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 7. BANKING AND SECURITIES Part I. State Finance Commission Chapter 3. Banking Section Subchapter B. General 7 TAC sec.3.31, sec.3.32 The Finance Commission of Texas (the Commission) adopts the repeal of sec.3.31 and sec.3.32, without changes to the text as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5944). The repealed sections, concerning certain application fees for state banks, have been rendered obsolete by new sec.3.37, adopted in final form in this issue of the Texas Register. Pursuant to Texas Civil Statutes, Article 342-112(2), the Banking Commissioner and the Commission are charged with establishing reasonable and necessary fees for the administration of the Banking Code, Texas Civil Statutes, Article 342- 101 et seq. Repealed sec.3.31 established a $5,000 application fee for a state bank or trust company charter and imposed the cost of investigation upon the applicant. Repealed sec.3.32 imposed a change of domicile fee of $150. Newly adopted sec.3.37 sets filing fees for certain types of applications for banks, trust companies and others, and duplicates and types of fees formerly imposed by sec.3.31 and sec.3.32. The repeal is for the purpose of deleting obsolete and duplicative fees from state law. The only comment received from the Texas Bankers Association was in favor of the proposed repeal of sec.3.31 and sec.3.32, and was coordinated with favorable comment on the then proposed sec.3.91. To the extent comments received on the proposal for a replacement section can be viewed as comments on the proposed repeal, all were favorable. The repeals are adopted under the general rulemaking authority of the Commissioner and the Commission with regard to fees for the administration of the Banking Code pursuant to Texas Civil Statutes, Article 342-112(2). 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 November 8, 1993. TRD-9331745 Everette D. Jobe General Counsel Texas Department of Banking Effective date: November 29, 1993 Proposal publication date: September 7, 1993 For further information, please call: (512) 475-1300 7 TAC sec.3.37 The Finance Commission of Texas (the Commission) and the Banking Commissioner of Texas (the Commissioner) adopts new sec.3.37, concerning application fees and recovery of investigative costs, without changes to the text as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5944). Pursuant to Texas Civil Statutes, Article 342-112(2), the Commissioner and the Commission are charged with establishing reasonable and necessary fees for the administration of the Banking Code, Texas Civil Statutes, Article 342-101 et seq. The purpose of any fee charged by the Commissioner, whether the fee is for applications, annual assessments, examinations, recovery of costs, or other purposes, is to enable the Texas Department of Banking (the Department) to be self-supporting. Texas Civil Statutes, Article 342-112(3) provide that all fees must be deposited in the Banking Department Expense Fund, from which all expenses incurred by the Department must be paid. State law prohibits payment of Department expenses from any other funds of this State. As a policy matter, the Commissioner and the Commission plan to reduce the Department's heavy reliance on examination fees, impose appropriate application fees and cost deposits to make identifiable services of the Department self- sustaining to the extent possible, and calculate periodic assessment fees in sufficient amount to fund the remaining unrecovered regulation expenses of the Department. This effort is being undertaken with respect to every industry regulated by the Commissioner with the objective of having each industry pay its proportionate share of the cost of regulation. Adoption of new sec.3.37 is expected to result in better matching of the actual cost of regulation with the service provided for the purpose of achieving economic self-sufficiency for application processing within the Department. A further purpose served by new sec.3.37 is the consolidation of all bank and trust company application fees in one section for ease of reference, even those fees set by statute. New sec.3.37 as adopted sets filing fees for certain types of application for banks, trust companies and others, and for protests filed against such applications, provides for payment of filing fees at the time of filing and for the nonrefundability of filing fees generally, sets the amount of application fees at the estimated base cost of processing the application or at the amount set by statute, and provides for recovery of investigative costs incurred by the Department in certain situations. Only one comment was received from the Texas Bankers Association, and that commenter, based on the Department's explanation of its guiding policy in the preamble, did not offer any objection to or comment against the proposed new fee structure, while noting that certain application fees were being substantially increased. The new section is adopted under Texas Civil Statutes, Article 342-112(2), which provide the Commissioner and the Commission with the authority to establish reasonable and necessary fees for administration of the Banking Code. Alternate statutory authority for certain fees can be found in Texas Civil Statutes, Articles 3921 (bank charter fees), 342-331(c), 342-363(c) (bank charter fees and costs), 342-401a(J) (fees and costs for review of stock transfer), 342-903(1)(c) (branch office application fees), 342-1005(4) (application fees for foreign bank agencies), 342-1007(c) (renewal application fees for foreign bank agencies), and 342-1102 (certain statutory provisions applicable to trust companies). The Commissioner expressly adopts those aspects of this section that are within her sole authority to do so. The Commission expressly adopts those aspects of this section that are within its sole authority to do so. 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 November 8, 1993. TRD-9331746 Everette D. Jobe General Counsel Texas Department of Banking Effective date: November 29, 1993 Proposal publication date: September 7, 1993 For further information, please call: (512) 475-1300 7 TAC sec.3.38 The Finance Commission of Texas (the Commission) adopts new sec.3.38, with changes to the proposed text as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5947). Article XVI, sec.16(c), of the Texas Constitution provides that a state bank "has the same rights and privileges that are or may be granted to national banks of the United States domiciled in this State." Pursuant to Texas Civil Statutes, Article 342-113(4), the Commission is charged with promulgating rules to "permit state banks to transact their affairs in any manner ... which they could do ... were they organized and operating as a National bank under the laws of the United States...." Through an apparent oversight, House Bill Number 1212, 73rd Legislature, 1993, provided for the conversion of national banks to state limited banking associations but not for conversion of state banks to state limited banking associations. State banks can become state limited banking associations, but only through a presumably more costly and time consuming method known as "phantom" mergers or "interim bank" mergers. New sec.3.38 will preserve competitive parity between state and national banks as mandated by the Texas Constitution and Article 342-113(4). The section will permit but not require a state bank that wishes to convert to a state-limited banking