption of the repeal. The repeal of these sections are adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate, adopt, and repeal rules concerning the filing of reports mandated by any statute administered or enforced by the commission. 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 September 2, 1993. TRD-9328275 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: September 24, 1993 Proposal publication date: July 2, 1993 For further information, please call: (512) 463-5800 Chapter 30. Personal Financial Disclosure Subchapter B. Reporting Forms Financial Statement 1 TAC sec.30.51 The Texas Ethics Commission adopts the permanent repeal of sec.30.51, concerning the Financial Statement form used by state officers, without changes to the proposed text as published in the July 2, 1993, issue of the Texas Register (18 TexReg 4270). This section is being replaced by sec.7.1 which allows the executive director to proscribe, revise and certify new and revised forms which are filed under the authority of the commission. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate, adopt, and repeal rules concerning the filing of reports mandated by any statute administered or enforced by the commission. 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 September 2, 1993. TRD-9328274 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: September 24, 1993 Proposal publication date: July 2, 1993 For further information, please call: (512) 463-5800. TITLE 7. BANKING AND SECURITIES Part IV. Texas Savings and Loan Department Chapter 63. Fees and Charges 7 TAC sec.63.5 The Texas Savings and Loan Department adopts new sec.63.5, without changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4785). The new section established the fees to be charged for examination of savings and loan associations by the Department. The section will produce a safer and more fiscally sound State thrift system, as the section will permit regular examination of savings and loan associations. Each association subject to the Savings and Loan Act will pay an examination fee based on a per day rate of $325 for each examiner engaged in the examination of an association. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the State and, from time to time, to amend same, and Texas Civil Statutes, Article 852a, sec.8.01(2), which authorize the Finance Commission of Texas to adopt rules relating to fees and procedures for processing, hearing, and deciding applications filed with the Commissioner. 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 September 2, 1993. TRD-9328194 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Chapter 65. Loans and Investments 7 TAC sec.65.24 The Texas Savings and Loan Department adopts new sec.65.24, concerning the local service area investment requirements for state-chartered savings and loan associations, without changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4786). The local service area investment requirement was enacted as part of House Bill 1790, 73rd Legislature, Regular Session. The rule will provide increased assurance that savings and loan associations provide housing and housing-related credit within their local service area. The rule requires that a percentage of local service area deposits be invested in certain types of loans and investments and sets forth the manner in which as association's local service area is determined and establishes criteria for determining what constitutes qualifying loans and investments. The new section is adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under House Bill 1790, sec.1.13, which provides the commissioner and the Finance Commission of Texas with the authority to adopt rules relating to investment within an association's local service area. 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 September 2, 1993. TRD-9328195 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Chapter 75. Applications 7 TAC sec.75.1 The Texas Savings and Loan Department adopts the repeal of sec.75.1, without changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4786). The repeal concerns the exemption of vehicles owned by the Texas Savings and Loan Department from the requirements of identification inscriptions when used for legitimate agency purposes. The Department no longer owns state vehicles and therefore the chapter and section are unnecessary. It will repeal deletes an unnecessary regulation. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same. 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 September 2, 1993. TRD-9328196 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 The Texas Savings and Loan Department adopts new sec. sec.75.1-75.10, concerning Charter Applications; sec.sec.75.31-75.41, concerning Additional Offices; sec.sec.75.81-75.91, concerning Reorganization, merger, Consolidation, Purchase and Assumption, and Acquisition; and sec.sec.75.121-75.127, concerning Change of Control. Section 75.89 and sec.75.90 are adopted with changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4787). Sections 75.1-75.10, 75.31-75.41, 75.81-75.88, 75.91, and 75.121- 75.127 are adopted without changes and will not be republished. The new regulations are part of a comprehensive series of new regulations, designated as Chapters 75, 77, and 79, which implement the Texas Savings Bank Act (the Act), adopted in Senate Bill 396 passed by the 73rd Legislature, Regular Session. The Act authorizes the establishment of a new type of state- chartered financial institution known as state savings banks and provides a framework for their regulation and supervision by the Department. State savings banks are regulated by the Department and by the Federal Deposit Insurance Corporation (FDIC). They are primarily housing lenders with powers similar to savings and loan associations; however, the federal regulatory structure applicable to these institutions, unlike savings and loan associations, is more consistent with that applicable to other types of federally insured depository institutions. The new regulations implement the provisions of the Texas Savings Bank Act in regard to the application process for state savings banks. The rules establish the procedure for applying for charter, for additional offices, for reorganization, merger, consolidation, purchase and assumption and acquisition, and for change of control with respect to savings banks. The Department received one comment suggesting that sec.75.89 of this title (relating to Conversion to Another Financial Institution Charter), and sec.75. 90 of this title (relating to Conversion into a Savings Bank) be revised to state that the initial step in the conversion process should begin with the board of directors rather than the shareholders. The Department agreed with the comment suggesting that the conversion process should begin with the board of directors rather than the shareholders and sec.75.89 of this title (relating to Conversion to Another Financial Institution) and sec.75.90 of this title (relating to Conversion into a Savings Bank) were revised to provide that the first step in the conversion process is the adoption of a resolution by a two-thirds vote of the institution's board of directors adopting a conversion plan and authorizing the filing of all necessary applications. The proposed regulations stated that the initial step was the adoption of a conversion plan by the stockholders or members of an institution. This procedure could require a converting institution to obtain approval from its stockholders more than once if changes were required as a result of regulator demands during the approval process. By revising the proposed language to state that the initial step begins with the board of directors, the procedure will be more consistent with general corporate law and will note require two separate meetings of its stockholders or members. Charter Applications 7 TAC sec.sec.75.1-75.10 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(2), passed by the Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to fees and procedures for processing, hearing, and deciding applications filed with the Commissioner. 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 September 2, 1993 TRD-9328198 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Additional Offices 7 TAC sec.sec.75.31-75.41 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(2), passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to fees and procedures for processing, hearing, and deciding applications filed with the Commissioner. 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 September 2, 1993. TRD-9328199 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Reorganization, Merger, Consolidation, Conversion, Purchase and Assumption, and Acquisition 7 TAC sec.sec.75.81-75.91 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(2), passed by the Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to fees and procedures for processing, hearing, and deciding applications filed with the Commissioner. sec.75.89. Conversion to Another Financial Institution Charter. (a) The commissioner may authorize any savings bank subject to this title to convert into another type of financial institution subject to applicable law and regulation relating to the type of institution into which the savings bank seeks to convert. (b) A conversion by a savings bank may be initiated by a two-thirds vote of the savings bank's board of directors approving the conversion plan and authorizing the filing of an application. Upon approval of the conversion plan, the plan shall be approved by the adoption of a resolution by a majority vote of the members or stockholders of a savings bank entitled to vote at an annual meeting or special meeting called to consider the conversion. The resolution must declare that the savings bank shall be converted. A copy of the minutes of the proceedings of the meeting of the stockholders or members, verified by affidavit of the secretary or an assistant secretary, must be filed in the office of the commissioner within 10 days after the date of the meeting. In addition, the following supporting information shall be submitted: (1) a copy of the proposed articles of incorporation and bylaws for the new federal savings bank; (2) estimates of the cost of conversion, exclusive of any application or filing fees; (3) a statement of the reasons or need for conversion; and (4) a statement of the savings bank's proposed plans for operation following conversion, including a description of any material changes in the savings bank's organizational structure and management and in the services to be provided by the savings bank to the public following conversion. (c) Within 10 days after the date of receipt of an application to convert and a copy of the minutes, the commissioner shall either consent to the conversion by written order or set a hearing to consider whether the proposed conversion complies with the statutory and regulatory conditions. The commissioner may approve a conversion if he finds that: (1) the conversion will not substantially lessen competition or be in restraint of trade and will not result in a monopoly or be in furtherance of a combination or conspiracy to monopolize or attempt to monopolize the savings and loan or savings bank industry in any part of the state, unless the anti- competitive effects of the proposed conversion are clearly outweighed in the public interest by the probable effect of the conversion in meeting the convenience and needs of the community to be served; (2) the proposed conversion will not cause undue harm to the public interest or to any other existing financial institution; and (3) the proposed conversion is not contrary to the best interests of the savers, depositors, creditors, and stockholders of the converting savings bank and of the public in general. (d) If a hearing is held, it must be held within 25 days after the date of the filing of the conversion application unless a later date is agreed to by the savings bank and the commissioner. The commissioner or a hearing officer designated by the commissioner shall conduct the hearing as a contested case in compliance with the Administrative Procedure Act, except that a proposal for decision may not be made and a final decision or order must be rendered by the commissioner within 15 days after the date of the close of the hearing. If