association to do so in the same manner as a national bank is authorized to do. Any state bank that chooses to take advantage of the option presented by this section must obtain the approval of its board of directors and its shareholders as if such transaction was a merger pursuant to Texas Civil Statutes, Article 342-305, including the obligation to pay dissenters' rights in the manner contemplated therein. Similarly, changes to the section as proposed will permit a state-limited banking association to convert to a state banking association in the same manner as a national bank can convert to a state bank. No state-limited banking association yet exists in Texas. All comments received from the Texas Bankers Association and Independent Bankers Association of Texas were strongly in support of the proposed section. One commenter stated that it was good policy for the Texas Department of Banking to promote and support alternative forms of charters for state banks to enhance their ability to compete and provide banking services to their communities. The Texas Department of Banking agrees with all comments. The rationale advanced by the commenters also supports a reciprocal provision permitting state limited banking associations, of which none currently exists, to convert to state banking associations. In other words, the section as proposed would permit corporate bank charters to be converted into partnership bank charters under specified conditions. The added subsection would permit partnership bank charters to convert to corporate bank charters under substantially similar conditions. An additional change was made to refer to the merger provisions for banks rather than to the merger provisions for business corporations. The Commission was primarily concerned with preserving dissenters' rights; the dissenters' rights provision of the Texas Business Corporation Act is incorporated by reference into the merger provision for banks contained in Texas Revised Civil Statutes, Article 342-305. The new section is adopted under Texas Civil Statutes, Article 342-113(4), which provide the Commission with the authority to promulgate general rules and regulations to permit state banks to transact their affairs in any manner which they could do were they organized and operating as national banks. sec.3.38. Conversion of a State Banking Association to a Limited Banking Association, or a Limited Banking Association to a state Banking Association. (a) Conversion of a Banking Association to a Limited Banking Association. (1) A banking association that desires to become a limited banking association may do so, in addition to any other method authorized by law, by conversion pursuant to Texas Civil Statutes, Article 342-310, in the same manner as it could do if it was organized and operating as a national bank under the laws of the United States, subject to the provisions of paragraph (2) of this subsection. (2) A banking association that wishes to convert to a limited banking association pursuant to Texas Civil Statutes, Article 342-310 must obtain the approval of its board of directors and its shareholders as if such conversion was a merger pursuant to Texas Civil Statutes, Article 342-305, including the obligation to pay dissenters' rights in the manner contemplated therein. (b) Conversion of a Limited Banking Association to a Banking Association. (1) A limited banking association that desires to become a banking association may do so, in addition to any other method authorized by law, by conversion pursuant to Texas Civil Statutes, Article 342-310, in the same manner as it could do if it was organized and operating as a national bank under the laws of the United States, subject to the provisions of paragraph (2) of this subsection. (2) A limited banking association that wishes to convert to a banking association pursuant to Texas Civil Statutes, Article 342-310 must obtain the approval of its board of managers and its participants as if such conversion was a merger pursuant to Texas Civil Statutes, Article 342-305, including the obligation to pay dissenters' rights in the manner contemplated therein. 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 November 8, 1993. TRD-9331742 Everette D. Jobe General Counsel Texas Department of Banking Effective date: November 29, 1993 Proposal publication date: September 7, 1993 For further information, please call: (512) 475-1300 Chapter 4. Currency Exchange 7 TAC sec.4.3 The Finance Commission of Texas (the Commission) and the Banking Commissioner of Texas (the Commissioner) adopt sec.4.03, with changes to the proposed text as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5950). Additional records required by the adoption of this amendment will assist the Department's examiners in fulfilling the examination requirement of the Currency Exchange Act (the Act) and increase the efficiency of the examination function. This increased efficiency should shorten the average amount of time required to conduct an examination of a licensee and should therefore lower the cost of examination to the licensee. Increased accuracy and completeness of recordkeeping outlined in the proposed amendment will enable the Department to ensure that the amount of the bond posted by the licensee under the Act is sufficient and complies with the Department's rules with respect to bonding. More detailed transaction records will increase the efficiency and effectiveness of the examination process, thereby enhancing the orderly administration of the Act and ensuring that the purposes of the Act are substantially fulfilled. Two comments were received during the statutory comment period. The first comment received addressed the ambiguity contained in subsection (d)(l)(B) and (2)(B) of the Section. The proposed language did not make it clear that these requirements applied only to transactions in an amount of $1,000 or more. Subsection (d)(l)(B) and (2)(B) has been revised to clarify this ambiguity. The other commenter supplied general as well as specific recommendations with respect to the proposed rule. Generally, the commenter was of the opinion the rule should conform in all respects to the federal regulations governing such transactions. The commenter also was of the opinion the regulation should provide the commissioner with discretion to waive any provisions of the rule upon a showing of good cause. Subsection (g) has been added in response to that recommendation. The commenter specifically objected to the requirements in subsection (d)(l) (A) and (2)(A) to the extent that the receipt issued by the licensee bear information other than the date of the transaction, the amount of the transaction, the rate of exchange, and the applicable commission for the transaction. The commenter also raised an objection to the requirement that the licensee issue sequentially numbered receipts. The commenter suggested, as an alternative, that the receipts bear a unique identification number. Subsection (d)(l)(A) and (2)(A) has been modified in response to these two comments. However, the additional information required on the receipt in these subparagraphs as originally proposed still must be recorded by the licensee, but need not be recorded on the receipt issued to their customer. The commenter also objected to the requirements in subsection (d)(l)(A) and (B) that duplicate copies of the receipts be maintained by the licensee for a period of at least five years. The commenter suggested that the licensee be allowed to retain the requested information in any retrievable form. Subsection (e) has been added in response to this comment. Subsection (e) allows the licensee to maintain the required logs, records, and receipt information in any readily accessible and retrievable form, and specifically notes that the licensee need not keep an actual duplicate copy of the receipt so long as the information required on the receipt is maintained in a readily accessible and retrievable form. The commenter objected to the requirements of subsection (d)(l)(B) and (2) (B) in their entirety. The commenter also objected to the requirements in subsection (d)(l)(C) and (2)(C) and suggested that this subsection imposed an undue burden on the licensee and suggested that the subparagraphs be amended and limited to multiple transactions occurring at the same physical location. Both commenters also commented on existing language in the rule. We have not addressed those comments, however, because they were not directed at any of the language in the proposed amendments. Robinson, Felts and Mashburn, Austin, commented in favor of the adoption. Howry and Simon, Washington, D.C., commented against the adoption. The Commissioner and the Commission disagree with the comment that all recordkeeping regulations under the Act should conform in all respects to federal regulations governing currency exchange and transmission transactions. Although the Commission and Commissioner agree that, in theory, the imposition of significantly different recordkeeping requirements at the state and federal levels may impose a heavy burden on licensees, that simply is not the case in this instance. The existing federal regulations regarding currency exchange transactions and the proposed federal regulations with respect to currency transmission transactions are significantly similar to the requirements which will be imposed by the amendments to this rule. The Commission and Commissioner disagree that the proposed amendments, to the extent they differ from existing and proposed federal regulations, will result in significantly increased costs to or severe burdens on licensees. Neither the Commission and Commissioner nor the federal government would penalize a licensee for maintaining records that exceed that which is required under their respective regulations. In short, because the recordkeeping requirements at the state and federal levels are so similar, a licensee need only comply with the more stringent recordkeeping regulations or a hybrid of the state and federal regulations that subsumes the two levels of regulation, rather than keep separate sets of records for each and every regulatory or reporting entity which comport with their respective requirements as the commenter seems to imply. By way of example, the commenter makes reference to the fact that subsection (d)(2)(A) requires certain records regarding currency transmission transactions in excess of $1,000, whereas the proposed federal regulations would require that licensees maintain similar records for all currency transmission transactions, and suggests that this inconsistency results in an added burden to the licensee. In fact, so long as the specific records required under the proposed federal regulations are the same as the records required under subsection (d)(2)(A) of the rule, then all licensees need do is comply with the proposed federal regulations, because in that instance the federal regulations would subsume the state regulations. The difference in the dollar threshold would be of no consequence. One commenter suggests that compliance with the proposed requirement in subsection (d)(l)(B) would be impossible in instances where the exchange transaction is conducted through the mail. The Commission and Commissioner are of the opinion that a licensee which engages in a currency exchange transaction in an amount of $1,000 or more via mail does so imprudently and with reckless disregard of its duties under the Act, and would be considered to be operating its business in an unsafe and unsound manner. It is understood that a licensee may engage in such transactions with customers or clients who have an established, on-going business relationship with the licensee. In such cases, it would be sufficient that the licensee verify this information once at the commencement of the relationship, so long as the licensee has procedures in place to ensure transactions purported to be initiated by the client or customer are in fact that customer's or client's transactions. In addition, the commenter suggests that compliance with subsection (d)(l) (C) and (2)(C) would be unworkable if they are intended to impose upon the licensee an obligation to obtain the requested information where a customer engages in multiple transactions in different locations. The terminology "should have known" in the rule was intended to denote the fact that a person of reasonable prudence and intelligence would ascertain the fact in question in the performance of his duty. The commenter seems to be under the impression that it charges employees, officers, directors or partners of a licensee with imputed knowledge that an earlier transaction was conducted or that a later transaction will be conducted by or on behalf of the same person. The actual intent was to make certain that licensees do not ignore apparent or readily ascertainable facts and, as a result, allow individuals to structure transactions to defeat the purposes of the recordkeeping requirements. The amendment is adopted under Texas Civil Statutes, Article 350, sec.7, which require that the Commission adopt rules necessary to implement Article 350, including rules related to recordkeeping and reporting requirements. sec.4.03. Reporting and Recordkeeping. (a) Persons holding a license (Licensees) pursuant to Texas Civil Statutes, Article 350 (the Act) shall maintain separate accounting books and records in Texas relating to their operations. All books and records maintained by Licensees shall be located where they are readily accessible to the Department of Banking. (b) Licensees shall comply with all federal laws and regulations affecting their operations and shall maintain records of all filings made pursuant to and documentation required under all applicable federal laws and regulations, including the requirements set forth in 31 United States Code, 5313, and 31 Code of Federal Regulations, Part 103. (c) Each Licensee shall, in a form prescribed by the Banking Commissioner, file quarterly written reports with the Department of Banking. (d) In addition to the records required to be maintained under subsections (a) and (b) of this section Licensees shall keep the following records. (1) Currency Exchange. (A) No Licensee may engage in a currency exchange transaction in an amount of $1,000, or more unless the Licensee issues sequentially numbered receipts or receipts bearing a unique identification or transaction number for each of those transactions. The receipts must include the date of the transaction, the amount and type of currency received and given in exchange, the rate of exchange, and the applicable commission for the transaction. The Licensee also shall maintain a record of each such transaction that includes the identifying receipt number as well as the following information: (i) the name and address of the customer; (ii) the social security number of the customer, or if the customer is an alien and does not have a social security number, then the passport number, alien identification