the commissioner denies an application to convert, the Administrative Procedure and Texas Register Act governs a motion for rehearing and available judicial review. (e) If the commissioner consents to the conversion, the savings bank, within three months after the date of the commissioner's written order, shall consummate the conversion in the manner prescribed and authorized by the applicable laws of this state or the United States. A copy of the charter issued to the new financial institution by the appropriate banking agency or the certificate showing the organization of the new financial institution, certified by the secretary or assistant secretary of the appropriate banking agency, must be filed with the commissioner. Failure to file the charter or certificate with the commissioner does not affect the validity of the conversion. (f) On the grant of a charter by the appropriate banking agency, the savings bank receiving the new charter ceases existence as a savings bank incorporated and is not subject to the supervision and control of the commissioner. sec.75.90. Conversion Into a Savings Bank. (a) The commissioner may authorize any financial institution to convert itself into a savings bank in a manner consistent with the provisions of applicable law and regulations of the institution. (b) In order to obtain such authorization, the converting savings bank must by a two-thirds vote of the savings bank's board of directors approve the conversion plan and authorize the filing of a conversion application. Upon approval of the conversion plan, the plan shall be approved by a majority vote of the members or shareholders of the financial institution entitled to vote at any annual or special meeting called to consider such conversion, a resolution declaring that the savings bank shall be so converted, which resolution, verified by affidavit of the secretary or an assistant secretary, shall be filed with the commissioner and mailed to the appropriate banking agency within 10 days after the date of its adoption. At the meeting to vote on a conversion to a domestic savings bank, the members or stockholders shall also vote on the directors of the savings bank. The proposed directors shall execute two copies of an application for certificate of incorporation as provided in the Texas Savings Bank Act, Chapter 2. Each proposed director shall sign and acknowledge the application for certificate of incorporation as a subscriber to the savings bank and shall sign and acknowledge the proposed bylaws as an incorporator of the savings bank. (c) The commissioner on receipt of the application and verified copy of the minutes shall conduct an examination of the financial institution seeking conversion. Following the examination, the commissioner shall approve the conversion without a hearing if the commissioner determines that the converting financial institution is in sound condition and meets all standards, conditions, and requirements of the Texas Savings Bank Act, Chapter 2, or relevant rules adopted by the commissioner and the finance commission. On approval of the conversion, there shall be inserted a paragraph preceding the testimonium clause in the certificate of incorporation stating that the savings bank is incorporated by conversion from another financial institution. (d) An applicant is entitled to a hearing under the Administrative Procedure and Texas Register Act if the commissioner denies an application to convert and a written request for a hearing is delivered to the commissioner within 10 days after the date of denial. A hearings officer designated by the commissioner shall hold the hearing. Within 30 days after the date the hearing is completed, the commissioner shall enter a final order either approving or denying the application. An applicant has the right to appeal a final order to a district court of Travis County with the commissioner named as defendant. The commissioner is not required to file an appeal bond in any cause arising under this section. Filing an appeal under this section does not stay an order of the commissioner. 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 September 2, 1993. TRD-9328200 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Change of Control 7 TAC sec.sec.75.121-75.127 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(2), passed by the Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to fees and procedures for processing, hearing, and deciding applications filed with the Commissioner. 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 September 2, 1993. TRD-9328201 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Chapter 77. Terminology 7 TAC sec.77.1, sec.77.2 The Texas Savings and Loan Department adopts the repeal of sec.77.1 and sec.77.2, without changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4798). The repeal concerns definitions terminology used in the Texas Savings and Loan Act. The definition and terms addressed these sections no longer need to be set forth separately. Therefore, these sections are not substantively necessary. The repeal deletes unnecessary regulations. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time to amend same. 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 September 2, 1993. TRD-9328197 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Chapter 77. Loans, Investments, Savings, and Deposits Authorized Loans and Investments 7 TAC sec.sec.77.1-77.11, 77.31-77.35, 77.51, 77.71-77.74, 77. 91-77.96, 77.101-77.113 The Texas Savings and Loan Department adopts new sec. sec.77.1-77.11, 77.31- 77. 35, 77.51, 77.71-77.74, and 77.91-77.96, concerning Authorized Loans and Investments and sec.sec.77.101-77.113, concerning Savings and Deposits. New sec.sec.77. 3, 77.4, 77.8, 77.32-77.35, and 77.96 are adopted with changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4798). Sections 77.1, 77.2, 77.5-77.7, 77.9-77.11, 77.31, 77.51, 77. 71-77.74, 77.91-77.95, and 77.101-77.113 are adopted without changes and will not be republished. The new regulations are part of a comprehensive series of new regulations, designated as Chapters 75, 77, and 79, which implement the Texas Savings Bank Act (the Act), adopted in Senate Bill 396 passed by the 73rd Legislature, Regular Session. The Act authorizes the establishment of a new type of state- chartered financial institution known as state savings banks and provides a framework for their regulation and supervision by the Department. State savings banks are regulated by the department and by the Federal Deposit Insurance Corporation (FDIC). They are primarily housing lenders with powers similar to savings and loan associations; however, the federal regulatory structure applicable to these institutions, unlike savings and loan associations, is more consistent with that applicable to other types of federally insured depository institutions. The new sections implement the provisions of the Texas Savings Bank Act pertaining to loans, investments, savings, and deposits for state savings banks. The rules establish authorized loans and loan limitations and requirements of minimum levels of investment in loans from the area in which the savings bank's deposits are derived, consistent with the statutory mandates established in the Texas Savings Bank Act. These rules will be enforced by the Department through its examination and supervisory activities. The Department received four comment letters regarding the proposed sections. Two commenters addressed restrictions contained in sec.77.3 of this title (relating to Residential Real Estate Loans). One commenter pointed out that subsection (b) of the section would prohibit in all cases residential real estate loans secured by liens other than first or second liens. The commenter stated that there are no similar lien restrictions for federally chartered associations on residential real estate loans and that this restriction could place state savings banks at a competitive disadvantage in structuring certain real estate transactions. Another commenter pointed out that subsection (c) of the section restricts all residential loans to monthly payment schedules and would not permit residential real estate loans with quarterly, semi-annual, or annual payments. These types of loans are important in agricultural and other farm communities. One commenter suggested a revision to sec.77.4(c)(4) of this title (relating to Appraisal Requirements for Home Improvement Loans). The commenter suggested that requiring an appraisal report for home improvement loans under $25,000 was unduly burdensome and inconsistent with recent federal decisions reducing the appraisal requirements for home loans. A comment was also made that sec.77.8(d) of this title (relating to Personal Property Loans) should be revised because the subsection required a savings bank to establish a complex monitoring system for personal property loans which was not required for other lenders. The commenter suggested that the requirement was unduly burdensome. One comment related to sec.77.32, suggesting that the one-half of 1.0% restriction on the amount that a savings bank could pay a commissioned loan officer was not consistent with the level of commissions paid by other lenders and that to establish such a restriction would place savings banks at a competitive disadvantage in attracting the best commissioned loan officers. The commenter suggested that a limitation of 1.0% of the loan balance would be more consistent with the prevailing rates paid to loan officers. Two comments pertained to sec.77.33 of this title (relating to Loans to and Transactions With Officers, Directors, Affiliated Persons and Employees) and sec.77.34 of this title (relating to Restrictions on Loan Transactions With Third Persons). The commenters suggested that the proposed restrictions on transactions with affiliates would place savings banks at a serious competitive disadvantage because the rules were inconsistent with similar rules applicable to every other type of federally insured depository institution. The commenters suggested a more appropriate standard for these types of transactions was the Federal Reserve Board's Regulation O and recommended strongly that this standard should be adopted for state savings banks. Three comments concerned sec.77.35 of this title (relating to Definitions). One commenter suggested that the definition of immediate family was too broad in that it included an unnecessarily broad list of persons. The commenter suggested that this definition should mirror the Federal Reserve's Regulation O. One commenter disagreed with the treatment provided to certain types of loans in the definition of loans to a single borrower. Another commenter stated that the definition of residential real estate should be revised specifically to include combinations of farm residences and commercial farm real estate, similar to the requirements applicable to savings associations. One comment was made regarding sec.77.72 of this title (relating to Liquidity Requirements). The commenter suggested that the liquidity requirement of 10% was too high, given the ability of the Federal Home Loan Bank to provide immediate liquidity to savings banks and suggested a lower liquidity requirement. Two comments were received suggesting that in order to provide parity with federal savings associations, savings banks should have the authority to invest in operating subsidiaries similar to the authority available to federal S&Ls and national banks. Operating subsidiary investment is very similar to other subsidiary investments except that the activities of operating subsidiaries are limited to investments and activities which the parent financial institution would be able to engage in directly. Operating subsidiary investment authority does not expand the types of activities in which a savings bank can invest and provides savings banks with the ability to conduct its activities through a subsidiary. Most often, these activities are conducted through a subsidiary in order to shield the parent company from liability. Investment in operating subsidiaries for federal savings associations does not count toward an institution's investment in subsidiary corporations. Other than a law firm, no group or association submitted comments. In response to the comments regarding restrictions contained in sec.77.3(b) of this title (relating to Residential