card number, or other official document of the customer evidencing nationality or residence (e.a., a provincial driver's license with indication of home address); (iii) the name and address of the person on whose behalf the transaction is being conducted if the customer is conducting the transaction on behalf of another person together with the appropriate identification for such other person specified in clause (ii) of this subparagraph; (iv) the location of the office where the transaction was conducted; and (v) the initials of the employee of the Licensee effecting the transaction. (B) In addition, in connection with all transactions in an amount of $1,000 or more, the Licensee shall verify the customer's name and address by examination of a document that contains the name, address, and a photograph of the customer and is customarily acceptable within the banking community as a means of identification when cashing checks for nondepositors. The Licensee shall record the specific identifying information on the receipt or in the log entry related to the transaction (e.a., state of issuance and number of driver's license). (C) Contemporaneous currency exchange transactions of the same or different types of currency made by or on behalf of the same person totaling $1,000 or more shall be treated as one transaction. Multiple transactions made by or on behalf of the same person during one business day totaling $1,000 or more shall be treated as one transaction if an individual employee, director, officer, or partner of the Licensee knew or should have known that the transactions occurred. (2) Currency Transmission. (A) No Licensee authorized to engage in currency transmission may enter into a currency transmission transaction in an amount of $1,000 or more unless the Licensee issues sequentially numbered receipts or receipts bearing a unique identification or transaction number for each of those transactions. The receipt must bear the date of the transaction, the amount of the transmission in U.S. dollars, the rate of exchange (if applicable), and the applicable fee or commission for the transaction. The receipt also must indicate whether the transaction was initiated or terminated at the Licensee's business. The Licensee also must maintain a record of each such transaction that includes the identifying receipt number as well as the following information: (i) the name and address of the customer, whether sender or recipient; (ii) the social security number of the customer, or if the customer is an alien and does not have a social security number, then the passport number, alien identification card number, or other official document of the customer evidencing nationality or residence (e.q., a Provincial driver's license with indication of home address); (iii) the date of birth of the customer: (iv) the name and address of the person on whose behalf the transaction is being conducted, if the customer is conducting the transaction on behalf of another person, together with the appropriate identification for such other person specified in clause (ii) of this subparagraph; (v) the location of the office where the transaction was conducted; (vi) the designated recipient's name, address, and telephone number, if the customer is the sender; (vii) the sender's name, address, and telephone number, if the customer is the recipient and that information is available to the Licensee; (viii) any instructions or messages relating to the transmission; and (ix) the method of payment (e.g., cash, check, credit card, etc.). (B) In addition in connection with all transactions in an amount of $1, 000 or more, the Licensee shall verify the customer's name and address by examination of a document that contains the name and address of the customer and is customarily acceptable within the banking community as a means of identification when cashing checks for nondepositors, and shall record the specific identifying information on the receipt (e.g, state of issuance and number of driver's license). (C) Contemporaneous transactions initiated by or on behalf of the same person or received by or on behalf of the same person totaling $1,000, or more shall be treated as one transaction. Multiple transactions during a single business day initiated by or on behalf of the same person or received by or on behalf of the same person and totaling $1,000 or more shall be treated as one transaction if an individual employee, director, officer, or partner of the Licensee knew or should have known that the transactions occurred. (3) A Licensee must maintain a log or logs for each calendar month on which shall be recorded the following information for each transaction; (A) the date of the transaction; (B) the location of the office where the transaction was conducted; (C) the amount and type of currency received and given in exchange, or the amount of the transmission, as applicable; (D) the rate of exchange, if applicable; (E) the amount of any service charges or fees assessed in connection with the transaction; and (F) the number of the receipt issued in connection with the transaction, if any. (e) All logs, records, and receipt information may be maintained by the Licensee in any readily accessible and retrievable form and must be maintained for a period of at least five years. An actual duplicate copy of receipts issued by a Licensee need not be retained if the information required on the receipt is maintained in a readily accessible and retrievable form. (f) Failure to comply with this section shall be grounds for denial. revocation, or suspension of a license as provided in the Act, sec.6 and assessment of a civil penalty in accordance with the Act, sec.15. (g) The commissioner may waive any requirement of this section upon a showing of good cause if the commissioner is of the opinion that: (1) the Licensee maintains records sufficient for the Department to examine the Licensee's operations; or (2) the imposition of the requirement would cause an undue burden on the Licensee and conformity with the requirement would not significantly advance the state's interests under the 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 November 8, 1993. TRD-9331739 Everette D. Jobe General Counsel Texas Department of Banking Effective date: November 29, 1993 Proposal publication date: September 7, 1993 For further information, please call: (512) 475-1300 Part II. Banking Department of Texas Chapter 13. Practice and Procedure Subchapter A. Hearing Procedures Hearings 7 TAC sec.13.71 The Finance Commission of Texas (the Commission) and the Banking Commissioner of Texas (the Commissioner) adopts new sec.13.17, without changes to the text as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5952). Applicants to the Department of Banking seeking approval for certain actions are charged fees and assessed costs for the purpose of enabling the function of processing applications to be self-supporting. Texas Civil Statutes, Article 342-112(3), provides that all fees must be deposited in the Banking Department Expense Fund, from which all expenses incurred by the Department must be paid. State law prohibits payment of Department expenses from any other funds of this State. Applicants who are forced to seek a hearing because of agency opposition to the application are thus charged for the cost of the hearing, including internal costs such as staff time and external costs such as the fee for a court reporter and costs of preparing the transcript. Applicants to the Department in opposition to a filed application who force a hearing to be held currently are not charged any portion of the incurred costs, artificially increasing the cost to the applicant seeking approval, sometimes prohibitively. Circumstances in the past have convinced the Banking Commissioner that, on occasion, the only reason for a protest, albeit unstated, is to increase the cost to the original applicant. New sec.13.71 allows the Commissioner, in the exercise of discretion, to equitably divide the costs associated with the hearing among the parties. All State incurred costs related to conduct of an administrative hearing are currently recoverable from the applicant seeking approval, and new sec.13. 71 will permit an equitable portion of such costs to be assessed to the applicant in opposition in appropriate circumstances, after hearing and upon a showing of good cause. One comment was received from the Texas Bankers Association and was in support of the proposed section. The new section is adopted under Texas Civil Statutes, Article 342-112(2), which provide the Commissioner and the Commission with the authority to establish reasonable and necessary fees for the administration of the Banking Code. 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 November 8, 1993. TRD-9331740 Everette D. Jobe General Counsel Texas Department of Banking Effective date: November 29, 1993 Proposal publication date: September 7, 1993 For further information, please call: (512) 475-1300 TITLE 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 5. Transportation Division Subchapter W. Registration of Commercial Carriers 16 TAC sec.5.501 The Railroad Commission of Texas adopts an amendment to sec.5.501, concerning definitions as they pertain to the registration of commercial carriers, without changes to the proposed text as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5953). The amendment is adopted as a result of legislative changes made by the 73rd Legislature, 1993, which transferred jurisdiction over the licensing of tow trucks from the Texas Department of Licensing and Regulation to the Railroad Commission of Texas. The proposed amendment adds tow trucks to the definition of the term "commercial motor vehicle," and specifically exempts tow trucks from the requirements of the commission's rules concerning the registration of commercial carriers. No comments were received regarding adoption of the proposed amendment. The amendment is adopted under Texas Civil Statutes, Article 911b, sec.4(a), which vest the commission with power and authority to prescribe all rules and regulations necessary for the government of motor carriers and for the safety of operations of motor carriers. The article affected by this rule is Texas Civil Statutes, Article 911b. 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 November 8, 1993. TRD-9331752 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Railroad Commission of Texas Effective date: November 29, 1993 Proposal publication date: September 7, 1993 For further information, please call: (512) 463-7095 Chapter 9. Liquefied Petroleum Gas Division Subchapter A. General Applicability and Requirements 16 TAC sec.9.19 The Railroad Commission of Texas adopts an amendment to sec.9.19, relating to insurance requirements, with changes to the proposed text as published in the October 5, 1993, issue of the Texas Register (18 TexReg 6794). The commission adopts changes to the proposed text of sec.9.19(i) and (j) to correct the citation to the statutory provisions which permit a state agency or institution, county, municipality, school district, or other governmental subdivision to substitute self-insurance for workers' compensation and general liability and/or motor vehicle liability coverage from Texas Revised Civil Statutes, Article 8309h, to Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h; and the Texas Natural Resources Code, sec.113.097. The commission adopts the amendments to implement House Bill 2007, 73rd Legislature, 1993, which allows LP-gas licensees to submit alternative accident and health insurance coverage as a substitute for workers' compensation insurance effective September 1, 1993. House Bill 2007 also provides for a state agency or institution, county, municipality, school district, or other governmental subdivision to substitute self-insurance for workers' compensation and general liability and/or motor vehicle liability insurance as authorized by the state workers' compensation act. The amendments add language that allows for accident and health insurance coverage for medical expenses in the principal amount of not less than $150,000; accidental death benefits in the principal amount of not less than $100,000; loss of limb or sight on a scale based on the principal amount of not less than $100, 000; and loss of income based on not less than 60% of the employee's pre-injury income for not less than 52 weeks, subject to a maximum weekly benefit equal to the average weekly wage calculated annually by the Texas Employment Commission (currently $460 weekly). The amendments also add language that allows a state agency or institution, county, municipality, school district, or other governmental subdivision to substitute self-insurance for workers compensation and general liability and/or motor vehicle liability insurance as authorized by the state workers' compensation act by filing an LP-Gas Form 995, Certification of Political Subdivision of Self-Insurance for Workers' Compensation, General Liability, and/or Motor Vehicle Liability Insurance, as evidence of self-insurance. The commission received only one comment on the proposed amendment, from the Texas Propane Gas Association (TPGA). TPGA's comment did not clearly indicate opposition or favor toward the proposed amendment, and did not offer alternative language. TPGA commented that the rules must not represent a means or a vehicle to ease entry into the propane business; that the commission should not view House Bill 2007 as an invitation to promote alternatives to workers' compensation coverage; and that rules allowing for workers' compensation alternatives must be strict and enforceable. The commission disagrees that the proposed amendment to sec.9.19 would ease entry into the propane business. The legislature, through enactment of House Bill 2007, established the availability of alternatives to workers' compensation insurance coverage, and the proposed rule amendment simply establishes the minimum amounts of alternative coverage. Whether the rule amendment eases entry into the propane business is irrelevant. The amendment is adopted under the Texas Natural Resources Code, 5113.051, which authorizes the Railroad Commission of Texas to promulgate rules and standards related to the LP-gas industry and its operations, which will protect or tend to protect the health, safety, and welfare of the general public, and sec.113.097, as amended by House Bill 2007, 73rd Legislature, 1993. The amendment implements Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h; and the Texas Natural Resource Code, sec.113.051 and sec.113.097. sec.59.19. Insurance Requirements. (a)-(c) (No change.) (d) A licensee or applicant for a license that does not employ or contemplate employing any employee in LP-gas related activities may file LPG Form 996B in lieu of a certificate of workers' compensation, including employers liability insurance or alternative accident and health insurance coverage. The licensee or applicant for license