Real Estate Loans), the Department agreed that since there are no similar restrictions for federally-chartered associations on residential real estate loans, the proposed restriction could place state savings banks at a competitive disadvantage in structuring certain real estate transactions. Since the statutory parity provision would enable a state savings bank to make these loans, subsection (b) was revised to clarify that comparable lending authority would be available. The Department also agreed with the comment on subsection (c), regarding the ability to make all residential loans with payment schedules other than monthly payments, which could adversely affect agricultural and other farm communities. The Department did not specifically intend to restrict all residential loans to monthly payment schedules; therefore, a new subsection (e) to the section was added as an exception to the requirement in subsection (c) of this section for monthly payment schedules similar to existing authority for state chartered savings associations. The Department agreed with the comment regarding proposed sec.77.4(c)(4) of this title (relating to Home Improvement Loans) which suggested that a savings bank should be able to accept a written opinion of value from an appraiser or a real estate broker for home improvement loans under $25,000. A distinction was already made in the proposed subsection for loans under $50,000, so this revised appraisal rule was made applicable to all loans under $50,000. In response to the commenter's suggestion that savings banks be permitted to use an in-house review of the current tax valuation as a basis for such loans, the Department concluded that a written broker's opinion or an appraiser's opinion provided sufficient flexibility and decided not to broaden this subsection further. Proposed sec.77.8(d) of this title (relating to Personal Property Loans) requires a savings bank to monitor the security property to determine that the value of personal property securing such a loan always equaled or exceeded the loan balance. In response to the comment that this requirement is unduly burdensome and not required of other insured lenders, the Department agreed that the requirement could be deleted without harm to safety and soundness in this type of lending and concluded that it was appropriate to delete this requirement. In response to the comment received regarding restrictions on the amount that a savings bank could pay a commissioned loan officer, the Department revised sec.77.32 of this title (relating to Restriction on Loan Procurement Fees) from one-half of 1.0% restriction to 1.0% for non-affiliated loan officers. The final regulations retain a prohibition on all such payments to affiliated persons. Two comments were received regarding sec.77.33 of this title (relating to Loans to and Transactions With Officers, Directors, Affiliated Persons and Employees) and sec.77.34 of this title (relating to Restrictions on Loan Transactions With Third Persons). In response to the commenters' suggestion that a more appropriate standard for transactions with affiliates would be the Federal Reserve Board's Regulation O, the Department believes that issues related to conflicts of interest are extremely important but that to impose significantly more restrictive standards than are applicable to all other financial institutions would be unduly burdensome and would not significantly affect the safety and soundness of the institution. For all other types of federally- insured depository institutions the clear standard is set forth in Regulation O. Therefore, the Department concluded that the Federal Reserve Regulation O standards should be incorporated by reference and sec.77.33 of this title (relating to Loans to and Transactions With Officers, Directors, Affiliated Persons and Employees) was revised to incorporate Regulation O by reference and sec.77.34 of this title (relating to Restrictions on Loan Transactions With Third Persons) was deleted in its entirety. In response to the commenters who suggested that the definition of Immediate Family set forth in sec.77.35 of this title (relating to Definitions) should mirror the Federal Reserve's Regulation O, the Department concluded that the Regulation O standard was appropriate for all transactions involving affiliated persons and believes such standards should be applied to the same categories of persons; therefore, the definition of Immediate Family was revised to incorporate the Regulation O definition. The Department concurred with the commenter regarding the definition of the term "loan" as set forth in the section. Because the regulations incorporate by reference the loans-to-one- borrower restrictions applicable to federal savings associations, the Department concluded that the proposed definition was inappropriate and that the rules on loans to one borrower should be applied in the same manner for savings banks as those rules are applied to federal S&Ls. Therefore, this definition was deleted in its entirety. In regard to the commenter who suggested that the definition of Residential Real Estate found in sec.77.35 should be revised to clarify that residential real estate specifically included combinations of farm residences and commercial farm real estate, the Department concluded that a clarification was reasonable and revised the language to correspond to the requirements applicable to savings association. With regard to the commenter who suggested reducing the liquidity requirement as set forth in sec.77.72 of this title (relating to Liquidity), the requirement as set forth in the regulations reflects the 10% statutory requirement contained in the Savings Bank Act. Thus, the Department is unable to change the regulations in the face of direct statutory language. In regard to two comments pertaining to permitting savings banks the same authority to invest in operating subsidiaries as that authority is available to federal S&Ls and national banks, the Department concluded that granting authority to savings banks to invest in operating subsidiaries does not constitute an expansion of authority and that such authority may be extremely beneficial to a financial institution. A separate sec.77.96 of this title (relating to Operating Subsidiaries) was added, permitting investment in operating subsidiaries. The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(9), passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to the powers of savings banks to make loans and investments, containing provisions reasonably necessary to ensure that loans made by savings banks are consistent with sound lending practices and that savings bank investment authority will promote the purposes of the Savings Bank Act. sec.77.3. Residential Real Estate Loans. (a) A savings bank may make loans or purchase participations in loans secured by residential real estate, on terms and in amounts consistent with the savings bank's real estate lending policies, subject to the limitations set forth in this section. (b) A savings bank may make loans or purchase participations in loans secured by a second or subsequent lien on residential real estate, in the amount as if the loan were secured by a first lien, less the unpaid balance of the first and all prior lien indebtedness and any authorized future advances thereon, on the terms set out in this section. Unless the savings bank holds the prior lien, the second or subsequent lien shall not be inferior to any open-ended future advances under any prior lien agreement to which the security property is subject, other than disbursements authorized under the Texas Savings Bank Act, sec.7.13. (c) Except as provided in subsection (d) or (e) of this section, all residential real estate loans shall be repayable in monthly installments in an amount sufficient to fully amortize payment of principal and interest within a period not to exceed 40 years from the date the loan is made. (d) Residential real estate loans may provide for variable interest rates, so long as the following provisions are met: (1) the term of the loan does not exceed 40 years; and (2) the factor or index governing the extent of the variation is not under the control of the savings bank and can be readily ascertained from sources available to the public or any other index approved in writing by the commissioner which is available to the public. (e) Residential real estate loans may: (1) be repayable in quarterly, semi-annual, or annual installments, provided such installments are in an amount sufficient to retire the debt, both principal and interest, within 20 years; and (2) include loan payments that do not amortize principal, provided interest is payable at least semi-annually and the term of the loan does not exceed five years. (f) The loan may provide for the deferral and capitalization of all interest on loans to natural persons secured by borrower-occupied property and on which periodic advances are being made. (g) Residential real estate loans which provide for variable interest rates or the deferral and capitalization of interest shall not exceed 125% of the original appraised value of the security, except where the commissioner has given specific prior written approval of a particular loan plan. (h) Prior to funding a loan under this section, a savings bank shall comply with the requirements of sec.77.31(a) of this Chapter (relating to Loan Documentation). (i) A loan secured by a first lien on a leasehold interest in real property and improvements situated thereon shall be considered a residential real estate loan, as applicable under this chapter, provided: if the term of the loan is five years or less, the unexpired term of the leasehold estate must extend or be automatically renewed for a period equal to twice the term of the loan; and if the term of the loan is more than five years, the unexpired term of the leasehold estate must extend or be automatically renewable for a period of at least five years beyond the duration of the loan. (j) Notwithstanding any provision of this chapter to the contrary, a savings bank may make loans to facilitate the sale by it of real property acquired through foreclosure in the amount of 100% of the purchase price, plus the cost of any improvements included in the subject loan, which loans shall be secured by the real property sold, shall be in accordance with all otherwise applicable lending rules and regulations, and shall be documented in accordance with the applicable requirements of this chapter. sec.77.4. Home Improvement Loans. (a) A savings bank may make or purchase participations in home improvement loans secured by a lien on a home, on the terms and in amounts consistent with the savings bank's real estate lending policies, subject to the limitations of this section. (b) Any such loan must mature and become payable within 240 months from the date the loan is made, and shall be repayable in monthly installments of principal and interest, or may mature and be repayable consistent within sec.77. 3 of this title (relating to Residential Real Estate Loans). (c) Prior to funding a loan under this section, a savings bank shall comply with the requirements set forth in sec.77.31(a)(1), (3), (4), (6), (7), and (10) of this title (relating to Loan Documentation), and shall additionally have the following documents and records in its permanent loan file for such loan: (1) a proposal signed by the borrower and, if applicable, the contractor reflecting the home improvements to be accomplished; (2) the original of the signed instrument or instruments creating or constituting the lien securing the loan; (3) evidence that the savings bank will have a valid lien on the security property according to the terms of the loan documents; (4) for all loans of $50,000 or more, a written appraisal report by an appraiser or committee of appraisers, who may be employees of the savings bank, who are on a list of appraisers approved by the board of directors and in a form approved by the American Institute of Real Estate Appraisers, the Society of Real Estate Appraisers, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Corporation. The appraisal report shall be signed by the appraiser or committee of appraisers. For all loans under $50,000, a written opinion of value, with picture of property, by an appraiser or real estate broker, who may be an employee of the savings bank, shall be required. (d) Other property may be provided as additional security for the loan, without meeting the requirements of this chapter for loans secured by such property, so long as all requirements of this section are met. (e) Upon completion of the improvements financed by the loan, a certificate of completion executed by the owner or contractor shall be made part of the permanent loan file. (f) A loan made under this section may include add-on interest as authorized by the Texas Credit Code, Texas Civil Statutes, Article 5069, sec.1. 