must file the required insurance certificate with the commission before hiring any person as a dealership employee. (e)-(g) (No change) (h) Notwithstanding the requirements specified in Table 1 of this section that each licensee carry a policy of workers' compensation insurance, the licensee may protect its employees by obtaining accident and health insurance coverage from an insurance company authorized to write such policies in this state as an alternative to workers' compensation coverage. The alternative coverage shall be in the amounts specified in Table 1 of this section. (i) A state agency or institution, county, municipality, school district, or other governmental subdivision may meet the requirements of this section for workers' compensation coverage by submitting an LPG Form 995 as evidence of self-insurance, if permitted by the state workers' compensation act, Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h; and the Texas Natural Resources Code, sec.113.097, to the commission. (j) A state agency or institution, county, municipality, school district, or other governmental subdivision may meet the requirements relating to general liability and/or motor vehicle liability insurance by submitting an LPG Form 995 as evidence of self-insurance coverage if permitted by the state Workers' Compensation Act, Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h; and the Texas Natural Resources Code, sec.113.097. [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 November 8, 1993. TRD-9331761 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Railroad Commission of Texas Effective date: November 29, 1993 Proposal publication date: September 28, 1993 For further information, please call: (512) 463-6949 Chapter 13. Regulations For Compressed Gas (CNG) Fuel Systems Subchapter C. Classification, Registration, and Examination 16 TAC sec.13.62, sec.13.63 The Railroad Commission of Texas adopts amendments to sec.13.62, relating to insurance requirements, and sec.13.63, relating to qualification as self- insured, with changes to the proposed text as published in the October 5, 1993, issue of the Texas Register (18 TexReg 6798). The commission adopts sec.13.62 with changes to the proposed text to redesignate the subsections ton incorporate other changes to sec.13.62 which became effective on October 15, 1993, after publication of the proposed text. The changes reflect that subsections sec.13.62(a)-(i) are unchanged, rather than sec.13.62(a)-(d), as published; and that new subsections sec.13.62(j), (k), and (1) are added, rather than new subsections sec.13.62(e), (f), and (g), as published. These changes are non-substantive and are editorial only. The commission adopts sec.13.63 with changes to the proposed text of sec.13. 63(i) and (j) to correct the citation to the statutory provisions which permit a state agency or institution, county, municipality, school district, or other governmental subdivision to substitute self-insurance for workers' compensation and general liability and/or motor vehicle liability coverage from Texas Civil Statutes, Article 8309h, to Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h; and Texas Natural Resources Code, sec.116.036. The commission adopts the amendments to implement Senate Bill 576, 73rd Legislature, 1993, which allows Compressed Natural Gas (CNG) licensees to submit alternative accident and health insurance coverage as a substitute for workers' compensation insurance effective September 1, 1939. Senate Bill 576 also provides for a state agency or institution, county, municipality, school district, or other governmental subdivision to substitute self-insurance for workers' compensation and general liability and/or motor vehicle liability insurance as authorized by the state workers' compensation act. The amendments add language that allows for accident and health insurance coverage in the following amounts: medical expenses in the principal amount of not less than $150,000; accidental death benefits in the principal amount of not less than $100,000; loss of limb or sight on a scale based on the principal amount of not less than $100,000; loss of income based on not less than 60% of the employee's pre-injury income for not less than 52 weeks, subject to a maximum weekly benefit equal to the average weekly wage calculated annually by the Texas Employment Commission (currently $460 weekly). The amendments also add language that allows a state agency or institution, county, municipality, school district, or other governmental subdivision to substitute self-insurance for workers' compensation and general liability and/or motor vehicle liability insurance as authorized by the state workers' compensation act by filing a CNG Form 1995, Certification of Political Subdivision of Self-Insurance for Workers' Compensation, General Liability, and/or Motor Vehicle Liability Insurance, as evidence of self-insurance. The amendments are adopted under the Texas Natural Resources Code, sec.116. 012, which authorizes the Railroad Commission of Texas to promulgate rules and standards related to the Compressed Natural Gas industry and its operations, which will protect or tend to protect the health, safety, and welfare of the general public, and sec.116.036, as amended by Senate Bill 576, 73rd Legislature, 1993. The amendments implement or affect the following statutes, articles, or codes: sec.13.62, sec.13.63-Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h; and Texas Natural Resources Code, sec.116.012 and sec.116.036. sec.13.62. Insurance Requirements. (a)-(i) (No change.) (j) Notwithstanding the requirement specified in Table 1 of this section that each licensee carry a policy of workers' compensation insurance, the licensee may protect its employees by obtaining accidental insurance coverage from an insurance company authorized to write such policies in this state as an alternative to workers' compensation coverage. The alternative coverage shall be in the amounts specified in Table 1 of this section. (k) A state agency or institution, county, municipality, school district, or other governmental subdivision may meet the requirements relating to workers' compensation coverage by submitting evidence of self-insurance that complies with the requirements of sec.13.63 of this title (relating to Qualification as Self-Insured). (l) A state agency or institution, county, municipality, school district, or other governmental subdivision may meet the requirements relating to general liability and/or motor vehicle liability insurance by submitting evidence of self-insurance that complies with the requirements of sec.13.63 of this title (relating to Qualification as Self-Insured). sec.13.63. Qualification as Self-Insured. (a)-(f) (No change.) (g) A state agency or institution, county, municipality, school district, or other governmental subdivision may meet the requirements for workers; compensation coverage of sec.13.62 of this title (relating to Insurance Requirements) by submitting title (relating to Insurance Requirements) by submitting evidence of self-insurance permitted by the state Workers Compensation Act, Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Articles 8309b, 8309d, 8309g, 8309g-1, and 8309h, and the Texas Natural Resources Code, sec.116.036, by submitting a CNG Form 1995 to the commission. (h) A state agency or institution, county, municipality, school district, or other governmental subdivision may meet the requirements for general liability and/or motor vehicle