01, et seq. (g) Except for add-on interest, a loan made under this section may include amounts to pay interest on the loan, and other fees, provided a detailed, narrative underwriting report is prepared and filed in the loan file explaining the reasons and justifications the savings bank relied upon to include such amounts in the loan. However, the loan shall not include amounts to pay interest on the loan, unless the savings bank has full recourse against the borrower for repayment of the loan and the amount of the loan does not exceed 80% of the appraised value of the security property. Any amount of the loan which represents interest shall not be disbursed until earned. sec.77.8. Personal Property Loans. (a) A savings bank may make loans or purchase participations in loans secured by perfected first lien security interests in personal property as provided in the Texas Business and Commerce Code, on the terms and in amounts consistent with the savings bank's lending policies, subject to the limitations of this section. (b) Loans made under this section may include add-on interest as authorized by the Texas Credit Code, Texas Civil Statutes, Article 5069, sec.1. 01, et seq. (c) Except for add-on interest, a loan made under this section may include amounts to pay interest on the loan, and other fees, provided a detailed, narrative underwriting report is prepared and filed in the loan file explaining the reasons and justifications the savings bank relied upon to include such amounts in the loan. However, the loan shall not include amounts to pay interest on the loan, unless the savings bank has full recourse against the borrower for repayment of the loan and the amount of the loan does not exceed 80% of the appraised value of the security property. Any amount of the loan which represents interest shall not be disbursed until earned. (d) Prior to funding a loan under this section, a savings bank shall comply with the requirements of sec.77.31(a)(1)-(8), (12), and (13) of this title (relating to Loan Documentation). If other property (for example, residential or commercial real estate) is provided as additional security for the loan, the loan is not required to meet the requirements of this chapter for loans secured by such property, so long as all requirements of this section are met. sec.77.32. Restriction on Loan Procurement Fees. No affiliated person of a savings bank may receive, either directly or indirectly, from such savings bank, any subsidiary thereof, or any other source, any fee or any other compensation of any kind in connection with the procurement of any loan made by such savings bank or subsidiary thereof without the prior approval of the commissioner. Nothing in this section shall prevent a savings bank from compensating an employee, who is not an affiliated person and whose primary job function is the procurement of loans, in the form of commissions or bonuses based on a percentage of the amount of any loan procured, provided that such percentage shall not exceed 1.0% for any one loan without the prior approval of the commissioner, and provided that such employee does not participate in the process for approving or disapproving such loan. sec.77.33. Loans to and Transactions With Officers, Directors, Affiliated Persons and Employees. All transactions, including loans, involving officers, directors, affiliated persons, controlling persons or employees shall be limited and governed by the provisions of Federal Reserve Board Regulation O and sec.23A and sec.23B of the Federal Reserve Act, which sections and regulations are hereby incorporated by reference. Such provisions shall be enforced by the Department. sec.77.35. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Affiliated person -A director, officer, or controlling person of a savings bank; a spouse of a director, officer, or controlling person of such savings bank; a member of the immediate family of a director, officer, or controlling person of such savings bank; any corporation or organization (other than the savings bank or a subsidiary of the savings bank) of which a director, officer, or controlling person of such savings bank is chief executive officer, chief financial officer, or a person performing similar functions, is a general partner, is a limited partner who directly or indirectly, either alone or with his spouse and the members of his immediate family, owns an interest of 10% or more in the partnership (based on the value of his contribution) or who, directly or indirectly with other directors, officers, and controlling persons of such savings bank and their spouses and their immediate family members, owns an interest of 25% or more in the partnership; or directly or indirectly either alone or with his spouse and the members of this immediate family, owns or controls 10% or more of any class of equity securities or owns or controls, with other directors, officers, and controlling persons of such savings bank and their spouses and their immediate family members, 25% or more of any class of equity securities; any trust or other estate in which a director, officer, or controlling person of such savings bank or a member of his immediate family has a substantial beneficial interest or as to which such person or his spouse serves as trustee or in a similar fiduciary capacity; a holding company affiliate; and any officer, director, or controlling person of a holding company affiliate. Commercial real estate-Land on which structures or improvements which do not qualify the property as residential real estate are located. Controlling person -Any person or entity which, either directly or indirectly, or acting in concert with one or more other persons or entities, owns, controls, or holds with power to vote, or holds proxies representing 25% or more of the voting shares or rights of a savings bank; or controls in any manner the election of the directors of a savings bank. A director of an insured institution will not deemed to be a controlling person of such institution based upon his voting, or acting in concert with other directors in voting, proxies obtained in connection with an annual solicitation of proxies or obtained from savings account holders and borrowers if such proxies are voted as directed by a majority vote of the entire board of directors of a savings bank, or of a committee of such directors if such committee's composition and authority are controlled by a majority vote of the entire board and if its authority is revocable by such a majority. Holding company affiliate-A corporation of which a savings bank is a subsidiary and any other subsidiary of such corporation other than a subsidiary of the savings bank. Home-A structure designed and used as a residence by one family, or a structure designed and used for occupancy for one to four family units. The term also includes common areas around town houses or condominium units which are incidental to ownership of the residence. Home improvement loan-Any loan made for the improvement, maintenance, repair, modernization, or equipment of a home. Immediate family -The spouse of an individual, the individual's minor children, and any of the individual's children (including adults) residing in the individual's home. Interim construction loans-Loans made to finance the improvement of or the building of residential or commercial structures on developed building sites, and may include the acquisition of such developed building sites. This term does not include home improvement loans allowed under sec.77.4 of this title (relating to Home Improvement Loans). Manufactured home -A structure, transportable in one or more sections, which in the traveling mode is 8 body-feet or more in width or 40 body-feet or more in length, or when erected on-site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air conditioning, and electrical systems. Officer-The president, any vice-president (but not an assistant vice- president, second vice-president or other vice-president having authority similar to an assistant or second vice-president) the secretary, the treasurer, the comptroller, and any other person performing similar functions with respect to any organization, whether incorporated or unincorporated. The term "officer" shall also mean the chairman of the board of directors if the savings bank's articles of incorporation or bylaws authorize the chairman to participate in the operating management of the institution or if the chairman in fact participates in such management. One-borrower-Any person or entity that is, or that upon the making of a loan will become, obligor on a loan or guarantor of a loan; nominees of such obligor; all persons, trusts, syndicates, partnerships, and corporations of which such obligor is a nominee, a beneficiary, a member, a general partner, a limited partner owning an interest of 10% or more (based on the value of his contribution), or a record or beneficial stockholder owning 10% or more of the capital stock; and if such obligor is a trust, syndicate, partnership, or corporation, all trusts, syndicates, partnerships, and corporations of which any beneficiary, member, general partner, limited partner owning an interest of 10% or more, or record or beneficial stockholder owning 10% or more of the capital stock, is also a beneficiary, member, general partner, limited partner owning an interest of 10% of more, or record or beneficial stockholder owning 10% or more of the capital stock of such obligor. In the case of a loan that has been assumed by a third party with the consent of the lending institution, the former debtor shall not be deemed an obligor. Personal property -Tangible and intangible property which is not real property, including the following items as defined in the Texas Business and Commerce Code: consumer goods, equipment, farm products, inventory, accounts, instruments, chattel paper, documents, general intangibles, cash proceeds, and non-cash proceeds. Recourse-For the purposes of this chapter, recourse shall mean a contract by a borrower or guarantor to repay 100% of all amounts due and owing under the loan. Residential real estate-Land on which a house, a home, or an apartment house is located, including combinations of farm residences and commercial farm real estate. Subsidiary-A subsidiary of a savings bank shall have the meaning prescribed in sec.77.91 of this title (relating to Subsidiary Corporations). Unimproved real estate-Land which has no substantial improvements or utilities. All other real estate shall be considered residential real estate or commercial real estate. sec.77.96. Operating Subsidiaries. A savings bank is authorized to invest in operating subsidiaries, the activities of which are exclusively limited to activities which could be conducted directly by the parent savings bank. Because an operating subsidiary is limited to activities that could otherwise be conducted directly by the savings bank, operating subsidiary investment is not limited by the percentage of assets or dollar amount restrictions applicable to subsidiary corporations as set forth in sec.77.95 of this title (relating to Subsidiary Investment and Debt Limitation). 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 September 2, 1993. TRD-9328202 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Chapter 77. Loans, Investments, Savings and Deposits Savings and Deposits 7 TAC sec.sec.77.101-77.113 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(9), Acts of the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to the powers of savings banks to make loans and investments, containing provisions reasonably necessary to ensure that loans made by savings banks are consistent with sound lending practices and that savings bank investment authority will promote the purposes of the Savings Bank 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 September 2, 1993. TRD-9328203 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Chapter 79. Miscellaneous Books, Records, Accounting Practices, Financial Statements Reserves The Texas Savings and Loan Department adopts new sec. sec.79.1-79.6, concerning Books, Accounting Practices, Financial Statements, and Reserves; sec.sec.79.21-79.26, Capital and Capital Obligations, sec.sec.79.41-79.46, Holding Companies; sec.79.6,. Foreign Savings Banks; sec.sec.79.71-79.76, Hearings; and sec.sec.79.91-79.107, Fees and Charges. Section 79.105 is adopted with changes to the proposed text as published in the July 23, 1993, issue of the Texas Register (18 TexReg 4808). Sections 79.1-79.6, 79.21-79.26, 79.41- 79.46, 79. 71-79.76, 79.91-79.104, 79.106, and 79.107 are adopted without changes and will not be republished. These new regulations are part of a comprehensive series of new regulations, designated as Chapters 75, 77, and 79, which implement the Texas Savings Bank Act (the Act), adopted in Senate Bill 396 passed by the 73rd Legislature, Regular Session. The Act authorizes the establishment of a new type of state- chartered financial institution known as state savings banks and provides a framework for their regulation and supervision by the Department. State savings banks are regulated by the Department and by the Federal Deposit Insurance Corporation (FDIC). They are primarily housing lenders with powers similar to savings and loan associations; however, the federal regulatory structure applicable to these institutions, unlike savings and loan associations, is more consistent with that applicable to other types of federally insured depository institutions. The new regulations implement rules regarding books, records, accounting practices, financial statements, reserves, capital and capital obligations, holding companies, foreign savings banks, hearings, and fees and charges pursuant to the Texas Savings Bank Act. The new rules provide guidelines for maintaining books and records, set out accepted accounting practices, determine the format and date financial statements are required, and the manner in which reserves are charged off against bad debts for state savings banks. The new rules also provide for capital obligations requirements. One commenter indicated in written comments that the proposed fee in sec.79. 105 of this title (relating to Fee for Conversion into a Savings Bank) was unnecessarily burdensome for smaller institutions. No group or association submitted comments concerning adoption of the rules. The Department agreed with comments that the conversion fees were disporportionately higher for smaller institutions and recommended that they be reduced. The Finance Commission of Texas agreed with that recommendation and the conversion fees for smaller institutions were reduced. 7 TAC sec.sec.79.1-79.6 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate genera rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(1) and (3)-(8), passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance commission of Texas to adopt rules relating to minimum capital requirements, required books and records to be maintained, applicable accounting principles and practices, the required publication of statements of condition, annual reports and other reports to be filed by savings banks, the manner in which assets, liabilities, and transactions are to be described on the books of a savings bank, and the conditions under which the commissioner may require assets to be charged off or reserves established. 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 September 2, 1993. TRD-9328204 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Capital and Capital Obligations 7 TAC sec.sec.79.21-79.26 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(1) and sec.8.03, passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to minimum capital requirements. 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 September 2, 1993. TRD-9328205 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Holding Companies 7 TAC sec.sec.79.41-79.46 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under the Senate Bill 396, sec.4.04(15) and sec.10.08, passed by the Acts of the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules providing for registration and reporting of holding companies, establishing limitations on the activities and investments of holding companies, and providing for other matters as may be appropriate under this chapter. 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 September 2, 1993. TRD-9328206 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Foreign Savings Banks 7 TAC sec.79.61 The new section is adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, Chapter 10, passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to foreign financial institutions. 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 September 2, 1993. TRD-9328207 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Hearings 7 TAC sec.sec.79.71-79.76 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.04(2), passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules relating to fees and procedures for processing, hearing, and deciding applications filed with the commissioner. 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 September 2, 1993. TRD-9328208 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 Fees and Charges 7 TAC sec.sec.79.91-79.107 The new sections are adopted under Texas Civil Statutes, Article 342-114, which provide the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same, and under Senate Bill 396, sec.4.07, passed by the 73rd Legislature, Regular Session, 1993, which authorizes the commissioner and the Finance Commission of Texas to adopt rules which establish fees to be charged for supervision, examination, applications, hearings, and for other services performed by the Department. sec.79.105. Fee for Conversion into a Savings Bank. The commissioner shall collect a filing fee for each application filed pursuant to sec.75.90 of this title (relating to Conversion into a Savings Bank) for conversion into a savings bank pursuant to the following schedule: [graphic] 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 September 2, 1993. TRD-9328209 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: September 23, 1993 Proposal publication date: July 23, 1993 For further information, please call: (512) 475-1350 TITLE 10. COMMUNITY DEVELOPMENT Part IV. Texas Department of Housing and Community Affairs Chapter 49. Low Income Rental Housing Tax Credit Rules 10 TAC sec.sec.49.1-49.14 The Texas Department of Housing and Community Affairs adopts the repeal of sec.sec.49.1-49.14, concerning low income rental housing tax credit rules, without changes to the proposed text as published in the March 9, 1993, issue of the Texas Register (18 TexReg 1335). The rules are repealed to establish new procedures for administering the Department's Low Income Rental Housing Credit Program. The new sections provide procedures for allocation, by the Department, of certain low-income rental housing tax credits available under federal income tax laws to owners of qualified low-income rental housing projects, thereby enhancing the State's ability to provide safe, decent, and sanitary housing for Texans. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Civil Statutes, Article 4413(501), sec.3. 02(2), which provide the Texas Department of Housing and Community Affairs with the authority to adopt rules governing the administration of the Department and its programs and Executive Order AWR-91-4 (June 17, 1991), which provide the Department with the authority to make housing credit allocations in the State of Texas. 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 September 1, 1993. TRD-9328180 Henry Flores Executive Director Texas Department of Housing and Community Affairs Effective date: September 22, 1993 Proposal publication date: March 2, 1993 For further information, please call: (512) 475-3916 The Texas Department of Housing and Community Affairs (the Department) adopts new sec.sec.49.1-49.14, concerning low income rental housing tax credit rules, without changes to the proposed text as published in the March 9, 1993, issue of the Texas Register (18 TexReg 1473). The rules are adopted to establish procedures for administering the Department's Low Income Rental Housing Credit Program. The new sections provide procedures for allocation, by the Department, of certain low-income rental housing tax credits available under federal income tax laws to owners of qualified low-income rental housing projects, thereby enhancing the State's ability to provide safe, decent, and sanitary housing for Texans. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 4413(501), sec.3.02(2), which provide the Texas Department of Housing and Community Affairs with the authority to adopt rules governing the administration of the Department and its programs and Executive Order AWR-91-4 (June 17, 1991), which provides the Department with the authority to make housing credit allocations in the State of Texas. 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 September 1, 1993. TRD-9328181 Henry Flores Executive Director Texas Department of Housing and Community Affairs Effective date: September 22, 1993 Proposal publication date: March 9, 1993 For further information, please call: (512) 475-3916 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part XIII. Texas Commission on Fire Protection Chapter 421. Standards for Certification 37 TAC sec.421.5 The Texas Commission on Fire Protection adopts an amendment to sec.421.5, concerning the definition for fire protection personnel, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3674). The amendment is justified by the necessity of avoiding conflict between the definition of fire protection personnel in the rules and the statutory definition. The amendment adopts by reference the statutory definition of fire protection personnel in the Government Code, sec.419.021. The standards manuals made available to fire departments will include an appendix with relevant sections of the Government Code, Chapter 419. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties. 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 September 2, 1993. TRD-9328224 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 423. Fire Suppression Subchapter B. Minimum Standards for Aircraft Crash and Rescue Fire Protection Personnel 37 TAC sec.423.201 The Texas Commission on Fire Protection adopts amendments to sec.423.201, concerning minimum standards for aircraft crash and rescue fire protection personnel, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3675). Since the recent adoption of new rules pertaining to training for aircraft rescue fire protection personnel, a number of departments have expressed uncertainty about which personnel must meet the new requirements. The new amendments are justified by the need to provide a clearer delineation by geographic location and "initial response" duty to determine application of the new rules. The new standby definition applies both a functional description of the duty of "initial response...