liability insurance in sec.13.62 of this title (relating to Insurance Requirements) by submitting a CNG Form 1995 as evidence of self insurance coverage if permitted by the state Workers Compensation Act, Texas Civil Statutes, Article 8308-1.01, et seq; Texas Civil Statutes, Article 8309b, 8309d, 8309g, 8309g-1, and 8309h, and the Texas Natural Resource Code, sec.116.036. [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 November 8, 1993. TRD-9331759 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Railroad Commission of Texas Effective date: November 29, 1993 Proposal publication date: September 28, 1993 For further information, please call: (512) 463-6949 TITLE 34. PUBLIC FINANCE Part IV. Employees Retirement System of Texas Chapter 83. Texas Public School District Insurance Plan 34 TAC sec.sec.83.1, 83.3, 83.5, 83.7, 83.9, 83.11 The Employees Retirement System of Texas (ERS) adopts the repeal of sec.sec.83.1, 83.3, 83.5, 83.7, 83.9, and 83.11, concerning the Texas Public School District Insurance Plan, without changes to the proposed text as published in the July 20, 1993 issue of the Texas Register (18 TexReg 4942). The ERS adopts the repeal in order to be in compliance with Acts of the 73rd Texas Legislature, Regular Session, Senate Bill 1181, which removed the responsibility for the ERS to administer an insurance program for public school employees. The responsibility for future implementation of an insurance program for public school employees has been transferred to the Teacher Retirement System of Texas. The agency received no comments regarding adoption of the repeal. The repeal is adopted under the Insurance Code, Article 3.50-2, sec.4, which provides the Board of Trustees of the ERS with the authority to promulgate all rules, regulations, plans, procedures, and orders reasonably necessary to implement and carry out the purposes and provisions of the Texas Employees Uniform Group Insurance Benefits 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 November 9, 1993. TRD-9331804 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: November 30, 1993 Proposal publication date: July 20, 1993 For further information, please call: (512) 867-3336 Chapter 87. Deferred Compensation 34 TAC sec.sec.87.1, 87.5, 87.7, 87.13, 87.19 The Employees Retirement System of Texas (ERS) adopts amendments to sec.sec.87.1, 87.5, 87.7, 87.13, and 87.19, concerning the Deferred Compensation Plan. Section 87.5 and sec.87.7 are adopted with changes to the proposed text as published in the September 17, 1993, issue of the Texas Register (18 TexReg 6287). Sections 87.1, 87.13, and 87.19 are adopted without changes and will not be republished. The amendments are justified in order to clarify the requirements for a member to utilize the "catch-up" provisions, capitalization requirements to be a qualified vendor, use of disclosure forms, and reporting and recordkeeping requirements for vendors. The amendments will function by allowing members to be better informed regarding the "catch-up" provisions of the deferred compensation plan; and reporting, disclosure, and capitalization requirements will provide additional protection for employees participating in the plan. The agency received no comments regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 6252-3g, sec.2.45, which give the Employees Retirement System of Texas the authority to adopt rules, regulations, plans, and procedures to carry out the purposes of this Act. sec.87.5. Participation by Employees. (a)-(f) (No change.) (g) Catch-up exception to the normal maximum amount of deferrals. (1) This subsection provides a limited exception to the normal maximum amount of deferrals. (2) In the event that a participant chooses to begin the catch-up option, the participant is required to complete and provide the plan administrator with a copy of the catch-up provision agreement form. (3) In this subsection, the term "normal retirement age" for any participant means a range of ages: (A) beginning with the earliest age at which a person may retire under the participant's basic pension plan: (i) without an actuarial or similar reduction in retirement benefits; and (ii) without the state's consent for the retirement; and (B) ending at age 70.5. (4) If a participant works beyond age 70.5, the normal retirement age for the participant is the age designated by the participant which, in this instance, may not be later than the participant's separation from service. (5) For any or all of the last three full taxable years ending before the taxable year in which a participant attains normal retirement age, the maximum amount that the participant may defer for each tax year is the lesser of: (A) $15,000; or (B) the sum of: (i) the normal maximum amount of deferrals; and (ii) the portion of the normal maximum amount of deferrals that the participant did not use in prior tax years commencing January 1, 1979, provided the participant was eligible to participate in the plan during those years. (6) This subsection applies only if the participant has not previously used the catch-up exception with respect to a different normal retirement age under the plan or another deferred compensation plan governed by the Internal Revenue Code of 1986, sec.457. (7) No participant shall be permitted to participate in any catch-up provision during or after the calendar year in which the participant reaches normal retirement age. If a participant makes deferrals in excess of the normal plan limits under the catch-up provision during or after the calendar year in which the participant reaches normal retirement age, the following actions will be taken. (A) Upon notification by the participant's state agency, the vendor will return to the participant's state agency, the amount of deferrals in excess of the normal plan limits, that is, the lesser of $7,500 or 33-1/3% of includible compensation without any reduction for fees or other charges. (B) Upon receipt of the funds, the participant's state agency will reimburse the participant through its payroll system. (h)-(n) (No change.) sec.87.7. Vendor Participation. (a)-(b) (No change.) (c) Eligibility to become a qualified vendor. (1) Banks. The plan administrator shall disapprove a bank's application to become a qualified vendor if: (A) (No change.) (B) the FDIC does not insure deposits with the bank; (C) the bank is either not well-capitalized or is adequately capitalized but has not obtained a waiver to accept brokered deposits as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991, Public Law 102-242, 105 Statute 2236 and the related regulations; or (D) the bank is not a state depository under the Government Code, Chapter 404. (2) (No change.) (3) Insurance companies. (A)-(B) (No change.) (C) An insurance company shall report its A.M. Best, Standard and Poors, Moody's, and Duff and Phelps rating information to the plan administrator on an annual basis and shall immediately report any change in its rating in the interim to the plan administrator. (D) The plan administrator shall disapprove an insurance company's application to become a qualified vendor if the company uses the sex of the person insured or of the recipient to calculate premiums, payments, or benefits for any of its investment products. (4) Savings and loan associations. The plan administrator shall disapprove a savings and loan association's application to become a qualified vendor if: (A) (No change.) (B) the FDIC does not insure deposits with the savings and loan association; (C) the