[to] await the arrival of an aircraft experiencing an announced emergency," and a geographic reference of the "movement area on the airfield." The "movement area" is also clearly delineated and described in a manner consistent with F.A.A. regulations. The amendment provides more flexibility to fire departments than the current rule by allowing the positioning of back up units that are not specially trained in areas not included in the "movement area." Several commenters argued that the definitions of "standby" and "movement area" needed additional work before final adoption because they felt the distinction between "movement area" and other area was contrived and artificial. The commission disagreed with these comments concluding that the new definitions clarify the requirements with terminology that is consistent with the F.A.A. regulations. Another commenter opposed the amendments arguing that the commission should not adopt so many rule changes. The commission disagreed with this commenter because of the need to clarify recently adopted requirements for aircraft rescue personnel. Another commenter argued that "movement area" should be limited to runways or alternatively that non-indexed airports be exempted from aircraft rescue personnel training requirements. The commission disagreed with the commenter for the reason that the terminology should be consistent with F.A.A. regulations and that incursion of untrained personnel into "movement area" should be limited. Other commenters spoke in favor of the new rule change arguing the need for a clearer delineation by geographic reference of the personnel who must be trained, and the need for flexibility offered by the rule change of positioning support personnel outside of the defined "movement area". Comments opposing the rule change were received from representatives of the Arlington Fire Department, the Texas Fire Chiefs Association, the Irving Fire Department, and the Conroe Fire Department. Comments in support of the amendment were received from representatives of fire departments in Dallas, Fort Worth, San Antonio, Tyler, and the Villages. The amendment is adopted under the Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.022, which provides the Commission with authority to establish minimum training standards for fire protection personnel in advanced or specialized fire protection personnel positions. 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 September 2, 1993. TRD-9328225 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 425. Fire Protection Personnel Instructors Subchapter A. Fire Service Instructor Certification 37 TAC sec.sec.425.1, 425.3, 425.5, 425.7, 425.9 The Texas Commission on Fire Protection adopts the repeal of sec.sec.425.1, 425.3, 425.5, 425.7, and 425.9, concerning Fire Protection Instructor Certification, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3675). The repeal of these sections will allow for replacement of obsolete language by new sections which will result in more consistent training and more effective Fire Protection Instructors. The repealed sections are replaced by new sections concerning the same subject matter also adopted in this issue. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopted rules for the administration of its powers and duties; and sec.419.028(b)(3), which provides the commission the authority to certify persons as qualified fire protection personnel instructors under conditions the commission prescribes. 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 September 2, 1993. TRD-9328226 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 The Texas Commission on Fire Protection adopts new sec. sec.425.1, 425.3, 425. 5, and 425.7, concerning Fire Service Instructor Certification; new subchapter C, sec.sec.425.301, 425.303, 425.305, and 425.307, concerning Fire Education Specialist Certification; and new subchapter D, sec.425.401, concerning Associate Instructor Certification. New sec.425.303, concerning minimum standards for intermediate fire education specialist certification is adopted with changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3679). The change corrected a cross-reference to subparagraph (4) instead of subparagraph (5) in subsection (a)(1). Sections 425.1, 425.3, 425.5, 425.7, 425.301, 425.305, 425.307, and 425.401 are adopted without changes and will not be republished. The justification for the new sections is the clarification of Fire Service Instructor Certification and the addition of new sections concerning Fire Education Specialist Certification and Associate Instructor Certification. These new sections allow for additional instructors with specialized training to obtain advanced levels of instructor certification, providing incentives to increase the expertise of Fire Protection Instructors. The new sections replace existing sections concerning the same subject matter. The new sections pertaining to fire education specialists permit fire instructors not employed by fire departments to achieve higher levels of instructor certification. The new section pertaining to associate instructor certification permits certification of instructors who are not in the fire service but have expertise in areas of fire protection or prevention. No comments were received regarding adoption of the new sections. 37 TAC sec.sec.425.1, 425.3, 425.5, 425.7 The new sections are adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and the Texas Government Code, sec.419.028(b)(3), which provides the commission the authority to certify persons as qualified fire protection personnel instructors under conditions the commission prescribes. 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 September 2, 1993. TRD-9328239 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Subchapter C. Fire Education Specialist Certification 37 TAC sec.sec.425.301, 425.303, 425.305, 425.307 The new sections are adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and the Texas Government Code, sec.419.028(b)(3), which provides the commission the authority to certify persons as qualified fire protection personnel instructors under conditions the commission prescribes. sec.425.303. Minimum Standards For Intermediate Fire Education Specialist Certification. (a) In order to be certified as an Intermediate Fire Education Specialist, the individual must: (1) have completed all the requirements listed under sec.425.301(b) of this title (relating to Minimum Standards for Basic Fire Education Specialist Certification) except for paragraph (4) (Note: Basic Fire Education Specialist certification is not a prerequisite for Intermediate Fire Education Specialist Certification.); and (2) have completed a commission approved "Methods of Teaching" course consisting of at least 40 class hours or three college semester hours, or the National Fire Academy course, "Instructional Methodology." (b) The Intermediate Fire Education Specialist Certification meets requirements of NFPA 1041, Standard for Fire Service Instructor Professional Qualifications, for Fire Instructor Level I and Fire Instructor Level II. Instructors wanting to meet NFPA 1041 for Fire Service Instructor Level II must meet the requirements for Fire Service Instructor I. 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 September 2, 1993. TRD-9328237 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Subchapter D. Associate Instructor Certification 37 TAC sec.425.401 The new section is adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and the Texas Government Code, sec.419.028(b)(3), which provides the commission the authority to certify persons as qualified fire protection personnel instructors under conditions the commission prescribes. 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 September 2, 1993. TRD-9328238 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 427. Training Facilities Subchapter A. Minimum Standards for Structure Recruit Training The Texas Commission on Fire Protection adopts the repeal of sec.sec.427.1, 427.3, 427.5, 427.7, 427.9, 427.11, and 427.13, concerning structure recruit training facilities for paid fire protection personnel and sec.sec.427.201, 427. 203, 425.205, 427.207, 427.209, 427.211, 427.213, 427.215, and 427.217, concerning aircraft fire protection personnel training facilities, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3680). The repeal of these sections will allow for replacement of obsolete language by new sections that consolidate provisions relating to training facilities for structure fire protection personnel and aircraft rescue fire protection personnel into one chapter. The repealed sections are replaced by new sections concerning the same subject matter. The new sections consolidate provisions relating to training facilities for structure fire protection personnel and aircraft rescue fire protection personnel into one chapter. No comments were received regarding adoption of the repeals. 37 TAC sec.sec.427.1, 427.3, 427.5, 427.7, 427.9, 427.11, 427.13 The repeals are adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and the Texas Government Code, sec.419.028(b)(1), which provides the commission the authority to certify facilities operated for training fire protection personnel. 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 September 2, 1993. TRD-9328255 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 427. Certified Training Facilities 37 TAC sec.sec.427.1, 427.3, 427.7, 427.9, 427.11, 427.13, 427.15, 427.17, 427.19 The Texas Commission on Fire Protection adopts new sec. sec.427.1, 427.3, 427. 7, 427.9, 427.11, 427.13, 427.15, 427.17, and 427.19, concerning certified training facilities for paid fire protection personnel. Section 427.17 is adopted with changes to the text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3681). Sections 427.1, 427.3, 427.7, 427. 9, 427.11, 427.13, 427.15, and 427.19 are adopted without changes and will not be republished. The changes made to sec.427.19(e) were the deletion of the words "and in the presence of" in the last sentence. This allows a guest instructor with special expertise to teach a specific subject area under the endorsement of a certified instructor without the certified course instructor being physically present. The new sections will allow for the replacement of obsolete language and will implement guidelines for training facilities for fire inspectors, arson investigators, and marine fire fighters. The new sections replace existing sections concerning the same subject matter. The new sections consolidate provisions relating to training facilities for structure fire protection personnel and aircraft rescue fire protection personnel into one chapter. In addition, the new sections are also applicable to training facilities for marine fire fighters, fire inspectors, and fire and arson investigators. Several commenters argued that the proposal in sec.427.19(e) to require guest instructors to teach "in the presence of" a certified instructor was unnecessarily burdensome particularly for smaller departments that do not have a large staff of certified instructors. Other commenters spoke in favor of the "in the presence of" requirement to insure the quality of instruction. The commission agreed with the commenters opposing the "in the presence of" requirement and deleted the language from the rule as finally adopted. Comments in favor of the proposed changes were made by representatives of fire departments in San Antonio and Dallas. Comments against the "in the presence of" rule change were made by representatives of the Texas Fire Chiefs Association and fire departments in Fort Worth, Arlington, Tyler, and Sugarland. The amendment is adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.028(b)(1), which provides the commission the authority to certify facilities operated for training fire protection personnel. sec.427.17. Staff. (a) A training officer, as a minimum, must possess an Intermediate Fire Service Instructor Certification (Refer to sec.425.3 of this title pertaining to Intermediate Fire Service Instructor). A newly appointed training officer must, as a minimum, possess an Intermediate Fire Service Instructor Certification within one year from date of appointment. (b) A coordinator, as a minimum, must possess an Intermediate Fire Education Specialist Certification (Refer to sec.425.303 of this title pertaining to Intermediate Fire Education Specialist Certification). A newly appointed coordinator must as a minimum possess an Intermediate Fire Education Specialist Certification within one year from date of appointment. (c) All instructors, except guest instructors, must as a minimum possess a Basic Fire Service Instructor Certification provided in sec.425.1 of this title, (relating to Minimum Standards for Certified Training Facilities for Fire Protection Personnel), a Basic Volunteer Fire Fighter Instructor Certification as provided in sec.475.1 of this title (relating to Minimum Standards for Basic Volunteer Fire Fighter Intructor Certification), a Basic Fire Education Specialist Certification as provided in sec.425.301 of this title (relating to Minimum Standards for Basic Fire Education Specialist Certification), or an Associate Instructor Certification as provided in sec.425. 401 of this title (relating to Minimum Standards for Associate Instructor Certification). The instructor or instructors that will be providing instruction must be approved by the commission to instruct in the applicable curriculum or subjects. (d) The lead instructor, as a minimum, shall possess an Intermediate Fire Service Instructor Certification (Refer to sec.425.3 of this title pertaining to Intermediate Fire Service Instructor) or an Intermediate Fire Education Specialist Certification (Refer to sec.425.303 of this title pertaining to Intermediate Fire Education Specialist Certification). (e) Guest instructors, including fire protection personnel utilized on a limited basis, are not required to be certified as instructors. A guest instructor is defined as an individual with special knowledge, skill, and expertise in a specific subject area who has the ability to enhance the effectiveness of the training. Guest instructors can teach under the endorsement of the instructor responsible for the subject being taught. (f) The commission encourages all certified training facility staff to upgrade their instructor certification by completing the appropriate instructor training courses and other education requirements set forth for higher levels of instructor certifications. 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 September 2, 1993. TRD-9328256 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Subchapter B. Minimum Standards for Aircraft Fire Protection Personnel Training Facilities 37 TAC sec.sec.427.201, 427.203, 427.205, 427.207, 427.209, 427. 211, 427.213 The repeals are adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and the Texas Government Code, sec.419.028(b)(1), which provides the commission the authority to certify facilities operated for training fire protection personnel. 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 September 2, 1993. TRD-9328265 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 435. Fire Fighter Safety 37 TAC sec.435.1 The Texas Commission on Fire Protection adopts an amendment to sec.435.1, concerning protective clothing for fire protection personnel, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3684). The National Fire Protection Association adopted a standard for protective clothing for proximity fire fighting effective August 14, 1992. The amendment informs regulated persons of the effective date of the standard and provides that proximity clothing purchased or contracted for prior to that date are not required to meet the standard consistent with language in the Government Code, sec.419.040. The amendment adds language concerning requirements for proximity fire fighting clothing used by aircraft rescue fire protection personnel to address a new National Fire Protection Association standard for proximity clothing. The proposed amendment identifies the date the standard became effective. No comments were received regarding adoption of the amendment. The amendment is adopted under the Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties and sec.419.042, which provides the Commission with authority to adopt standards for protective clothing and SCBA. 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 September 2, 1993. TRD-9328254 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 437. Fees 37 TAC sec.sec.437.3, 437.5, 437.9, 437.13 The Texas Commission on Fire Protection adopts amendments to sec.sec.437.3, 437.5, and 437.9, and new sec.437.13, concerning certification and renewal fees, curriculum manual fees, and examination fees, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3684). The justification for adopting these sections is to make current curriculum information available to the fire service, to provide funds for inspection of training facilities to insure their quality, and to allocate the cost of examinations to those individuals and entities which use the services. The amendments to sec.437.3 and sec.437.5 require approved training facilities to pay an annual certification fee of $20. The amendment to sec.437. 9 establishes an annual fee of $12 to receive current revisions to the curriculum manual. New sec.437.13 establishes a $15 fee for the basic certification written examination. No comments were received regarding adoption of the amendments and new section. The amendments and new section are proposed under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.026, which authorizes the commission to establish fees relating to certification and basic certification tests. 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 September 2, 1993. TRD-9328253 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 439. Examinations for Certification 37 TAC sec.sec.439.7, 439.13, 439.15 The Texas Commission on Fire Protection adopts amendments to sec.439.7, concerning procedures for examinations, with changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3685); and amendments to sec.439.13 and sec.439.15, concerning performance skills and testing for certification status, with changes to the proposed text as published in the March 12, 1993, issue of the Texas Register (18 TexReg 1667). The changes to sec.439.7 inserts the word "the" in two places in subsection (d)(2) to improve readability. Section 439.13 is changed from the proposal to permit the random selection by the staff proctor of any skill from the subject area failed for a retest rather than the same skill failed. The changes to sec.439.7 are justified by the need for an equitable allocation of costs when examinations are conducted for less than eight examinees. The commission has determined that a fee equal to the amount charged for eight examinees is required to recover the cost to the commission of administering the examination for certification. The changes concerning protective clothing and self-contained breathing apparatus are justified by the need for the safety of the examinee. The justification for changes to sec.439.13 is the removal of unnecessarily harsh language requiring retesting on all performance skills if one skill is failed. The amendment to sec.439.15(c) is justified by the elimination of potential conflict with other state and federal law pertaining to military leave and legislative leave. The amendment to sec.439.7 provides procedures for the conduct of examinations of a class of fewer than eight examinees, requiring payment of an examination fee equal to the amount required for eight examinees. The amended section also outlines equipment required for the safety of the examinee that must be furnished and provides for issuance of a certificate of completion of the basic certification examination. The changes to sec.439.13 provide more flexibility to the staff proctor in selecting a skill for a retest and at the same time remove the requirement for retest of the entire performance skills portion of the examination. Amended sec.439.15 conforms commission rules concerning examinations for recertification to applicable federal and state laws concerning military leave and legislative leave by exempting qualified individuals from examinations for recertification. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.032(b), which authorizes the commission to establish qualifications relating to basic certification tests. sec.439.7. Procedures. (a)-(c) (No change.) (d) To apply for a commission examination, the designated training officer or coordinator of the entity providing the training must complete that portion of the "Course/School Prior Approval Submission Form (CFP-T)" pertaining to commission examinations. The CFP-T form must be submitted to the commission 20 days prior to the proposed starting date of the course. The commission will set the time and place of the examination. A reasonable attempt shall be made to schedule the examination as soon as possible after the completion of the applicable course and at a place agreeable to the provider of training. (1) commission examinations, or retakes, for less than eight examinees shall be conducted in Austin, or other place designated by the commission. The commission shall coordinate with the provider of training as to the time of the examination. (2) commission examinations, or retakes, for less than eight examinees shall be conducted in accordance with this section, provided that the entity providing the training agrees to pay an examination fee equal to the amount that would be charged for eight examinees. (3) If a performance test is part of the commission examination, examinees that are required to take the commission examination in Austin, or other place designated by the commission, shall be required to furnish a complete set of protective clothing that complies with sec.435.1 of this title (relating to Protective Clothing). Examinees are encouraged, but not required, to provide a self-contained breathing apparatus that complies with sec.435.3 of this title (relating to Self-Contained Breathing Apparatus) that the examinee is familiar with and an extra full cylinder. (e) If the designated training officer or coordinator of the entity providing the training determines that the time and/or place of the examination as set by the commission is not acceptable for good cause, he may request the commission to reschedule or relocate the examination providing the request is received at least 20 days prior to the original scheduled time of the examination or the new proposed time, whichever would result in the earliest notification. The commission shall give all such request due consideration and may reschedule or relocate the examination as necessary. (f)-(m) (No change.) (n) An examinee that successfully completes the applicable curriculum and the required commission basic certification examination shall be issued a certificate of completion from the provider of training. The certificate of completion shall, as a minimum, identify the provider of training, the course I.D. number, the course approval number, hours of instruction, date issued (date commission basic certification examination was successfully passed), name of instructor, and the name of the person completing the course. sec.439.13. Performance Skills. If performance skills are required as part of a commission examination, the performance skills portion shall be conducted as follows: (1)-(5) (No change.) (6) An examinee who fails a practical skill shall be allowed one retest, at a time and place to be determined by the staff proctor. Generally, a retest should not be conducted until after the conclusion of the performance skill portion of the examination. (7) An examinee being retested on a practical skill shall be retested on any skill from the same subject area as the practical skill that was failed. The practical skill shall be randomly selected by the staff proctor. sec.439.15. Testing for Certification Status. (a)-(b) (No change.) (c) For purposes of this section, the time that a person serves in the military who is called to active duty in accordance with applicable federal law or that a person serves in the state legislature who qualifies for legislative leave under the provisions of Texas Civil Statutes, Article 6252-4c, is not considered a break in service for any reason and the person is not required to complete the examination requirement upon return to employment to a fire protection personnel position in order to obtain a new certificate, provided that the individual must comply with the continuing education requirement applicable to the certificate previously held by the individual after the effective date of this rule except as provided by federal law. 