savings and loan association is either not well-capitalized or is adequately capitalized but has not obtained a waiver to accept brokered deposits as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991, Public Law 102-242, 105 Statute 2236 and the related regulations; or (D) the savings and loan association is not a state depository under the Government Code, Chapter 404. (5) (No change.) (d)-(f) (No change.) (g) Voluntary termination of participation in the plan. (1)-(5) (No change.) (6) When a qualified vendor that is an insurance company voluntarily terminates its participation in the plan, this paragraph applies in addition to the preceding paragraphs of this subsection. (A) (No change.) (B) A participant whose deferrals and investment income have been invested in a terminated life insurance product may continue life insurance coverage with the insurance company offering the product. (C)-(D) (No change.) (E) A participant may exercise the right to continue life insurance coverage only if the participant mails to the insurance company written notice of the participant's intention to continue the coverage. The written notice must be postmarked no later than the 60th day after the effective date of the company's termination of participation in the plan. However, an insurance company may increase the 60-day time limit for a participant or for all participants. (F) When a participant elects to continue life insurance coverage, the insurance company with which coverage is continuing may not: (i)-(viii) (No change.) (G) (No change.) (H) If a vendor does not comply with subparagraph (G) of this paragraph, then a participant may exercise the right to continue insurance up to the 120th day after the vendor actually mails written notice to the participant, containing a full explanation of the participant's rights. (h)-(i) (No change.) (j) Collateralization by banks. (1)-(3) (No change.) (4) Once each quarter, a qualified vendor shall furnish to the plan administrator the following information certified by its chief financial officer: (A) its current capital category as defined in the Prompt Corrective Action regulations, 12 CFR, Part 325, Subpart B, i.e., well capitalized, adequately capitalized, etc.; (B) its total capital to risk-weighted assets ratio as defined in the applicable FDIC regulations; (C) its Tier 1 capital to total book assets ratio as defined in the applicable FDIC regulations; (D) its Tier 1 capital to risk-weighted ratio; (E) its most recent Call Report and/or other financial report that can be used to substantiate subparagraphs (A)-(D) of this paragraph; and (F) if applicable, evidence of a waiver from the FDIC that permits the qualified vendor to accept brokered deposits. (5) A qualified vendor shall immediately notify the plan administrator if the qualified vendor's capital category changes before its next Call Report or if its waiver from the FDIC with regard to brokered deposits expires, is revoked, or materially changes. (6) A qualified vendor must collateralize deferrals in accordance with the Government Code, Chapter 404. If a monthly report indicates that a qualified vendor is under-collateralized, the vendor shall immediately pledge additional collateral and comply with the directives of the State Treasury Department and the plan administrator. The plan administrator may suspend or expel an under- collateralized qualified vendor in accordance with sec.87.21(a)(7) of this title (relating to Remedies). (7) A qualified vendor may not require a participant to withdraw some or all of the participant's deferrals so that the vendor may avoid the collateralization requirements in the Government Code, Chapter 404. A qualified vendor may not establish a maximum amount of deferrals that a participant may invest in the vendor's qualified investment products. (8) Notwithstanding a qualified vendor's reinvestment of deferrals and investment income in investment products offered by the vendor's trust department or by other vendors, the deferrals and investment income are deemed invested in the vendor's qualified investment products for the purpose of this subsection. (9) The plan administrator, in its discretion, may immediately transfer under- collateralized funds plus any amount reasonably necessary to prevent future under-collateralization. The transfer shall be carried out in accordance with the procedures set forth in sec.87.15(e) of this title (relating to Transfers). The vendor may not charge the participant a fee or penalty due to a withdrawal of under-collateralized funds. (k) Collateralization by savings and loan associations. (1)-(3) (No change.) (4) Once each quarter, a qualified vendor shall furnish to the plan administrator the following information certified by its chief financial officer: (A) its current capital category as defined in the Prompt Corrective Action regulations, 12 CFR, Part 325, Subpart B, i.e., well capitalized, adequately capitalized, etc.; (B) its total capital to risk-weighted assets ratio as defined in the applicable FDIC regulations; (C) its Tier 1 capital to total book assets ratio as defined in the applicable FDIC regulations; (D) its Tier 1 capital to risk-weighted ratio; (E) its most recent Call Report and/or other financial report that can be used to substantiate subparagraphs (A)-(D) of this paragraph; and (F) if applicable, evidence of a waiver from the FDIC that permits the qualified vendor to accept brokered deposits. (5) A qualified vendor shall immediately notify the plan administrator if the qualified vendor's capital category changes before its next Call Report or if its waiver from the FDIC with regard to brokered deposits expires, is revoked, or materially changes. (6) A qualified vendor must collateralize deferrals in accordance with the Government Code, Chapter 404. If a monthly report indicates that a qualified vendor is under-collateralized, the vendor shall immediately pledge additional collateral and comply with the directives of the State Treasury Department and the plan administrator. The plan administrator may suspend or expel an under- collateralized qualified vendor in accordance with sec.87.21(a)(7) of this title. (7) A qualified vendor may not require a participant to withdraw some or all of the participant's deferrals so that the vendor may avoid the collateralization requirements in the Government Code, Chapter 404. A qualified vendor may not establish a maximum amount of deferrals that a participant may invest in the vendor's qualified investment products. (8) Notwithstanding a qualified vendor's reinvestment of deferrals and investment income in investment products offered by the vendor's trust department or by other vendors, the deferrals and investment income are deemed invested in the vendor's qualified investment products for the purpose of this subsection. (9) The plan administrator, in its discretion, may immediately transfer under- collateralized funds plus any amount reasonably necessary to prevent future under-collateralization. The transfer shall be carried out in accordance with the procedures set forth in sec.87.15(e) of this title. The vendor may not charge the participant a fee or penalty due to a withdrawal of under- collateralized funds. (l)-(m) (No change.) 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 November 9, 1993. TRD-9331803 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: January 1, 1994 Proposal publication date: September 17, 1993 For further information, please call: (512) 867-3336