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 September 2, 1993. TRD-9328236 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993, March 12, 1993 For further information, please call: (512) 873-1700 Chapter 443. Adoption By Reference 37 TAC sec.443.1 The Texas Commission on Fire Protection adopts an amendment to sec.443.1, concerning the adoption by reference of the Basic Fire Suppression Curriculum, with changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3686). The adoption by reference is changed to the curriculum manual as amended July 14, 1993. The changes to the curriculum manual include adding the identification and/or demonstration of the working end when tying a knot or hitch; the deletion of tying a double loop figure eight; the addition of the reference International Fire Service Training Association, Essentials of Firefighting, and the addition of National Fire Protection Association standard references as curriculum competencies. The amendment is justified by the need to delete obsolete language from the curriculum, to add more current editions of reference material and to add competencies deemed essential for fire fighter training. The amendment adopts by reference a revised Chapter 1, Basic Fire Suppression Curriculum. The revised curriculum deletes obsolete material, adds more current references, and adds new competencies concerning NFPA references. The new reference materials must be utilized by certified training facilities, and fire fighter trainees are responsible for learning the new competencies concerning NFPA references. Some commenters argued that fire fighters do not need to learn NFPA standard numbers and titles as part of the Basic Fire Suppression Curriculum; rather than just the subject matter should be covered. Other commenters spoke in favor of the addition of NFPA standards as competencies, arguing that the fire fighter might need to reference the standard number in connection with responsibilities for public fire education and to increase professionalism for fire fighters. The commission disagreed with the comment against including NFPA standards as competencies, concluding that the knowledge was essential for fire fighter training. Comments in favor of the revised curriculum were made by representatives of the Commission's Testing Committee and the San Antonio Fire Department. Comments opposing the curriculum change concerning NFPA standards were made by a representative of the Galveston Fire Department. The amendment is adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.022, which provides the commission with authority to establish minimum training standards for fire protection personnel. sec.443.1. Basic Fire Suppression Curriculum. (a) The effective date of this section shall be April 1, 1992. (b) The Commission on Fire Protection adopts by reference Chapter 1, Basic Fire Suppression Curriculum, of the Commission's document titled "Commission Certification Curriculum Manual" as amended July 14, 1993. (c) The document adopted by reference in this section is on file in the offices of the Commission on Fire Protection, 3006 B Longhorn Boulevard, Austin, Texas 78759-6735, and is available for public inspection during regular working hours. A copy of the document may be obtained upon request and payment of the fee as specified in Chapter 437 of this title (relating to fees) . 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 September 2, 1993. TRD-9328250 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 473. Volunteer Fire Fighter 37 TAC sec.473.1 The Texas Commission on Fire Protection adopts an amendment to sec.473.1, concerning requirements for volunteer fire fighter certification, with changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3686). The changes include taking out the word "programs" in the second sentence of sec.473.1(a), changing "are" to "is" in two places as grammatical corrections, and adding the words "or any combination" to the last sentence of sec.473.1(b) to allow a combination of the sources of training specified in sec.473.1(b)(1)-(5). Changes also include taking out the word "program" in sec.473.1(b)(1) and (2) and correcting the grammar by deleting the words "an" and "a" and adding the word "the" in those subsections. The change to sec.473.1 is justified by the anticipated reduction in administrative record keeping costs and certification fees paid by volunteer departments and the elimination of unnecessary duplicate training of fire fighters previously trained by permitting a combination of training sources and certification as volunteers of previously certified paid municipal fire protection personnel. Section 473.1(b)(5) adds language to clarify that approval of a training program under this section includes approval of training facilities and instructors recognized by the program. In addition, sec.473.1(d) is amended to expressly exempt out-of-state training, military training, and training through the State Firemen's and Fire Marshals' Association of Texas from the requirements for facility approval. Finally, new sec.473.1(e) is added to provide for certification as a volunteer fire fighter of persons holding certification as paid fire protection personnel under Chapter 423 of this title. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.071(e), which provides the Texas Commission on Fire Protection with authority to establish rules for qualifications relating to education, training programs, continuing education, and testing procedures for the volunteer certification program. sec.473.1. Minimum Standards for Basic Volunteer Fire Fighter. (a) The effective date of Chapter 473 (relating to Minimum Standards for Basic Volunteer Fire Fighter) shall be January 1, 1993. Training that is intended to satisfy the requirements for basic volunteer fire fighter certification that is started after the effective date of this chapter must meet the curriculum, competency, hour, and examination requirements of this chapter. (b) In order to be certified under this chapter, a basic volunteer fire fighter must complete a commission approved basic volunteer fire fighter curriculum. An approved basic volunteer fire fighter curriculum shall consist of one or any combination of the following: (1) completion of the commission-approved basic volunteer fire fighter curriculum as specified in Chapter 1, Basic Volunteer Fire Fighter Curriculum, of the commission's document titled "Commission Volunteer Certification Curriculum Manual", as adopted by reference in sec.473.3 of this title (relating to Basic Volunteer Fire Fighter Curriculum) and successfully pass the commission examinations as specified in Chapter 479 of this title (relating to Examinations for Volunteer Fire Fighter Certification); or (2) completion of out-of-state training deemed equivalent to the commission- approved basic volunteer fire fighter curriculum, and successfully pass the commission examinations as specified in sec.439.17 of this title (relating to Testing for Proof of Proficiency); or (3) completion of military training deemed equivalent to a commission-approved basic volunteer fire fighter curriculum, and successfully pass the commission examination as specified in sec.439.17 of this title (relating to Testing for Proof of Proficiency); (4) documentation of the receipt of an advanced certification from the State Firemen's and Fire Marshals' Association of Texas before September 1, 1993; or (5) completion of a commission-approved training program that meets or exceeds the standards set for an approved basic volunteer fire fighter curriculum. Approval of a training program under this subsection constitutes approval of training facilities and instructors recognized by the program. Upon successful completion of the training program, the applicant must successfully pass the commission examination as specified in Chapter 479 of this title (relating to Examinations for Volunteer Fire Fighter Certification). (c) All questions of training equivalency will be decided by the commission. (d) The commission approved basic volunteer fire fighter curriculum must be taught through a training facility that has been certified by the commission as provided in Chapter 477 of this title (relating to Volunteer Fire Fighter Training Facilities) or Chapter 427, Subchapter A of this title (relating to Structure Recruit Training Facilities), except as provided in sec.471.7(d) or sec.sec.473.1(b)(2)-(5). (e) A person who holds any level of Structure Fire Protection Personnel Certification issued by this commission as provided for in Chapter 423, Subchapter A, may be certified as a Basic Volunteer Fire Fighter. If the certificate has been inactive for more than one year, the person must take the commission examination as provided for in this section. A person who has completed a Structure Fire Protection Personnel Certification Recruit School prior to January 1, 1993, and has not been certified as provided for in Chapter 423, Subchapter A, may be certified as a Basic Volunteer Fire Fighter upon completion of the two additional modules as provided for in this section and successful completion of the examination provided for in Chapter 479 of this title. 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 September 2, 1993. TRD-9328247 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 475. Volunteer Fire Fighter Instructor and Instructor Training 37 TAC sec.475.1 The Texas Commission on Fire Protection adopts an amendment to sec.475.1, concerning minimum standards for basic volunteer fire fighter instructor certification, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3687). The amendment to the section is justified by the need to provide additional time for individuals to qualify to instruct volunteer fire fighters. The amendment permits persons holding a Level II instructor certification from the State Firemen's and Fire Marshal's Association of Texas on or before September 1, 1993, to qualify for a commission basic instructor certificate, moving the deadline from December 31, 1992. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.071(e), which provides the Texas Commission on Fire Protection with authority to establish rules for qualifications relating to education, training programs, continuing education, and testing procedures for the volunteer certification program. 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 August 31, 1993. TRD-9328246 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 Chapter 489. Volunteer Fire Department Inspections 37 TAC sec.489.3 The Texas Commission on Fire Protection adopts an amendment to sec.489.3, concerning volunteer fire department inspection reports, without changes to the proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3687). The removal of mandatory language to underline the voluntary nature of inspections of volunteer fire departments is justified by an anticipated increase in the number of volunteer fire departments requesting voluntary inspections and improved awareness of volunteer fire fighter safety. The amendment removes all reference to mandatory language to underline the voluntary nature of inspections of volunteer fire departments. Although volunteer fire departments will be encouraged to take corrective action, the commission has no jurisdiction to compel compliance. No comments were received regarding adoption of the amendment. The amendment is adopted under the Government Code, sec.419.008, which provides the Texas Commission on Fire Protection with authority to adopt rules for the administration of its powers and duties; and sec.419.071(e), which provides the Texas Commission on Fire Protection with authority to establish rules for qualifications relating to education, training programs, continuing education, and testing procedures for the volunteer certification program. 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 August 31, 1993. TRD-9328243 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 873-1700 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 31. Division of Public Transportation Federal Programs 43 TAC sec.31.36 The Texas Department of Transportation adopts an amendment to sec.31.36 without changes to the proposed text proposed text as published in the June 11, 1993, issue of the Texas Register (18 TexReg 3689). As a first step in the contracting process, eligible recipients are required to submit a funding request, which includes a project budget, to the Texas Department of Transportation. Recent changes in funding sources for rural public transportation services makes it necessary to provide greater budgetary flexibility to avoid disruption of vital services. Final adoption of the amendment deletes subparagraph (c)(3)(C) of the section, which currently prescribes budgeting requirements for sec.18 contractors. The deletion of this requirement allows the contractor more flexibility in its annual budget application. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Articles 6666, 6663b, and 6663c, which provide the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically to administer the state public transportation fund and state and federal public transportation programs. 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 September 2, 1993. TRD-9328213 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: September 23, 1993 Proposal publication date: June 11, 1993 For further information, please call: (512) 463-8630